Rookie120 0 #1 September 30, 2008 By Jeremy Gaunt, European Investment Correspondent 42 minutes ago LONDON (Reuters) - World stocks were at near three-year lows on Tuesday but fears of a major market meltdown failed to carry through from Wall Street to Europe as confidence in bank rescue packages persisted. The U.S. Congress's rejection of a bank rescue plan tore nearly 9 percent off the broad S&P 500 on Monday but European shares and many Asian stock markets clawed back from early losses on hopes the U.S. plan would eventually go through. U.S. stock index futures also pointed to a higher opening, suggesting belief that Monday's selloff was over-done. "It's certainly my working assumption that there (will be) some sort of agreement reached in the U.S. and based on that I would expect the market to recover quite strongly from yesterday's sell-off," said Darren Winder, equity strategist at Cazenove. Angst over the battered financial sector continued, nonetheless, with Belgian-French financial services group Dexia getting a 6.4 billion euro ($9.18 billion) capital boost from public shareholders to help it fight the global credit crisis. Ireland also offered to guarantee all bank deposits for two years to improve banks' access to funds on international markets. It also guarantees covered bonds, senior debt and dated subordinated debt. Money markets remained on life support with benchmark rates continuing to climb, albeit distorted by the final day of the third quarter. European stocks fell as much as 2 percent in early trading and Japan's Nikkei closed 4.12 percent lower after the deep losses on Wall Street in the wake of Congress's failure to agree a $700 billion plan to buy up toxic debt from the financial industry. Globally, MSCI's main world stock index, a benchmark for many leading investors, was down 0.7 percent, adding to a 6.84 percent loss on Monday that saw the index's market capitalization plunge $1.73 trillion. But the FTSEurofirst 300 index of top European shares recovered to gain 0.6 percent. "No one really expected a no vote (in Washington), but it's encouraging that they're clearly going to vote on this again," said one equities trader in Europe. Earlier, the Nikkei average hit a three-year closing low, shedding 483.75 points to 11,259.86, the lowest finish since June 2005. It earlier lost nearly 5 percent. Other Asian stocks recovered, however. Hong Kong's Hang Seng index closed 0.8 percent higher, while South Korea's KOSPI pared losses to end down 0.6 percent. Both had fallen more than 5 percent early in the day. The dollar jumped 1 percent against the yen as shock at the failure of the bailout proposal gave way to cautious optimism that a deal may yet be reached. "We're seeing dollar/yen bounce around as optimism ebbs and flows about the U.S. bailout package, but we're not getting a trend," Standard Bank currency analyst Steve Barrow said. The dollar was up 1.1 percent against the yen to 105.19, according to Reuters data. The euro fell 0.6 percent to $1.4416 and by 0.1 percent against the yen to 150.27. Euro zone government bond prices eased, sending yields slightly higher. Oil recovered to trade above $99 a barrel after slumping almost 10 percent in the previous session. *** Whats pisses me off is all these investors are betting that the Govt will bail them out instead if finding a solution on there own. Sounds like the lazy easy way out to me.If you find yourself in a fair fight, your tactics suck! Quote Share this post Link to post Share on other sites
Gawain 0 #2 September 30, 2008 Quote Whats pisses me off is all these investors are betting that the Govt will bail them out instead if finding a solution on there own. Sounds like the lazy easy way out to me. Absolutely. The government doesn't have the money to spend, but despite these losses, the world market has trillions. These guys may have forgotten how to be salesmen. The money is already there.So I try and I scream and I beg and I sigh Just to prove I'm alive, and it's alright 'Cause tonight there's a way I'll make light of my treacherous life Make light! Quote Share this post Link to post Share on other sites
billvon 3,120 #3 September 30, 2008 > The government doesn't have the money to spend, but despite these >losses, the world market has trillions. These guys may have forgotten >how to be salesmen. The money is already there. No, it's not. That's the problem. No one has piles of gold floating around. Instead, their money consists of things like debt instruments and stock in companies, neither of which has any real value. The value of debt instruments is declining rapidly. That means the money is going away. That's what the problem is. It's not that people are investing in different things, it's that the money they once used to invest in those things is disappearing. As a reference, the world's GDP is around $65 trillion. It's very hard to put a value on things like the CDS market, but one estimate puts its value at around $70 trillion. That $70 trillion could indeed largely disappear. That's why the whole bailout thing can work at all. If it takes $700 billion to maintain the value of a $70 trillion market, you've leveraged your money at 100 to 1. And if you get even 1% of that back in the form of taxes, you've paid for it. (Not to say that it's a good idea even if it works, but it _can_ work.) Quote Share this post Link to post Share on other sites
Gawain 0 #4 September 30, 2008 These banks aren't extending credit because they're expecting a free infusion from the government. Again, the money is there, but the "free market" is becoming a bum on the dole instead. All the greed, no stomach for the risk, and now that they're caught too deep in the cookie jar, they want a free hand up. Citigroup didn't just pull out $2B in cash for Wachovia. They're moving stock and credit instruments. Small banks are still extending credit because they're more conservative in their operation. Big investment-house-turned-bank-companies are the ones hurting. They aren't willing to sell their bad debt for 22-cents on the dollar, if they think the SecTreas will buy it off them for 30-35-cents on the dollar...So I try and I scream and I beg and I sigh Just to prove I'm alive, and it's alright 'Cause tonight there's a way I'll make light of my treacherous life Make light! Quote Share this post Link to post Share on other sites
karlm 0 #5 October 1, 2008 Quote No one has piles of gold floating around WHAT? ..... You telling me the secret vault under the hanger at Skydive Chicago is a lie Better never to have met you in my dream than to wake and reach for hands that are not there. Quote Share this post Link to post Share on other sites
