Economy Watch - Coverage of the financial crisis from The Washington Post and around the Web - November 9, 2008

IMF Will Increase 'Surveillance' of World Economy

In remarks at the International Monetary Fund after the G-20 summit, International Monetary Fund head Dominique Strauss-Kahn said the IMF will begin keeping a closer eye on world economies as a way of trying to spy trouble before it happens....

By Frank Ahrens | November 15, 2008; 4:48 PM ET | Permalink | Comments (0)
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Sarkozy: Europe Got What It Wanted From Summit

French President Nicholas Sarkozy said Europeans got “virtually everything” they sought at the summit, The Post's Tony Faiola reports. Sarkozy, as usual, had a number of colorful quotes during a news conference concluded moments ago at Washington's Willard Hotel. --...

By Frank Ahrens | November 15, 2008; 4:28 PM ET | Permalink | Comments (0)
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Bush: Reform, Transparency Are Key

UPDATED to fill in missing audio gaps. New material is noted. Here's the transcript of President Bush's statement following the G-20 meeting today. Because it's a transcript of Bush speaking, there are some audio gaps, which you'll see: Bush:...

By Frank Ahrens | November 15, 2008; 3:58 PM ET | Permalink | Comments (3)
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Gordon Brown: Comic Stylist

It's nice to know the Brits can maintain their sense of humor in the middle of a global economic collapse. Then again, they can joke about that whole dissolution-of-empire thing, too. Finally. Here's British Prime Minister Gordon Brown yukking it...

By Frank Ahrens | November 15, 2008; 3:14 PM ET | Permalink | Comments (0)
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India: Globe in 'Systemic Crisis'

Indian Prime Minister Manmohan Singh just released a statement from the G-20 summit, saying the world's economies are experiencing "exceptional difficulty." Singh is calling for a system of "multilateral surveillance" so countries can keep an eye on one another and...

By Frank Ahrens | November 15, 2008; 3:01 PM ET | Permalink | Comments (0)
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Auto Workers Union Issues Warning

United Auto Workers President Ron Gettelfinger is concerned about a domino effect in the U.S. auto industry. "Our fear is if one of these companies goes down it’s almost a certainty that two if not all three would go," he...

By Terri Rupar | November 15, 2008; 1:43 PM ET | Permalink | Comments (17)
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Cities: Give Us Money, Too

Philadelphia, Atlanta and Phoenix are asking Treasury for some of the $700 billion bailout/rescue to help them pay bills and and finance construction projects. The three cities want Treasury to provide $50 billion to cities nationally to spend on infrastructure...

By Frank Ahrens | November 14, 2008; 5:32 PM ET | Permalink | Comments (0)
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Buffett Buys Oil, Sells Drywall

World's Richest Man Warren Buffett just reported the holdings of his Berkshire Hathaway investment company in an SEC filing and it shows the Oracle of Omaha is going long in oil. BerkHath increased its stake in oil giant ConocoPhillips to...

By Frank Ahrens | November 14, 2008; 4:50 PM ET | Permalink | Comments (0)
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Wall Street Closes 2nd Down Week In a Row

As if it wanted to set us up for a heartbreak, the Dow lived in negative territory all day before popping positive at the beginning of the last hour of trading. Then the Dow fell out of bed, and hard,...

By Frank Ahrens | November 14, 2008; 4:22 PM ET | Permalink | Comments (0)
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Nov. 14, 2008

We in many ways humiliated ourselves as a nation." — Treasury Secretary Henry Paulson to CNBC's Erin Burnett, Nov. 14...

By washingtonpost.com Editor | November 14, 2008; 3:04 PM ET | Permalink | Comments (0)
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Paulson: Why I Changed My Mind

Everyone wants to know why Treasury Secretary Hank Paulson changed his mind on using the $700 billion government bailout/rescue money to make direct investments in businesses rather than buying troubled assets off their balance sheets, which is what he told...

By Frank Ahrens | November 14, 2008; 2:45 PM ET | Permalink | Comments (10)
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Cummings To Kashkari: Don't Be a 'Chump'

Neel Kashkari, Treasury's man running the $700 billion government bailout/rescue, just wrapped up his grilling before a subcommittee of the House Oversight committee, which is unhappy with the way the government is spending the bailout money. The issue: Treasury asked...

