Stock Market Crash Expected In 2008 To Be Worse Than 1929

[Soldier4Christ]

The protest was symbolic because Italians typically stock up on pasta, buying multiple packages at a time. But in the next two months pasta consumption dropped 5 percent, said farm lobbyist Rolando Manfredini.

"The situation has gotten even worse," he said.

In decades past, farm subsidies and support programs allowed major grain exporting countries to hold large surpluses, which could be tapped during food shortages to keep prices down. But new trade policies have made agricultural production much more responsive to market demands—putting global food reserves at their lowest in a quarter century.

Without reserves, bad weather and poor harvests have a bigger impact on prices.

"The market is extremely nervous. With the slightest news about bad weather, the market reacts," said economist Abbassian.

That means that a drought in Australia and flooding in Argentina, two of the world's largest suppliers of industrial milk and butter, sent the price of butter in France soaring 37 percent from 2006 to 2007.

Forty percent of escargot, the snail dish, is butter.

"You can do the calculation yourself," said Romain Chapron, president of Croque Bourgogne, which supplies escargot. "It had a considerable effect. It forced people in our profession to tighten their belts to the maximum."

The same climate crises sparked a 21 percent rise in the cost of milk, which with butter makes another famous French food item—the croissant. Panavi, a pastry and bread supplier, has raised retail prices of croissants and pain au chocolat by 6 to 15 percent.

Already, there's a lot of suspicion among consumers.

"They don't understand why prices have gone up like this," said Nicole Watelet, general secretary at the Federation of French Bakeries and Pastry Enterprises. "They think that someone is profiting from this. But it's not us. We're paying." Food costs worldwide spiked 23 percent from 2006 to 2007, according to the FAO. Grains went up 42 percent, oils 50 percent and dairy 80 percent.

Economists say that for the short term, government bailouts will have to be part of the answer to keep unrest at a minimum. In recent weeks, rising food prices sparked riots in the West African nations of Burkina Faso, where mobs torched buildings, and Cameroon, where at least four people died.

But attempts to control prices in one country often have dire effects elsewhere. China's restrictions on wheat flour exports resulted in a price spike in Indonesia this year, according to the FAO. Ukraine and Russia imposed export restrictions on wheat, causing tight supplies and higher prices for importing countries. Partly because of the cost of imported wheat, Peru's military has begun eating bread made from potato flour, a native crop.

"We need a response on a large scale, either the regional or international level," said Brian Halweil of the environmental research organization Worldwatch Institute. "All countries are tied enough to the world food markets that this is a global crisis."

Poorer countries can speed up the adjustment by investing in agriculture, experts say. If they do, farmers can turn high prices into an engine for growth.

But in countries like Burkina Faso, the crisis is immediate.

Days after the riots, Pascaline Ouedraogo wandered the market in the capital, Ouagadougou, looking to buy meat and vegetables. She said a good meal cost 1,000 francs (about $2.35) not long ago. Now she needs twice that.

"The more prices go up, the less there is to meet their needs," she said of her three children, all in secondary school. "You wonder if it's the government or the businesses that are behind the price hikes."

Irene Belem, a 25-year-old with twins, struggles to buy milk, which has gone up 57 percent in recent weeks.

"We knew we were poor before," she said, "but now it's worse than poverty."

[Soldier4Christ]

Oil tops $107 after Iraqi pipeline bombed
Buying spree also spurred by anemic dollar, U.S. inventory data

Oil prices were steady Thursday after easing slightly from highs prompted by the bombing of a key Iraqi pipeline.

Crude prices, which already spiked by nearly $5 on Thursday because of an anemic dollar and lower U.S. fuel inventories were briefly propelled higher by the second bombing in a week in Basra, where Iraqi security forces have been clashing with Shiite militia fighters before falling back to closing levels.

After moving up by more than a dollar and topping the $107 mark, light, sweet crude for May delivery was lately down 8 cents to fetch $105.82 a barrel by afternoon European electronic trading on the New York Mercantile Exchange. The contract rose $4.68 to settle at $105.90 a barrel Wednesday.
Story continues below ↓advertisement

The market was apparently reassured by comments from Oil Minister Hussein al-Shahristani, who said that ongoing clashes would not affect oil exports and drilling operations. But with an average of 1.54 million barrels a day transiting the southern city last month, an official, who demanded anonymity because he was not authorized to comment, acknowledged that the blast could impact crude sales.

Iraq’s average production for February was 2.4 million barrels per day. Exports averaged 1.93 million barrels per day during that month.

Basra Rumaila South and North oil fields produce around 1.3 million barrels per day. The city also is home to one of Iraq’s three largest oil refineries, the Shuaiba refinery which has a capacity of 160,000 barrels a day but has been functioning below capacity at about 100,000 barrels per day.

Wednesday’s spike followed the release of data by the U.S. Energy Department’s Energy Information Administration, showing that U.S. stockpiles of gasoline, heating oil and diesel fuel fell more than forecast last week.

Levels are still higher than in past years. But the inventory report stoked worries that stockpiles of gasoline are falling right when analysts would like to see them rising — in advance of peak summer driving season. Gasoline inventories slid 3.3 million barrels last week, more than four times the decline analysts had expected.

“The gasoline stock movement was probably quite supportive, it’s the second week in a row now we’ve seen a larger than expected drop in U.S. gasoline stocks,” said Mark Pervan, a commodity strategist at ANZ Bank in Melbourne, Australia.

The EIA reported that U.S. refinery activity also dropped, which analysts attributed to some refiners cutting gasoline production due to low profit margins. Despite the most recent declines, gasoline inventories are 9 percent higher than a year ago.

“(Gasoline) stock levels are at a higher than normal level, so they’ve pulled back on production, and this is why we’ve seen a fairly sharp drop in (refinery) utilization rates,” Pervan said.

Valero Energy Corp. cut output at its Corpus Christi, Texas, refinery due to high supplies and falling demand, Dow Jones Newswires reported Wednesday. While gas prices are near records, they have not kept pace with crude’s recent rally.

“Refinery runs are now at the lowest level since the end of October 2005,” noted Vienna’s JBC Energy, in its daily newsletter.

Crude oil inventories, meanwhile, were unchanged. Analysts surveyed by Dow Jones Newswires had expected crude supplies to rise 1.7 million barrels.

Pervan warned that the steadiness in crude oil inventories despite a decline in refinery utilization was an indication that U.S. crude demand was falling, which could lead to a drop in oil prices in the weeks ahead.

“What the U.S. is doing is to try to match their crude oil stocks to the low refinery capacity by pulling back on their imports,” Pervan said. “That should start to manifest itself in lower oil prices in the near term.”

