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Tracked by: 109 Boarders
Thanks for clearing my doubts. Here u r quite right as to why anyone should write a msg in total anguish and desperation, as from such msgs nobody gets anything, on the contrary, it rather disturbs the boarders. Thanks once again....
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by :
googol
0708
Dear vkk ji,
I think you have not got my message right.I did not say that senior boarders should say good about market.I said senior boarders cheer up those who have incurred huge losses and are in the verge of a breakdown.Yesterday I recd two messages and both disturbed me .I have some knowledge of reading the mind by reading the message and the first message was written in total anguish and desperation which is a dangerous sign.I thought apart from my replying,if others also write,it would help that boarder to get some peace of mind.Thats all.Hope I have made myself clear now.
Regards,
Tracked by: 109 Boarders
Dear Googol,
Infosys will beat the rupee targets , but fall short by Dollar revenue targets, If they can meet their Dollar revenue target this time that will signal a small Bull run up to 3900, ( this 3900 I have considered that we will go dwon to 3300 till friday ), and if they don`t god knows where is the bottom for nifty....
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : googol
0707
Dear vkk ji,
I am shocked to see the first result that has rolled out today that of Prism cement.Their NP has fallen 71% on a y-o-y basis and 77% on q-o-q basis.I think many cos would come out with such results only.No wonder cement stocks are falling like nine pins.I do not know what Infosys is going to offer on 10th!.I think Lakshmicotsyn also would fail in the results going by how its price has been butchered
Regards,
Tracked by: 109 Boarders
Dear BSR,
Since USA markets DOW finished at 9447, Now we can see the NIFTY at 3100 levels
Today we will fall bay 250 points , to finish at 3350. and then to 3100 , at 3100 levels bottom can be formed... ( earliar i had a view that 3500 is support ) now 3100........
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : BullSheetRules
Dear vam_aru,
That totally depend on those BIG PLAYers! Let us hope that FIIs do not go for MAD / Panic SELLing to generate that liquidity! Else we will that Capitulation behaviour coming from those FIIs! :) If those FIIs are ready to go for Capitulation behaviour, Let us use their Billion of DOllars to make Money for FREE! :) Index can be taken up lator on once their MAD SELLing is over! :)
Figure of 9800 on DOW corresponds to 3450 on Nifty!
So, let us hope for the best! Let us hope that those BIG PLAYers continue to PLAY the GAME Sensibly!
Gud luk & happy investing !:)
Tracked by: 0 Boarder
Market will be slowly stabilising though not in a bullish mode. One can invest in small lots and book profit as and when noticed. But market is not out of bearish mode. Traders can invest now in active stocks. But investors still have time to wait till rest of the day of the week. ...
In reply to:
Expert strategies to adopt in volatile mkts
Posted by : MMB Messenger
It was an extremely volatile outing for the markets. Sajiv Dhawan, JV Capital Services feels that we are in a very unique situation. “Based on valuations and the current economy, I would stick my neck out and say I would buy the index."
Tracked by: 0 Boarder
Pensions lose $2 trillion
Congressional budget analyst says many workers may need to delay retirement
WASHINGTON (AP) -- Americans` retirement plans have lost as much as $2 trillion in the past 15 months, Congress` top budget analyst estimated Tuesday....
In reply to:
The End of Wall Street
Posted by : sambala
A 5-year low
U.S. stocks clobbered for 2nd straight day, with Dow losing 500 points, as investor gloom persists.
NEW YORK -- Wall Street`s drubbing continued Tuesday, with a 500-point loss bringing the Dow`s two-day scalding to nearly 900 points, as the Federal Reserve`s plan to loosen credit markets failed to counter investor pessimism about the government`s ability to rescue the markets.
Fed Chairman Ben Bernanke`s dour economic outlook in an afternoon speech added to the day`s weakness. And a report showed consumer borrowing in August fell for the first time since January 1998.
According to early tallies, the Dow Jones industrial average (INDU) lost 508 points or 5.1%, closing at lowest point since Sept. 30, 2003.
The Standard & Poor`s 500 (SPX) index fell 5.7% and closed below 1,000 for the first time since Aug. 27, 2003. The Nasdaq composite (COMP) lost 5.8% and ended at its lowest point since Aug. 18, 2003.
"There is this feeling that no matter what is done, it won`t be enough, " said Darin Pope, chief investment officer at United Advisors of Secaucus, N.J.
Credit markets remained tight Tuesday, but showed some improvement from the previous day. Treasury prices inched lower, with the yields modestly higher. The dollar slumped versus other major currencies. Oil and gold prices gained.
