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Stimulas Plan : The US Senate approved the USD 787 billion dollar financial stability plan to boost the ailing economy, sending the emergency stimulus legislation to President Barack Obama, who is expected to sign it into law. The senate voted 60-38 for the Compromise Bill on the same day the House of Representatives also passed it.
The measure, aimed at combating the worst economic crisis since the Great Depression of the 1930s, marks Obama's first major victory in Congress, less than a month after taking office.
The measure, aimed at combating the worst economic crisis since the Great Depression of the 1930s, marks Obama's first major victory in Congress, less than a month after taking office.
Speaking in his weekly radio and Internet address, Obama said, "I will sign this legislation into law shortly, and we'll begin making the immediate investments necessary to put people back to work doing the work America needs done."
At the same time, he cautioned, "The problems that led us into this crisis are deep and widespread, and our response must be equal to the task."
Earlier in the day, the US House of Representatives passed the USD 787 billion Economic Stimulus Bill in a 246 to 183 vote. The bill was passed with no Republican support. The final spending and tax cut mix in the USD 787 package stands at about 64% and 36% respectively.
Majority leaders like Stenny Hoyer accused Republicans of sticking to same policies of the failed eight years of the Bush administration.
Nancy Pelosi, House Speaker (Democrat), said the American people are feeling a great deal of pain. "They have uncertainty about their jobs, about healthcare, about ability to pay for the education of their children and sad to say in our great country even their ability to put food on the table. So, today we have passed legislation that does take that swift action on their behalf."
Senator Chris Dodd, Chairman, Banking Committee, said we are in the deepest economic crisis in the lifetime of any American. "They are worried about their pay. Our system of economy is at risk these days. We'll be judged by history as to whether or not we could respond intelligently to it."
In its bleakest forecast in years, the International Monetary Fund (IMF) said the world economy was set for a major downturn with the United States and Europe either in or on the brink of recession.The IMF said a still developing financial upheaval — the most violent since the 1930s — would exact a heavy economic toll as markets wrestle with a crisis of confidence and global credit is choked off.
In its report, the IMF warned that credit conditions would remain very difficult, restraining global growth prospects. “The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s,” the IMF said in its World Economic Outlook.
In hindsight, the IMF said lax economic and regulatory policies probably allowed the global economy to “exceed its speed limit”. At the same time, market flaws, together with policy shortcomings, allowed stresses to build.
The IMF slashed its 2009 forecast for world growth to 3 per cent, which would be the slowest pace in seven years, from a July projection of 3.9 per cent, and warned that a recovery would be unusually slow. It said growth this year would come in at 3.9 per cent, a touch below the 4.1 per cent projected in July.
In its latest report, the global economic watchdog warned that emerging and developing economies were also slowing, and, in some cases to rates well below trend.
China and India will experience slower growth on weaker exports, but should continue to be supported by solid private consumption, according to the report.
Growth in China is likely to remain at 9.7 per cent this year and 9.3 per cent in 2009, compared with 11.9 per cent in 2007, the IMF said. India will grow at 7.9 per cent this year and slow to 6.9 per cent in 2009, it said. The Indian economy grew 9.3 per cent last year.
Elsewhere in Asia, domestic demand has softened as high food and fuel prices have weighed on consumption.
Central banks around the world cut interest rates in Unpredictable moment this evening in the first such collective response to the global financial crisis which sent fresh waves of panic through stock markets, including that in India.
But the initial response of the markets was not encouraging: Wall Street turned negative and European stocks sank to a near five-year low, shrugging off the co-ordinated cuts.
Earlier in Mumbai, the sensex plunged below 11000 points for the first time since August 9, 2006 — a helpless, hand-wringing moment for investors who were still groping for answers to why the index had fallen by 10000 points in exactly nine months.
By evening in India, the world was witnessing a dramatic — and desperate — intervention led by the US Federal Reserve which cut a key interest rate — the federal funds rate — by 50 basis points to 1.5 per cent. This is the rate at which US private banks lend money to each other for overnight loans.
In the damburst that followed, China, the European Central Bank (ECB) and the apex banks in Britain, Canada, Sweden and Switzerland also cut key interest rates. Interest rate cuts are an age-old pill that is supposed to stimulate markets because the reductions make it easier for companies to borrow.
