Stocks Slide Again, Mirroring Overseas Declines
- Nov 11, 2008
U.S. Marine Corps Commandant General James Conway commemorated the 90th anniversary of Veterans Day this morning by ringing the Opening Bell at the New York Stock Exchange. The markets, however, have not shown much enthusiasm; the Dow Jones index fell in the wake of lower markets in Asia and Europe overnight, losing more than 176 points, or nearly 2 percent. The S&P 500 was down 2.2 percent, and the Nasdaq was down 2.22 percent.The three-month Libor rate dropped yesterday to 2.18 percent, which is the lowest the rate has been in more than four years. The rate was as high as 4.82 percent in October. Libor, or the London Interbank Offered Rate, is a key measurement of liquidity in the credit market, and a lower rate could point to a thaw in credit markets–eventually. Citigroup has announced a moratorium on foreclosures for many of its mortgage loans, following the lead of a number of other major lenders, who seem to have figured out that now is a bad time to take ownership of many more thousands of foreclosed properties. According to the bank, it won’t start a foreclosure on a borrower who seeks to stay in a house, and who has enough income to make “affordable” mortgage payments–presumably at a rate more resembling the teaser ARM rate than the reset rate. Not everyone is happy about the latest wad of taxpayer money–money borrowed on behalf of taxpayers, actually–offered to insurer AIG. Bloomberg reports that Robert Eisenbeis, the chief monetary economist at hedge fund Cumberland Advisors and former director of research at the Atlanta Fed, characterizes the revised AIG bailout as “keeping the zombie alive,” which is a memorable turn of phrase. Switching metaphors, Eisenbeis added that “we keep getting deeper and deeper into these holes.” Circuit City Stores Inc., which filed for bankruptcy yesterday, has finagled $1.1 billion in financing that might ultimately keep the retailer going in the longer run. Part of the company’s immediate problems stemmed from suppliers cutting off credit and insisting on cash. The financing, which has been approved by the bankruptcy court, will come in the form of a line of credit from Bank of America Corp., which has an existing relationship with the retailer. As reported in CPN last week, Circuit City has closed 155 of stores and cut about 20 percent of its 43,000-person workforce.