Tracked by: 0 Boarder
good place to start would be for the presidential candidates to acknowledge our $53 trillion (and growing) federal financial hole and commit to begin to address it. Their endorsement of the need for a bipartisan fiscal future commission along the lines of the one sponsored by Rep. Jim Cooper, D-Tennessee, and Rep. Frank Wolf, R-Virginia, also would make sense.
Any such commission should, at a minimum, address the need for statutory budget controls, comprehensive Social Security reform, a first round of tax reform and a first round of comprehensive health care reform. It should hold hearings both inside and beyond the Beltway. And, its recommendations should be guaranteed to receive an up-or-down vote by Congress if a super-majority of the commission`s members can agree on a comprehensive proposal.
Our fiscal time bomb is ticking, and the time for action is now
David M. Walker served as comptroller general of the United States and head of the Government Accountability Office (GAO) from 1998 to 2008. He is now president and CEO of the Peter G. Peterson Foundation
...
In reply to:
A Nation on the Grill
Posted by : sambala
Commentary: America`s $53 trillion debt problem
Story Highlights
David Walker: The U.S. faces a debt much larger than the bailout amount
Walker: No one is going to bail out America, we have to do it ourselves
U.S. needs panel to examine how to cut $53 trillion long-term debt, he says
Social Security, health care and taxes need to be reformed, Walker says
CNN) -- The Emergency Economic Stabilization Act contains plenty to make lawmakers on the left and right shudder. On the right, it`s the apparent abandonment of free-market principles. On the left, it`s the absence of punishment for high-flying Wall Street CEO`s.
Looking down the middle, what I found downright unnerving was how hard Washington struggled to pass a bill that, in reality, represents less than 1 percent of our current federal financial hole.
Don`t get me wrong. Congress and the Bush Administration are to be commended for acting to relieve the credit crunch and trying to minimize any immediate, adverse effect on our economy and by consequence, on American jobs and access to credit.
The ultimate cost of the act should ring up at less than $500 billion, less than the advertised $700 billion because of anticipated proceeds from the government`s sale of the assets it will acquire with the appropriated funds.
The nation`s real tab, on the other hand, amounted to $53 trillion as of the end of the last fiscal year. That was the sum of our public debt; accrued civilian and military retirement benefits; unfunded, promised Social Security and Medicare benefits; and other financial obligations -- all according to the government`s most recent financial statement of September 30, 2007.
The rescue package and other bailout efforts for Fannie Mae, Freddie Mac, AIG and the auto industry, escalating operating deficits, compounding interest and other factors are likely to boost the tab to $56 trillion or more by the end of this calendar year.
With numbers and trends like this, you might ask, "Who will bail out America?" The answer is, no one but us!
Since we`re going to have to save ourselves, recent events could hardly be called encouraging. It took an additional $100 billion in incentives -- some would call them "sweeteners;" others might call them bribes -- to get lawmakers to pass the rescue package. Regardless of what you call these incentives, ultimately the taxpayers will have to pick up the tab, with interest.
The process that was employed to achieve enactment of this bill was hardly a model of efficiency or effectiveness. The original proposal represented an over-reach and under-communication by the administration.
Neither lawmakers nor ordinary citizens had enough information to properly assess the real risks, the need for action and what an appropriate course of action might be. Furthermore, the key players allowed the legislation to be characterized as a $700 billion bailout of Wall Street, which was neither an accurate nor a fair reflection of the legislation.
Passage of the credit-crunch relief provisions in the act was understandable, not just because of what risks and needed actions the Treasury and the Federal Reserve were aware of, but more importantly, because of what policymakers didn`t know and eventually might have to address.
Let`s face it -- the regular order in Washington is broken. We must move beyond crisis management approaches and start to address some of the key fiscal and other challenges facing this country if we want our future to be better than our past.
Cont.....
Tracked by: 0 Boarder
Commentary: America`s $53 trillion debt problem
Story Highlights
David Walker: The U.S. faces a debt much larger than the bailout amount
Walker: No one is going to bail out America, we have to do it ourselves
U.S. needs panel to examine how to cut $53 trillion long-term debt, he says
Social Security, health care and taxes need to be reformed, Walker says
CNN) -- The Emergency Economic Stabilization Act contains plenty to make lawmakers on the left and right shudder. On the right, it`s the apparent abandonment of free-market principles. On the left, it`s the absence of punishment for high-flying Wall Street CEO`s.