By Frank Ahrens | November 14, 2008; 1:20 PM ET | Permalink | Comments (0)
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Kashkari: Lower Mortgage Rates Needed

Rep. Elijah Cummings (D-Md.) just asked Neel Kashkari, Treasury's man in charge of the $700 billion bailout/rescue, what advice he would give President-elect Barack Obama if he asked Kashkari for his best advice on how to keep homeowners in their...

By Frank Ahrens | November 14, 2008; 11:49 AM ET | Permalink | Comments (3)
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Now It's Cummings vs. Kashkari

Rep. Elijah Cummings (D-Md.) just took his turn beating up on Neel Kashkari, Treasury's man in charge of the $700 billion rescut/bailout, in a classic Cummings harangue, which we'll reprint here, pretty much in its entirety: "I live in the...

By Frank Ahrens | November 14, 2008; 11:36 AM ET | Permalink | Comments (0)
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Kucinich, Kashkari Battle On the Hill

Rep. Dennis Kucinich (D-Ohio) is hammering away at Neel Kashkari, the man in charge of running the $700 billion government rescue/bailout plan at a hearing underway right now on Capitol Hill. Kucinich, chair of a subcommittee of the House Oversight...

By Frank Ahrens | November 14, 2008; 11:07 AM ET | Permalink | Comments (3)
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Bush Nominates IG for Bailout

President Bush is nominating Neil M. Barofsky to be the Special Inspector General for the $700 billion government bailout/rescue. Barofsky is an assistant U.S. attorney for the Southern District of New York and chief of the mortgage fraud group. He...

By Frank Ahrens | November 14, 2008; 10:36 AM ET | Permalink | Comments (0)
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Bernanke: Let's Keep Working Together

Federal Reserve chairman Ben S. Bernanke hopped the pond for Germany to celebrate the 10th birthday of the euro. Nobody is really celebrating, though, especially with the euro zone now in a recession. His speech summarized the earthquake rippling through...

By Michael S. Rosenwald | November 14, 2008; 10:13 AM ET | Permalink | Comments (0)
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Wall Street Opens Down, Again

Another bleak morning on Wall Street, as stocks opened down sharply across the board. In the first 15 minutes of trading, the Dow is down about 120 points, or 1.4 percent. The S&P 500 is down 1.6 percent and the...

By Frank Ahrens | November 14, 2008; 9:45 AM ET | Permalink | Comments (0)
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Retail Sales Fall by Record Amount

October retail sales dropped by the largest amount on record, the Commerce Department reported this morning, as worries about the financial crisis caused consumers to sharply scale back purchases large and small. The department said October sales were $363.7 billion,...

By Sara Goo | November 14, 2008; 9:33 AM ET | Permalink | Comments (0)
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Friday: What To Watch For Today

This could be really good: Treasury's Neel Kashkari, the $700 Billion Man, the guy charged with running the government bailout, is scheduled to appear under oath before Rep. Henry Waxman's (D-Calif.) Oversight committee this morning. The title of the hearing...

By Frank Ahrens | November 14, 2008; 7:30 AM ET | Permalink | Comments (0)
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No Sale: Nordstrom Profits Plummet by Half

Nordstrom's third-quarter profits plunged to $71 million from $166 million in the third quarter of 2007, as the luxe department store followed most other retailers into a blue Christmas. Third-quarter revenue was down 8.4 percent compared to last year and...

By Frank Ahrens | November 13, 2008; 4:28 PM ET | Permalink | Comments (0)
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Even Buffett Hits (Relative) Hard Times

Okay, maybe now it's time to panic: Shares of Warren Buffett's Berkshire Hathaway holding/investment company briefly dipped below $100,000 per share today for the first time since 2006. Yes, you read that right: $100,000 per share. Shares peaked at nearly...

By Frank Ahrens | November 13, 2008; 3:36 PM ET | Permalink | Comments (0)
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Nov. 13, 2008

Economic Mobility Pew Charitable Trusts | A Pew study looks at economic mobility -- the opportunity to make more money and live a higher quality of life -- and why more Americans feel they don't have opportunities to move...

By washingtonpost.com Editor | November 13, 2008; 2:55 PM ET | Permalink | Comments (0)
Categories: Neil Irwin's Must Reads
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Hedge Funds Managers Made $1B in 2007

Well, if you're a hedge fund manager and you get dragged before a congressional panel, you should probably expect to get your compensation made public. The heads of five of the biggest U.S. hedge funds are testifying right now before...

