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The Biz Roundup March 5

The business news todays is stocks stocks stocks falling falling falling.

Stock markets in the US and Europe tumbled on Thursday after Chinese authorities failed to deliver a stimulus package expected by many investors and European central banks slashed interest rates in response to a worsening recession.

The global turmoil combined with continuing concerns about US banks – Citigroup fell below $1 a share at one point – to send the S&P 500 skidding 4 per cent to its lowest level since September 1996. Germany’s Dax lost 5 per cent, France’s Cac 40 fell 4 per cent and the UK’s FTSE 100 dropped 3 per cent.

Asian markets continued the rout on Friday, though losses were less dramatic than in the US. Tokyo’s Nikkei average slid 3.1 per cent and the MSCI index of Asia-Pacific stocks outside Japan was down 0.9 per cent. Australia’s share market fell 1.8 per cent, while South Korea dropped 1.2 per cent.

(“Global stock markets tumble,” Financial Times, March 6) You know the outlook is bad when you can buy a share of your bank’s stock for less than the ATM fees they charge you to withdraw ten bucks.

Now, of course, is the perfect time to shut down the government.

Senate Republicans blocked a $410 billion omnibus spending measure on Thursday night, forcing Congressional Democrats to prepare a stopgap budget resolution to keep the federal government from shutting down.

(“G.O.P. Delays Fiscal Bill Over Earmarks,” New York Times, March 5) Here’s the odd thing about government. Democrats are saying that the budget bill is not their fault (“the bill is last year’s business, Bush’s last budget”) and the Republicans are saying that the budget bill is not their fault (even though the Senate minority leader, Mitch McConnell is getting the largest share of earmarks). When everyone’s pointing fingers at each other, that means nobody is pointing a finger showing the way out.

Finally, the folks with the checkbook figure out the the AIG bailout is really about putting the entire financial industry on welfare.

Members of the Senate Banking Committee pressed Federal Reserve Vice Chairman Donald Kohn about why his agency has refused to disclose the trading partners of AIG who have benefited from the government’s rescue package, now estimated at about $170 billion. Large sums have been spent by the company to pay off its obligations to other financial firms.

(“Senators Call AIG ‘Lost Cause,'” Washington Post, March 6) I have said in this blog several times that the AIG bailout is just a cover for a wider industry bailout. All the banks and hedge funds that AIG is funneling taxpayer money to aren’t accountable for it. Remember what Warren Buffett said about “too big to fail.”

There’s always Wal*Mart.

Wal-Mart Stores once again proved itself the chain best able to capitalize on the new frugality. At stores open at least a year, a barometer of retail health known as same-store sales, Wal-Mart exceeded analysts’ expectations, reporting a 5.1 percent sales increase in February (not including fuel), compared with a 2.7 percent increase for the period a year ago.

(“Retail Sales Slide Further, Except at Wal-Mart,” New York Times, March 5) Nothing says “I lost my job” like a shopping spree at Wal*Mart. By the way, in case you’re finding a ray of hope in the heartwarming fact that the decline in retail sales wasn’t as bad as expected, flat is never “up.”

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