Business, Finance and Market News

Not a lot of logic behind the bourse's latest descent

MALCOLM MAIDEN A potential conclusion from yesterday's global sharemarket slump is that investors had not worked out until now that the credit crisis is going to shred economic growth.

Chinese growth faces slowdown

China's economic growth will slow in coming months as crucial export markets in Europe and the US dry up, the World Bank's senior economist in Beijing says.

Germany slashes growth forecast

Angela Merkel's government slashes its growth forecast for Europe's biggest economy next year, saying that gross domestic product will barely expand.

Switzerland bails out UBS

Switzerland provides UBS a $US59.2 billion rescue and pushes Credit Suisse to raise funds, joining authorities around the world in shoring up banks.

Arnie fires up investors

Gov. Arnold Schwarzenegger hits the celebrity switch in bid to terminate California's funding woes.

Citi, Merrill losses hit $12b, more red ink ahead

Citigroup and Merrill Lynch reported almost $11.9b of losses in the third quarter as their top executives said the economic contraction will shred profit into 2009.

Bernanke's dour assessment spooks markets

Turmoil in credit markets poses a "significant threat'' to the the US economy, Fed chairman Ben Bernanke says, suggesting an openness to further interest-rate cuts.

Push for global summit to overhaul capitalism

British PM Gordon Brown pushes a four-point plan to reshape the rules of global capitalism and wants a new Bretton Woods to discuss the plan.

EU leaders endorse $3.3tn bail-out

EU leaders endorsed a $3.3 trillion continent-wide emergency bail-out for the banking sector and debated other measures to protect their economies.

Iceland scouts for cash

Hit gale-force by global financial turmoil, Iceland has gone from being viewed as a European success story to the continent's sickest patient.

World Bank pledges $14b for Asia

Asian officials have agreed to put up a standby fund to help countries who may suffer liquidity problems as a result of the global financial crisis, with the World Bank committing $US10 billion.

After bail-out party, beware the hangover

The price of averting a US financial meltdown goes well beyond the mind-boggling sums the government is handing out and may have to be repaid with years of higher borrowing costs.

Thousands of US banks may get state aid

The US government pumps $354b into some of the nation's biggest banks and President Bush says "thousands" may get state aid.

Fed cred on the line

MICHAEL WEST The solvency of the US Federal Reserve deserves scrutiny, as does the role APRA might play as Australia shores up its banks.

US budget deficit triples, may hit $US2tn

The US government posted a record budget deficit for 2008 as financial market strains slowed economic growth and spending climbed.

Trichet urges global action to fight crisis

European Central Bank President Jean- Claude Trichet calls for a global approach to solve the financial market crisis.

EU bail-out bill could run into the trillions

Ian Traynor and Angelique Chrisafis THE governments of Europe have embarked on their biggest financial gamble since the launch of the euro. They are pledging to buy up tottering banks, underwrite their lending, and flood the markets with liquidity in a package that could run to a staggering €2 trillion ($3.9 trillion) in total across the European Union.

The challenge ahead

MICHAEL WEST It is hard to fathom the depth and breadth of this storm which has engulfed world markets.

Morgan Stanley seals Mitsubishi pact

Morgan Stanley shares climb after the firm sealed its $12b investment from Mitsubishi UFJ Financial Group.

Bush critic Krugman wins Nobel prize

US economist Paul Krugman, a fierce critic of President George Bush's handling of the global financial crisis, has won the 2008 Nobel Economics Prize.

Government guarantees all desposits

Prime Minister Kevin Rudd today announced the government would guarantee all deposits being held in Australian financial institutions for the next three years.

Europe united on battle plan

European leaders have agreed to guarantee new bank refinancing and use government money to prevent lenders from going under.

Crisis plans should thaw credit markets

Last-ditch efforts to unclog credit markets and halt a record slide in stock markets should ease serious strains in the global financial system, but the devil will be in the details.

IMF hails progress in fight against crisis

The IMF and the World Bank have hailed progress to coordinate responses to the financial crisis in the G7, the euro zone and multilateral institutions.

British banks may get $97b capital injection

Major British banks are expected to announce plans to recapitalize early on Monday, people familiar with the matter said, which could see the government take multibillion pound stakes in several lenders.

End of US era - now China calls the tune

JOHN GARNAUT The world order is changing, because China is propping up the US.

Iceland goes fishing for a solution to its dissolution

Niklas Magnusson ICELAND'S Prime Minister, Geir Haarde, has some advice for his fellow citizens after the implosion of the country's banking system: go fishing.

Morgan Stanley in 'urgent' need of rescue: Soros

Morgan Stanley ``urgently needs rescue'' by the US Treasury, which should buy preferred stock to help protect Mitsubishi UFJ Financial Group Inc.'s stake in the investment bank,

HBOS says Lloyds takevoer plan remains 'on track'

HBOS said the takeover of the bank by Lloyds TSB remained on, rejecting a report that the deal had collapsed.

