On panic's edge

With the fate of a financial bailout plan still uncertain — and fear that it wouldn't be enough to quell the crisis — the ripples of the country's credit freeze widened Thursday. Even without billionaire financier Warren Buffett warning of an "economic Pearl Harbor," investors and consumers had a jittery day. Among the developments: The Dow sank nearly 350 points on ominous reports on unemployment claims and factory orders. The big drop points to a market increasingly resigned to further economic instability whether or not the bailout plan becomes law. Cash scarcity hit yet another all-time high, as the LIBOR, the London interbank offered rate, which banks charge each other for loans, rose for a fourth straight day. The rates have soared, Bloomberg reports, as financial institutions hoard cash in fear that more banks will collapse. The Federal Reserve said commercial banks averaged a record $44.5-billion in daily borrowing from its emergency lending facility over the past week. For the week ending Wednesday, investment firms drew a record $147.7-billion, up significantly from $88.15-billion the previous week.

Fertilizer giant Mosaic Co., which operates five phosphate rock mines in the Tampa Bay area, led a plunge in agricultural stocks by dropping 40 percent. Despite nearly tripled profits, first-quarter earnings stoked fears that a global slowdown will hurt demand for commodities, Forbes reported. A day after Senate Majority Leader Harry Reid said a major insurer is on the verge of bankruptcy, stocks of several insurers took a dive. Stock in Hartford Financial Services fell 32 percent while MetLife Inc. fell 15 percent. A Reid spokesman later said the senator had no specific knowledge of any troubled insurer. Marriott International Inc. said its third-quarter profit dropped 28 percent and it warned investors about deteriorating conditions for 2009. Marriott said its revenue per available room declined in North America, and timeshare sales dried up amid the cutbacks in spending.

The price of oil, which soared near the $150-a-barrel mark in July, continued its dramatic fall as investors sought safe havens for their money and bet that an economic slump will curtail demand for fuel. U.S. crude settled down $4.56 a barrel at $93.97. Alarmed by the financial meltdown, stores nationwide are slapping sale signs on everything from fall sweaters to furniture — frantically trying to attract shoppers who are cutting back. Some analysts were already expecting the weakest sales growth for the holiday season in 24 years.

On panic's edge 10/02/08 [Last modified: Wednesday, November 3, 2010 2:32pm]

    

Join the discussion: Click to view comments, add yours

Loading...