NEW YORK - The stock market took another nosedive Wednesday as the American banking system appeared even shakier and investors worried that the financial crisis is spinning so far out of control that even government rescues can't stop it.
The Dow Jones industrial average, which only two days earlier had suffered its steepest drop since the days after the Sept. 11 attacks, lost another 450 points. About $700 billion in investments vanished.
One day after the Federal Reserve stepped in with an emergency loan to keep American International Group Inc., one of the world's largest insurers, from going under, Wall Street wondered which companies might be the next to falter.
A major investor in ailing Washington Mutual Inc. removed a potential obstacle to a sale of the bank, and stock in two investment banks, Morgan Stanley and Goldman Sachs, was pummeled.
It was the fourth consecutive day of extraordinary turmoil for the American financial system, beginning with news on Sunday that another venerable investment house, Lehman Brothers, would be forced to file for bankruptcy.
The 4 percent drop Wednesday in the Dow reflected the stock market's first chance to digest the Fed's decision to rescue AIG with an $85 billion taxpayer loan that effectively gives it a majority stake in the company. AIG is important because it has essentially become a primary source of insurance for the entire financial industry.
As the stock market staggered, the price of gold, which rises in times of panic, spiked as much as $90.40 an ounce. Bonds, a traditional safe haven for investors, also climbed.
"The economy is not short of money. It is short of confidence," said Sung Won Sohn, an economics professor at California State University.
The financial stocks in the Standard & Poor's 500 dropped even more, falling 10 percent, and insurance that backs corporate debt soared for the last two surviving independent U.S. investment banks, Morgan Stanley and Goldman Sachs.
"It seems as though banks are hoarding cash, no matter what rate they could be lending it at," said David Rosenberg, North American economist at Merrill Lynch.
Markets around the world also tumbled, with stocks dropping from Hong Kong to London. Brazil's benchmark index saw the largest drop, losing nearly 7 percent in a day.
Worse, the short-term credit markets remained frozen, with overnight interest rates soaring for loans between banks and for overnight loans to businesses. Long-term loans, however, didn't rise as much.
"The worry on short-term loans is you're not sure who the ultimate borrower is," said Brian Bethune, chief U.S. economist at Global Insight Inc.
And in case anyone needed additional symbolism, a glass panel near the top of a Bank of America skyscraper in Midtown Manhattan fell more than 50 stories onto the street below and shattered. No injuries were reported.
In the United States, the faltering economy and banking system have begun to dominate conversations at dinner tables, bars and online, not to mention seizing the campaign trail.
One blogger, Michele Catalano of Long Island, posted this on Wednesday: "Dreamed about AIG and the stock market, woke up with the urge to stock up on canned goods and shotguns."
Mortgage rates, which had fallen after the government's takeover of Fannie Mae and Freddie Mac, rose again, removing a glimmer of hope that the housing crisis, the kindling for the broader financial meltdown, was hitting bottom.
And new statistics showed that construction of new homes and apartments fell a surprising 6.2 percent in August to the weakest pace in 17 years.
The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs.
Treasury officials said the action did not mean that the Fed was running short of cash, but simply was a way for the government to better manage its financing needs.
Separately, the Securities and Exchange Commission tightened rules on short selling, the practice of betting that a stock will fall.
A $62 billion money market fund _ Primary Fund from Reserve _ on Tuesday saw its holdings fall below its total deposits, a condition known as "breaking the buck" that hasn't happened to a money market fund since 1994, Rosenberg said. Money market funds are supposed to be conservatively invested and almost as safe as cash.
Democratic presidential nominee Barack Obama appeared Wednesday in a two-minute commercial to outline his economic plans and caution it won't be easy to fix the nation's worsening financial problems.
"The truth is that while you've been living up to your responsibilities, Washington has not," he said.
Republican John McCain's running mate, Alaska Gov. Sarah Palin, said of the AIG move: "It's understandable but very, very disappointing that taxpayers are called upon for another one."
The Dow fell 449.36 to 10,609.66, finishing near its lowest point of the trading day. The index is down more than 7 percent just this week and more than 25 percent since its record close less than a year ago, on Oct. 9, 2007.
Stock in Washington Mutual fell 13 percent, dropping 31 cents to $2.01 amid reports that the government was trying to find a buyer for the bank, which has been battered by bad home loans. It lost $3.3 billion in the second quarter.
