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1 Government unveils bold plan to rescue Citigroup
By JEANNINE AVERSA, AP Economics Writer
42 mins ago
|WASHINGTON – The government unveiled a bold plan Sunday to rescue Citigroup, injecting a fresh $20 billion into the troubled firm as well as guaranteeing hundreds of billions of dollars in risky assets.
The action, announced jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already crippled financial system and the U.S. economy.
The sweeping plan is geared to stemming a crisis of confidence in the company, whose stock has been hammered in the past week on worries about its financial health.
2 European stocks higher on Citigroup rescue
By PAN PYLAS, AP Business Writer
6 mins ago
|LONDON – European stock markets rose Monday after Friday’s strong close on Wall Street and on relief that the U.S. government is providing a lifeline to ailing banking giant Citigroup.
The FTSE 100 index of leading British shares was up 174.98 points, or 4.6 percent, at 3,955.95, while Germany’s DAX was 162.51, or 3.9 percent, higher at 4,289.92. The CAC-40 in France was up 140.36, or 4.9 percent, at 3,021.62.
“Equities have started the week with a significant bounce as traders look to exploit the Dow’s 500 point gain on Friday and news that Citigroup will now be bailed out by the U.S. government may also have the potential to add some stability to the troubled banking sector on both sides of the Atlantic,” said Matt Buckland, a dealer at CMC Markets.
3 Oil prices rise back above $50
By PABLO GORONDI, Associated Press Writer
3 mins ago
|Oil prices were fluctuating around $50 a barrel Monday as investors gained some confidence from reports that ailing U.S. bank Citigroup will get a state bailout and that U.S. President-elect Barack Obama has chosen an economic team to tackle what could be the worst slowdown in decades.
But worries about falling demand for oil because of the broadening recession kept a lid on prices.
By midday in Europe, light, sweet crude for January delivery was up 91 cents to $50.84 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe, trading in a range between $48.80 and $51.34. On Friday, the contract gained 51 cents to settle at $49.93.
4 More customers resume using old-fashioned cash
By ANNE D’INNOCENZIO, By AP Retail Writer
Sun Nov 23, 6:07 pm ET
|NEW YORK – Cash or credit? For more Americans, who have already maxed out their credit cards or are just trying to manage their spending better in the tough economy, the answer is increasingly the old-fashioned one.
Retailers like Wal-Mart Stores Inc., Target Corp. and J.C. Penney Co. are noticing a marked shift away from credit cards in favor of cash and debit cards. A big factor is less credit available as major card issuers cut spending limits and raise fees even for customers who pay their bills on time.
The shift ends Americans’ long love affair with credit cards and is one of the changes in consumer behavior that has emerged since the financial meltdown that could depress consumer spending this holiday season and affect shoppers’ habits long afterward.
5 Consumers cautious about effect of auto bankruptcy
By KIMBERLY S. JOHNSON, AP Auto Writer
Sun Nov 23, 4:54 pm ET
|NEW YORK – Cash-strapped General Motors insists declaring bankruptcy would be disastrous because it would scare away customers. It’s unlikely Chevrolet and Cadillac owners would be left with worthless warranties and no replacement parts, but the headlines about the Detroit Three’s dire situation may already be keeping buyers away.
“If GM is under the imminent threat of bankruptcy or actually declares bankruptcy, I would not consider a GM product,” said Kevin Ketels, who might replace his family’s 2004 Toyota RAV4 late next year. “I just don’t know if the company will be around to fulfill their warranty obligations. Will they be there for me? There are too many unknowns and a car is my second biggest investment next to my house.”
The 38-year-old from Grosse Pointe Woods, Mich., would be among the 80 percent of Americans who General Motors Corp. insists wouldn’t even consider a GM brand such as Buick, Saturn or Saab if the company was in bankruptcy. Chief Executive Rick Wagoner brought up the statistic from a CNW Research survey last week during his congressional plea for $25 billion in federal loans.