Looking down the middle, what I found downright unnerving was how hard Washington struggled to pass a bill that, in reality, represents less than 1 percent of our current federal financial hole.
Don`t get me wrong. Congress and the Bush Administration are to be commended for acting to relieve the credit crunch and trying to minimize any immediate, adverse effect on our economy and by consequence, on American jobs and access to credit.
The ultimate cost of the act should ring up at less than $500 billion, less than the advertised $700 billion because of anticipated proceeds from the government`s sale of the assets it will acquire with the appropriated funds.
The nation`s real tab, on the other hand, amounted to $53 trillion as of the end of the last fiscal year. That was the sum of our public debt; accrued civilian and military retirement benefits; unfunded, promised Social Security and Medicare benefits; and other financial obligations -- all according to the government`s most recent financial statement of September 30, 2007.
The rescue package and other bailout efforts for Fannie Mae, Freddie Mac, AIG and the auto industry, escalating operating deficits, compounding interest and other factors are likely to boost the tab to $56 trillion or more by the end of this calendar year.
With numbers and trends like this, you might ask, "Who will bail out America?" The answer is, no one but us!
Since we`re going to have to save ourselves, recent events could hardly be called encouraging. It took an additional $100 billion in incentives -- some would call them "sweeteners;" others might call them bribes -- to get lawmakers to pass the rescue package. Regardless of what you call these incentives, ultimately the taxpayers will have to pick up the tab, with interest.
The process that was employed to achieve enactment of this bill was hardly a model of efficiency or effectiveness. The original proposal represented an over-reach and under-communication by the administration.
Neither lawmakers nor ordinary citizens had enough information to properly assess the real risks, the need for action and what an appropriate course of action might be. Furthermore, the key players allowed the legislation to be characterized as a $700 billion bailout of Wall Street, which was neither an accurate nor a fair reflection of the legislation.
Passage of the credit-crunch relief provisions in the act was understandable, not just because of what risks and needed actions the Treasury and the Federal Reserve were aware of, but more importantly, because of what policymakers didn`t know and eventually might have to address.
Let`s face it -- the regular order in Washington is broken. We must move beyond crisis management approaches and start to address some of the key fiscal and other challenges facing this country if we want our future to be better than our past.
Cont.....
...
In reply to:
A Nation on the Grill
Posted by : sambala
Such an approach would leave the better capitalised banks - HSBC and Santander, where there is no perceived problem - free of interference. Only RBS, Barclays, HBOS and Lloyds would be caught by the edict. Can the UK Government do this unilaterally? The time for international convention on these matters seems to have passed. Each country must do what it can to bolster confidence in its banking system.
Exaggerated media reports that Sir Fred had begged the Government on bended knee for a massive capital injection certainly played their part in today`s further, catastrophic collapse in bank share prices. Anything now seems to go in reporting on the affairs of banks, with even the most ill informed of briefings and rumours - many of which would in more normal times have been regarded as virtually actionable - now seen as fair game for publishing and spun as gospel truth.
Since the damage is now done, here`s my penny`s worth to add to the growing weight of negative speculation. According to one of the stories circulating in the market yesterday, so challenging did RBS`s funding difficulties become late last week in its US retail banking division that it was forced to seek emergency assistance from the Bank of England on top of the liquidity available through generally available channels. Believe it if you will.
Whatever its validity, stories such as these have been piling the pressure on the Government to come up with an urgent, bold and immediate response. Recapitalisation on its own won`t work. Indeed there is some danger than taxpayers` will only be throwing good money after the bad which has already been squandered. Yet in conjunction with a state guarantee of deposits, as announced by Ireland and others, deep cuts in interest rates, and further injections of liquidity, it might just succeed in putting a floor under the British banking system and halt the process of "deleveraging" which is threatening to undermine economic activity.
Tracked by: 0 Boarder
two things:
how does TRIN work when there is ban on short selling
does it work in times of such unbelievable volatility?...
In reply to:
Tuesday 7th September
Posted by : radhika_nandlal
So the commercial paper funding news was leaked... else the NYSE TRIN couldnt have been so overbought on Friday and monday at 0.1 and 0.5 respectively even when they fell hard.
Tracked by: 0 Boarder
Hey Lady
Commercial paper is nothing but a unsecured promisary note - there is no collateral involved.
only the companies with very best credit rating manage to sell their commercial paper.
it is like a Fixed deposit - it earns interest and is for max 270 days in the USA - however if the issuer goes bankrupt before the maturity - God save the purchaser of the commercial paper - It automatically become toilet paper ;)...