Many economists worried about the unintended consequences of the Fed's actions.
"Every time that umbrella widens, it gets heavier and heavier for those holding it up _ which is the taxpayer," said Bernard Baumohl, chief economist at the Economic Outlook Group in Princeton, N.J.
"With most Americans now preoccupied about their own future job security, the one thing they do not want to hear is how they will end up paying the bill for poorly managed companies," he said.
Post from yahoo
Thursday, September 18, 2008
Wednesday, September 17, 2008
美政府借六千八億救AIG
AIA客戶須知
【明報專訊】■AIA保單成立形式，如果附設條款中有「bankruptcy remote」及用信託形式處理保單，萬一母公司進入破產程序，保險公司還是可以按照正常情况，因應客戶要求作日常賠償及退保等；若沒有這條款，當母公司進入破產程序，就算保單持有人要索償，也要全球一齊排隊，要排到何時則難說
■一般保險保單的受保人要索償或提取資金，主要看現金價值，供款期愈長現金價值愈大，故頭兩三年新做保單受保人受今次事件影響不大，「Cut單」與否要視乎個人情况
■現金價值屬高或者已差不多取回已供保費的受保人，如果「Cut單」，就可免萬一AIG破產而受到影響
■終止保單取回現金一般需時一個月，另一方法是使用持有的人壽保險單去貸款，保險公司貸款手續寬鬆，如購買有儲蓄成分的保險，毋須任何證明文件及抵押，已可借到不高於保單列明保金的金額
post from yahoo.hk
■一般保險保單的受保人要索償或提取資金，主要看現金價值，供款期愈長現金價值愈大，故頭兩三年新做保單受保人受今次事件影響不大，「Cut單」與否要視乎個人情况
■現金價值屬高或者已差不多取回已供保費的受保人，如果「Cut單」，就可免萬一AIG破產而受到影響
■終止保單取回現金一般需時一個月，另一方法是使用持有的人壽保險單去貸款，保險公司貸款手續寬鬆，如購買有儲蓄成分的保險，毋須任何證明文件及抵押，已可借到不高於保單列明保金的金額
post from yahoo.hk
AIA保單持有人自救法
【明報專訊】■儲蓄保險
若供款多年，累積了一定水平現金紅利，美聯金融集團行政總裁施德芝建議「錢在身邊較安全」，現時最好終止保單取回保金；若只供了一兩年，現金價值不高，無論AIA是否「出事」，斷單的作用也不大
■醫療保險
萬一保險公司進入破產程序，所有保單持有人會成為債權人，要索償就要排隊申索，隨時要等一年半載。受保人若擔心中途遇上意外未獲賠償，最好先將醫療保險轉至第二間公司，但要留意須成功投保新保險公司及保單生效後才斷單，以防未能享有保障
■投資相連保險
尚乘財富策劃董事兼行政總裁曾慶璘坦言，投保人若押注在環球基金，當中又主打歐美等股票或債券，投資回報會受重創。不過，由於AIA只是扮演中介人、託管人角色，在今次事件中最不受影響，取不取回有關資金，要視乎投資者是否急於用錢，若在市况不好時沽出基金，將要承受投資損失
Post from yahoo.hk
若供款多年，累積了一定水平現金紅利，美聯金融集團行政總裁施德芝建議「錢在身邊較安全」，現時最好終止保單取回保金；若只供了一兩年，現金價值不高，無論AIA是否「出事」，斷單的作用也不大
■醫療保險
萬一保險公司進入破產程序，所有保單持有人會成為債權人，要索償就要排隊申索，隨時要等一年半載。受保人若擔心中途遇上意外未獲賠償，最好先將醫療保險轉至第二間公司，但要留意須成功投保新保險公司及保單生效後才斷單，以防未能享有保障
■投資相連保險
尚乘財富策劃董事兼行政總裁曾慶璘坦言，投保人若押注在環球基金，當中又主打歐美等股票或債券，投資回報會受重創。不過，由於AIA只是扮演中介人、託管人角色，在今次事件中最不受影響，取不取回有關資金，要視乎投資者是否急於用錢，若在市况不好時沽出基金，將要承受投資損失
Post from yahoo.hk
Government announces $85 billion loan to save AIG
WASHINGTON - In a bid to save financial markets and economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion emergency loan to rescue the huge insurer AIG. The Federal Reserve said in a statement it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.