By Frank Ahrens | November 13, 2008; 1:54 PM ET | Permalink | Comments (3)
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Hedge Fund Titans Support Some Fed Regulation

Seated before Rep. Henry Waxman's (D-Calif.) Oversight committee right now are the very, very, very well-compensated heads of five of the U.S.'s largest hedge funds. Waxman asked the five: Do unregulated hedge funds pose systemic risk to the economy and...

By Frank Ahrens | November 13, 2008; 12:54 PM ET | Permalink | Comments (0)
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Five Questions for CNBC's Rick Santelli

It's time for the next installment of our Wildly Popular Five Questions segment. Last month, our victims were CNBC's Erin Burnett and the Motley Fool's Tim Hanson. Today, we've teed up CNBC's Rick Santelli. CNBC's Rick Santelli (Courtesy of NBC...

By Frank Ahrens | November 13, 2008; 12:31 PM ET | Permalink | Comments (0)
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Foreclosure Rate Up 25 Percent From 2007

October home foreclosures were up 25 percent compared to October 2007, according to RealtyTrac, a business that tracks foreclosures for people who are looking to buy distressed properties. Nearly 280,000 homes received at least one foreclosure-related notice last month, an...

By Frank Ahrens | November 13, 2008; 11:43 AM ET | Permalink | Comments (0)
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Senate Panel Hammers Treasury, Paulson

The Post's Binyamin Appelbaum is reporting from Sen. Chris Dodd's (D-Conn.) Banking Committee, which is taking a look at how Treasury is doling out the federal government bailout. The Democratic senators are taking the opportunity to critique Treasury Secretary Hank...

By Frank Ahrens | November 13, 2008; 11:01 AM ET | Permalink | Comments (1)
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Former SEC Head: Some Regulations on Hedge Funds Needed

David Ruder, SEC chairman under President Ronald Reagan, called for limited regulations on hedge funds at a hearing of the House Oversight committee this morning. Ruder said that the SEC should get the power to "register and inspect" all hedge...

By Frank Ahrens | November 13, 2008; 10:49 AM ET | Permalink | Comments (1)
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Chevy Chase Declines Comment on Citigroup "Rumor"

Chevy Chase bank this morning declined to comment on a report in the Wall Street Journal that it may be acquired by Citigroup. The report said that Citigroup is among several bidders for the Washington regional bank and might walk...

By Sara Goo | November 13, 2008; 10:46 AM ET | Permalink | Comments (23)
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Dodd: Congress Could Legislate Executive Pay

Sen. Chris Dodd (D-Conn.) just said something that has been unthinkable up to now: Congress may be ready to make laws limiting executive compensation. The pay of top executives, especially those that are receiving government bailout money, has become an...

By Frank Ahrens | November 13, 2008; 10:40 AM ET | Permalink | Comments (0)
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Markets Open Slightly Up, But Show Weakness

Wall Street opened up, slightly, across the board this morning, despite the release of some dismal and surprise unemployment news this morning. In the first 15 minutes of trading, the Dow is essentially flat, dipping in and out of negative...

By Frank Ahrens | November 13, 2008; 9:52 AM ET | Permalink | Comments (0)
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Jobless Claims Make Surprise Jump

The Labor Department reported this morning that the number of newly laid-off people seeking unemployment benefits unexpectedly leaped last week to levels not seen since shortly after the Sept. 11, 2001, attacks. Seasonally adjusted, last week's jobless claims increased by...

By Frank Ahrens | November 13, 2008; 9:39 AM ET | Permalink | Comments (0)
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Wal-Mart Benefits From Economic Slowdown

Wal-Mart, the nation's biggest retailer and grocer, this morning reported a 10 percent increase in net income for the third quarter, although it adjusted its forecast downward. The company said it made $3.14 billion (80 cents) in the three months...

By Frank Ahrens | November 13, 2008; 7:02 AM ET | Permalink | Comments (0)
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Nov. 12, 2008

I just can't tell you how many proposals I've looked at to modify mortgages and keep people in their homes...This is a very complicated area. There are no easy answers." — Treasury Secretary Henry Paulson, Nov. 12...

By washingtonpost.com Editor | November 12, 2008; 5:09 PM ET | Permalink | Comments (1)
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More Big Cuts At Morgan Stanley

The contraction continues, Episode 236: Former investment bank Morgan Stanley said today that it will cut 10 percent of its institutional-securities group and 9 percent of its asset-management professionals. The most recent cuts come after Morgan Stanley laid off 10...