In reply to:
Commercial Paper, Exactly what does it mean?
Posted by : radhika_nandlal
Hey guys,
Whats the meaning of commerical paper funding??.. can someone explain from ABC... whatever is this paper. .LOL LOL
Quote from yahoo finance today
Dow Futures rebound on news that the Federal Reserve created a commercial paper funding facility, where it will buy three-month commercial paper. It is meant to provide a liquidity backstop, as the commercial paper market has been strained.
Unquote
Tracked by: 0 Boarder
A 5-year low
U.S. stocks clobbered for 2nd straight day, with Dow losing 500 points, as investor gloom persists.
NEW YORK -- Wall Street`s drubbing continued Tuesday, with a 500-point loss bringing the Dow`s two-day scalding to nearly 900 points, as the Federal Reserve`s plan to loosen credit markets failed to counter investor pessimism about the government`s ability to rescue the markets.
Fed Chairman Ben Bernanke`s dour economic outlook in an afternoon speech added to the day`s weakness. And a report showed consumer borrowing in August fell for the first time since January 1998.
According to early tallies, the Dow Jones industrial average (INDU) lost 508 points or 5.1%, closing at lowest point since Sept. 30, 2003.
The Standard & Poor`s 500 (SPX) index fell 5.7% and closed below 1,000 for the first time since Aug. 27, 2003. The Nasdaq composite (COMP) lost 5.8% and ended at its lowest point since Aug. 18, 2003.
"There is this feeling that no matter what is done, it won`t be enough, " said Darin Pope, chief investment officer at United Advisors of Secaucus, N.J.
Credit markets remained tight Tuesday, but showed some improvement from the previous day. Treasury prices inched lower, with the yields modestly higher. The dollar slumped versus other major currencies. Oil and gold prices gained.
...
In reply to:
The End of Wall Street
Posted by : sambala
"It was a financial disaster for that client," said Mr. Hester. "I think there`s a lot of that going on."
Crude oil rebounded after hitting an eight-month low on Monday. Futures were finished $2.25 higher, up 3%, at $90.06 a barrel in New York.
Gold, which tends tends to benefit when investors are looking for safe havens, posted a solid gain. Futures climbed $15.70, or 1.8%, to $878.40 per ounce in New York. The dollar weakened against the euro, yen, and British pound. The U.S. Dollar Index, which measures the currency`s value against a basket of six foreign denominations, was down 0.8%
Tracked by: 0 Boarder
The CBI became the latest voice to virtually beg the Bank of England to cut interest rates at the next meeting of the MPC on Thursday. Its Deputy Director-General, John Cridland, said: "In the light of the current turmoil in the markets, the damage to confidence and implications for the real economy, the CBI believes that the Bank of England should cut interest rates by half a point when it meets on Thursday."
Almost every economist in the City now believes the Bank will reduce rates, perhaps by a half-percentage point to 4.5 per cent. Some predict a fall to as low as 2.5 per cent next year, the lowest since 1951. The snag, as central banks around the world have discovered, is that the commercial money markets are so seized up that these cuts are hardly passed onto borrowers and house-buyers.
The credit crunch inspires a fear that no mere government can overcome.
...
In reply to:
The day fear hit the markets
Posted by : sambala
Fear. If there was one word to sum up the world`s financial markets yesterday, it was that. No one wanted to buy shares and, yet again, no one much wanted to lend money.
Richard Fuld, the former chief executive of Lehman Brothers, told Congress his bank had been blown away by a "storm of fear". That storm shows no sign of subsiding. Banks are one thing; countries quite another. yet now, almost unbelievably, the credit crisis seems on the point of claiming its first victim among sovereign nations – Iceland, whose banks have been badly exposed to the global chaos and where they are now closed. There is talk of Iceland having to join the EU simply to be bailed out, like a national Bradford and Bingley.
The Asian markets felt the fear first, and Tokyo slumped to a four-year low, as did China. Emerging markets dropped by their biggest margin in 20 years led by Russia`s bourse, suffering its worst day since the Bolsheviks took over. As the fear moved West, there was not much hope then for London, and so it proved.
The FTSE 100 index suffered its biggest one-day points fall, with banking and mining shares taking a hammering as the fallout from the financial crisis once again overwhelmed global markets. The FTSE ended 391.1 points lower, down 7.85 per cent, the third-biggest percentage decline in its history, leaving the index back at levels not seen for more than four years.