Will the cuts work this time? That was the question playing on the lips of the financial superpowers as Wall Street opened for trading a few hours after the central bank action. But the Dow Jones index fell in see-saw morning trade. In Delhi, late evening by then, the Union cabinet met to consider the global crisis and assess its impact on India. Asserting that India would grow at 8 per cent this year, finance minister P. Chidambaram said the government was watching the global crisis closely and would react swiftly to the needs of the market. He said the RBI had already taken steps to pump funds into the system and would do so again if required. US officials said this was the first time ever that the Federal Reserve co-ordinated a reduction in interest rates with other central banks. The closest thing to a precedent for today’s action came in November 2001, when the Federal Reserve and the European Central Bank announced a rate reduction on the same day. But those moves were nominally independent, and they did not involve any additional foreign central banks.
The European Central Bank had been reluctant to lower rates because policy makers there tended to see the meltdown primarily as an American problem with secondary ripple effects in Europe. But any lingering comfort outside the US evaporated last week, as money markets froze around the world and major corporations and banks across Europe began suffocating.
Before the rate cuts, Asian stock markets were clobbered with the Nikkei plunging 9.4 per cent to its biggest one-day fall since 1987.
In Mumbai, investors were groping for answers. “There is blood on the street; cold logic says that’s when you should buy stocks. But what do you do when it’s your own blood on the floor?” asked an investor. On January 10 this year, the sensex had peaked at 21206.77; today it hit a low of 10740.76 — a precipitous slide of 49.4 per cent this year. Even though the index clambered up to close at 11328.36, it was down by 3.14 per cent from Tuesday’s close. Domestic funds started buying stocks aggressively when the sensex toppled by 954 points to the day’s low around noon.
The rupee slid to its lowest level in five years at 48.75 to the dollar. However, the currency hardened on news of the rate cuts and closed at Rs 48. Gold continued to surge and hit an historic peak of Rs 13,820 per 10 grams
Originally posted here - The Telegrpah India
The US Federal Reserve opened up its coffers Tuesday to companies hit by the credit crunch with a new program that will buy up commercial paper, short-term debt critical for many corporate operations.The latest effort in an all-out war against the credit crunch creates a new "liquidity backstop" for corporate finance and was established after the US Treasury determined it was "necessary to prevent substantial disruptions to the financial markets and the economy," the central bank said.
The Fed gave no estimate of how much money would be devoted to the program but said the US Treasury would "make a special deposit" at the New York Fed to get the program rolling. The effort is aimed at getting banks and other portfolio managers to buy and sell commercial paper, short-term securities issued by companies and banks for payrolls and other day-to-day expenses. The market for commercial paper has been virtually frozen in recent weeks with banks and other financial firms reluctant to take on any risk and pumping their cash into US Treasury bills, which are guaranteed."The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors, themselves often facing liquidity pressures, have become increasingly reluctant to purchase commercial paper, especially longer-dated maturities," the Fed said.
The moves puts the central bank on the line in some cases for unsecured commercial paper from private firms, but the Fed said the loans would be secured by fees and other collateral arrangements "that are satisfactory to the Federal Reserve." The announcement creates a Commercial Paper Funding Facility (CPFF) "that will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers," the Fed said.
The Federal Reserve will provide financing to a special entity under the CPFF "and will be secured by all of the assets" of this entity. The Fed said the credit would be available to "eligible issuers," but offered few details. It said it would be open to US companies and other US issuer with a foreign parent firm. Companies will pay up-front fees paid or provide "security acceptable to the Federal Reserve in consultation with market participants.""The Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy and will make a special deposit at the Federal Reserve Bank of New York in support of this facility," the Fed said.
The program will buy three-month commercial paper that is either unsecured or asset-backed -- using the company's holdings as collateral that have been rated as investment grade. Commercial paper that is not backed by assets "must be secured to the satisfaction of the Federal Reserve," the Fed said. This may be through an upfront fee or other guarantee or other collateral arrangements.
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Russian President Dmitry Medvedev, in a video statement published on the Kremlin website, has called for urgent international measures to tackle the global financial crisis.
