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October 9, 2008

Bailout Strategy Clobbers Stock Market Three Days In A Row

The Dow has seen close to a 900 point loss over a two days period. The Federal Reserves decision to let go of their grip on the credit markets did not the overall bad feeling that investors have about the markets. Instead, the financial crisis continued to dip further into the depths of despair.

The economic outlook is not getting any better according to Federal Chairman Ben Bernanke. The Dow ones closed at the lowest point since September 30,2003. Consumer borrowing was down in August and the bailout deal is making investors and consumers fearful of the market.

The doom and gloom of wall Street is not confined to that realm of the financial markets. Around the world there are people struggling to make ends meet. Wednesday stock markets around the world once again fell and Russia’s stock exchange closed after one hour of operation. The world is suffering terribly from the global financial crisis and even rate cuts around the world are not helping the situation.

The world stock markets react to the financial crisis on a hourly basis. No longer are the temperatures of the stock markets relatively steady for a day or even half of a day. The tumultuous setting has investors hesitant to do anything with their money. Even though investors were relieved with the rate cut, the outlook for the economy is still bleak. The economy is getting weaker and weaker and investors are smart enough to know that whatever is done to strengthen the markets, things are still volatile.

Over the past week the Dow has lost just about 1,600 points. There are have been three major stock gauges and the markets have fallen to a five year low. Now both the stock market and the credit markets are showing the problems that exist in the global economy.

There seems to be no absolute solution to the economic crisis. Instead there are a few things that may or may not help improve the global economy. No one seems to have any type of answer for the economy at this point. The last hour of the session saw financial stocks fall.

Citigroup, Morgan Staley and Merrill Lynch lost gains in the afternoon. Wells Fargo and Citigroup are fighting for control over Wachovia. Bank of America lost an afternoon recovery attempt after news that it will buy back as much as 4.7 billion dollars in to settle fraud charges for auction-rate securities. This is clearly not a time to be in the financial industry.

Retail sales continue to be down. Discount stores are the places where people are spending money. Great deals have to be present for people to buy these days. Costco’s and Wal-Mart saw sales rise because of their discounted prices. Home sales also showed a slight rise which was a total surprise. With all of the repossessed home that are up for sale buying seems like a good idea for some. Department stores saw terrible losses with retailers like J.C. Penny’s and Nordstrom seeing huge drops in sales.

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