Eeyore's News and View

Major stock market indexes fall to 1997 levels
NEW YORK (AP) - Wall Street has turned the clock back to 1997.
Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since May 7, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997. It's as if the decade's dot-com surge, collapse and subsequent recovery never occurred.
The Dow is just over 100 points from 7,000. Both indexes have lost about half their value since hitting record highs in October 2007.
"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.
Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.
Although the government has said it doesn't want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They're also worried that banks' losses will keep escalating as the recession sends more borrowers into default.
"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."
The Treasury and other agencies issued a statement after The Wall Street Journal reported Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent. Analysts said the market, which initially rose on the statement, wanted more details of the government's plans.
It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."
Meanwhile, technology stocks fell after The Journal reported that Yahoo Inc.'s new chief executive plans to reorganize the company. But the selling came across the market as pessimism about the recession and its toll on companies deepened.
"There's no where to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.
The market's decline extends massive losses from last week when the major stock indexes tumbled more than 6 percent. While falling to their 1997 levels, the major indexes plunged through the lows they reached in late November, at the height of the credit crisis.
"There's no main driver of the down day," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "There's just so much skepticism in the overall market and (the question is) is the government doing proper things to get us out of this problem. Obviously the stock market is voting no."
The Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on May 7, 1997 when it finished at 7,085.65. The Dow hasn't traded below the 7,000 mark since October 1997. The index is down 14 percent over the past 10 sessions.
The Standard & Poor's 500 index fell 26.72, or 3.47 percent, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.
When the indexes were last at these levels, they were in their ascendancy, climbing amid the dot-com boom. But 1997 was also the year that saw stock prices later plunge amid a growing financial crisis in Asia. Far away from Wall Street, it was the year that the U.S. first heard the name Monica Lewinsky, whose relationship with President Bill Clinton led to his impeachment and trial. And it was the year that the world was stunned by the death of Britain's Princess Diana, on Aug. 31.
On Monday, the S&P 500 did close above its Nov. 21 trading low of 741.02. But the 14-month recession has decimated the major indexes: The Dow is down 49.8 percent from its record highs of October 2007, while the S&P 500 index is down 52.5 percent.
Detrick warned that a move below the S&P's Nov. 21 low could set off "violent selling" as even more confidence drains from the market.
The technology-laden Nasdaq composite index dropped 53.51, or 3.71 percent, to 1,387.72.
Investors looking for a bottom also dumped smaller stocks. The Russell 2000 index of smaller companies fell 16.38 or 3.99 percent, to 394.58.
Declining issues outnumbered advancers by more than 6 to 1 on the New York Stock Exchange, where volume came to 1.61 billion shares compared with heavy volume of 2.12 billion shares on Friday.
Morgan Smith, investment counselor for Burns Advisory Group, said investors are now pushing out their expectations for a recovery in the industry until after this year.
"Everyone is trying to grasp at some type of bottom," Smith said. "The market is just trying to figure out if it has priced in a worst-case scenario."
Among tech stocks, Hewlett-Packard Co. fell $1.96, or 6.3 percent, to $29.28, and Intel Corp. dove 70 cents, or 5.5 percent, to $12.08.
Other big losers included General Electric Co., which dropped to a 14-year low of $8.80, but ended down 53 cents, or 5.7 percent, at $8.85. Aluminum producer Alcoa Inc. tumbled 48 cents, or 7.6 percent, to $5.81.
Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7 percent, to $2.14, and Bank of America Corp., which gained 12 cents, or 3.2 percent, to $3.91.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.77 percent from 2.79 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.28 percent from 0.26 percent Friday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $1.59 to settle at $38.44 per barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.95 percent, and France's CAC-40 slipped 0.82 percent. Earlier, Japan's Nikkei stock average fell 0.54 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
http://www.wtop.com/?nid=111&sid=1450051