Mr Medvedev said he would join European leaders for discussions in the French town of Evian on October 8 where he hopes a joint response can be formulated to global problems."The crisis of the international financial system demands urgent joint action. It's absolutely obvious the time has come for new decisions," Mr Medvedev said in the two-minute clip.
Russia's stock market has fallen dramatically in recent weeks, with the dollar-denominated RTS Index down 19.1 per cent on Monday (local time). The Russian President also repeated his demand for a new international security umbrella for Europe and said he would raise this at the Evian meeting with other leaders.
The short video, which opens showing Mr Medvedev working at his computer, was the first time the Kremlin has issued a statement using the internet as its primary medium.
“Steel prices in India will go down,” Steel Minister Ram Vilas Paswan told reporters on the sidelines of a function here, and attributed it to the India-US civil nuclear co-operation agreement. "The domestic steel sector will benefit immensely from the nuclear deal, as the availability of energy in adequate amount would lead to a boom in the infrastructure sector," he said, and explained: “A boom in the infrastructure sector will benefit India's steel sector immensely, which is doing extremely well.”
The minister also said there has been no increase in steel prices since May, and that prices would moderate now.
Paswan, who earlier chaired a meeting of the fertiliser advisory forum as the country's chemicals and fertiliser minister, did not specify any time frame for the steel prices coming down.
A month ago, Paswan had spoken about steps to maintain the steel prices if needed.
His observation Sunday once again showed the government's unwillingness to allow the steel firms to go for an upward price revision after their three-month voluntary moratorium on price revision ended Aug 7.
Though in India, the government does not fix prices, the major steel producers normally do not go against the state's wishes, given the say of public sector firms like Steel Authority of India Ltd (SAIL) in the market.
Steel secretary P.K. Rastogi Aug 22 had told reporters here that there was no scope for an upward revision in the prices of steel products, and had instead called for a reduction following softening of global prices.
“Since global prices of steel are softening, we do not see any immediate reason to go for any upward revision. Instead, the companies should think in terms of further reduction in the prices of steel,” Rastogi had said.
The steel manufacturers at a meeting with Prime Minister Manmohan Singh here May 7 agreed to reduce prices of flat steel products by Rs.4,000 a tonne and that of structural steel by Rs.2,000 per tonne.
They also agreed not to revise prices for the next three months.
Citing documents filed with a New York bankruptcy court late last week, the newspaper said that Lehman creditors have accused JPMorgan of freezing $US17 billion ($21.96 billion) in cash and securities on Friday, September 12. Lehman filed for bankruptcy the following Monday.
"The creditors' committee understands that LBHI (Lehman Brothers Holding Inc) had at least $17 billion in excess assets which were held at JPMC (JPMorgan Chase) on the Friday going into the weekend before its bankruptcy filing," the court documents reportedly allege.
"In freezing LBHI's assets, JPMC was purportedly holding all of LBHI's assets as a potential offset against any claims JPMC may have had against LBHI."
The documents continued to say that "as a result of JPMC's actions, LBHI suffered an immediate liquidity crisis, that could have been averted by any number of events, none of which transpired."
In a statement to the Sunday Times, JPMorgan described the allegations as "unfounded conjecture."
Lehman Brothers - which was America's fourth-biggest investment bank - was the biggest name in international finance to fall prey to the credit crunch when it collapsed last month, though several others have been nationalised, or required some other form of government intervention since.
Last week, lawmakers in Washington finally approved a $US700 billion rescue package after much political wrangling, while European governments were forced to ride to the rescue of several major European banks.
A question is now hoovering on Inernet now a days.. stating China may dip down more as Wall Street falls more ???
Well we find a articles on this topic on Financial site Bloomberg..
Few questions confound economists more: What might tip China into the meltdown that so many have feared for so many years?
Possibilities include overheating, social instability, corruption, pollution, debt crises, war over Taiwan and a post- Olympics growth swoon. It's a perfectly rational expectation. No rapidly industrializing nation has ever avoided some kind of crisis, least of all upstarts in Asia. The list rarely, if ever, included a Wall Street crash. And yet, financial troubles in the U.S. may be the catalyst that devastates the world's fourth-biggest economy.