IMF warns of meltdown

The IMF warns the world's financial system is near meltdown and France promised that a meeting of European leaders in Paris will detail measures to contain market panic.

World Bank reassures poor countries on aid

The heads of the World Bank and International Monetary Fund today assured developing countries their needs would not be forgotten in efforts to tackle the financial crisis.

Chrysler, GM in talks to merge

Chrysler has had talks with GM to merge as both struggle to cut costs and shore up cash to survive.

Ford may sell Mazda stake

Ford, after almost three decades as an investor in Japan's Mazda, is believed to be considering selling its controlling stake.

GM, Ford may face bankruptcy

General Motors, Ford and Chrysler may be forced into bankruptcy by slowing economies and falling US car sales, a Standard & Poor's analyst says.

AIG host with most to explain

Erik Holm and Hugh Son AMERICAN International Group said it would cancel most of its events after politicians castigated the insurer for hosting a $US440,000 ($637,000) function at a resort while benefiting from a $US85 billion government bail-out.

We should have seen this storm coming

Everyone has a theory why the world's financial markets have gone belly-up. Simon Hoyle delves into the past for some answers.

Early signs of credit thaw

Banks cut the rates they charge each other on Friday, providing tentative signs that some corners of the credit market are thawing.

Islamic finance rides the storm

Clancy Yeates A thriving financial sector sounds like an oxymoron these days. Even Australia's banks - among the most profitable in the world - kept a fifth of this week's interest rate cut to cushion their margins. But there is one sector that has tongues wagging in the hubs of commerce: Islamic finance.

An unprecedented crisis

Malcolm Maiden This crisis is different because it is more than a year old, and there is still no clear picture about how it is going to be fixed.

Financial crisis brings down Japanese insurer

The credit crunch claimed its first victim among Japan's financial institutions today as hopes faded that Asia's largest economy would be relatively immune to the crisis.

China confident it can weather crisis

China says it is "fully confident and capable" it can overcome current economic difficulties and will work closely with other countries to guard the stability of the global financial system.

Citi pulls out of Wachovia bid

Citigroup has walked away from its attempted purchase of Wachovia, handing victory to Wells Fargo in a struggle for the nation's sixth-biggest bank.

Crisis enters critical stage

MICHAEL WEST It's bank run time, in wholesale terms at least. Now even the US government is thinking about nationalising its banks and guaranteeing all deposits.

US ponders ownership stakes in banks

US Treasury Secretary Henry Paulson is weighing plans for the US government to invest in banks as the next step in trying to resolve the deepening credit crisis.

Global finance: no one's in charge

IAN VERRENDER HAS Dick Fuld, the profligate head of collapsed Wall Street pillar Lehman Brothers, finally achieved what the motley collection of anti-globalisation protesters couldn't during the past decade?

GM, Ford shares crash on rating cut fear

GM shares tumbled to its lowest since 1950 and Ford fell to almost a 26-year low as the US car-sales outlook worsened and S&P said it may cut their debt deeper into junk.

IMF prepares emergency bail-outs for countries

The International Monetary Fund readies to lend to countries hit by the global credit crunch and has activated an emergency financing mechanism first used in the 1990s Asian crisis.

Paulson calls urgent meeting of G20

Anne Davies THE US Treasury Secretary, Henry Paulson, has convened a special meeting of the G20, comprised of the world's 20 largest economies including Australia, in Washington this weekend, as US authorities injected another $US38 billion ($55 billion) into the toppling insurance group AIG to keep it afloat.

Iceland crisis hits UK councils

British local authorities are bracing for potentially painful losses stemming from Icelandic investments, while the two governments bicker.

China's rate cut reflects change in global role

Kevin Hamlin IT MAY go down as the day the economic balance of power shifted in Asia.

Fed cut loosens credit only at the margins

The credit markets might not be quite as squeezed as they have been recently, thanks to the Fed's interest rate cut, but they are hardly back to normal.

Netherlands bolsters banks with $40b

The Dutch government will make available 20 billion euro ($40 billion) to protect the financial sector against shocks from the world economic crisis,

European growth may face bigger hit

The financial crisis could hit the euro zone economy harder than expected, dampening inflation, and potentially clearing the way for further cuts in European Central Bank interest rates.

Perfect storm hits emerging markets

G7 finance ministers gather this weekend to discuss ways to prevent the financial crisis from snowballing into developing countries.

Concerted action creates a few glimmers of hope in crisis of confidence

MALCOLM MAIDEN The markets were calmer after the intervention than they were before it.