Iran plans 'pre-commissioning' of nuclear plant
Iran will this week "pre-commission" its first nuclear power plant, which is being built by Russia in the southern city of Bushehr, local news agencies reported on Sunday.
"In the presence of the heads of the atomic energy organisations of Iran and Russia, the pre-commissioning of Bushehr power plant will be carried out on Wednesday," the ISNA news agency said, quoting Iran Atomic Energy Organisation spokesman Mohsen Delaviz.
It did not say exactly what the pre-commissioning of the much-delayed plant would entail.
Russia took over construction of the plant in 1994 but completion has been delayed due to a number of factors, including the controversy over Iran's nuclear programme.
Earlier this month, the chief of Russia's state nuclear federation, Sergei Kiriyenko, said that his visit to Iran would be "to get acquainted with the works at the plant."
He also said that a "technical launch" of the plant was possible before the end of this year as everything was going according to plan, unless there are "unforeseen circumstances since we have to integrate all the equipment."
The nuclear fuel supplied by Moscow for the plant is sealed by the International Atomic Energy Agency, according to the latest report by the UN body released on Thursday.
According to the report, Iran has informed the agency that the loading of the fuel in the plant will take place only in the second quarter of 2009.
All the main equipment at Bushehr has been installed by Russian contractor Atomstroiexport.
The start-up of the plant, as and when it happens, will be a leap forward in Iran's plan to develop nuclear technology.
Tehran's ambitious nuclear drive has triggered a row with Western governments which suspect it is seeking to acquire a warhead, a charge Iran strongly denies.
Western powers fear Iran could use uranium enrichment technology to make a nuclear bomb but Tehran insists it wants solely to generate electricity for a growing population whose fossil fuels will eventually run out.
http://www.breitbart.com/article.php?id=CNG.a487d1626ac7f6642f40e4622cd4de5c.b41&show_article=1

Got this from 411man at the Family Readiness Center
Crisis may be worse than Depression, Volcker says
By Pedro da Costa and Kristina Cooke
NEW YORK, Feb 20 (Reuters) - The global economy may be deteriorating even faster than it did during the Great Depression, Paul Volcker, a top adviser to President Barack Obama, said on Friday.
Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.
"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker told a luncheon of economists and investors at Columbia University.
Given the extent of the damage, financial regulations must be improved and enhanced to prevent future debacles, although policy-makers must be cautious not disrupt things further while the turmoil is ongoing.
Volcker, a former chairman of the Federal Reserve famed for breaking the back of inflation in the early 1980s, mocked the argument that "financial innovation," a code word for risky securities, brought any great benefits to society. For most people, he said, the advent of the ATM machine was more crucial than any asset-backed bond.
"There is little correlation between sophistication of a banking system and productivity growth," he said.
He stressed the importance of preventing financial institutions large enough to pose a threat to the entire system from engaging in risky behavior such as running hedge funds or trading for its own accounts.
The current crisis had its beginning in global imbalances like a lack of savings in the United States, but policy-makers around the world were too reticent to take action until it was too late, Volcker said.
Now that the crisis had erupted, it was important to take decisive actions, including a more effective regulatory structure and some movement toward uniform accounting systems, Volcker said.
He said all financial institutions that are deemed too large to fail should be subject to increased scrutiny, echoing the findings of the Group of 30, a panel of policy-makers and influential economists, which he leads. (Reporting by Pedro Nicolaci da Costa and Kristina Cooke; Editing by Tom Hals)
http://frc4u.org/phpbb/index.php?topic=254.0

