Last night the Federal Reserve announced yet another bailout, this time of AIG. The Fed has agreed to a two-year, $85 billion loan to AIG in exchange for a nearly 80% stake in the company.
Despite this, or perhaps even because of it, the U.S. stock market plunged on Wednesday, with the Dow Jones Industrial Average down over 350 points at the time of this writing, the Nasdaq down 78 and the S&P down 45.
It's clear that the housing woes, problems at Merrill Lynch (since swallowed up by B of A), Fannie Mae / Freddie Mac bailouts, Lehman Brothers' bankruptcy filing, Washington Mutual problems (do I have to continue) have left a definite impression on Wall Street and Americans at large.
Certainly, the market was not helped by a new report indicating that new housing construction declined 6.2% in August to a seasonally adjusted annual rate of 895,000 units. This is the slowest building rate since January of 1991.
"Due to this week's failures in the financial sector, banks, insurance firms, the fund industry, and non-regulated financial institutions will have to absorb further losses," said Tim Brunne, a strategist at UniCredit SpA. "There is systemic pain in the financial world."
“I think every day is sui generis now,” said Douglas M. Peta, market strategist at J. & W. Seligman & Company, a brokerage firm. “Every 30-minute segment might be.” Sui generis means "unique."
At the same time, oil rebounded to to $94.12 a barrel on the New York Mercantile Exchange, up $2.97, as concerns eased slightly over a global slowdown.
Still, as the U.S. is no longer a manufacturer, but the world's largest consumer, there must be concern that whither goes the U.S. economy, so goes the world.
After all, if I were in the market to buy something ... I'd put it off unless I needed to. That mindset has to be spreading throughout America. Any retail sales reports which come in the future will definitely be gone over with a finetoothed comb.
Comment and add to the story without registration, but keep the comments meaningful please. Links are not accepted.