Oil prices were also supported by U.S. economic news. The Commerce Department said new home sales fell last month to a 13-year low, and that orders for durable goods fell in February when analysts had expected an increase.

Many investors view weak economic news as a sign that the U.S. Federal Reserve will cut interest rates more sharply than expected later this year. Lower interest rates tend to further weaken the dollar, which boosts oil prices.

In other Nymex trading, heating oil futures rose by over a penny to $3.0584 a gallon (3.8 liters.) Gasoline prices, meanwhile underwent a significant correction, losing more than 3 cents to sell at $2.7080 a gallon. Natural gas futures dropped by over 16 cents to $9.406 per 1,000 cubic feet.

In London, Brent crude gained 31 cents to trade at $104.30 a barrel on the ICE Futures exchange.

[Soldier4Christ]

Wall Street's crisis
hits small business
Some firms having problems obtaining loans,
others being informed of reduced credit lines

 The ripple effect of the financial turmoil on Wall Street is spreading more deeply into the American economy.

The local hardware store is finding it more difficult to get the loan it needs to buy its summer gardening merchandise. Ivy-covered colleges and universities are finding that donors have second thoughts about contributions until the stock market quiets down. Some small businesses that count on using credit cards to finance their business are getting letters informing them of reductions in their credit lines or increases in their rates.

"Wall Street's woes are increasingly giving Main Street the blues," says Mark Zandi, chief economist at Moody's Economy.com.

One sign of the blues on Main Street: consumer-confidence surveys. On Tuesday, the Conference Board said that consumer confidence had dropped to a level not seen since the recessions of 1980 and 1973.

"The plunge is directly related to the turmoil in the financial system," says Mr. Zandi.

Economists are particularly concerned about one development: CIT Group, a commercial finance company that lends to small business, used a $7.3 billion line of credit from banks because it was having trouble selling its debt.

"CIT does lending to Main Street business," says Fred Dickson, market strategist at D.A. Davidson & Co. in Lake Oswego, Ore.

CIT, for its part, says it is looking to sell some nonstrategic assets or business lines and is looking for additional capital. "We recognize that given the current market environment, we need to operate a smaller, more focused company," writes Mary Flynn, a spokeswoman, in an e-mail.

Limited credit availability

Strains on CIT could pose just one more challenge for small to medium-size businesses, which are finding it increasingly tough to get loans. "Bank lending to small business is freezing in place," says George Cloutier, a small-business expert and chairman of American Management Services, a consulting group. "Availability of credit to small and mid-sized companies has almost dried up."

The decline in housing prices isn't helping either, in that many small-business people use their homes as collateral for loans, says Michael Leonard, executive director of the greater Richmond Small Business Development Center in Virginia. "What we're finding is that clients already somewhat highly leveraged are finding it difficult to get new money."

Small-business owners are also increasingly running into late-paying clients, he says. "They need to borrow money to bridge that gap as well," he says.

Business surveys seem to be mixed on the issue of the availability of credit. Last month, a survey conducted for the National Federation of Independent Business found no problem getting credit, says Bill Dunkelberg, chief economist for the organization. "We've been doing the surveys for 35 years, and when things get tough, our members let us know," he says.

But a survey done in 2007 for the National Small Business Association (NSBA) found that just 67 percent of respondents said they could obtain adequate financing, compared with 76 percent in 2000. The largest source of financing for the small-business members: their credit cards.

That's the case for Marilyn Landis, chairman of NSBA and owner of Basic Business Concepts Inc. in Pittsburgh. Ms. Landis is expanding her business, which provides temporary chief financial officers for companies not large enough for a full-time CFO. She applied twice for a line of credit and instead was sent a credit card.

Recently, Landis has been traveling weekly to New England as part of the expansion of her business, so she has run up her credit-card balances. "Much larger monthly balances – even though I pay off the card every month – triggered a change in my credit score," says Landis, a former banker. "One card company cut my credit line in half. Another card company raised my finance charge from 3.99 percent to 23.99 percent."

Impact on universities

Educational institutions have also been encountering challenges. Last week at a dinner in New York, many of the presidents or chancellors of eight universities said that the turmoil in the credit markets was affecting their institutions. G.P. "Bud" Peterson, chancellor of the University of Colorado, Boulder, said he was expecting a significant contribution from an alumnus. But out of the blue, his potential donor said he wanted to wait until the financial markets settled down.

Rebecca Chopp, president of Colgate University in Hamilton, N.Y., said her graduates sometimes have landed jobs at Bear Stearns, an investment bank that will disappear after an emergency merger with JPMorgan Chase.

Lois DeFleur, president of the State University of New York at Binghamton, recounted how more students are coming in for financial aid because their parents' financial situations have changed.

The credit-market turmoil also means some states and other municipal borrowers are paying more interest on some debt. For example, the state of Wisconsin is in the process of restructuring $945 million in short-term borrowings. In the past, the debt carried interest rates in the 5 to 6 percent range. But last month, it spiked up to 10 to 11 percent. To remedy that, on April 1, the state will issue longer-term debt for most of the prior short-term borrowings.

It's still too early to know if it will cost the taxpayers of Wisconsin more money to borrow. But in any event, other costs exist. "At the moment, there are some additional transaction costs and enhancement costs we had not planned on doing," says Frank Hoadley, state director of finance.

[Soldier4Christ]

'Silent' famine sweeps globe
Rice, fertilizer shortages, food costs, higher energy prices equal world crisis

From India to Africa to North Korea to Pakistan and even in New York City, higher grain prices, fertilizer shortages and rising energy costs are combining to spell hunger for millions in what is being characterized as a global "silent famine."

Global food prices, based on United Nations records, rose 35 percent in the last year, escalating a trend that began in 2002. Since then, prices have risen 65 percent.

Last year, according to the U.N. Food and Agriculture Organization's world food index, dairy prices rose nearly 80 percent and grain 42 percent.

"This is the new face of hunger," said Josetta Sheeran, director of the World Food Program, launching an appeal for an extra $500 million so it could continue supplying food aid to 73 million hungry people this year. "People are simply being priced out of food markets. ... We have never before had a situation where aggressive rises in food prices keep pricing our operations out of our reach."

The WFP launched a public appeal weeks ago because the price of the food it buys to feed some of the world's poorest people had risen by 55 percent since last June. By the time the appeal began last week, prices had risen a further 20 percent. That means WFP needs $700 million to bridge the gap between last year's budget and this year's prices. The numbers are expected to continue to rise.

The crisis is widespread and the result of numerous causes – a kind of "perfect storm" leading to panic in many places:

    * In Thailand, farmers are sleeping in their fields because thieves are stealing rice, now worth $600 a ton, right out of the paddies.