6 Bernanke says he erred in gauging mortgage fallout
By JEANNINE AVERSA, AP Economics Writer
Sun Nov 23, 3:30 pm ET
|WASHINGTON – Federal Reserve Chairman Ben Bernanke acknowledges he was wrong in believing that there would be limited fallout to financial markets from risky mortgages that soured after the housing market’s collapse.
“I and others were mistaken early on in saying that the subprime crisis would be contained,” Bernanke said in an article in the Dec. 1 issue of The New Yorker magazine.
“The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict,” he said in the piece titled “Anatomy of a Meltdown.”
7 Wall Street braces for another pivotal week
By JOE BEL BRUNO, AP Business Writer
Sun Nov 23, 9:38 pm ET
|NEW YORK – Wall Street faces another pivotal week, with investors enmeshed in a stock market knocked to 11-year lows amid growing fears about the fate of the nation’s ailing automobile industry and banking system.
The market, considered a forward-looking gauge of the economy, appears to lack any catalysts for buying. The triggers of last week’s massive stock losses continue to hang over the market, with no bailout seen for Detroit’s three automakers and Citigroup Inc. shares plunging to all-time lows.
And, that’s just the start of it – even more uncertainty is expected to come in a week shortened by the Thanksgiving holiday. A stream of economic reports, the start of the holiday shopping season, and more clues about the job market will keep investors scrambling in the coming days.
8 After record profits, steel shaken by sudden drop
By DANIEL LOVERING, AP Manufacturing Writer
Sun Nov 23, 4:08 pm ET
|PITTSBURGH – Just weeks after posting record profits, steel makers are facing a harsh new reality: dwindling orders, production cuts, layoffs. And tougher times lay ahead, analysts say.
The steel industry had been riding high earlier this year, as surging demand from China and other countries, coupled with soaring prices for materials used in steel making, produced the most lucrative market for the metal in more than 60 years.
But the credit crisis and global economic slowdown have undercut customers in key markets – construction, automobiles and industrial equipment – sending prices tumbling and prompting steel companies to slash production, scale back shipment forecasts, delay expansion plans and furlough workers.
9 AP IMPACT: Govt pays millions for unapproved drugs
By RICARDO ALONSO-ZALDIVAR and FRANK BASS, Associated Press Writers
Sun Nov 23, 4:22 pm ET
|WASHINGTON – Taxpayers have shelled out at least $200 million since 2004 for medications that have never been reviewed by the government for safety and effectiveness but are still covered under Medicaid, an Associated Press analysis of federal data has found. Millions of private patients are taking such drugs, as well.
The availability of unapproved prescription drugs to the public may create a dangerous false sense of security. Dozens of deaths have been linked to them.
The medications date back decades, before the Food and Drug Administration tightened its review of drugs in the early 1960s. The FDA says it is trying to squeeze them from the market, but conflicting federal laws allow the Medicaid health program for low-income people to pay for them.
10 APEC leaders don Andean ponchos for group photo
By ANDREW WHALEN, Associated Press Writer
Sun Nov 23, 2:26 pm ET
|LIMA, Peru – It’s a card the host country always plays close to the chest. When Pacific Rim leaders wrap up their annual summit, what traditional outfit will they be forced to wear for the photo-op?
With models from Paris to New York strutting down runways in Peruvian fleeces, it didn’t come as much of a surprise when the heads of state emerged from Peruvian army headquarters wearing flowing, brown ponchos spun from baby alpaca shearings.
The tradition began in 1993, when Asian Pacific Economic Cooperation forum leaders donned leather bomber jackets for their group photo in Seattle. Since then, they have exchanged their coats and ties each year for a traditional outfit provided by the host country.
11 U.S. government steps in to save Citi, markets rally
By Glenn Somerville and Ralph Boulton, Reuters
25 mins ago
|WASHINGTON/LONDON (Reuters) – The U.S. government agreed to inject $20 billion of new capital into one of the world’s biggest banks, Citigroup Inc (C.N), to avoid a collapse that could have wrought financial havoc around the globe.