By Frank Ahrens | November 12, 2008; 3:13 PM ET | Permalink | Comments (0)
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Is Bailout Now Better For Taxpayers?

What happens when TARP is no longer TARP? The $700 billion Wall Street rescue/bailout plan is called TARP, which stands for Troubled Asset Relief Program. Except, thanks to Treasury Secretary Hank Paulson's speech today, there's no longer any "TA" in...

By Frank Ahrens | November 12, 2008; 2:31 PM ET | Permalink | Comments (1)
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Mikulski: Deduct Interest on Car Loans

Maryland Sen. Barbara Mikulski (D) today unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes as a way to help the ailing U.S. auto industry. Under Mikulski's plan,...

By Sara Goo | November 12, 2008; 1:16 PM ET | Permalink | Comments (1)
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Paulson: Congress Could Help Automakers

Treasury Secretary Hank Paulson said Congress can help struggling automakers by changing the terms of the $25 billion in direct loans recently approved for Detroit. Automakers -- facing plummeting sales, impossible-to-get credit and shocking cash-burn rates -- are teetering on...

By Frank Ahrens | November 12, 2008; 11:43 AM ET | Permalink | Comments (11)
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Paulson: Bailout Has 'Helped Stabilize' Financial System

Treasury Secretary Hank Paulson is speaking at the moment, giving an update on the bailout/rescue plan, some of the details of which The Post had here yesterday. He said things are slightly better than they were in September, when the...

By Frank Ahrens | November 12, 2008; 10:53 AM ET | Permalink | Comments (0)
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Macy's, Best Buy: Tough Retail News; Markets Drop

Macy's and Best Buy this morning released some more sobering retail news, portending a bleak Christmas and a tough-it-out 2009. Macy's swung to a $44 million loss in the third quarter as sales dropped about 7 percent at the middle-range...

By Frank Ahrens | November 12, 2008; 9:51 AM ET | Permalink | Comments (0)
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Feds Play Santa for U.S. Corporations

If the federal government is Santa Claus -- and it increasingly appears to be -- then America's corporations are lining up in front of him with their wish lists. Instead of getting a lump of coal for their bad behavior,...

By Frank Ahrens | November 12, 2008; 7:13 AM ET | Permalink | Comments (0)
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"Do-Nothing" Government

'Do-Nothing' Government FDR blasts previous administrations for ignoring mounting problems and shunning the needs of Americans. He says he will fight for "low interest rates, better banking, for the regulation of security issues...and against the costs added by monopoly and...

By washingtonpost.com Editor | November 11, 2008; 5:29 PM ET | Permalink | Comments (0)
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Nov. 11, 2008

Foreclosures have increased 150 percent in the past two years...We need to stop this downward spiral." — James Lockhart III, head of the Federal Housing Finance Agency, Nov. 11...

By washingtonpost.com Editor | November 11, 2008; 4:38 PM ET | Permalink | Comments (0)
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Nov. 11, 2008

Boom Over Portfolio | Michael Lewis chronicled the culture of Wall Street in his famous book "Liar's Poker." Now he returns to Wall Street to find the "scandal" he's been expecting for 20 years. Geithner's Lehman Angle The New...

By washingtonpost.com Editor | November 11, 2008; 2:33 PM ET | Permalink | Comments (0)
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Govt. Announces New Help for At-Risk Mortgages

UPDATED at 2:44 p.m.: Here are some details on the federal re-work of at-risk mortgages, per an interview on CNBC just concluded with James Lockhart III, chief Fannie and Freddie regulator: - Interested homeowners should contact their mortgage servicer...

By Frank Ahrens | November 11, 2008; 2:16 PM ET | Permalink | Comments (0)
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GM Shares Lowest Since 1943

Shares of General Motors sank to their lowest price since April 1943 today, as time runs out for the troubled U.S. auto giant. GM shares were partially pushed down by the broader market decline this morning -- the Dow is...

By Frank Ahrens | November 11, 2008; 1:47 PM ET | Permalink | Comments (0)
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Amex: Card Holders Unaffected By Corporate Change

Earlier today, we reported that the Treasury Department had granted American Express's request to become a bank-holding company in order to access government financing and stave off serious and continued decline. Unfortunately, the Amex announcement contained no language about how...

