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Reuters – U.S. President Barack Obama‘s $825 billion stimulus plan cleared its first Congressional hurdle as the Federal Reserve eyed more extreme measures to ease credit market strains, boosting Asian stocks despite deep skepticism that a global slowdown can be reversed quickly.
Signs of corporate distress were still obvious regardless of the passage of Obama’s bill through the House of Representatives, the first big legislative success of his new presidency.
Sony Corp followed fellow Japanese electronics maker Canon Inc with a dismal quarterly profit report on Thursday as the fallout grows from a global crisis which has already cost trillions of dollars and threatens millions of jobs.
Atlanta Journal Constitution – Unlike the nation’s banks, hedge funds haven’t been lining up for government bailouts in the wake of losses they can’t handle. But the funds do share one Wall Street problem: a huge mismatch between the short-term funds they take in and the long-term bets they make. Without a rethink of their business models, many in the hedge fund business risk going the way of the investment banking dodo.
Recall the nightmare on Wall Street. Going into 2008, America’s five big investment banks held trillions of dollars in long-term and illiquid assets that were financed largely by short-term borrowings. That did not work out so well. Two of them disappeared. Another was swallowed by a traditional bank, and the last two had to don the sober garb of regulated, deposit-taking banks to survive.
Tacoma News Tribune – It was a year of disillusionment, betrayal and excruciating pain for investors.
Wall Street got investing so wrong that the financial system needed an emergency $700 billion transfusion of taxpayer money to avoid collapse, and investors lost trillions of dollars of their life’s savings.
For the regular person with a 401(k), it didn’t help much if they obeyed the lessons of sound investing. Although investors are told that diverse mutual fund choices will help them get through a stock market downturn, the practice didn’t save them from a miserable 2008.
As the stock market plunged more than 50 percent from its October 2007 high, everything but U.S. Treasury bonds suffered drastic losses – real estate, commodities, U.S. stocks, international stocks and even hedge funds, municipal bonds and corporate bonds. As investors panicked and headed for the exits, strong and weak investments were sold. Virtually nothing was immune.
“All 10 sectors within the Standard & Poor’s 500 fell, from a 22 percent slump for consumer staples to a 74 percent thrashing for the financials,” said Standard & Poor’s chief investment strategist Sam Stovall.