At this rate, in 10 days` time, the entire London stock market could be purchased with the small change you have in your pocket. In Europe, the fear was equally potent – Paris was down 7 per cent, Frankfurt down 8 per cent and Madrid down 9 per cent.
The credit markets remained stubbornly frozen, despite renewed efforts by the central banks to lend the system money, and even the oil price slumped to below $90, way off its near $150 a barrel peaks seen earlier this year. And on Wall Street, the Dow Jones industrial average of leading US stocks fell below the 10,000 mark for the first time in four years.
Of the myriad fears stalking the world`s financial system, perhaps the most terrible is that the ability of the world`s governments to control events is ebbing away. Yesterday the President of the World Bank, Robert Zoellick, almost admitted as much. "The G7 is not working," he said. "We need a better group for a better time" – not a hopeful curtain-raiser for the G7 finance ministers` summit at the IMF/World Bank meeting in Washington at the end of this week.
After the successful passage of the $700bn (£400bn) Paulson Plan to rescue America`s banks passed through Congress on Friday, this tsunami of fear was not supposed to happen. The EU summit at the weekend; the meeting of Gordon Brown`s National Economic Council yesterday, and the Chancellor`s statement to parliament; the announcement of a $900bn lending programme to the banks by the US Federal Reserve: all of these too were designed to reassure.
They may have achieved the opposite effect, drawing attention to the fact that the authorities may have little left with which to counter the force of nature that the credit crisis has become. Certainly the unilateral decision by Germany to offer a guarantee to her nation`s savers, especially set against the warmly co-operative words of the EU communiqué, and the botched rescue of the stricken Hypo Real Estate mortgage bank, fuelled fears that the authorities were not quite up to the challenge. President George Bush told the world that "it`s going to take a while" for his financial rescue plan to work.
And if the authorities run out of ammunition, what then? The new fear is that the credit crunch is about to visit upon the "real economy" the damage it has inflicted on the financial and property sectors. That is certainly frightening the markets as they assess and reassess the probabilities of a slump, one that will leave no corner of the globe untouched, not even China. Hence the decline in mining stocks and much else.
The credit crisis could soon begin to throttle otherwise perfectly healthy companies. Willem Buiter, a former member of the Bank of England`s Monetary Policy Committee (MPC), explained: "A few of the larger and better-known corporates can bypass the banks and issue directly in the capital markets, but this option is not open to smaller and newer firms. All they can do is hunker down and cut back first on fixed investment, then on working capital and ultimately on employment.
The economies of the euro area and the UK have entered a recession that is likely to be both deeper and longer than seemed likely even a month ago."
Cont.....
Tracked by: 0 Boarder
Fear. If there was one word to sum up the world`s financial markets yesterday, it was that. No one wanted to buy shares and, yet again, no one much wanted to lend money.
Richard Fuld, the former chief executive of Lehman Brothers, told Congress his bank had been blown away by a "storm of fear". That storm shows no sign of subsiding. Banks are one thing; countries quite another. yet now, almost unbelievably, the credit crisis seems on the point of claiming its first victim among sovereign nations – Iceland, whose banks have been badly exposed to the global chaos and where they are now closed. There is talk of Iceland having to join the EU simply to be bailed out, like a national Bradford and Bingley.
The Asian markets felt the fear first, and Tokyo slumped to a four-year low, as did China. Emerging markets dropped by their biggest margin in 20 years led by Russia`s bourse, suffering its worst day since the Bolsheviks took over. As the fear moved West, there was not much hope then for London, and so it proved.
The FTSE 100 index suffered its biggest one-day points fall, with banking and mining shares taking a hammering as the fallout from the financial crisis once again overwhelmed global markets. The FTSE ended 391.1 points lower, down 7.85 per cent, the third-biggest percentage decline in its history, leaving the index back at levels not seen for more than four years.
At this rate, in 10 days` time, the entire London stock market could be purchased with the small change you have in your pocket. In Europe, the fear was equally potent – Paris was down 7 per cent, Frankfurt down 8 per cent and Madrid down 9 per cent.
The credit markets remained stubbornly frozen, despite renewed efforts by the central banks to lend the system money, and even the oil price slumped to below $90, way off its near $150 a barrel peaks seen earlier this year. And on Wall Street, the Dow Jones industrial average of leading US stocks fell below the 10,000 mark for the first time in four years.
Of the myriad fears stalking the world`s financial system, perhaps the most terrible is that the ability of the world`s governments to control events is ebbing away. Yesterday the President of the World Bank, Robert Zoellick, almost admitted as much. "The G7 is not working," he said. "We need a better group for a better time" – not a hopeful curtain-raiser for the G7 finance ministers` summit at the IMF/World Bank meeting in Washington at the end of this week.