This will sound like a reach to those viewing Asia's strengths. China, for example, is enjoying 10 percent growth as U.S. lawmakers argue over rescuing markets and averting a depression. With its $1.8 trillion of reserves, China could bail out the U.S. without batting an eye.
Japan is returning to acquisition mode after its banks avoided the toxic debt devastating U.S. peers. Mitsubishi UFJ Financial Group Inc.'s $9 billion investment in Morgan Stanley this week is a case in point. After years of lecturing Japan about its shaky banks, the U.S. is coming hat-in-hand to Tokyo.
Yet China's chances of avoiding the U.S. crisis are dwindling by the day.
``U.S. consumers are tapped out and they're going to stop buying Chinese exports,'' says Simon Grose-Hodge, a strategist at LGT Group in Singapore. ``There's no way China's domestic demand can take up that slack.''
Recession Risks
Adds Michael Pettis, a finance professor at Peking University in Beijing: ``We should all hope the recession associated with the U.S. financial crisis is very, very mild.''
The odds of a mild U.S. slowdown are declining almost as fast as stock prices. Even with hundreds of billions of dollars worth of Wall Street bailouts, consumption decreases and big job cuts will probably intensify. The slow drip, drip, drip nature of Wall Street's swoon should concern officials in Beijing. China's mercantilist model makes the most populous nation dangerously dependent on consumers in the biggest economy. Growth in Asia will experience quite a setback if the U.S. enters a prolonged period of weakness.
While a Japan-like ``lost decade'' isn't the best-case scenario, Americans aren't sitting on the kind of savings that Asians are. As U.S. growth slows, debt is reduced and households increase savings, exporters such as Hong Kong, South Korea and Thailand must look elsewhere for demand.
Little Help
Europe and Japan may be of little help. Japan is on the verge of a recession, while Europe is becoming increasingly vulnerable to events in the U.S. China will be hurt by all of the above, ridding Asia of a key source of stability.
Many say China's slowing from 10 percent growth to 8 percent isn't a disaster. Yet if a government relies on rising prosperity to conceal domestic challenges -- including the widening gap between rich and poor -- slowing growth is a major problem.
Nothing less than a drastic rebalancing will be required: More domestic consumption, a strengthening currency and greater investment in health care, pensions and education. Pulling that off quickly and with minimal disruption would be a feat like no other in economic history.
Anyone who believes China is set for smooth sailing as the U.S. sinks is likely to be as wrong as those arguing a year ago that the subprime-loan crisis was containable.
Asia Decoupling
One of the key points here is the importance of Asia decoupling itself from the U.S. once and for all. It's easier said than done.
There is reason to think Asia can stand its ground. The region's improvements since the 1997 crisis left banks stable, markets humming and currency reserves at comfortable levels. Turmoil in the U.S. is encouraging Asia to take steps to become more independent from bigger economies.
Nations such as China are succeeding by ignoring advice from officials in Washington. After years of being lectured to bolster its banks, China is watching as the financial system the U.S. espoused as optimal crumbles.
The reluctance of Asian banks to buy hard-to-value securities such as collateralized debt obligations left them in ``rock solid'' financial shape, says Marc Faber, managing director of Marc Faber Ltd. in Hong Kong. Also, central banks have been taking steps to boost investor and consumer confidence.
If things get shakier, though, Asia could be dragged down with the U.S. economy. Amid unprecedented upheaval, it almost seems fitting that a risk few considered a year ago could be the one to undermine China.
The global meltdown in financial market has arrised a series of chain reactions in India, but the impact is not going to be as widespread as earlier imagined. Noted that global financial gaint Lehman ( which was supposed sometime , it can save any bankcrupt companies by giving his valuable advice.. ), but what happen to U.S forth largest bank now itself is on Sale !! yes on Sale... Lehman North America's Investment banking and brokerage is sold to Barclays, now Lehman India operation which is a mainly a back office operation of Lehman based in Mumbai has more than 2,000 employees and handle the investment bank’s information technology and R&D activities is also on sale. Japanese financial services major Nomura Holdings is all set to buy the Indian operations of fallen Lehman Brothers and is likely to retain nearly 2,000 strong workforce.
