Bushonomics: Stocks decline on unemployment, factory reports
Trader Eric Schumacher, left, watches the numbers as he works on the New York Stock Exchange floor, on 2 October 2008.2 October 2008
By JOE BEL BRUNO
NEW YORK- Stocks tumbled and credit markets remained tight Thursday after plunging factor orders and a seven-year high in jobless claims stoked fears that the government's financial rescue plan might not be enough to ward off a recession. The Dow Jones industrials fell nearly 230 points, their fourth straight triple-digit move.
Investors appeared to be pulling more money out of the market and settling in for a prolonged economic winter. The main concern is that the $700 billion bailout plan won't be enough to stimulate growth, and the latest economic reports delivered on Tuesday demonstrate that the economy continues to struggle.
The government said the number of people seeking unemployment benefits rose last week and that demand at the nation's factories has fallen by the largest amount in nearly two years. The market is interpreting the Commerce Department report on factories as a sign that tight credit conditions are hitting manufacturers.
"The economy is what's driving this weakness," said Subodh Kumar, global investment strategist at Toronto-based Subodh Kumar & Associates. "I think now what's going on is a focus on the economic weakness in a whole bunch of areas."
He said "the next couple of days are going to be pretty intense politically" as Wall Street girds for another vote on the financial bailout plan.
The bill that passed the Senate late Wednesday will be sent to the House as soon as Friday. The latest version of the bill adds $100 billion in tax breaks for businesses and the middle class and raises the limit on federal deposit insurance to $250,000 from $100,000.
Supporters are hoping the sweetened bill will be more palatable to some of the 133 House Republicans who rejected the measure in a vote Monday that took Wall Street, and many on Capitol Hill, by surprise.
Those in favor of the plan to let the government buy billions of dollars in bad mortgage debt and other now-toxic assets say it will help unclog the world's ailing credit markets. Banks are fearful of making loans, even to each other, because of worries they won't be repaid. That, in turn, is weighing on the economy, making borrowing more difficult and expensive for businesses and consumers alike.
The credit markets showed some increased strain on Thursday. The yield on the 3-month T-bill, the safest type of investment, rose to 0.80 percent from 0.79 percent late Wednesday. The historically low yields indicate investors are willing to accept the smallest of returns to safeguard their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.66 percent from 3.74 percent late Wednesday.
The Dow fell 226.52, or 2.09 percent, to 10,604.55. The blue chips plunged nearly 778 points Monday, logged a partial rebound Tuesday and finished moderately lower Wednesday.
Broader stock indicators also fell sharply Thursday. The Standard & Poor's 500 index fell 29.00, or 2.50 percent, to 1,132.06, and the Nasdaq composite index fell 53.08, or 2.56 percent, to 2,016.32.
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On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
By JOE BEL BRUNO
NEW YORK- Stocks tumbled and credit markets remained tight Thursday after plunging factor orders and a seven-year high in jobless claims stoked fears that the government's financial rescue plan might not be enough to ward off a recession. The Dow Jones industrials fell nearly 230 points, their fourth straight triple-digit move.
Investors appeared to be pulling more money out of the market and settling in for a prolonged economic winter. The main concern is that the $700 billion bailout plan won't be enough to stimulate growth, and the latest economic reports delivered on Tuesday demonstrate that the economy continues to struggle.
The government said the number of people seeking unemployment benefits rose last week and that demand at the nation's factories has fallen by the largest amount in nearly two years. The market is interpreting the Commerce Department report on factories as a sign that tight credit conditions are hitting manufacturers.
"The economy is what's driving this weakness," said Subodh Kumar, global investment strategist at Toronto-based Subodh Kumar & Associates. "I think now what's going on is a focus on the economic weakness in a whole bunch of areas."
He said "the next couple of days are going to be pretty intense politically" as Wall Street girds for another vote on the financial bailout plan.
The bill that passed the Senate late Wednesday will be sent to the House as soon as Friday. The latest version of the bill adds $100 billion in tax breaks for businesses and the middle class and raises the limit on federal deposit insurance to $250,000 from $100,000.
Supporters are hoping the sweetened bill will be more palatable to some of the 133 House Republicans who rejected the measure in a vote Monday that took Wall Street, and many on Capitol Hill, by surprise.
Those in favor of the plan to let the government buy billions of dollars in bad mortgage debt and other now-toxic assets say it will help unclog the world's ailing credit markets. Banks are fearful of making loans, even to each other, because of worries they won't be repaid. That, in turn, is weighing on the economy, making borrowing more difficult and expensive for businesses and consumers alike.
The credit markets showed some increased strain on Thursday. The yield on the 3-month T-bill, the safest type of investment, rose to 0.80 percent from 0.79 percent late Wednesday. The historically low yields indicate investors are willing to accept the smallest of returns to safeguard their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.66 percent from 3.74 percent late Wednesday.
The Dow fell 226.52, or 2.09 percent, to 10,604.55. The blue chips plunged nearly 778 points Monday, logged a partial rebound Tuesday and finished moderately lower Wednesday.
Broader stock indicators also fell sharply Thursday. The Standard & Poor's 500 index fell 29.00, or 2.50 percent, to 1,132.06, and the Nasdaq composite index fell 53.08, or 2.56 percent, to 2,016.32.
___
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Commentary:
While there is a huge increase of unemployed and the ever-increasing poor, it seems they are never in the picture as for as what has been said numerous times towards this bailout bill and these people are extremely important.
As far as taxes towards these people, they can not afford the cost of living now; let alone in the future.
This second run of this souring bailout bill, is just another case of it will not work, let’s think again.
As far as buying bad debt paper, the chances of recouping and paying back or slim to none and in the long-run will make matters worse; as has been mentioned previously.
I do not know about other people in America, but I do not care to see another deceased homeless person on a public park bench and what makes matters worse; knowing they are forgotten by there government or the gentleman who had a suit job yesterday, sleeping on a bench the next day without a job and lost there home.
Needless to say, these two people could not afford the bailout bill, anymore, then the ones standing in the never-ending unemployment line.
As another quick example, can US afford to build a new embassy in London?
Labels: Bush, Depression, Economy, Employment, Poverty, United States
posted by HRM Deborah of Israel and the Messenger of Peace at 7:03 PM
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