It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said.
"The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto. "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy."
Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."
"I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement.
The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG.
Earlier, Fed chairman Bernanke and Paulson met with Sen. Christopher Dodd, D-Conn., Majority Leader Harry Reid, D-Nev., and House Republican leader John Boehner of Ohio, to brief them on the government's option.
"At the administration's request, I met this evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. They expressed the administration's views on the deepening economic turmoil and shared with us their latest proposals regarding AIG," Reid told reporters. "The Treasury and the Fed have promised to provide more details in the near future, which I believe must address the broader, underlying structural issues in the financial markets."
On Tuesday, shares of the insurance company swung violently as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent _ and another 45 percent after hours. Still, no deal emerged.
The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.
The worries were triggered after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance _ such as banks and other financial companies _ would have found themselves without protection against losses on the debt they hold.
"It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law. "If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next."
New York-based AIG operates an insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those traditional insurance operations are considered healthy and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims."
Post from yahoo.sg
It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said.
"The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto. "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy."
Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."
"I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement.
The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG.
Earlier, Fed chairman Bernanke and Paulson met with Sen. Christopher Dodd, D-Conn., Majority Leader Harry Reid, D-Nev., and House Republican leader John Boehner of Ohio, to brief them on the government's option.
"At the administration's request, I met this evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. They expressed the administration's views on the deepening economic turmoil and shared with us their latest proposals regarding AIG," Reid told reporters. "The Treasury and the Fed have promised to provide more details in the near future, which I believe must address the broader, underlying structural issues in the financial markets."
On Tuesday, shares of the insurance company swung violently as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent _ and another 45 percent after hours. Still, no deal emerged.
The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.
The worries were triggered after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance _ such as banks and other financial companies _ would have found themselves without protection against losses on the debt they hold.
"It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law. "If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next."
New York-based AIG operates an insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those traditional insurance operations are considered healthy and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims."
Post from yahoo.sg
Sunday, September 14, 2008
Good advise(2)
*Here are some great ways of dealing with the burdens of life:*
* Accept that some days you're the pigeon, and some days you're the statue.
* Always keep your words soft and sweet, just in case you have to eat them.
* Always read stuff that will make you look good if you die in the middle of it.
* Drive carefully. It's not only cars that can be recalled by their maker.
* If you can't be kind, at least have the decency to be vague.
* If you lend someone $20 and never see that person again, it was probably worth it...
* It may be that your sole purpose in life is simply to be kind to others.
* Never put both feet in your mouth at the same time, because then you
won't have a leg to stand on.
* Nobody cares if you can't dance well. Just get up and dance.
* Since it's the early worm that gets eaten by the bird, sleep late.
* The second mouse gets the cheese.
* When everything's coming your way, you're in the wrong lane.
* Birthdays are good for you. The more you have, the longer you live.
* You may be only one person in the world, but you may also be the world to
one person.
* Some mistakes are too much fun to only make once.
* We could learn a lot from crayons ... some are sharp, some are pretty and
some are dull. Some have weird names, and all are different colours, but
they all have to live in the same box.
* A truly happy person is one who can enjoy the scenery on a detour.
*Have an awesome day and know that someone has thought about you today
FW: Good Advice
*Stress*
A lecturer, when explaining stress management to an audience, raised a glass of water and asked: 'How heavy is this glass of water?'
Answers called out ranged from 20g to 500g.
The lecturer replied, 'The absolute weight doesn't matter. It depends on how long you try to hold it.
If I hold it for a minute, that's not a problem
If I hold it for an hour, I'll have an ache in my right arm.
If I hold it for a day, you'll have to call an ambulance.
In each case, it's the same weight, but the longer I hold it, the heavier
it becomes.'
He continued, 'and that's the way it is with stress management. If we carry our burdens all the time, sooner or later, as the burden becomes increasingly heavy, we won't be able to carry on.'
'As with the glass of water, you have to put it down for a while and rest before holding it again. When we're refreshed, we can carry on with the burden.'
'So, before you return home tonight, put the burden of work down. Don't carry it home. You can pick it up tomorrow. Whatever burdens you're carrying now, let them down for a moment if you can.', my friend put down anything that may be a burden to you right now. Don't pick it up again until after you've rested a while.
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