after major economies had slipped in a recession.
The US government is dividing bailouts to troubled banks and financial institutions, because any failure in those corporations will result in disastrous consequences in financial markets, though banks are not using funds in order to ease the troubles and lack of cash they are facing, those money are used in acquisitions.
After banks took this money the truth turned out to be different, huge banks in the world had used the TARP money in order to acquire other smaller banks that were teetering on the brink of total destructions, in addition to saving the cash instead of lending it out to ease the credit squeeze in markets. Based on that the New president Barack Obama is now considering some reform in the financial sector where he we would be negotiating the subject with congress members.
The President is asking for total transparency, they want justifications for every step they are taking, okay this would violate all the free markets rules, but the continuous failures in the approved fiscal plans had resulted in pushing all Central Banks to start intervening in the managements and balance sheets.
Confidence must be restored in any way possible; indices across the globe are still struggling, the US indices last week tumbled between red and green. Dow Jones industrial average fell 0.56% or 45.24 points reaching 8077.56 levels resulting to 7.96% losses since the beginning of the year, S&P 500 gained 0.54% or 4.45 points reaching 831.95 levels, NASDAQ fell 0.81% or 11.80 points reaching 1477.29 levels, reaching a total of 6.32% in losses since 2009 started.
Earnings are still the main concern, companies are releasing huge losses for the first time; technology companies such as Microsoft along with Sony released that they faced losses in the fourth quarter of the past year as the economic slowdown continues.
Based on the continuous pessimism, Nikkei Index had lost 0.81% or 63.11 points reaching 7682.14 levels, leaving the total index with 13.29% losses in 2009. Topix fell 0.68% or 5.27 points reaching 768.28 levels, leaving the index with 10.59% losses since the beginning of the year; most Asian markets are out this week as they are enjoying the Lunar New Year.
This weeks US calendar is full, the Americans will be waiting for the fourth quarter advanced GDP reading, the FOMC rate decision, Durables Goods and more Housing Sector readings.
The increasing number of terminated workers in the United States along with the lost confidence had resulted in pushing the US growth deeply down to a contraction; according to the median estimate growth contracted 5.5% in the fourth quarter where now we can officially say that the United States had fallen in a recession especially after we saw more than 2.59 million terminated job in the prior year.
The falling demand and deteriorating household incomes had resulted in a contract in the demand on goods, December the month where investors heads toward spending money face extreme squeeze because citizens no longer in a shape of shopping spree, based on that the Durable goods fell 2.0% according to the median estimate, the durables ex transportation fell 2.7% from the revised precious 0.6%.
The endless turbulence in the world's leading economy had pressured the Federal Open Market Committee to slash their interest rates for the first time in history to a range between 0.0%-0.25% just to obligate people to withdraw money from banks and to start investing money in markets, while on the other hand the committee is now trying to fight any signs of deflation which would take place as crude prices continue to slide after the demand in markets plunged heavily.
With the full US calendar for this week, we will be starting our fundamentals with Existing Homes Sales, according to them median estimates home sales fell in December to 4.40 million units sold from the previous 4.49 million units, but a wider range of expectations is available by analysts, the highest expectations that sales rose to 4.75 million unit but the pessimist analysts that do not see a bottom to the housing sector predict sales had fallen to 4.20 million units.
The situation is still tumbling, the Americans along with other citizens across the globe are facing endless distresses from the prolonged Credit Crisis, so my dear reader lets just wait to see to what levels the US GDP fell in the final quarter of 2008.