With the decision to hold off using the $700 billion rescue package to buy bad mortgage assets, U.S. stocks suffered further slides, increasing the apprehension of many investors regarding consumer spending levels. Declines were precipitated by Treasury Secretary Paulson’s comments on the severity of the problems that were plaguing the economy.
Paulson’s decision to change the focus of the $700 billion plan approved by Congress in October from buying toxic assets, particularly mortgage-backed securities, from financial institutions to emphasis aid to non-bank financial institutions, has added to worries.
No sector is immune to the dramatic downward shifts in the economy. There is a widespread cascade effect that is hitting interrelated industries. The economic slump and faltering consumer spending has resulted from industries as diverse as big electronic chain stores like Best Buy and Circuit City (which recently filed for bankruptcy insurance), as well as major credit card issuers like American Express, which are estimating lower market outlooks.
Following a move by American Express to establish a bank holding company, the company experienced a 8% stock drop. Like other companies, it was seeking assistance from the US government.
Technology shares, like consumer-oriented stocks, were being dumped by many investors. Apple Inc. was particularly vulnerable to the market shift, suffering a 2.6% drop on NASDAQ.
The fears about the status of the economy have spread to the broader market, creating the right atmosphere for a true bear market. As of October 12, the S&P 500 has a 40% drop in points for a year to date average; this number makes a new low for 2008, the lowest level in more than five years.
With no clear picture of where to go forward, consumers and investors alike are left to fend for themselves as the Treasury Department strives to sort out the messy task of using the massive billion dollar bailout plan in an effective way.
Tags: bad debts
Related Articles
- Consumer Lending Shares Rise Due To New Debt Plan According to recent reports, the share of consumer lenders and student loan providers experienced significant gains in the stock market following the announcement by government representatives that the US government
- Creeping Debt – How To Cope With It Via Debt Consolidation If, like many people, you're currently in debt and trying to rebuild your financial security, you no doubt remember "the day". The day you first looked around you and really
- Why A Recession Is The Worst Time To Let Your Credit Score Slide Right now, if you are just straining to make your finances work out each month then you are not alone. You may be totally focused on paying your bills,
- Late Credit Card Payments On The Rise It appears that more American consumers are late in paying their credit card bills. The organization known as CardTrak reports that the percentage of customers who are tardy in making
- Berkshire To Purchase Corporate Debt Berkshire Hathaway, the company of billionaire investor Warren Buffet, is purchasing corporate debt and foreign government-issued securities even as Buffet has lowered spending on stock falls. The company was holding approximately