World finance chiefs prepare for crunch talks

Finance chiefs from the world's richest nations meet in Washington tomorrow for a crucial meeting at a time of unprecedented fear about the global financial system.

Bleak outlook for developing nations

World Bank president Robert Zoellick warns developing countries to prepare for tougher times.

Iceland nationalises biggest bank

Iceland's government has nationalised the country's biggest bank, Kaupthing, as the country's economy verges on collapse.

Central banks slash rates

The Fed, European Central Bank and four other central banks cut interest rates in an unprecedented coordinated effort to stem the financial crisis.

• South Korea, Taiwan and HK cut rates to spark growth

UK plan triumphs over US bail-out

Confronting the worst financial crisis since the Great Depression, Gordon Brown and Henry Paulson went in different directions.

Fed pumps $56b into AIG

The US Federal Reserve will provide as much as $56b in additional liquidity to American International Group's regulated insurance units after rescuing the company with an $US85b loan last month.

French banks merge to weather storm

Caisse d'Epargne and Banque Populaire have approved plans for a merger in a bid to protect themselves from the global financial tsunami.

Europe stocks plunge further on recession fears

European stocks fell, sending the Dow Jones Stoxx 600 Index to its worst three-day retreat since October 1987, on concern a coordinated interest-rate cut by six central banks won't prevent a global recession.

Westminster to the rescue

Jon Swaine THE British Government last night unveiled a £500 billion ($1.3 trillion) rescue package for the nation's battered finance industry in which major banks will cede a large stake to the taxpayer in return for a massive injection of money to prop up their shattered balance sheets.

Britain sues Iceland over frozen savings

Britain has taken legal action against Iceland seeking to recover money belonging to British customers threatened with losing their savings in frozen Icelandic banks.

Swedes rush to Iceland's rescue

Iceland's biggest bank received an emergency loan from Sweden on Wednesday as the country's financial crisis showed no sign of abating.

Nikkei plunges 9.4% in biggest fall since 1987

The Nikkei stock average plunged 9.4% today, its biggest one-day drop since the 1987 stock market crash, as fear spread of a global recession.

Central banks try new methods amid market mayhem

Central banks across Asia stepped up efforts to offer more support to commercial banks, to try to ease painful pressure on funding costs.

Fed tackles corporate debt to ease credit squeeze

The Federal Reserve will create a special fund to buy US commercial paper, seeking to unblock the financing tool that drives everyday commerce for American businesses.

Investors don't buy Morgan Stanley's assurances

Morgan Stanley stock tumbled on a rumour that Mitsubishi would withdraw from an agreement to buy nearly a quarter of the investment bank.

Denmark raises rates to support krone

The Danish central bank has raised its key interest rate by 0.40 points to 5.0% to support the krone.

IMF warns of major downturn

Global growth is headed for a ''major downturn'' next year, as US gross domestic product grinds close to a halt, the International Monetary Fund says.

UK, Spain go solo on bail-outs

The UK and Spain raced to buttress their banking systems after European policy makers failed to form a united front to combat the deepening financial crisis.

Bernanke hints at rate cut

Federal Reserve chairman Ben S. Bernanke signals policy makers are ready to lower interest rates as the credit freeze worsens the outlook for US economic growth.

European disarray as all go own way

Brian Swint, Francois de Beaupuy and Edmund Andrews EUROPEAN finance ministers failed to agree on steps to shore up the banking system hours after their countries' leaders pledged to do whatever was needed to restore confidence as the continent's stocks fell the most in two decades.

EU mulls raising deposit insurance to stem credit pinch

European Union finance ministers are considering a fivefold increase in deposit insurance for consumers across the EU after failing to agree on a US-style bank-bailout fund to stem the deepening global credit crunch.

RBA's cut first of many as other central banks to match

MALCOLM MAIDEN Central banks that fail to guarantee deposits risk sparking an exodus of funds.

Iceland gets $7.6b Russian loan to halt meltdown

Iceland got a $7.6b loan from Russia, pegged the krona to a trade-weighted index and nationalized the nation's second-biggest bank after the currency's slump and bad debts crippled the financial system.

Europe battles to contain crisis

European governments from Brussels to Copenhagen to Berlin rushed to shore up their faltering banks as the credit crunch worsened.

Sharpest slide since 1987

European stocks tumbled, sending the Dow Jones Stoxx 600 Index to its steepest drop since 1987, as the yearlong credit market seizure caused bank bailouts to spread.

Britain poised to bankroll rescue package

BRITAIN'S Chancellor of the Exchequer, Alistair Darling, is reportedly considering giving banks billions of pounds in return for shares to shore them up in the face of the global credit crunch.

European leaders pump billions to counter crisis

Sandrine Rastello, Paris The credit crunch deepened in Europe as government leaders pledged to bail out troubled banks and protect depositors.