Similarly, American Insurance Group (AIG), - A Insurance Gaint of America and world is now taken over 70% by Federal Government for a sum of $85 bl. AIG has a business in India also, by special purpose vechicles namely TATA AIG. TATA holds 74% and rest 26% is with AIG. On concerns of TATA AIG future, there is TATA who have given thumbs up to all consumers who were worried about their insurance carried out through this special purpose vehicle (SPV).
Third, and even more significant, is the fact that the conservative approach to reforms in the financial services sector has ensured that the tremors of earthquakes in the US are being felt minimally in India.A meeting a few days ago of the regulators for the pension, insurance and other similar sectors concluded with a sigh of relief and pronouncement that slow and steady opening up of the economy has helped in the long run. This is not to say that capital account convertibility - or making the rupee freely tradable - will not take place. But probably as the regulators have pointed out, this can happen when the economy is at a more mature stage.
Ultimately, therefore, the big losers in the global financial crisis in this country are likely to be the iconic software firms like Infosys, Wipro and Tata Consultancy Services (TCS). Much of their business comes from the erstwhile giant investment banks and that could affect their profitability in the short term. In the medium-to-long term, however, these companies are likely to have greater resilience given their innovative approach in the past to hunting out new markets and customers.
The other area where worries still remain is the pullout of funds by foreign institutional investors from the country's equities and debt markets. The bourses have been showing considerable volatility ever since the news came in about the failure of Lehman and the domino-like effect on other investment banks.
While the Indian stock markets became volatile, they have not crashed as might have been expected initially. They now seem to be stabilizing as safety nets are being created for collapsed banks, like converting Goldman Sachs and JP Morgan into commercial banks while other banks are picking up some entities cheap like the takeover of Wachovia by Wells Fargo.
As far as the US and even Europe are concerned, the ramifications appear to be unending as the scenario is unfolding into the biggest banking crisis in 100 years. Financial institutions considered to have a rock-like stability including Merrill Lynch, Morgan Stanley, JP Morgan and the Lehman Brothers collapsed within days of each.
Some were rescued through various manoeuvres and only Lehman actually declared bankruptcy. Reports reaching here also indicate that many smaller banks are declaring insolvency in the US - a development not being taken note of by the international media which is focusing on the big fish. Thus average people in the US are facing severe hardship. No wonder then the battle is being described as one of Main Street vs Wall Street.
U.S. Senate approved a revised $700 billion rescue package for the House of Representatives , following the House's rejection on earlier version. This bill , approves government to buy bad assest from financial institution due to record forcloser. Senate passed this vote on 74-25, senators authorized the Treasury secretary Mr. Henry Paulsonto buy bad assets from financial's books, allowed the Federal Deposit Insurance Corp. (FIDC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.
Republicans changed their mind on Historic fall on DOW of 778 points drop on the reaction of first Vote Out. That bill was defeated on House's. Republcans were opposing that Bill and asking for some modification. One of the House of Representatives said Interviews : " The big drop'' in the Dow Index ``really had a chilling effect on a lot of our members and a lot of their constituents "The dollar rose against the euro, approaching a one-year high, after the Senate approval, bolstering expectations the U.S. will act faster than Europe to address the seizure in credit markets. The dollar advanced to $1.3880 per euro at 8:51 a.m. in London, from $1.4009 late yesterday in New York.
The most sweeping change is language to raise the limit for insured bank deposits sought by the FDIC, which asked to raise the capital temporarily to $250,000 from $100,000. This was designed to attract votes of some members of Congress who said that little was being done for Main Street.
The Senate also sweetened the measure for Republicans by authorizing the government's purchase of troubled assets with a $149 billion package of tax breaks. They would spare 24 million households from a $62 billion alternative minimum tax and extend $17 billion in benefits to companies that produce alternative energy.
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After a long three years of Controversial talk on Indo - US Nuclear deal, U.S. Congree finally approved this deal on Wednesday. The motion get 86 votes in favour and 13 votes against the motion. One of the Congressman quoted on this deal " Historic Vote " and said this will form a lasting strategic alliance between the United States and the world's largest democracy. The agreement, which the Bush administration considers a significant foreign policy achievement, will open door for India's Civil Nuclear projects. This will end a drought or 'technology denial regime' of 34 year that India was facing ban from U.S and many Nuclear Power Supply countries from late 1974 ( Pokhran-1 ) after the first Nuclear Test. India-US Nuclear Deal Sparks Interest in Doing Business in India.