After the successful passage of the $700bn (£400bn) Paulson Plan to rescue America`s banks passed through Congress on Friday, this tsunami of fear was not supposed to happen. The EU summit at the weekend; the meeting of Gordon Brown`s National Economic Council yesterday, and the Chancellor`s statement to parliament; the announcement of a $900bn lending programme to the banks by the US Federal Reserve: all of these too were designed to reassure.
They may have achieved the opposite effect, drawing attention to the fact that the authorities may have little left with which to counter the force of nature that the credit crisis has become. Certainly the unilateral decision by Germany to offer a guarantee to her nation`s savers, especially set against the warmly co-operative words of the EU communiqué, and the botched rescue of the stricken Hypo Real Estate mortgage bank, fuelled fears that the authorities were not quite up to the challenge. President George Bush told the world that "it`s going to take a while" for his financial rescue plan to work.
And if the authorities run out of ammunition, what then? The new fear is that the credit crunch is about to visit upon the "real economy" the damage it has inflicted on the financial and property sectors. That is certainly frightening the markets as they assess and reassess the probabilities of a slump, one that will leave no corner of the globe untouched, not even China. Hence the decline in mining stocks and much else.
The credit crisis could soon begin to throttle otherwise perfectly healthy companies. Willem Buiter, a former member of the Bank of England`s Monetary Policy Committee (MPC), explained: "A few of the larger and better-known corporates can bypass the banks and issue directly in the capital markets, but this option is not open to smaller and newer firms. All they can do is hunker down and cut back first on fixed investment, then on working capital and ultimately on employment.
The economies of the euro area and the UK have entered a recession that is likely to be both deeper and longer than seemed likely even a month ago."
Cont........
Tracked by: 0 Boarder
Such an approach would leave the better capitalised banks - HSBC and Santander, where there is no perceived problem - free of interference. Only RBS, Barclays, HBOS and Lloyds would be caught by the edict. Can the UK Government do this unilaterally? The time for international convention on these matters seems to have passed. Each country must do what it can to bolster confidence in its banking system.
Exaggerated media reports that Sir Fred had begged the Government on bended knee for a massive capital injection certainly played their part in today`s further, catastrophic collapse in bank share prices. Anything now seems to go in reporting on the affairs of banks, with even the most ill informed of briefings and rumours - many of which would in more normal times have been regarded as virtually actionable - now seen as fair game for publishing and spun as gospel truth.
Since the damage is now done, here`s my penny`s worth to add to the growing weight of negative speculation. According to one of the stories circulating in the market yesterday, so challenging did RBS`s funding difficulties become late last week in its US retail banking division that it was forced to seek emergency assistance from the Bank of England on top of the liquidity available through generally available channels. Believe it if you will.
Whatever its validity, stories such as these have been piling the pressure on the Government to come up with an urgent, bold and immediate response. Recapitalisation on its own won`t work. Indeed there is some danger than taxpayers` will only be throwing good money after the bad which has already been squandered. Yet in conjunction with a state guarantee of deposits, as announced by Ireland and others, deep cuts in interest rates, and further injections of liquidity, it might just succeed in putting a floor under the British banking system and halt the process of "deleveraging" which is threatening to undermine economic activity.
...
In reply to:
A Nation on the Grill
Posted by : sambala
Banks set to agree £50bn package
Exclusive: Jeremy Warner on how a dramatic meeting in Downing Street is likely to lead to £50bn recapitalisation package - and why it may not be enough.
UK banks are set to agree a £50bn injection of taypayers` money under a bold plan to resolve the crisis in credit markets. Banking chiefs were this evening due to meet the Prime Minister to discuss the proposals, scheduled to be announced tomorrow morning, but subject to seeing the detail, are understood to have already agreed to be supportive. The plan could mean substantial dilution for some shareholders.
Sir Fred Goodwin`s top bullet point in his slide presentation to the Merrill Lynch banking conference in London this morning was: "The outlook is subdued". Even by the notoriously phlegmatic standards of the Royal Bank of Scotland chief executive, this was something of an understatement. In fact the outlook is truly dire, as one glance at Sir Fred`s plummeting share price reveals - at the close it was down by nearly 40 per cent to a fifteen year low of less than a pound. RBS was not alone. Halifax Bank of Scotland shares were down by a similar order of magnitude.