    * Four people were killed in Egypt in riots over subsidized flour that was being sold for profit on the black market.

    * There have been food riots in Morocco, Senegal and Cameroon.

    * Mexico's government is considering lifting a ban on genetically modified crops, to allow its farmers to compete with the United States.

    * Argentina, Kazakhstan and China have imposed restrictions to limit grain exports and keep more of their food at home.

    * Vietnam and India, both major rice exporters, have announced further restrictions on overseas sales.

    * Violent food protests hit Burkina Faso in February.

    * Protesters rallied in Indonesia recently, and media reported deaths by starvation.

    * In the Philippines, fast-food chains were urged to cut rice portions to counter a surge in prices.

    * Millions of people in India face starvation after a plague of rats overruns a region, as they do cyclically every 50 years.

    * Officials in Bangladesh warn of an emerging "silent famine" that threatens to ravage the region.

According to some experts, the worst damage is being done by government mandates and subsidies for "biofuels" that supposedly reduce carbon dioxide emissions and fight climate change. Thirty percent of this year's U.S. grain harvest will go to ethanol distilleries. The European Union, meanwhile, has set a goal of 10 percent bio-fuels for all transportation needs by 2010.

"A huge amount of the world's farmland is being diverted to feed cars, not people," writes Gwynne Dyer, a London-based independent journalist.

He notes that in six of the past seven years the human race has consumed more grain than it grew. World grain reserves last year were only 57 days, down from 180 days a decade ago.

One in four bushels of corn from this year's U.S. crop will be diverted to make ethanol, according to estimates.

"Turning food into fuel for cars is a major mistake on many fronts," said Janet Larsen, director of research at the Earth Policy Institute, an environmental group based in Washington. "One, we're already seeing higher food prices in the American supermarket. Two, perhaps more serious from a global perspective, we're seeing higher food prices in developing countries where it's escalated as far as people rioting in the streets."

Palm oil is also at record prices because of biofuel demands. This has created shortages in Indonesia and Malaysia, where it is a staple.

Nevertheless, despite the recognition that the biofuels industry is adding to a global food crisis, the ethanol industry is popular in the U.S. where farmers enjoy subsidies for the corn crops.

Another contributing factor to the crisis is the demand for more meat in an increasingly prosperous Asia. More grain is used to feed the livestock than is required to feed humans directly in a traditional grain-based diet.

Bad weather is another problem driving the world's wheat stocks to a 30-year low – along with regional droughts and a declining dollar.

"This is an additional setback for the world economy, at a time when we are already going through major turbulence," Angel Gurria, head of the Organization for Economic Co-operation and Development, told Reuters. "But the biggest drama is the impact of higher food prices on the poor."

According to the organization, as well as the U.N., the price of corn could rise 27 percent in the next decade.

John Bruton, the European Union's ambassador to the U.S., predicts the current trend is the beginning of a 10-15 year rise in food costs worldwide.

The rodent plague in India occurs about every half century following the heavy flowering of a local species of bamboo, providing the rodents with a feast of high-protein foliage. Once the rats have ravaged the bamboo, they turn on the crops, consuming hundreds of tons of rice and corn supplies.

Survivors of the previous mautam, which heralded widespread famine in 1958, say they remember areas of paddy fields the size of four soccer fields being devastated overnight.

In Africa, rats are seen as part of the answer to the food shortage. According to Africa News, Karamojongs have resorted to hunting wild rats for survival as famine strikes the area.

Supplies of fertilizer are extremely tight on the worldwide market, contributing to a potential disaster scenario. The Scotsman reports there are virtually no stocks of ammonium nitrate in the United Kingdom.

Global nitrogen is currently in deficit, a situation that is unlikely to change for at least three years, the paper reports.

South Koreans are speculating, as they do annually, on how many North Koreans will starve to death before the fall harvest. But this year promises to be worse than usual.

Severe crop failure in the North and surging global prices for food will mean millions of hungry Koreans.

Roughly a third of children and mothers are malnourished, according to a recent U.N. study. The average 8-year-old in the North is 7 inches shorter and 20 pounds lighter than a South Korean child of the same age.

Floods last August ruined part of the main yearly harvest, creating a 25-percent shortfall in the food supply and putting 6 million people in need, according to the U.N. World Food Program.

Yesterday, the Hong Kong government tried to put a stop to panic-buying of rice in the city of 6.9 million as fears mounted over escalating prices and a global rice shortage. Shop shelves were being cleared of rice stocks as Hong Kong people reacted to news that the price of rice imported from Thailand had shot up by almost a third in the past week, according to agency reports.

Global food prices are even hitting home in New York City, according to a report in the Daily News. Food pantries and soup kitchens in the city are desperately low on staples for the area's poor and homeless.

The Food Bank for New York City, which supplies food to 1,000 agencies and 1.3 million people, calls it the worst problem since its founding 25 years ago.

Last year, the Food Bank received 17 million pounds of food through the Emergency Food Assistance Program, less than half of the 35 million pounds it received in 2002. And donations from individuals and corporations are also down about 50 percent, according to the report.

High gas prices, increased food production costs and a move to foreign production of American food are contributing to the problem.

[Soldier4Christ]

Congress offers solution to housing meltdown
But does it prevent foreclosures or bail out lenders?

With the foreclosure crisis reaching unprecedented levels in the United States, Senate Republican Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid have reached an agreement to craft a bi-partisan housing bill aimed at helping families facing the loss of their home.

Critics watching the Senate forge the plan, however, question whether the bill would help families facing foreclosure or the lenders facing financial losses on repossessions.

Jennifer Morris, McConnell's press secretary, confirmed to WND today Senate Banking Committee chairman Christopher Dodd, D-Conn., and the committee's ranking Republican, Sen. Richard Shelby of Alabama, held closed door meetings throughout the day finalizing the language of a bill to bring to the floor of the Senate.

Late today, Dodd and Shelby announced that final language on the Foreclosure Prevention Act of 2008, the proposed legislation, had been delayed until tomorrow.

But summary points released by Dodd and Shelby included $4 billion in Community Development Block Grant Funds to be used by communities hardest hit by foreclosures and delinquencies to purchase foreclosed homes at a discount and to rehabilitate or redevelop the homes to stabilize neighborhoods and stem the losses in house values of neighboring homes.

Until language of the compromise bill is available, it remains unclear whether the $4 billion in grants would be available to prevent any families from losing their homes or would be available for community purchase only after foreclosed homes had been repossessed by lenders.

The compromise legislation also would provide $100 million in additional funding for the Neighborhood Reinvestment Corp. to be used this year.

