Moody’s says spending threatens US rating The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday. The warning over the future of the triple-A rating – granted to US government debt since it was first assessed in 1917 – reflects growing concerns over the country’s ability to retain its financial and economic supremacy. It could also put further pressure on candidates from both the Republican and Democratic parties to sharpen their focus on healthcare and pensions in the run-up to November’s presidential elections. Most analysts expect future governments to deal with the costs of healthcare and social security and there is no reflection of any long-term concern about the US financial health in the value of its debt.
Gold Bull - Alive And Well! Big Picture Reveals $2000+ Gold It sure has been a week for gold and its shares this first week of 2008. Right from the start gold blasted through its 1980 all time high and the gold shares exploded to the upside as well thereby finally showing some signs of strength after failing to out perform gold for quite a while. Now what can we expect from gold and its shares this year? Is this bull market coming to an end as many of the gold bears want you to believe? Or are we nowhere to an end of this bull market yet? Yes, reading gold market analysis form many different sources can be quite disturbing and confusing for the average gold investor. Remember the gold pundits declaring the end of the gold bull market last year when gold hit $680? Gold was supposed to be overvalued then and bound to correct to $500. Well, obviously the bears were wrong since gold went exactly the opposite way and challenged its old all time high by end of last year.
Bernanke says more rate cuts coming Federal Reserve Chairman Ben Bernanke said Thursday that more interest rate cuts are on the way, as the U.S. central bank wrestles with a deteriorating economy brought on by a struggling housing market, high energy prices and a weaker stock market. In an unusually blunt speech, Bernanke said the economic outlook has taken a turn for the worse in the early days of the new year and that the Fed stands ready to act aggressively to ward off further weakening. "In light of recent changes in the outlook for and the risks to growth, additional policy easing may be necessary," Bernanke said in a speech to a business group in Washington.
Bank of America to buy Countrywide Financial Bank of America Corp. said on Friday it's purchasing Countrywide Financial Corp. for $4 billion, effectively doubling down on a previous investment in the troubled firm and catapulting the buyer into the top spot among mortgage lenders and loan servicers in the U.S. The stock-swap deal will put an end to the independence of the troubled California lender headed by Angelo Mozilo, and represents an increase from the Charlotte, N.C., bank's August investment of about $2 billion. "We believe this is the right decision for our shareholders, customers and employees," said Mozilo, Calabasas, Calif.-based Countrywide's chairman and chief executive, in a statement.
Merrill Lynch reportedly facing massive write-down The nation's largest brokerage firm, Merrill Lynch & Co., is expected to report losses of $15 billion stemming from soured mortgage investments, according to a published report Friday. The New York Times, citing people who have been briefed on the broker's plans, said the losses would come in nearly double its original estimate, prompting the firm to raise additional capital from outside investors. The losses are expected to be disclosed when the brokerage reports earnings next week, those people said. Among estimates on Wall Street, Merrill expected to report losses of $10 billion to $12 billion. Merrill is likely to write down the value of its CDO and subprime mortgage-backed security exposures by $10 billion next week, Bernstein Research estimated.
American Express says credit crunch hits its bottom line Credit-card company American Express Co. said Thursday it "is seeing signs of a weaker U.S. economy" that is impacting its cardholders' ability to make purchases and pay their bills. As a result, American Express said in a statement that it will take a pre-tax charge of approximately $440 million in its fourth quarter, due to a combination of lower spending and higher delinquencies and loan write-offs. American Express shares fell nearly 6% to $46.02 in after-hours trading. American Express is one of a number of credit-card companies suffering through the current credit crisis. Also on Thursday, Capital One Financial Corp. said it is lowering its earnings outlook for fiscal 2007, and raised its loan loss reserves.
US investigates sovereign funds as Wall Street hunts for capital The US Senate has ordered an inquiry into "sovereign wealth" funds controlled by foreign governments as Citigroup and Merrill Lynch negotiate a second wave of capital injections from the funds. The Government Accountability Office, the US equivalent of the National Audit Office, this week began investigating the sovereign wealth funds, which in recent weeks have invested about $35 billion (£17.9 billion) in UBS, Bear Stearns, Morgan Stanley, Merrill Lynch and Citigroup. The office is charged with finding out how much money these opaque funds control, where it has been invested and how the investments have been treated. It is also examining what information the funds are required to disclose on their investments and what action can be taken to discipline them if they misuse their power.
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