If there wasn`t already a retail and wholesale run on these banks, there would have been by the time everyone had clocked the meltdown in share prices. Quite who was responsible for this latest, calamitous collapse in confidence scarcely seems to matter any more. Was it cack-handed briefing by the Treasury, or merely confidence sapping guesswork and speculation? Certainly it conforms to the Treasury`s inept handling of this crisis from the start, where kite-flying and leaks over the Government`s response have only succeeded in making a bad situation infinitely worse.
Who knows? What`s important is that the Government is now seen to act, and despite the denials and hand-wringing, a substantial injection of taxpayers` money into the banking system now seems an inevitable part of the policy response and may even be announced in the morning. Again, if the recapitalisation hadn`t been decided on before, it will have been by now. These stories have a habit of becoming self-fulfilling. Expect a stock exchange announcement first thing tomorrow.
I think we can be reasonably clear about how it`s all going to work. One way or another, the weaker banks are going to be forced to sign up to recapitalisation whether they like it or not. Policymakers have taken the view that it has to be all for one and one for all. There`s no point in a piecemeal approach as this will only switch the confidence issue from one bank to another.
Even Barclays, hitherto fiercely resistant to the idea that it needs more capital having only recently committed itself to a dividend increase, seems to have dropped its objections and is prepared to be supportive. A one size fits all approach would be acceptable to Barclays if it helps restore confidence in the banking system. As things stand, there is a high chance of a domino effect of failing banks. Once the markets have finished with one bank, they merely move on to another. If a bank as big as Royal Bank of Scotland were to start failing, all banks would eventually get sucked into the hole. An industry wide solution is therefore called for.
One reasonably eloquent way in which this might be achieved, which would address the problem apparent from the reaction of individual banks yesterday - that some of them still regard it as unnecessary and don`t want to do it - would be to make in mandatory on UK banks to raise their so-called tier one equity capital ratios to 7 per cent or more.
The Treasury would stand ready to provide the money that would enable this to happen. In return, the taxpayer would get convertible preference shares on favourable terms.
Cont.....
Tracked by: 0 Boarder
Banks set to agree £50bn package
Exclusive: Jeremy Warner on how a dramatic meeting in Downing Street is likely to lead to £50bn recapitalisation package - and why it may not be enough.
UK banks are set to agree a £50bn injection of taypayers` money under a bold plan to resolve the crisis in credit markets. Banking chiefs were this evening due to meet the Prime Minister to discuss the proposals, scheduled to be announced tomorrow morning, but subject to seeing the detail, are understood to have already agreed to be supportive. The plan could mean substantial dilution for some shareholders.
Sir Fred Goodwin`s top bullet point in his slide presentation to the Merrill Lynch banking conference in London this morning was: "The outlook is subdued". Even by the notoriously phlegmatic standards of the Royal Bank of Scotland chief executive, this was something of an understatement. In fact the outlook is truly dire, as one glance at Sir Fred`s plummeting share price reveals - at the close it was down by nearly 40 per cent to a fifteen year low of less than a pound. RBS was not alone. Halifax Bank of Scotland shares were down by a similar order of magnitude.
If there wasn`t already a retail and wholesale run on these banks, there would have been by the time everyone had clocked the meltdown in share prices. Quite who was responsible for this latest, calamitous collapse in confidence scarcely seems to matter any more. Was it cack-handed briefing by the Treasury, or merely confidence sapping guesswork and speculation? Certainly it conforms to the Treasury`s inept handling of this crisis from the start, where kite-flying and leaks over the Government`s response have only succeeded in making a bad situation infinitely worse.
Who knows? What`s important is that the Government is now seen to act, and despite the denials and hand-wringing, a substantial injection of taxpayers` money into the banking system now seems an inevitable part of the policy response and may even be announced in the morning. Again, if the recapitalisation hadn`t been decided on before, it will have been by now. These stories have a habit of becoming self-fulfilling. Expect a stock exchange announcement first thing tomorrow.
I think we can be reasonably clear about how it`s all going to work. One way or another, the weaker banks are going to be forced to sign up to recapitalisation whether they like it or not. Policymakers have taken the view that it has to be all for one and one for all. There`s no point in a piecemeal approach as this will only switch the confidence issue from one bank to another.
Even Barclays, hitherto fiercely resistant to the idea that it needs more capital having only recently committed itself to a dividend increase, seems to have dropped its objections and is prepared to be supportive. A one size fits all approach would be acceptable to Barclays if it helps restore confidence in the banking system. As things stand, there is a high chance of a domino effect of failing banks. Once the markets have finished with one bank, they merely move on to another. If a bank as big as Royal Bank of Scotland were to start failing, all banks would eventually get sucked into the hole. An industry wide solution is therefore called for.