A position paper released by McConnell's office called for state housing finance agencies to issue up to $10 billion in tax exempt bonds with the proceeds being used to refinance subprime mortgages.

Other key features sought by McConnell include providing $15,000 tax credits for the purchase of a home in or approaching foreclosure and extending the current three-month delay of any looming foreclosure for a returning GI deployed overseas to six months.

The compromise language released by Dodd and Shelby today suggested the bill would delay foreclosures on returning GIs deployed overseas to nine months.

Also proposed in the compromise legislation were reforms to the Federal Housing Administration program, extending various limits to qualify additional families for FHA loans.

"The package that we agreed to is not perfect, nor will it solve all the problems that the economy and the American homeowners are facing today," said a joint statement released by Dodd and Shelby. "But it is an important step, and sends a strong message to the American people that Congress is willing to put aside our partisan differences and come together to tackle the challenges at hand."

Realty Trac reported foreclosure filings during 2007 were up 75 percent from 2006, with more than 1 percent of all U.S. households in some stage of foreclosure during the year.

Last week, the Wall Street Journal reported 2 percent of all home loans were in foreclosure, double the rate over the past 28 years and the highest foreclosure rate since the Mortgage Banking Association began collecting data in 1979.

According to Realty Trac, the top 10 states reporting foreclosures in Dec. 2007 were, in order: Nevada, California, Florida, Colorado, Arizona, Michigan, Ohio, Georgia, Illinois, and Massachusetts.

The Denver Post reported yesterday home foreclosure liquidators are offering dispossessed homeowners as much as $900 simply for agreeing to leave the property without stealing appliances or otherwise damaging or vandalizing the property in their anger and frustration.

In one anecdote, the Denver Post told the story of a little girl who had written a note in a walk-in closet, "Dear Bedroom, I'm going to miss you. When I get older, I’ll buy you back."

The Cleveland Plain Dealer reported yesterday Ohio has launched a program where 1,100 lawyers from across the state have volunteered under a "Save the Dream" program to provide free legal assistance to Ohioans making under $54,000 a year who are in danger of losing their homes.

The paper disclosed data compiled by the Ohio Supreme Court showed more than 83,000 foreclosures were filed during 2007, the most in the history of the Buckeye State, while Cleveland, Akron, Toledo, Dayton, Columbus and Cincinnati were all ranked among the top 50 cities in the country in foreclosed properties.

The Federal Reserve Bank of New York has posted a dynamic map of subprime mortgage conditions in the United States, displaying statewide, county specific and zip code variations the condition of securitized, owner-occupied subprime mortgage loans.

On Monday, the New York Times reported the Congressional Budget Office is projecting a record 28 million Americans will receive food stamp assistance in 2008.

The Times also reported one in eight Michigan residents, 12.5 percent, are now receiving food stamps.

[Soldier4Christ]

U.S. jobless data worse than feared
Before, there was a debate about whether we were in recession but I think this settles it

US employers shed 80,000 jobs in March, Labor Department figures have shown, in the latest sign that the US economy may be falling into recession.

The decline was the third monthly drop in succession, and worse than market expectations of a 60,000 reduction.

The jobless rate rose to 5.1% in March, the highest level since September 2005, and a rise from February's 4.8%.

Federal Reserve boss Ben Bernanke warned earlier this week that the US economy faced the risk of recession.

'Pretty bad'

While the Labor Department said March's job losses were spread across the economy, the biggest cuts came in the construction and manufacturing sectors.

Figures also showed that for the first quarter of 2008 as a whole, job losses averaged 77,000 a month.

This compares with average monthly job creation rates of 76,000 for the second half of last year.

"The numbers are pretty bad," said analyst Rudy Narvas of 4Cast.

"Before, there was a debate about whether we were in recession but I think this settles it.

"We've passed the tipping point."

'No silver lining'

Ben Bernanke warned on Wednesday that US gross domestic product (GDP) could contract in the first six months of 2008.

"It now appears likely that real GDP will not grow much, if at all, over the first half of 2008 and could even contract slightly," he told Congress.

The downturn in the US economy centres on the sharp slump in the housing market.

"There doesn't appear to be any silver lining," said Carl Lantz, an analyst at Credit Suisse.

"It shows that we're right in the middle of a recession that will probably take a while."

[Soldier4Christ]

200,000 U.S. banking jobs at risk from subprime crisis
'There's no horizon yet that anybody can see. New events keep rolling out'

If you work in the finance industry, look for ways to hold on to your job. And if you want a job in banking, well, you might want to look somewhere else.

The U.S. financial industry has been shedding jobs at a record clip, and some analysts predict the pace will accelerate over the next 18 months as banks cut costs in the face of the housing market slump and the weak economy.

Analysts at the financial research firm Celent LLC said in a report Tuesday that it expects the U.S. commercial banking industry — essentially, all companies that lend or collect deposits — to lose 200,000 of its 2 million jobs over the next 12 to 18 months.

An annual loss of 200,000 jobs at the nation's commercial banks would be an unprecedented number.


In 2007, the entire financial services sector — which consists of mostly commercial banks — announced job cuts that totaled a record 153,000, according to the job placement consultancy Challenger, Gray & Christmas Inc. More than half of those cuts were in the mortgage lending business and occurred all over the country, particularly in New York and California.

Octavio Marenzi, the head of Celent's financial consultancy unit, said more layoffs are inevitable as the subprime crisis hits other parts of the banking industry and spreads beyond mortgages to mortgage-related products, such as home equity loans, and other types of lending, such as credit cards.

"The banking industry over the past 40 years has never seen a downturn in its revenue growth," Marenzi said. "In 2008, it looks like it will decrease for the first time in living memory. They're going to have to respond with severe cost cutting."

The credit crisis began in earnest last summer when the markets tightened up at the sight of spiking subprime mortgage defaults.

"There's no horizon yet that anybody can see," said John Challenger, who runs outplacement consulting firm Challenger, Gray & Christmas. "New events keep rolling out … suggesting that there's more to come."

Financial services companies announced in January that they were cutting 16,000 U.S. jobs, and companies said in February that they were trimming 6,000 more, Challenger said.

Those figures are below last year's peak in August, when companies announced they were cutting nearly 36,000 jobs, but analysts expect further bloodletting in the coming months.

Many banks that have reported huge losses have so far not announced significant layoffs outside the mortgage area, Challenger said.

And Celent's estimate does not include the securities industry, which currently employs some 800,000 people — more than it ever has, after a multiyear hiring spree, Marenzi said.

The investment bank Bear Stearns Cos. has 14,000 staffers, and JPMorgan Chase & Co., the company buying the investment bank, has not yet announced how much of that staff it intends to keep.