EU leaders back sweeping financial rules
BERLIN (AP) — European leaders mounted a united front against the global financial crisis Sunday, proposing sweeping new market regulations, but it remained unclear whether economic giants like the United States and China would go along.
Heads of government and finance ministers from Europe's largest economies joined German Chancellor Angela Merkel in Berlin to lay the groundwork for a common European position on economic reforms before an April 2 summit of the Group of 20 nations in London.
"Europe will own up to its responsibility in the world," Merkel told reporters following the talks.
Leaders from Britain, France, Germany, Italy, Luxembourg, Spain, the Netherlands and the Czech Republic agreed to press for sanctions on tax havens, caps for managers' bonus payments and a stronger role and increased funding for the International Monetary Fund.
While the plans were based on an agenda adopted by the G-20 in November, the measures announced Sunday were more far-reaching and concrete, particularly on long-disputed issues such as hedge fund regulation.
However, analysts say other G-20 members, including the U.S., China, Japan and developing nations like India and Brazil, might not share Europe's zeal for blanket global regulations.
During Germany's turn at the presidency of the Group of Eight two years ago, Merkel pushed hard for more transparency on global financial markets and, especially, hedge fund regulation. But her efforts ran into against stiff resistance from Washington and London.
Even the global crisis and a change of administration may not be enough to convince the U.S. to hand over its autonomy.
"I see the U.S. as wary of giving away powers of oversight and regulation," said Robert Brusca of New York-based Fact And Opinion Economics.
Financial industry leaders, on the other hand, may have lost too much credibility in the current crisis to fight off heavy restrictions on their practices.
"What the industry thinks is irrelevant," Brusca said." It has squandered any good will it had by being given a leash of self regulation — then running amok."
French President Nicolas Sarkozy said that "Europe wants the system to be refounded," and stressed the importance of the April meeting.
"We all want London to be a success and we are all aware that it's (our) last chance," Sarkozy said. "We cannot afford a failure in London."
European leaders also backed Merkel's call for a "charter of sustainable economic activity" that would subject all financial market activities around the globe to regulation, including credit rating agencies.
Merkel's proposal envisions giving increased powers to the IMF, which the leaders agreed needed to receive double its current funding in order to help members respond "swiftly and flexibly" to a crisis.
British Prime Minister Gordon Brown called for a "global New Deal" to be adopted to help right the world economy, saying international financial institutions need some $500 billion to do the job.
That could prove complicated unless the U.S. agrees to cede the needed authority to the IMF to make it effective, analysts say.
"The IMF is a policeman without a whistle, let alone a gun," Brusca said. "I see more international cooperation as essential but still difficult."
Other key points agreed to Sunday included adopting a "sanctions mechanism" to penalize tax havens and urging banks to keep larger reserves of capital.
"A new system of regulation without sanctions would not have any meaning," said Sarkozy.
He said European countries should jointly draw up a list of tax havens, as well as sanctions they might face for continuing reckless financial activity.
Merkel also warned the United States to avoid protectionism in its automobile market.
"When I look at the restructuring plans of some American companies, there are a lot of state funds flowing into them," Merkel said, swiftly adding that "this is not an accusation."
She said the European Commission would be asked to examine whether the U.S. was violating global trade laws.
Officials said a final copy of the summit agreement would not be circulated Sunday, in order to allow European Union members not present to view it first. All 27 EU members are to debate the document next week, and it is to be taken up by the European Council on March 19-20, then presented to the G-20.
That summit will be President Barack Obama's first and a test of just how much regulation the U.S., and other world leaders, is willing to accept in an effort to prevent another meltdown.
http://www.usatoday.com/money/economy/2009-02-22-europe_N.htm

Internet threat: Hackers swarm bank accounts
New and nasty banking trojans are on the rise on the Internet and attacking online bank accounts.
The new trojan programs — which wait on your hard drive for an opportunity to crack your online banking account — are different from traditional "phishing" e-mail scams that try to trick you into typing your login information at fake bank websites.
They're invisible, can steal data multiple ways and require no action by the victim to be launched.
"Phishing doesn't work as well as it used to," says Patrik Runald, security specialist at F-Secure, the Internet security firm. "Banking trojans provide a very effective and direct means for the bad guys to get their hands on the money."
Banking trojans can be gotten by clicking on a viral link to a greeting card or video that arrives in e-mail spam. Or, they can be picked up by clicking to a Web page that's been corrupted by hackers.
F-Secure tallied 59,177 unique banking trojans circulating on the Internet in 2008, up from 15,969 in 2007. The escalation partly underscores how intensively criminal hackers churn out new variants to escape detection by antivirus programs.
Banking trojans "are more advanced and evolving faster than antivirus solutions," says Gunter Ollmann at IBM Internet Security Systems.
The American Bankers Association acknowledges the rise. Doug Johnson, vice president of risk management policy, notes that most U.S. banks try to make certain that online customers log in from their usual computer.
Losses caused from unauthorized transactions aren't known. Banks generally don't disclose them.
A typical banking trojan remains dormant until the customer logs on to a banking website. It then steals usernames and passwords by capturing keystrokes or copying the log-on page after the victim has filled it out.
So-called man-in-the-middle trojans go further. One type makes illicit cash transfers while the victim is legitimately logged on. Another can reproduce a copy of the Web page showing account balances — except with the balances altered to show the numbers the victim expects to see. This buys time for the thief to drain the account and hide his trail, Ollmann says.
Despite the trojans, Johnson of the bankers' association insists "online banking, on balance, is safe."
http://www.usatoday.com/money/industries/banking/2009-02-22-bank-accounts-hackers_N.htm?loc=interstitialskip