Washington, also under pressure to rescue an ailing motor industry, effectively guaranteed most of Citigroup’s potential $306 billion losses in high-risk assets. It was the biggest bank bailout yet and a measure of the crisis sweeping the world.
The Gulf emirate of Dubai, home to a new luxury mega-resort built on a manmade palm-shaped island visible from space, announced it was pulling back on a building spree symbolic of extravagant boom years leading up to the current crisis.
12 UBS clients seek amnesty on U.S. taxes: report
Mon Nov 24, 2:17 am ET
|(Reuters) – Some wealthy clients of UBS AG are coming forward to make amends with U.S. tax authorities after a former UBS private banker was indicted, a sign that U.S. efforts to battle offshore tax evasion are having the desired effect, the Wall Street Journal reported on its website.
UBS said it did not comment on market speculation and rumor, when asked about the report by Reuters.
The UBS clients are hiring tax lawyers and pursuing amnesty through an Internal Revenue Service (IRS) voluntary disclosure program, the paper said.
13 Government coffers open as jobs vanish
By Emily Kaiser, Reuters
Sun Nov 23, 3:06 pm ET
|WASHINGTON (Reuters) – From the 200 jobs cut at Air New Zealand to the 52,000 heading out the door at Citigroup, unemployment is on the rise around the world, straining government efforts to corral the credit crisis.
Even as credit markets show signs of slowly returning to working order, the real economy is fading fast and looks likely to deteriorate over the coming months.
Governments that were reluctant to spend public money to salvage banks will face growing pressure to act now that unemployment lines are lengthening. Coffers will be depleted as public spending increases while tax receipts drop.
14 Black Friday sales intensify in downturn
By Nicole Maestri, Reuters
53 mins ago
|NEW YORK (Reuters) – Black Friday, the traditional start to the U.S. holiday shopping season, means more to retailers this year as they struggle to win over consumers with a recession looming.
Black Friday falls on November 28, the day after the Thanksgiving holiday, and many stores have already begun advertising deep discounts to attract shoppers as early as midnight.
Retailers that fail to rack up sales during the three-day weekend face the prospect of clearing out merchandise at profit-crunching prices closer to Christmas.
15 U.S. retail sales struggle in early November: MasterCard
53 mins ago
|NEW YORK (Reuters) – U.S. sales of apparel, shoes and appliances fell dramatically in the first two weeks of November, as consumers worried about a recession and job losses further cut spending, MasterCard Advisors said in a report.
The results from SpendingPulse provide an early look into the strength of the crucial U.S. holiday sales season, which traditionally begins on the day after Thanksgiving. This year, the major holiday sales period begins on Friday, November 28.
Analysts are predicting the worst holiday sales season in nearly two decades.
16 Wanted: catalysts for buying
By Jeremy Gaunt, European Investment Correspondent, Reuters
Sun Nov 23, 10:10 am ET
|LONDON (Reuters) – Many financial assets across the world are looking cheap after the market ructions of the past year but investors in general have yet to rediscover the impulse to buy.
The mood appears to be so negative that even the odd bit of good news is quickly shrugged off by market players.
Consider, for example, last week’s decision by Saudi Prince Alwaleed bin Talal to increase his stake in battered Citigroup (C.N) because the bank’s shares were “dramatically undervalued.”
17 US government promises to protect Citigroup from ‘large losses’
39 mins ago
|WASHINGTON (AFP) – The US government is promising to protect struggling banking giant Citigroup against large losses by issuing a 306-billion-dollar guarantee for its capital and purchasing a 20-billion-dollar stake in the company using a financial rescue package approved by Congress.
The announcement came shortly before midnight Sunday, after the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation reached an agreement with Citigroup to provide a package of guarantees to the bank saddled with staggering losses.