Meanwhile, Citigroup Inc. officially announced in January that it was cutting 4,200 jobs globally, mostly in its investment banking business, but said there are more layoffs to come.

[Soldier4Christ]

Gas prices rise to new record
Fuel now above $3.30 a gallon – crude costs also rising

Retail gas prices surged to a new record above $3.30 a gallon Friday and appear poised to rise further in coming weeks as gasoline supplies tighten.

Oil prices, meanwhile, supported the gas price rally by jumping more than $2 a barrel after a dismal employment report sent the dollar lower.

At the pump, gas prices rose 1.4 cents overnight to a national average of $3.303 a gallon, according to AAA and the Oil Price Information Service. That’s the latest in a series of records, and about 60 cents higher than a year ago.
Story continues below ↓advertisement

While oil’s surge above $100 over the last month has boosted gas prices so far this year, analysts now expect gas prices to continue rising regardless of what direction crude takes. The Energy Department expects prices to peak near $3.50 a gallon later in the spring, but many analysts predict the spike could approach $4.

That’s because gasoline supplies are falling, in part because producers are cutting back on output of the fuel due to the high cost of crude — the more expensive crude is, the more refiners have to pay and the lower their profits are. They’re also in the process of switching over from producing winter grades of gasoline to the less polluting but more expensive grade of fuel they’re required to sell in the summer.

“That cuts back on some of the supply and helps to pump up the price,” said Mike Pina, a spokesman for AAA.

The margin between the price refiners pay for crude and receive for selling the products they make from it is around $11 to $12 a barrel right now, according to the Oil Price Information Service. However, that margin has occasionally slipped into negative territory in recent weeks and is well below margins of $37 a barrel refiners earned last spring.

On Thursday, ConocoPhillips said high crude prices were significantly hurting its refining margins. Last week, Valero Energy Corp. cut output at its Corpus Christi, Texas, refinery due to high supplies and falling demand. Analysts believe many other refiners are adopting similar tactics.

Friday’s price spike is a sign those cutbacks may be working, giving everyone in the supply chain, from refiners to retailers, the ability to raise prices to try to boost margins. Many gas retailers say they make more on the sale of coffee and sundries in their convenience stores than from selling gasoline.

Of course, that’s not good news for consumers also paying higher food prices and watching their home values slide. Food prices are high due in part to diesel prices, which held steady overnight at a national average of $4.023 a gallon, near recent records.

High oil prices are also hurting airlines. Aloha Airlines shut down and ATA Airlines filed for bankruptcy protection in recent weeks, citing high fuel prices as a cause of their failures.

In futures trading, meanwhile, oil futures rose Friday after the Labor Department said employers cut payrolls by 80,000 jobs last month, much more than analysts had expected. The unemployment rate rose to 5.1 percent. That news sent the dollar lower and pushed light, sweet crude for May delivery up $2.40 to settle at $106.23 a barrel on the New York Mercantile Exchange. Gasoline futures for May delivery rose 3.24 cents to settle at $2.7567 a gallon.

Gasoline futures were also boosted Friday by a fire that shut down part of a Los Angeles refinery.

Much of crude’s price moves in recent months have been tied to the dollar. Many investors view crude, gold and other hard commodities as hedges against a falling dollar and rising prices. Also, crude becomes less expensive for overseas investors when the dollar is falling.

In other Nymex trading Friday, May heating oil futures rose 6.93 cents to settle at $2.9921 a gallon, while May natural gas futures fell 9.5 cents to settle at $9.322 per 1,000 cubic feet.

In London, May Brent crude futures rose $2.38 to settle at $104.90 a barrel on the ICE Futures exchange.

[Soldier4Christ]

Huge job losses set off recession alarms
'It is now very clear that the fat lady has sung for the economic expansion.'

It's no longer a question of recession or not. Now it's how deep and how long. Workers' pink slips stacked ever higher in March as jittery employers slashed 80,000 jobs, the most in five years, and the national unemployment rate climbed to 5.1 percent. Job losses are nearing the staggering level of a quarter-million this year in just three months.

For the third month in a row total U.S. employment rolls shrank - often a telltale sign that the economy has jolted dangerously into reverse.

At the same time, the jobless rate rose three-tenths of a percentage point, a sharp increase usually associated with times of deep economic stress.

The grim picture described by the Labor Department on Friday provided stark evidence of just how much the jobs market has buckled under the weight of the housing, credit and financial crises. Businesses and jobseekers alike are feeling the pain.

"It is now very clear that the fat lady has sung for the economic expansion. The country has slipped into a recession," said Stuart Hoffman, chief economist at PNC Financial Services Group. Indeed, there is widening agreement that the first recession since 2001 has arrived. Even Ben Bernanke, in a rare public utterance for a Federal Reserve chairman, used the "r" word, acknowledging for the first time this week that a recession was possible.

Job losses were widespread last month, hitting workers at factories, construction companies, retailers, banks, real-estate firms and even temporary-help agencies. Also mortgage brokers, hotels, computer design shops, accounting firms, architecture and engineering companies, legal services, airlines and other transportation as well as telecommunications companies.

Those cuts swamped employment gains elsewhere, including at hospitals and other heath-care sites, educational services, child day-care providers, bars and restaurants, insurance companies, museums, zoos and parks. And the government, which is almost always up.

In fact, private employers have shed jobs for four straight months, though December showed an overall gain for the economy because the government increase outweighed the private loss.

March's losses were the most since the same month in 2003, when companies were still struggling to recover from the last recession. Adding to the angst: Revised figures showed losses were actually deeper than first reported for both January and February.

All told, the economy now has lost 232,000 jobs in the first three months of this year.

On Wall Street, investors took the weak employment figures in stride. The Dow Jones industrials lost just 16.61 points, while other indexes edged higher.

All the economy's problems are forcing people and businesses to hunker down, crimping spending and hiring, a vicious cycle.

"Across the board, businesses have become very, very conservative," said Joel Naroff, president of Naroff Economic Advisors. More downbeat about their own sales prospects because of cautious consumers, employers are cutting back. "It only makes sense for them to run leaner if we are going into a recession or already in one" as Naroff now believes.

The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs.

Michael Gregory, senior economist at BMO Capital Markets Economics, said the employment report was "emitting recession signals."

The national unemployment rate of 5.1 percent, relatively modest by historical standards, is nonetheless the highest since September 2005, following the devastating blows of the Gulf Coast hurricanes.

Some groups are feeling more of the strains from the economy's current woes. The unemployment rate for Hispanics, for instance, jumped to 6.9 percent in March, the highest in over four years. The rate for blacks climbed to 9 percent, a two-month high.