In last month India has agreed to open its civilian nuclear facilities to international inspection under the Nuclear Non proliferation Treaty, though its eight military nuclear plants would not be subject to scrutiny in NSG brifed meeting. This deal will open $150 billion market to devlope Nuclear Plants and maintain them for both Indian and American plus all devloped nation who have Nuclear facilities. Though the amount is large and will surely helped American companies who are facing cool off in heir home countries.
Bush praised the vote, saying the agreement "will strengthen our global nuclear nonproliferation efforts, protect the environment, create jobs and assist India in meeting its growing energy needs in a responsible manner."Ron Somers , President of Industries Association - A group of U.S. top 300 companies who are committed to a long term partnership with India, quoted "The benefits will be many and the impact profound, beckoning a new era in US-India relations."
"By enabling US-India civil nuclear cooperation, India not only joins the international nuclear non-proliferation mainstream, but now has the opportunity to achieve energy security, while protecting the global environment," later he said.
"A massive scope for commercial opportunity between US and Indian companies will also be the result, valued at more than $150 billion over the next 30 years, spurring a revival of the nuclear power industries of both countries that will create as many as a quarter million high-tech US jobs for generations to come," words of Ron Somers.
It would shore up "a durable foundation upon which US-India relations will flourish and America's partnership will deepen with the world's largest free-market democracy," the business advocacy organisation said.
On the day of Gandhi's Jayanti - World know him as Mahatma Gandhi and we know by Bapu. Indo - US deal took place, this Proves that India will always use Nuclear power for its Civil Projects. And U.S also know this fact, thats why it completed on October 2nd , 2008 in IST.
On the day of Gandhi's Jayanti - World know him as Mahatma Gandhi and we know by Bapu. Indo - US deal took place, this Proves that India will always use Nuclear power for its Civil Projects. And U.S also know this fact, thats why it completed on October 2nd , 2008 in IST.
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Media Report : A media report stating that one of the UK banks Bradford & Bingley is soon going to be nationlised. "Officials from the Treasury and the Financial Services Authority (FSA) have been in talks with executives from the bank in a bid to secure its future," BBC said. On Friday , stock quoting to his lowest rates on History . Bradford & Bingley has seen erosion of its share price over 90 per cent this year and it is down more than 60 percent since the beginning of the month. The bank has high dependence on expensive wholesale funding raising doubts over its prospects as an independent lender.
Quoting Bradford & Bingley spokesman Tony McGarahan, BBC said discussions were taking place and an announcement would be made before the stock market opened tomorrow. Bradford & Bingley would be the second British bank to be nationalised this year after Northern Rock, which came into public ownership in February.
BBC said the bank would be nationalised using the special legislation the Treasury had put through when it took Northern Rock into public ownership earlier this year. The measure is expected be announced on Sunday night or Monday morning.
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Rescue Plan - U.S. Congress will pass a law on Sunday to create a fund of $700 billion to buy bad debts from the hosted banks aiming to minimise the Credit Crisis which is a accused for Global economy mahyem. U.S. congress leaders will talk on Sunday Morning to finalise the map for $700 billion fund. A Congressman stated that this is the worst financial crisis since the Great Depression.Nancy Pelosi , speaker of House of Representatives said "We've made great progress", "We have to get it committed to paper so we can formally agree." Treasury Secretary Henry Paulson had lobbied hard for the package, which would rank as the largest bailout in U.S. history, saying the sweeping program was needed to keep credit markets from grinding to a halt under the burden of bad mortgage debts. Remeber US forth largest bank Lehman Brothers , third largest bank Washington Mutual ( WaMu) is washed from system. Government Purchased the Mortgage Lender Fannie Mae and Freddie Mac and Insurance gaint AIG due to this Sub Prime Crisis. The Carolina based Wachovia is also on the queue.. and government status helped Morgan Stanly and GoldMan Sachs to remain in market.
