Administration seeks to free frozen credit markets...

Source: Mail.com

AP - Monday, 23 March, 2009 10:21:38 PM
By MARTIN CRUTSINGER

The Obama administration took a fresh shot at ending a national paralysis in lending Monday, teaming up with investors to buy bad bank assets and ease credit for hard-pressed consumers and businesses.

The program, announced by Treasury Secretary Timothy Geithner, was not the first such attempt by the new administration to revitalize an economy mired in recession.

Geithner pleaded for patience, saying work to rehabilitate the banking and financial industry has to go forward despite "deep anger and outrage" over bad lending and investment practices.

The newest initiative, he told reporters, will seek to harness government and private resources to purchase an initial half-trillion dollars of bad assets off the balance sheets of banks. And he held out the expectation that the program eventually could grow to $1 trillion

Wall Street seemed to feel rejuvenated, at least at the opening. In late morning, the Dow Jones industrial average was up 221 at 7,500. The Standard & Poor's 500 index was up 23 at 792, and the Nasdaq composite index is up 42 at 1,500.

But the investor reaction to the administration's initial bank rescue program on Feb. 10 was anything but enthusiastic. Disappointed investors sent the Dow Jones down that day by a whopping 380 points.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP) -- The Obama administration took a fresh shot at ending a national paralysis in lending Monday, teaming up with investors to buy bad bank assets and ease credit for hard-pressed consumers and businesses.

The program, announced by Treasury Secretary Timothy Geithner, was not the first such attempt by the new administration to revitalize an economy mired in recession.

Geithner pleaded for patience, saying work to rehabilitate the banking and financial industry has to go forward despite "deep anger and outrage" over bad lending and investment practices.

The newest initiative, he told reporters, will seek to harness government and private resources to purchase an initial half-trillion dollars of bad assets off the balance sheets of banks. And he held out the expectation that the program eventually could grow to $1 trillion in purchases.

Apology...

Hey everyone,

I apologise for not informing earlier that I will be on a trading holiday for this Month of March and April. Been busy and taking time out for R&R with my wife and family. With school holidays and everything, been spending a lot of time with my wife and family for BBQs and family quality time :)

With the time spent with my family, I also manage to have a little bit of time, putting things together for my nature of business to enhance benefits for the community.

Everything for this blog will resume as per normal once the month of April ends and a new month of May begins :) I still wish everyone a safe trading profits for the time to come :)

Peace and trade safely everyone...

Warmest Regards,
Ash Ariffin

Consumer spending rises in Jan, unlikely to last...

Source: Mail.com

Consumer spending rose in January after falling for a record six straight months, pushed higher by purchases of food and other nondurable items. But the increase is expected to be fleeting given all the problems facing the economy.

The Commerce Department said Monday that consumer spending rose 0.6 percent in January, even better than the 0.4 percent gain that economists expected.

Personal incomes rose 0.4 percent in January, partly reflecting the cost-of-living adjustments provided to millions of Social Security recipients. Still, that was better than the 0.2 percent decline economists expected.

The personal savings rate surged to 5 percent, the highest level since 1995 as consumers continued to sock away more of their incomes amid the deepening recession.

The 0.6 percent rise in spending followed a record six straight declines, including a 1 percent drop in December when retailers endured their worst holiday shopping season in at least four decades.

The January increase was driven by a sharp 1.3 percent rise in purchases of nondurable goods led by much higher spending on food. Durable goods posted a tiny 0.1 percent increase, as Americans again avoided spending on cars and other large items.

While the 0.6 percent increase in consumer spending was the largest since May, analysts do not expect the strength to continue amid a recession that's already the longest in a quarter-century.

The cutback in consumer spending has been a key factor making this recession so severe. The government reported last week that the overall economy, as measured by the gross domestic product, shrank at an annual rate of 6.2 percent in the final three months of 2008. That was the sharpest fall in about 26 years.

The economic weakness is keeping a lid on inflation. A price gauge tied to consumer spending showed a modest increase of 0.2 percent in January after three straight monthly declines that reflected sharp drops in energy costs. Excluding food and energy, the price gauge rose 0.1 percent in January and has risen only 1.6 percent in the last 12 months.

Consumer spending, which accounts for about 70 percent of total economic activity, was falling at an annual rate of 4.3 percent during the fourth quarter, the biggest drop since the second quarter of 1980.

The 0.4 percent increase in personal incomes followed two months of declines and was somewhat surprising in light of the massive layoffs that have occurred this year. The country lost a net total of 598,000 jobs in January and the unemployment rate jumped to a 16-year high of 7.6 percent.

However, January incomes got a boost from the cost-of-living adjustment made to Social Security benefits and a pay raise given to federal civilian and military workers.

The slump in consumer spending in recent months has been tough on many of the nation's retailers. Macy's Inc. last month said its fourth-quarter earnings fell almost 59 percent, while J.C. Penney Co. recorded a 51 percent drop in earnings and projected a wider first-quarter loss than analysts had expected.

Wal-Mart Stores Inc., the world's largest retailer, managed to buck the trend. The company reported better-than-expected earnings for the fourth quarter as it appeared to benefit from a wave of store liquidations at former competitors such as Circuit City Stores Inc.