With the public on edge, Congress, the White House and presidential contenders are scrambling to come up with their own relief plans to stem record-high home foreclosures and stabilize housing - even as they engage in a political blame game.

Democrats want more economic assistance, including extending unemployment benefits. The Bush administration has resisted, saying the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses will be sufficient once it kicks in.

"We don't like to see one job lost, let alone 80,000," Commerce Secretary Carlos Gutierrez said in an interview with The Associated Press. "These are challenging times," he said. Gutierrez was hopeful the economy would turn around in the second half of this year, given the relief efforts by the government and the Federal Reserve. "We'll get through this."

Democrats were skeptical of the administration's efforts.

"Our economy is spiraling downward," said presidential contender Hillary Rodham Clinton. "It is time for this administration to put ideology aside and get serious about stemming this crisis."

Barack Obama said, "Instead of doing nothing for out-of-work Americans, we need a second stimulus that extends unemployment insurance and helps communities that have been hit hard by this recession."

Republican John McCain said the unemployment news "underlines the need to focus on innovation, which grows the economy and creates an urgent need for effective worker retraining."

Given the worsening employment situation, the Federal Reserve probably will lower a key interest rate, now at 2.25 percent, later this month.

The Fed has taken a number of extraordinary actions recently - slashing interest rates, providing financial backing to JP Morgan's takeover of troubled Bear Stearns and opening an emergency lending program for big investment houses. All the actions were aimed at limiting damage to the national economy.

With the pace of hiring slowing, the number of unemployed people increased to 7.8 million in March.

Workers with jobs saw modest wage gains. Average hourly earnings for jobholders rose to $17.86 in March and are up 3.6 percent over the past 12 months. With lofty energy and food prices, workers may feel like their paychecks are shrinking. If the job market continues to falter, wage growth probably will slow, too, making consumers even less inclined to spend, which would further hurt the economy.

Many analysts believe the economy shrank in the first three months of this year and could still be ebbing now. The government will release its estimate of first-quarter economic growth later this month. Under one rough rule, if the economy contracts for six straight months it is considered in a recession. When a determination is made by a panel of experts about when a recession has started and ended - it is usually done well after the fact.

Bernanke and the Bush administration are hopeful the economy will improve in the second half of this year. Even so, Bernanke predicted this week that the unemployment rate would rise further. Some analysts say it could climb to 5.75 percent or higher this year.

Advises Hoffman: "If you've got a job, hang on to it the best you can."

[Barbara]

This is part of an article from Koenig's Eye View:

by Bill Wilson

"Connecting the Dots - Rising food prices type-and-shadow of ancient prophecies of the One World Order

The types and shadows of ancient end time Biblical prophecies are in play as America's leadership accelerates the sell out of the moral and economic backbone of the United States - the middle class - in order to establish the foundation of the One World Order.

One such example is the rising cost of food prices that have been triggered by government policies and could result in a food shortage never before seen since the Pilgrim's first winter.

Jesus Christ warned of the beginning of sorrows in Matthew 24:7 (NKJV) "For nation shall rise against nation, and kingdom against kingdom; and there shall be famines, and pestilences, and earthquakes in various places."

And the Apostle John wrote in Revelation 6:5-6, "So I looked, and behold a black horse, and he who sat on it had a pair of scales in his hand. And I heard a voice in the midst of the four living creatures saying, 'A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not harm the oil and the wine."

This end-time prophecy is speaking of extraordinarily high prices for food staples that hurt the poor and middle class - all but those who can afford oil and wine.

Government policies, based on scare tactics over the shrill cry against the scientifically unfounded global-warming fraud - are causing drastic increases in food prices. The government has mandated that oil companies increase the ethanol content in gasoline, which has encouraged expanded corn production at the expense of other staples.

It is estimated that the total cost for wheat, corn, and soy products, will be 61.7 billion dollars more in the 2008 crop year than in 2006. In 2007 the cost of eggs rose 40 percent, milk increased by 26 percent, and white bread went up nearly 20 percent. These costs will continue to rise as oil prices rise and as more ethanol is required in the gasoline mix.

The cost of producing ethanol includes using gas or oil for distillation and processing. In addition, vehicles using ethanol experience a 20 to 30 percent decline in gas mileage. So the net benefit of using ethanol is a huge loss, especially when one considers the collateral costs of rising food prices. There is absolutely no reason to follow such a flawed policy with such dangerous consequences.

The One World Order, which will require the 'Mark of the Beast' to even buy or sell, will depend heavily on control of the poor. And the wealthiest nation in the world, America, must be brought to it's knees for the One World Order to advance. Yes, prophecy will be fulfilled, but we can determine our place in it. Now is the time to choose that."

 

[Barbara]

From Bill Koenig:

"The Associated Press reported on Saturday, March 29, that the Bush administration would propose a sweeping overhaul of the way the government regulates the nations financial services industry from banks and securities firms to mortgage brokers and insurance companies.

The plan would give major new powers to the Federal Reserve.

The Fed would be given broad authority to oversee financial market stability. That would include new powers to examine the books of any institution deemed to represent a potential threat to the proper functioning of the overall financial system.

On Saturday, March 29, a German magazine reported that the financial market crisis could cause losses of up to $600 billion in banks and other financial institutions worldwide, citing an internal report by financial watchdog BaFin.

The $600 billion represents a worst case scenario for losses linked to the financial turmoil sparked by the meltdown in the U.S. subprime mortgage market, DerSpiegel magazine said in a story released in advance of a publication on Monday.

Also, on Monday, U.S. Treasury Secretary Hank Paulson proposed a set of sweeping changes to the nation's financial system including broad expansion of the Federal Reserve's powers, in what could become the biggest regulatory overhaul of Wall Street since the Great Depression.

On Wednesday, Federal Reserve Chairman Bernacke all but said that the U.S. economy is in a recession.

Perspective: The Bush Administration's plans to give broad expansion of the Federal Reserve's powers to an entity that is not part of our Federal government, whose monetary policies are directly responsible for the S & L crisis of the late 80's and early 90's, the dotcom bust of 2000 and today's subprime fiasco, is very questionable.

Today we have fewer banks in the United States, a number that dropped considerably with the S & L crisis, and this number is expected to drop much further with the subprime shakeout - leaving even less competition for the big banks.

Plus, the Federal Reserve is funding the major bank acquisitions of Wall Street firms and other financial entities - which will make them even larger and eventually provide fewer options for the American public.

"Government has a responsibility to make sure our financial system is regulated effectively," Paulson said. "And in this area we can do a better job."