Congress has been racing to reach an agreement before Asian markets open on Monday to avoid a repeat of last week's white-knuckle volatility.It was unclear when the House and Senate might vote on the legislation or whether last-minute hitches might arise.U.S. President George W. Bush spoke with House Speaker Nancy Pelosi on Saturday evening about the negotiations and news of the deal was welcomed at the White House.
"We're pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy," White House spokesman Tony Fratto said. At one point, lawmakers consulted by phone with billionaire investor Warren Buffett, who last week invested $5 billion in Goldman Sachs and also warned that markets were in a "dangerous situation" and on the verge of breaking down.
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Wachovia Corp.'s may face a accusition like Washington Mutual ( WaMu). Suitors may use a style like JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon did last week: Chase waited for regulators to seize WaMu business and they came & buy the best assets and let the government sort out the rest. 
Among Suitors Citigroup Inc., Wells Fargo & Co. and Banco Santander SA are in talks with Wachovia, report from the Wall Street Journal reported yesterday. This is the same constorium who was taking to WaMu to buy its entire system. But Unfortunetly regulators seized the bank two days ago and Chase purchased the best assest in $1.9 billion which is a fraction amount what they were paying in March. Analysts of Goldman Sachs and some other leading Ratings Co beleives that soon North Carolina based - Wachovia will join the league. Regulators may help suitors to purchase the bank by seizing its assest. Later a press release from Regulator desk stated that - " U.S. benefited from seizing and selling WaMu because the Federal Deposit Insurance Corp. didn't have to tap its $45 billion insurance fund. "
Views on WaMu Failure
``WaMu's takeover has proven that there's an easy way, if the FDIC is involved,'' said Sean Egan, president of Egan-Jones in Haverford, Pennsylvania. ``You kick the hell out of the equity holders and bondholders. That may be the new model for bank takeovers.''
Christina Pretto, a spokeswoman for New York-based Citigroup, declined to comment on the Journal's report, as did Santander's Peter Greiff, spokesman for the Spanish bank, and Wells Fargo's Julia Tunis Bernard in San Francisco. Wachovia's Christy Phillips Brown wouldn't comment on the news accounts or on analysts' reports.
Limited Risk
After WaMu's failure -- the biggest in U.S. history -- Dimon said in an interview that the New York-based bank gained ``a fabulous franchise'' while limiting the risk. ``We got this at a price that protects us, where if we were wrong, it still protects us,'' said Dimon, 52.
Wachovia has more resources to draw upon than WaMu did, including its market capitalization of $21.6 billion and assets that rank sixth among U.S. lenders. CEO Robert Steel, 57, the former Treasury official hired this summer to replace Kennedy Thompson, told employees in an e-mail yesterday that Wachovia was ``strong and performing well.'' The bank is more diversified than WaMu, owning the third-biggest U.S. brokerage, plus units in wealth management and corporate and commercial banking, he wrote.
Credit Ratings
Wachovia dropped $3.70 to $10 in New York Stock Exchange composite trading yesterday and lost $1.50 more in extended hours. Yields on Wachovia's bonds soared to 24 percent, from 7.5 percent on Sept. 5, an indication that investors are concerned about default.
Analysts questioned Wachovia's ability to stay independent after seeing loan losses tied to WaMu. JPMorgan is taking on $176 billion in mortgage-related assets and taking writedowns of about $31 billion, the New York bank said. Some of those were option ARM loans, which are prone to default because they let borrowers defer some interest and add it to the principal.
JPMorgan concluded that losses on the loans may equal up to 20 percent of their value, said Sean Ryan, an analyst at Sterne Agee & Leach in New York. Wachovia has $122 billion in option adjustable-rate mortgages.
``If we apply marks similar to those used by JPMorgan in the recent WaMu acquisition, the levels of potential losses would bring Wachovia very close to the threshold of being considered `well-capitalized,' '' Goldman analyst Louise Pitt wrote in a note to investors yesterday. Banks that are less than well-capitalized face curbs on their activities by regulators.
Those potential losses may discourage immediate bids for Wachovia, said Larry Carroll, president of Carroll Financial Associates Inc. in Charlotte, which oversees $1.3 billion.
