A week of wrangling over Fed bailout
This mornings financial news is again dominated by the on again / off again US Treasury bailout.
Despite George Bush urging swift action to avoid a long and painful recession, wrangling over the details of the proposal has meant that Friday is now upon us, with still no deal confirmed.
The Republicans, while agreeing to a number of the Democrats demands which would see the Treasury buy up a number of banks risky assets, are now attempting to put in place additional measures to prevent excessive pay of bank executives who are involved in the scheme.
Whilst it seems likely that if Paulson is to get his wish of the near $750 billion bailout, his access to the funds will come in the form of staggered payments, rather than a lump sum.
Earlier yesterday, it had been thought that a deal was extremely close to being agreed, and both the Dollar and US equities rallied as a result, with the S&P 500 closing up 2% and the FTSE Eurofirst 300 rose 2.16% to 1,125.43.
However, the stalling of US politicians and failure to agree a deal has seen some of the Dollar strength and gains in equities reverse this morning. Some economists are now warning investors not to get too carried away by hopes of the US Treasury deal as worries regarding the wider global economy would not be going away any time soon.
This view was reflected in economic data released in the US yesterday. US New Home Sales fell in August to a 17 year low, dropping 11.5% to an annual rate of 460,000, the fewest since January 1991. Orders for Durable Goods in the US also dropped 4.5% in August, more than twice as much as had been forecast by economists, a clear sign that the tightening credit conditions had seen a cut back in spending.
These figures added to last weeks Initial Jobless Claims figure, which at 493,000 was the highest since September 2001, all point to the fact that the US economy is still very much stuttering along.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Despite George Bush urging swift action to avoid a long and painful recession, wrangling over the details of the proposal has meant that Friday is now upon us, with still no deal confirmed.
The Republicans, while agreeing to a number of the Democrats demands which would see the Treasury buy up a number of banks risky assets, are now attempting to put in place additional measures to prevent excessive pay of bank executives who are involved in the scheme.
Whilst it seems likely that if Paulson is to get his wish of the near $750 billion bailout, his access to the funds will come in the form of staggered payments, rather than a lump sum.
Earlier yesterday, it had been thought that a deal was extremely close to being agreed, and both the Dollar and US equities rallied as a result, with the S&P 500 closing up 2% and the FTSE Eurofirst 300 rose 2.16% to 1,125.43.
However, the stalling of US politicians and failure to agree a deal has seen some of the Dollar strength and gains in equities reverse this morning. Some economists are now warning investors not to get too carried away by hopes of the US Treasury deal as worries regarding the wider global economy would not be going away any time soon.
This view was reflected in economic data released in the US yesterday. US New Home Sales fell in August to a 17 year low, dropping 11.5% to an annual rate of 460,000, the fewest since January 1991. Orders for Durable Goods in the US also dropped 4.5% in August, more than twice as much as had been forecast by economists, a clear sign that the tightening credit conditions had seen a cut back in spending.
These figures added to last weeks Initial Jobless Claims figure, which at 493,000 was the highest since September 2001, all point to the fact that the US economy is still very much stuttering along.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: credit crunch, New Home Sales, unemployment, US recession
posted by Drs Search @ 9:13 AM
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