In a joint statement issued after the talks, the three agencies said they will provide Citigroup “protection against the possibility of unusually large losses on an asset pool of approximately 306 billion dollars of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup’s balance sheet.”
18 Governments roll out economic crisis battleplans
2 hrs 30 mins ago
|WASHINGTON (AFP) – Governments on Monday rolled out new manoeuvres in their battle against a world economic crisis, with the United States propping up yet another pillar of its financial sector, Citigroup.
US President-elect Barack Obama was meanwhile reported to be planning a vast stimulus package and was set to unveil the heavyweight economic advisors in his future administration.
Britain’s government was expected to announce plans to slash taxes and boost spending to avert recession while the leaders of France and Germany were to discuss French plans for concerted action to boost the recession-hit EU.
19 Standard Chartered to raise $2.66 bln in rights issue
2 hrs 25 mins ago
|SINGAPORE (AFP) – British-based Standard Chartered bank said Monday it plans to raise 1.78 billion pounds (2.66 billion US dollars) in a rights issue to better position itself during the global financial turmoil.
The bank said its largest shareholder, Singapore sovereign wealth fund Temasek Holdings, intends to take up the offer and is also participating in underwriting the issue.
The rights issue “reinforces the strength of the balance sheet during this turbulent period,” the bank said in a statement, adding that the move would allow it to take advantage of opportunities amid the world’s economic crisis.
20 Dollar slides after US government rescues Citigroup
24 mins ago
|LONDON (AFP) – The dollar sank against leading currencies on Monday after the announcement of a US rescue package to protect troubled banking titan Citigroup, dealers said.
In late morning trading here, the euro rose to 1.2660 dollars from 1.2587 late in New York on Friday.
Against the Japanese currency, the dollar slid to 95.33 yen from 95.89 yen on Friday.
21 Stricken German public bank KfW expects further losses
Sun Nov 23, 6:15 pm ET
|BERLIN (AFP) – Germany’s state-owned development bank KfW is expecting further losses in its final-quarter 2008 results, following losses in the first three quarters of the year, the bank’s chief said.
October and November had been “catastrophic” for the bank, chief executive Ulrich Schroeder says in Monday’s edition of the daily Sueddeutsche Zeitung.
The bank would need years to get over its losses, he added.
22 Britain set to slash tax on goods and services
by Ben Perry, AFP
Sun Nov 23, 12:55 pm ET
|LONDON (AFP) – Britain was Monday expected to announce a cut in value added tax (VAT) to 15 percent from 17.5 percent to stimulate spending on goods and services as the nation faces recession.
A cut in VAT was emerging as a likely centrepiece of the Labour government’s upcoming budget report, British newspapers said Sunday, as Prime Minister Gordon Brown also attempts to further close a gap on the main opposition Conservatives in the polls.
“I want every household facing difficulty at this time to know we are ready to help and on their side,” Brown wrote in the popular News of the World weekly tabloid.
23 German HSH Nordbank gets 30 bln euros in state guarantees
Sat Nov 22, 3:50 pm ET
|BERLIN (AFP) – HSH Nordbank announced it had obtained up to 30 billion euros (38.5 billion dollars) in loan guarantees from the German government as part of a national rescue plan for the banking sector.
The regional bank reached a deal late Friday with a special market stabilisation fund created by the government to help banks in Europe’s biggest economy weather the world financial crisis.
Based in the port of Hamburg and the state of Schleswig-Holstein, the public bank had request government aid earlier this month.
24 Worst of financial crisis yet to come: IMF chief economist
Sat Nov 22, 6:04 pm ET
|ZURICH, Switzerland (AFP) – The IMF’s chief economist has warned that the global financial crisis is set to worsen and that the situation will not improve until 2010, a report said Saturday.
Olivier Blanchard also warned that the institution does not have the funds to solve every economic problem.
“The worst is yet to come,” Blanchard said in an interview with the Finanz und Wirtschaft newspaper, adding that “a lot of time is needed before the situation becomes normal.”