Shares of Bank of American Corp. (BAC) fell more than 26% during trading yesterday (Tuesday) as investors reacted to the company’s disclosure that it was cutting its dividend after its third-quarter earnings plunged a stunning 68%.
Major indices around the world plunged yesterday (Monday), as the credit crisis picked up momentum in Europe and markets in Asia began bracing for a deep recessionary environment in the West.
The buzz on Capitol Hill is that Congress could pass an updated version of the bailout bill before the end of the week. But Shah Gilani in Money Morning says taxpayers are being “force-fed a political solution, instead of a sound economic market-based solution to a financial crisis.” He says the the bailout bill has eight key failings.
In every economic boom and bust, there are winners and losers. Never before in American history, or any other history, have the winners won so much. The big winners were in the financial industry. They profited enormously from the expansion of the money supply from August 1982 until March 2000. They rose in the corporate ranks during this period.
Even with a congressional compromise having been reached, the $700 billion credit-crisis bailout plan will remain the headline story this week as analysts monitor whether the deal is viewed as a good one, or is ultimately regarded as a flawed deal that can only do damage to the U.S. economy over the long haul.
The government gravy train is at full throttle. The “big three” automakers in Detroit don’t want to be left out. They’re close to snapping up a $25 billion bailout. It’s another nail in the coffin for the dollar, according to Smart Comodities UK editor Garry White. This will send gold prices into orbit.
Rumors of a capital crisis due to overexposure to distressed U.S. securities drove shares of a Hong Kong bank sharply lower today (Wednesday), as concerned customers lined up outside retail branches to withdraw deposits.
U.S. stocks dropped for the third straight day yesterday (Wednesday) on worries that increasingly rancorous debates will squelch a proposed $700 billion bailout of the U.S. financial system even as Federal Reserve Chairman Ben S. Bernanke warned Congressional leaders that the credit crisis was already damaging the American economy.
Investing icon Warren Buffett took his own advice Tuesday – getting “greedy when others are fearful” – when he ignored the banking-sector bonfire and slapped down a cool $5 billion for a stake in Goldman Sachs Group Inc. (GS). By literally putting his money where his mouth is, Buffett’s actions – and reputation as a shrewd bargain hunter – restored some of Goldman’s luster and helped bolster investor confidence in the U.S. banking system.
U.S. Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben S. Bernanke both testified before Congress today (Tuesday) to urge lawmakers to quickly approve the proposed $700 billion government banking bailout plan.
