Bear Stearns gets help from Fed, J.P. Morgan Bear Stearns Cos. said Friday that it got short-term financing from the Federal Reserve and J.P. Morgan Chase after the brokerage firm's liquidity "deteriorated significantly" during the past 24 hours. J.P. Morgan also said it's working with Bear to secure permanent financing or "other alternatives" for the brokerage firm. "Our liquidity position in the last 24 hours had significantly deteriorated," Alan Schwartz, chief executive at Bear, said in a statement. "We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations. "Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity," he added. "We have tried to confront and dispel these rumors and parse fact from fiction."
Most Economists in Survey Say Recession Is Here Economists in the latest Wall Street Journal forecasting survey are increasingly certain the U.S. has slid into recession, a view reinforced by new data showing a sharp drop in retail sales last month. "The evidence is now beyond a reasonable doubt," said Scott Anderson of Wells Fargo & Co. Thirty-six of 51 respondents, or more than 70%, said in a survey conducted March 7-11 that the economy is in recession. The Commerce Department said yesterday that retail sales fell 0.6% in February; sales excluding the volatile auto and auto-parts categories fell 0.2%. The declines reflect a sharp slowdown in consumer spending, which accounts for more than 70% of U.S. economic activity, as Americans grapple with high gasoline and food costs and declines in home values and other asset prices.
Dollar falls below parity vs Swiss franc The dollar fell below parity with the Swiss franc for the first time on Friday as fears about more credit turmoil and a U.S. recession sparked broad selling of the U.S. currency. The dollar fell to an all-time low of 0.9987 Swiss francs , according to electronic trading platform EBS. It last traded at 1.0026 francs.
Home Prices Plunge Across California Median home prices plunged in many of California's most populous counties in February, with Southern California leading the slide with an overall drop of 17.9 percent compared to a year earlier, according to new housing data released Thursday. The drops reflect a deepening housing crisis in the state, which saw home values soar during the housing boom then decline sharply in most areas. Median home prices fell this year in 15 major counties, DataQuick Information Systems said. The median price in a six-county area of Southern California fell to $408,000 -- the lowest level since October 2004, when it was $402,500. That median is 19.2 percent below the region's peak price of $505,000 last summer, and it's 1.7 percent below January's median, the firm said.
Dollar under pressure as US outlook darkens The dollar remains under pressure against all major currencies on fears that the Federal Reserve may need to slash interest rates further to stop the downward spiral in the credit markets. The greenback was at 100.57 against the yen after breaking below 100 yesterday in a day of wild trading, that set off alarm bells at Japan's Keidanren industry lobby. It touched a record low of $1.5651 against the euro and came within a whisker of parity with the Swiss franc for the first time in history. It rebounded somewhat in London today and was trading at $1.5582 by mid morning. However, Mitul Kotecha, head of currency strategy at Credit Agricole, said: "The real risk remains that we get a dollar rout. The news from from the US is consistently negative and investors are actually not overly long euros."
Problems of sagging dollar likely to snowball Battered by bad news and mounting fears over the American economy, the dollar is plumbing new depths, helping drive prices of commodities like oil and gold to record levels. The dollar has been declining in value against the euro and several other currencies since 2002, slamming travelers to Europe and American consumers purchasing European goods. Politicians are deploring the weak dollar as a sign of American economic decline and influence. To make matters worse, many economists say that the problems of a sagging dollar are feeding off each other. As the dollar weakens, holders of dollars, especially those overseas, are aiming for better returns on their assets by diversifying their portfolios toward other currencies, sending the dollar into further decline. "If we look forward, we are going to see the U.S. economy weakening more and interest rates cut more," said Desmond Lachman, a resident fellow at the conservative American Enterprise Institute. "The immediate prospects for the dollar don't look encouraging."
Dollar Puts Morgan, Goldman on `Intervention Watch' The dollar's record-breaking slide may trigger the first coordinated effort to shore up the currency in 13 years, according to strategists at Morgan Stanley and Goldman Sachs Group Inc. The currency yesterday fell below $1.56 a euro for the first time and slumped to the lowest level in 12 years versus the yen. That has prompted complaints from European Central Bank President Jean-Claude Trichet and Japanese Finance Minister Fukushiro Nukaga. U.S. Treasury Secretary Henry Paulson said yesterday he backs a ``strong dollar'' and refused to elaborate when questioned at a press conference in Washington. The challenge for officials is fighting the $3.2 trillion- a-day currency market while the Federal Reserve reduces interest rates and the U.S. economy falters. With traders increasing bets on a weaker dollar, the Group of Seven nations may be compelled to act, some strategists said.
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