By Frank Ahrens | November 11, 2008; 1:12 PM ET | Permalink | Comments (0)
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Cig-maker Altria Starts Cutting Jobs

A few weeks ago, we reminded readers that in tough economic times, many economic advisers say that the best stocks to own are from companies that make things you eat, drink, clean with or smoke. Well, you can strike one...

By Frank Ahrens | November 11, 2008; 11:38 AM ET | Permalink | Comments (1)
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Wall Street Stumbles Out Of Gates

The major indexes all opened down today, as the markets responded to poor news from home builders and worries about consumer spending. In the first 20 minutes of trading, the Dow is down nearly 200 points, or more than 2...

By Frank Ahrens | November 11, 2008; 9:54 AM ET | Permalink | Comments (0)
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Amex Becomes Bank Holding Company

The Treasury Department announced late yesterday that it has accepted American Express's application to become a bank holding company -- the same move that Goldman Sachs and Morgan Stanley pulled in September. This means: a) Amex can now accept consumer...

By Frank Ahrens | November 11, 2008; 9:32 AM ET | Permalink | Comments (0)
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Home Builder Toll Brothers' Advice to Washington

This morning, home builder Toll Brothers released bleak quarterly earnings that speak to the state of the real estate industry. Revenue is down 41 percent and net signed contracts declined 27 percent for the three months ended Oct. 31. The...

By Sara Goo | November 11, 2008; 8:49 AM ET | Permalink | Comments (1)
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Global Stocks Turn Negative

Data out of China this morning shows just how quickly the global economic downturn is taking its toll on one of the fastest-growing nations. Chinese exports are still rising, but not as much as they had been. Merchandise exports rose...

By Sara Goo | November 11, 2008; 7:39 AM ET | Permalink | Comments (0)
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China Stimulus: More Show Than Substance?

Westerners are used to reading headlines from authoritarian governments with a grain of salt. Should the same skepticism be applied today to China's grand economic stimulus plan? America awoke today to the announcement that the Chinese government is rolling out...

By Frank Ahrens | November 10, 2008; 4:38 PM ET | Permalink | Comments (1)
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Report: Home Safe Sales Surge

Growing up in West Virginia, we had something we called "Appalachian investing:" Taking your cash, sealing it in Mason jars and then burying it in the back yard. Goes way back. Dig around in a Southern back yard enough, you're...

By Frank Ahrens | November 10, 2008; 3:00 PM ET | Permalink | Comments (0)
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Forecast: Unemployment To Hit 8.5 Percent By Next Year

In a research note today, Goldman Sachs Group Inc. predicted that the U.S. economy will hit its worst recession since 1982 next year, with the unemployment rate soaring from its current level of 6.5 percent to 8.5 percent by the...

By Frank Ahrens | November 10, 2008; 2:01 PM ET | Permalink | Comments (1)
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McDonald's Laughs at Recession

During the Great Depression, Americans flocked to the movies to forget their troubles. During these troubled times, Americans are drowning their sorrows in . . .Big Macs? McDonald's, the world's No. 1 burger-maker, appears to be running a recession-proof business....

By Frank Ahrens | November 10, 2008; 1:11 PM ET | Permalink | Comments (0)
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Kashkari: Financial System Still 'Fragile'

Speaking this morning to the Securities Industry and Financial Markets Association (SIFMA) summit in New York about the state of the government bailout program, Neel Kashkari -- who's running the program -- said the U.S. financial system is still "fragile"...

By Frank Ahrens | November 10, 2008; 12:16 PM ET | Permalink | Comments (1)
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GM Shares Crushed By Analyst Downgrade

In better times, a healthier company would be able to shrug off an analyst's bad report card. But these are not better times, and GM is not healthy. So this morning, when Barclays' analyst Brian Johnson downgraded GM to "underweight"...

By Frank Ahrens | November 10, 2008; 11:07 AM ET | Permalink | Comments (0)
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AIG Chair: Policyholders Should Feel Secure

AIG chairman and chief executive Ed Liddy, who just finished an interview on CNBC, said AIG's insurance business is "very strong," and that the troubled areas of the company have been "ring-fenced off." This morning, the government announced an additional...

By Frank Ahrens | November 10, 2008; 10:05 AM ET | Permalink | Comments (1)
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Network News

Economy Watch: November 9, 2008 - November 15, 2008