``If you just wait, it may get you at a much cheaper price and not have to take all the bad stuff,'' he said.
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Market Today - Choppy
On expiry day market ended on negative side. Sensex lost 145 points and closed @ 13547 while the broader index NSE NIFTY shuts its shop down abt 50 points @ 4110. In Sept series BSE SENSEX lost about 3.6% and NSE Nifty lost 2.4% . Inflation came @ 12.14 % V/s a expectation of 12.23% . Crude is also expected to dip down tomorrow. In USA , president Mr. Bush called a emergency meeting on today to make a common consense on $700 billion bail out plan to help US ecomony to boost again.
Setorial
All BSE secorial index ended in RED except Auto Index , which ended in marginally green. Ranbaxy and Wipro are the worst performer on sensex closing down 5% each. While HDFC Bank and ONGC ended in Green due to fund buying on this counter , both stock ended green with 1.3% and 0.9% respectively. Suzlon was the top losser on BSE Group A stocks, down about 7.17% on the news of equity dilution and fund raising of Rs.1800 crs.
Turnover on 11th Sept , 2008
NSE Cash Rs.15311.01BSECash-Rs.5070.61Future Rs.82697.69
Arbitrage Opportunities NSE & BSE No Arbitrage activity found in any stock.
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CAlls & Strategy for September 26, 2008
We beleive that market on SEPT 26 will be highly influnced by outcome of US Govt bailout plans. In early trade , US market gained on the news of US Govt called meeting where they will discuss on $700 billion bailout. Inflation figure also came @ 12.14% against the market expectation of 12.23% and same as previous week as it was 12.14% also. Tomorrow Nifty may open around @ 4150 lelvls.. and then it can move towards North.
No Premarket calls for tomorrow.
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Wall Street’s wolf pack has lost its fangs, and the Indian markets are finding it tough to stand apart. That despite strong economic fundamentals and a largely insulated macroeconomic situation.
The answers are quite clear — this is the underbelly of globalization. The Indian economy is feeling the heat of the contagion effect, like never before. And as the global contagion effect spreads like a bush fire to the Indian economy, the question that arises is what’s up ahead for Indian investors and industry?
“We will certainly be influenced by this global slowdown, the pain will be felt with the stock markets reacting in a downturn, but then what do we do? Do we shut or doors on the globe or we go ahead, face the slowdown and emerge out of it,” feels Sanjeev Sanyal, Singapore-based chief economist, Deutsche Bank.
Analysts say there has been a double whammy for India. Direct hit are the ones which had some kind of business linkages with the no longer existing global investment banking giants, such as IT services, real estate and infrastructure.
The major players which are hurt in the IT segment include TCS, Wipro and Satyam. In the real estate sector, Unitech and DLF, among others, have been affected. Analysts agree that all those companies which had these investment banks’ holdings as a significant proportion of their portfolio and business are feeling the squeeze.
Among banks, ICICI Bank is the worst hit private bank, while PSU players Bank of India and Bank of Baroda are affected because of their derivative exposure. FIIs pressed the panic button on India as global agency Fitch downgraded the credit profile to “negative”. However, investors in India have been hit only indirectly, through exposure in the markets. Says Rajeev Shastri, head of alternate businesses of the asset management company Lotus India: “The linkages of Indian investors with these events have been weak as none of these banks are allowed to set up branches in India.”
There is a consensus among asset managers that Indian investors will not be affected very badly. “The Indian markets are certainly over-reacting. The global meltdown has created volatility in the markets but it will not last for long,” says Waqar Naqvi, CEO, Taurus Mutual fund.
However, not all are optimistic. Some analysts feel every large player had invested in some way or the other in India. Lehman had holdings in Satyam, AIG had partnership with Tata’s insurance wing and Merrill Lynch had business with Infosys. Says Anil Advani, head of research, SBICAP Securities, “Nobody is aware of the depth and magnitude of the crisis.
The situation is not transparent as of now.”
Arindam Ghosh, CEO, Mirae, sums it up: “The impact will certainly be felt but not at the portfolio level. The short-term volatility may erupt but the medium and long term perspectives are healthy and safe.
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