One reasonably eloquent way in which this might be achieved, which would address the problem apparent from the reaction of individual banks yesterday - that some of them still regard it as unnecessary and don`t want to do it - would be to make in mandatory on UK banks to raise their so-called tier one equity capital ratios to 7 per cent or more.
The Treasury would stand ready to provide the money that would enable this to happen. In return, the taxpayer would get convertible preference shares on favourable terms.
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In reply to:
A Nation on the Grill
Posted by : sambala
IRS changes rule to help ease credit
The agency doubles the time companies can keep cash borrowed from overseas subsidiaries
WASHINGTON (AP) -- The Internal Revenue Service, seeking to make cash more available during the current credit crunch, has issued a rule making it easier for U.S. corporations to bring home money made by their foreign subsidiaries.
The IRS temporarily expanded a 1988 ruling allowing corporations to borrow money held by foreign subsidiaries without having to pay the 35% corporate income tax.
"We were recognizing that there were liquidity restraints for companies" during the current credit crisis, Treasury Department spokesman Andrew DeSouza said Tuesday. He said the action would make it easier for foreign subsidiaries to provide loans to their domestic parents.
The current rule allows a company`s foreign units to make a tax-free loan to the company as long as it is repaid in 30 days. Over a one-year period, the company can have outstanding loans from its subsidiaries for up to 60 days.
The temporary rule change would allow the U.S. company to keep cash from a single loan for up to 60 days. In total, the company could have borrowed money for up to 180 days in a one-year period.
To avoid being subject to taxation, the money would have to be paid back and could not be used as distributions such as dividends.
Congress, as part of tax legislation passed in 2004, enacted a similar break giving corporations a one-time deduction of 85% on dividends received from foreign subsidiaries. That act, aimed at encouraging domestic investment, lowered the effective tax on qualifying dividends from 35% to 5.25%.
The IRS said in a recent report that 843 corporations took advantage of the deduction. It said that $312 billion in repatriated dividends qualified for the deduction, creating a total deduction of $265 billion.
Tracked by: 0 Boarder
1st of all Thanx alot to giving yor valuable time to me. I juzz thinking is this the end of World Leader Us? at current situation, how much worlds money they r carrying?? is till there elections finish n wats the surety new Govt would solve all Economical Issues heading up?? Hence we r watching, before pass out Bail out package Dow was recovering, or can say trying to recover, but the most impo thing have u seen, after pass out this package Dow n NASDAQ r juzz running back, fast, Y?? What does it mean?? Is Govt approved the Economic Fall of United Stets Of America, isn`t any false or artificially created thing, its really happening here, so Dear investors of The Great US u can run away frm markets...!! Have u seen the everyday falls above 300 points of Dow??
N most impo thing is here Y This Is Happening with US?? Some major reasons r (all r as my study, kindly note it),
US`s Major Profit making Weapon Shopping Center is not getting customers??
Y no Customers?? Coz Citizens r panic,At WTC there was almost everyone`s someone was got killed (based on Population Density of US) they dont want mess with Fool n Unliterate ppl belongs to Africa, especially Arabian n Muslim countries, so they r apposing Govt to shut their Business, which is becoming fetal for them? So science 9/11`s matter Govt is become helpless (N finely they loosed their seats.) Now Govt must thinking how to run all Weapons R&D, N what abt the huge investments did before on Big projects?? Who has invested in these Weapon Manufacturing Units?? Obviously Local Big Banks n Govt is the Guarantor, So paying money them back.
US Citizen is not willing to pay Taxes?? No they will pay happily, but if Govt will not make new enemies,
N wats the Employment data shows?? The figure`s r increasing?? Y if the young generation is not willing to do any kind of work, they only wants to enjoy how it`ll decrease??
Worldwide everything was fine, everyone is doing his work (Everyone was getting work) who wants to get frustrate n wants to buy weapons??
So there is nothing happened in world, there is no major earthquake, no tsunami, no world war, what does it shows, when all world is running well US falls??
I`m not good in economics but Dose anyone really think, after elections of US the situation will be fine?? N how much every Investor (expect US) should beleve on US n wait for there repairing work?? Other strong countries couldn`t take chance to be Leader?? We r not that willing n attitude, do u think China wont use this chance to chase others?
Pls reply some of answers
Regards
Prashant......