Yes, that is correct, Secretary Paulson, but the Federal Reserve is not government. It is a non-government entitiy, a third party, and you want to give it oversight over taxpayer funded regulatory branches of the Federal Government?

Paulsons plan would eventually have the Federal Reserve serve as a financial markets moderator which would step in if the nation's markets were again threatened by an episode like the near collapse of Bear-Stearns.

[Soldier4Christ]

Greenspan: U.S. in recession
'I have no regrets on any of the Federal Reserve policies that we initiated'

Former Federal Reserve Chairman Alan Greenspan said on Tuesday the U.S. economy was in recession, and said it would be appropriate to tap public funds to resolve the mortgage-related crisis that has helped pull the economy under.
ADVERTISEMENT

In an interview with CNBC television in which he defended his chairmanship of the U.S. central bank against charges that his policy missteps had laid the groundwork for the current crisis, Greenspan said Fed decisions on his watch were rationally constructed based on evidence at the time.

"I have no regrets on any of the Federal Reserve policies that we initiated back then because I think they were very professionally done," Greenspan said.

It is unfair to hold his Fed to task for the housing bubble or the current crisis in credit markets, because global market forces were at work to keep long-term interest rates low, not just Fed policies that brought short-term U.S. interest rates down to multi-decade lows, he said.

"Clearly, certain of our anticipations of what would happen as a consequence of those policies were off but there's no way of avoiding that," he said.

Greenspan went farther than the Fed has by saying outright that the economy is in a recession, although he said it is too soon to say how deep or prolonged the downturn will be.

"Consumers are beginning to shrink in, the automobile markets are beginning to contract, production is beginning to ease, and we are in the throes of recession," he said.

The U.S. economy will not stabilize until housing markets recover, Greenspan said. To speed that process, the Bush administration should look to the 1980s savings and loan crisis for lessons on settling the crisis by committing taxpayers' money to the project.

"I think if you're going to deal with a situation like this it's an issue for appropriated funds of the Treasury to set up something like the Resolution Trust Corporation, which as you remember was very successful in resolving the S&L crisis," Greenspan said.

The RTC was set up to liquidate assets of troubled savings and loan associations that had been declared insolvent by the Office of Thrift Supervision. It operated between 1989 and 1995 and closed or helped resolve hundreds of thrifts, many of which had gotten into trouble through sloppy lending practices.

The Bush administration so far has adamantly refused to commit public money to help settle a housing crisis in which millions of Americans are expected to lose their homes through foreclosure.

Greenspan has in recent days made a series of public statements defending his record at the Fed in light of criticism that a long period of low interest rates and a laissez-faire oversight approach led to reckless market behavior that resulted in the sharp housing correction and the ongoing credit freeze.

The Financial Times this week published an article of his entitled, "The Fed is blameless on the property bubble."

In an interview with The Wall Street Journal, Greenspan said, "I was praised for things I didn't do. I am now being blamed for things I didn't do."

Greenspan's office did not respond to a request for an interview on Tuesday.

[Soldier4Christ]

Fed auctions another $50 billion
To cash-strapped banks in battle against credit squeeze

The Federal Reserve, still working to combat the effects of a severe credit squeeze, said Tuesday it had auctioned another $50 billion to cash-strapped banks. Meanwhile, the International Monetary Fund warned that further actions are needed globally to prevent more wrenching problems.

The Fed auction marked the ninth in a series that began in December that so far have pumped $310 billion in short-term loans into the nation's banking system.

Meanwhile, the 185-nation IMF delivered its most detailed review yet of the global credit crisis that hit last August. It said Tuesday that governments must be prepared to do more to support the global financial system if conditions worsen.

"Markets remain under considerable strain" from a variety of forces such as weakened balance sheets from increased bad loans, the IMF said in a report prepared for meetings this week in Washington of the IMF and its sister lending institution, the World Bank.

The global credit crisis is expected to be a top agenda item at those discussions. The IMF report urged policymakers in the United States and other nations to consider what else needs to be done.

"The critical challenge now facing policymakers is to take immediate steps to mitigate the risks of an even more wrenching adjustment, including by preparing contingency and other remediation plans, while also addressing the seeds of the present turmoil," the IMF said.

Federal Reserve Chairman Ben Bernanke and his colleagues hope that the increased resources being supplied in the Fed auctions will encourage banks to keep lending to consumers and businesses and alleviate the economic drag from a severe credit squeeze that began last August.

In a related move, the European Central Bank, which serves the 15 nations that use the euro as their common currency, announced Tuesday that it had auctioned $15 billion in short-term credit to European banks. It was the sixth auction conducted in tandem with the Fed as the two central banks continue to coordinate their efforts to battle the credit crisis.

Bernanke told Congress last week that it was possible that all the blows the economy has sustained from the credit crisis, a prolonged housing slump and now rising unemployment could push the country into a recession. But he said he still believed that the period of weakness would be short-lived and the economy would resume stronger growth in the second half of this year.

The Fed has been holding its auctions to supply direct loans to commercial banks every two weeks starting in December.

The auctions are only one of a number of emergency procedures the central bank has employed to battle the credit crisis, which claimed its biggest victim last month with the forced sale of Bear Stearns, the nation's fifth largest investment bank, to JP Morgan Chase & Co.

In addition to the auctions which supply loans for 28 days to commercial banks, the Fed announced last month that it was employing Depression-era provisions to allow investment banks to borrow directly from the Fed. Previously, only commercial banks had that privilege.

This week's auction, which was held on Monday with the results announced Tuesday, attracted 79 bids seeking a total of $91.6 billion.

[Soldier4Christ]

WaMu gets $7 billion infusion, cuts jobs, sees loss
Largest U.S. savings-and-loan to close its 186 stand-alone home lending offices

Washington Mutual Inc (NYSE:WM - News), the largest U.S. savings and loan, said on Tuesday it obtained a $7 billion capital injection from private equity firm TPG Inc and other investors, but that mortgage problems will lead to a $1.1 billion quarterly loss and the elimination of 3,000 jobs.

The thrift also plans to close its 186 stand-alone home loan offices and stop offering home loans through brokers. It will instead offer mortgages through its retail branches, where some of the affected mortgage employees will be offered jobs, spokesman Derek Aney said.

WaMu, as the thrift is known, said it expects a first-quarter loss of $1.40 per share, more than twice the 51 cents that analysts on average expected.

The Seattle-based thrift expects to set aside $3.5 billion in the quarter for loan losses, nearly twice what it previously projected, and said net charge-offs will total $1.4 billion.

WaMu will also reduce its quarterly dividend per share to 1 cent from 15 cents, saving $490 million a year. The cut is the second in four months.

