Word: stockely
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...damage had been mounting so swiftly that in the midst of a global stock-market rout that ate 18% of the Dow, Treasury Secretary Hank Paulson was forced to import a plan he once considered practically un-American. Paralleling a program authored by U.K. Prime Minister Gordon Brown, it called for the U.S. government to take partial ownership of nine leading banks and offer to buy pieces of hundreds of others. On Oct. 13, the nine bank bosses, assembled in the Treasury's imposing boardroom, were each handed a piece of paper with the terms: $25 billion of preferred shares...
...Treasury still plans to start buying troubled assets in the next month or so. But that wasn't soon enough for worried investors or for Fed Chairman Ben Bernanke, who according to inside reports had been advocating for a recapitalization for months. Money flowed out of the stock market, including that of many large hedge funds. Some $2 trillion in market value disappeared in a week. "It was tunnel vision," says Republican Congressman Spencer Bachus, ranking member of the House Committee on Financial Services. At a meeting at the White House on Sept. 25, Bachus says, he and others brought...
...move to recapitalize the banks got an endorsement in global stock markets, which momentarily roared back, in many cases with record one-day gains. "[They] have headed off a full-blown collapse of the economy," says Anil Kashyap, an economist at the University of Chicago Graduate School of Business. "There's a 0% chance of 1930s-type depression...
...thinking for the long term, it still is. To stock watchers, the flight to safety--capitulation, in other words--is a good thing, signaling that a market bottom is near. More important, though, says Tom McManus, chief investment officer at Wachovia Securities, is your own comfort level: "If you can't sleep, you have to sell down to the sleeping level--a mode where you are comfortable opening the statement and discussing it with your adviser or a family member...
...forced to increase savings, then spending has to drop, and that has ramifications for the stock market and the economy, because it implies we'll buy fewer computers and take fewer trips. With consumers hard-pressed, it is the government that will have to do the spending, says McManus. "Now is the time for us to spend, spend, spend, to make sure people are employed and have money on the table." Both presidential candidates have proposed economic-stimulus packages on top of the $168 billion stimulus Congress passed in early February. At some point, of course, the next President will...