"These companies are getting serious," said James McGlynn, a portfolio manager at Summit Investment Partners in Southlake, Texas. "They are bringing in capital, (and) getting out of businesses where they weren't efficient. It just seems like they are getting their comeuppance."

Shares of WaMu fell 73 cents, or 5.6 percent, to $12.39 in morning trading. They had risen 29 percent on Monday, after news of the thrift's plans to raise $5 billion first surfaced.

WaMu joined more than a dozen commercial and investment banks to seek cash from outside investors in the last year, following more than $200 billion of write-downs and credit losses tied to the nation's housing and credit crisis.

The thrift lost $1.87 billion in the fourth quarter, hurt by exposure to housing markets such as California and Florida.

While the thrift last year pared its exposure to subprime and other risky home loans, it didn't do so fast enough.

In a statement, Chief Executive Kerry Killinger said: "This substantial new capital -- along with the other steps we are announcing today -- will position us for a return to profitability as these elevated credit costs subside."

Killinger was not immediately available for further comment.

BONDERMAN REJOINS BOARD

In the capital-raising, WaMu sold about 176 million shares at $8.75 each, for gross proceeds of $1.54 billion. It also sold $5.5 billion of convertible preferred shares with an initial conversion price of $8.75.

David Bonderman, a founding partner of TPG and a director of WaMu from 1996 to 2002, will rejoin WaMu's board. Larry Kellner, the chief executive of Continental Airlines Inc (NYSE:CAL - News), will become a board observer, at TPG's request, WaMu said.

The investment could signal confidence in the banking system, but would expose TPG to losses if WaMu's business sours further.

"It's a sign of smart money making a major bet in what they hope is a bottom in real estate," said Robert Stovall, a strategist at Wood Asset Management in Sarasota, Florida.

It was not immediately clear which other investors were involved in the transaction, or how much each invested. Neither TPG nor Continental was immediately available for comment.

Last year, WaMu was the nation's sixth-largest U.S. mortgage lender and 11th-largest subprime lender, according to the newsletter Inside Mortgage Finance.

The thrift's other units include retail banking, commercial banking and credit cards. To shore up capital, WaMu in the fourth quarter cut its dividend 73 percent and sold $3.9 billion of preferred shares.

Goldman Sachs & Co., Lehman Brothers Inc and the law firm Simpson Thacher & Bartlett LLP assisted WaMu on the TPG-led transaction. Credit Suisse and the law firm Cleary Gottlieb Steen & Hamilton LLP advised TPG.

[Soldier4Christ]

Citigroup, Wells Fargo to loan less?
Ex-chairman of FDIC: 'This is a nightmare for the country'

Bank holding companies including Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. have the thinnest safety cushion against losses in seven years.

The margin may erode further in coming weeks. Credit ratings on $704 billion of bonds have been cut this year following the collapse of the U.S. housing market. Sheila Bair, chairman of the Federal Deposit Insurance Corp., said last week that downgrades may compromise bank capital ratios enough that some of the largest institutions will no longer be considered well capitalized.

Falling below a regulatory benchmark that is intended to maintain a minimum level of capital to protect depositors against losses would subject banks to more scrutiny from regulators than they have ever experienced.

``This is a nightmare for the country,'' said William Isaac, who was chairman of the FDIC from 1981 to 1985. Banks will ``raise what capital they can, then they'll slow down their growth and stop lending, and what should be a mild recession becomes a much more serious one.''

The biggest danger to the economy is that to preserve their ratios, banks will cut off the flow of credit, causing a decline in loans to companies and consumers. Banks have already raised $136 billion in capital, based on data compiled by Bloomberg, and cut dividends. More stock sales and payout reductions are likely to follow, says analyst Meredith Whitney at Oppenheimer & Co.

`Institutional Panic'

The credit crunch has already cost the world's biggest financial companies about $232 billion and forced a government bailout of New York-based Bear Stearns Cos., the fifth-largest U.S. investment bank. The International Monetary Fund said last week that banks were in the worst financial crisis since the Great Depression.

``Banks have to maintain their ratios,'' said Dennis Santiago, chief executive officer of Institutional Risk Analytics, a Torrance, California-based research firm that monitors banking statistics. ``This is an institutional panic. At what point will consumers feel the panic? I don't know.''

The banks need to shore up the ratio of the value of their common stock, preferred shares, retained earnings and loss reserves to the total of risk-adjusted assets, which are affected by credit ratings. To be considered a ``well capitalized bank'' by U.S. regulators, an institution can't have more than 10 times its capital in risk-weighted assets. More than 99 percent of American banks qualify as well capitalized.

Washington Mutual

As a group, regulated banks had a total risk-based capital ratio of 12.79 percent at the end of last year, according to data compiled by Bloomberg. The figure was the lowest since 2000, before the last U.S. recession.

Washington Mutual Inc., the largest U.S. savings and loan, got $7 billion capital injection today from a group led by private equity firm TPG Inc., the Seattle-based company said today. The Seattle-based institution's total risk-capital ratio was 12.35 percent.

Pittsburgh-based PNC Financial Services Group Inc.'s banking unit had a 10.24 percent total risk-capital ratio at the end of 2007, according to the FDIC. Cleveland-based National City Corp.'s banking unit had a ratio of 10.31 percent.

Citi's Ratio

The holding companies for Citigroup, Bank of America and Wells Fargo have the lowest ratios in at least the five years that the Federal Reserve has been tracking the data.

Citigroup, based in New York, had stock, retained earnings and preferred shares in 2007 equal to 10.7 percent of its risk- weighted assets. That's down from 12.02 percent in 2005. Wells Fargo, based in San Francisco, was at 10.68 percent, down from 11.76 percent, and Charlotte, North Carolina-based Bank of America, 11.02 percent, down from 11.08.

By contrast, the average ratio for the nation's 66 biggest bank-holding companies was 11.63 percent. New York-based JPMorgan Chase & Co., the third-biggest U.S. bank holding company, had a ratio of 12.57 percent, up from 12.04 percent. The measurements are so important that JPMorgan obtained an exemption from the Fed last week so it could exclude from risk-weighted assets certain securities in the planned takeover of Bear Stearns.

`When Tide Goes Out'

Spokesmen for the 10 biggest bank holding companies, including Citigroup, Bank of America and Wells Fargo, declined to comment for this story, some citing rules restricting what they can say in the days leading up to financial reports. One factor affecting Bank of America's capital ratio was its October purchase of LaSalle Bank for $21 billion.

The FDIC's Bair said last week that ratings changes will probably lower bank capital ratios for some U.S. banks.

``It's a big concern,'' Bair said in an interview April 3. ``We are dealing with an unprecedented situation.''

cont'd