The market seems to be selling-off on the back of limited bad news imo, apart from the dollar that is.

If you can hold your nerve and apart from any short term requirements to offload poor performing stocks, I have a couple!!, my advice would be sit tight. This does not have the feel of the tech(mining!) bubble at all. Difference being there are a lot of good fundamentals, unlike in 2000 when there were a lot of over rated nothing companies.

The message now is SELL off the banks....


$2 trillion lending crunch seen. Goldman Sachs economist says mounting credit losses could force banks to significantly scale back their lending.

LONDON (CNNMoney.com) -- The mortgage wipeout could result in a $2 trillion cutback in lending and have dramatic implications for the U.S. economy, according to Wall Street investment bank Goldman Sachs.

The housing slump is expected to end up costing banks, hedge funds and other lenders an estimated $400 billion as defaults on home loans rise, according to Goldman economist Jan Hatzius.

A $400 billion loss is equal to just about 2.5 percent of U.S. stock market capitalization - or a bad day on Wall Street, he wrote in a commentary on Thursday.

But most stock investors don't react aggressively to capital losses the way banks and other lenders do. A bank that aims to maintain a capital ratio of 10 percent would need to shrink its balance sheet by $10 for every $1 in credit losses, the note said.

That means that if lenders end up suffering just half of the $400 billion in potential credit losses, they could be forced to reduce the amount they loan by $2 trillion. Such a drastic credit crunch could have dire consequences for the economy.

"Even if this occurs gradually, and even if there are some offsets from reduced credit demand and increased lending by other sectors, the drag on economic activity could be substantial," Hatzius wrote.

Wall Street banks and brokerages face pain on two fronts. They hold home loans, as well as securities backed by mortgages. Losses on these holdings are expected to deepen as falling housing prices trigger more defaults.

There are a number of factors that could lessen the lending shock, Hatzius noted. Regulators could encourage financial institutions to keep lending, even in times of stress. Some players could raise additional capital by selling stakes in themselves.

But the overall outlook is bleak, as pressure on lending is likely to raise the risk of "significant weakness" in economic activity, the note said.

Jobless claims post surprising jump.
Newly filed claims for unemployment rose to 339,000 last week, the highest total in a month.

WASHINGTON (AP) -- The number of laid off workers filing claims for unemployment benefits rose by a larger-than-expected amount last week, partly reflecting the impact of the California wildfires and a writers' strike.

The Labor Department said that the number of applications for jobless benefits jumped by 20,000 to 339,000, the highest total in a month.

The increase was double what economists had been expecting.

Labor Department analysts said that the California wildfires boosted the number of jobless claims by about 2,000 layoffs and the writer's strike, which has shut down production on many television programs, was also having an impact.

Over the past three weeks, the wildfires have increased jobless claims by between 5,000 and 6,000, primarily reflecting businesses that have had to close or lay off workers because of disruptions caused by the fires.

The increase in claims occurred after three consecutive weekly declines. Because of that improvement, the four-week average for claims remained unchanged last week at 330,000.

Bad news after bad news...


Industrial production nosedives.
Largest plunge in nine months, led by electricity, gas, auto and housing weakness; rate cut more likely if conditions worsen, analysts say.

WASHINGTON (AP) -- Industrial production plunged in October by the largest amount in nine months, reflecting a big drop in utility output and continued troubles in auto and housing-related industries.

The Federal Reserve said that output at the nation's factories, mines and utilities fell by 0.5 percent last month, a much worse outcome than had been expected.

The October decline, the biggest since a similar drop in January, was led by a sharp plunge in output of electricity and natural gas due to warmer-than-normal weather during the month.

Also contributing to the weakness was the third straight drop at auto factories and further weakness in industries producing lumber, appliances and other products tied to housing.

Auto makers are struggling with slumping demand in the face of soaring gasoline prices while housing is enduring its worst slump in more than two decades.

Analysts believe that the economy will slow significantly in the current quarter and the first three months of next year, with many raising the odds for a recession.

The Federal Reserve has cut interest rates twice since September but Federal Reserve Chairman Ben Bernanke sought to lower expectations for further rate cuts to boost economic growth. He said that Fed policymakers see the risks of weaker economic growth as roughly balanced with the risks of higher inflation that could be triggered by the latest surge in oil prices. That surge pushed the price of a barrel of crude oil briefly above $98 per barrel last week.

Still, many analysts believe that if the economic slump worsens, the Fed will cut interest rates again, possibly as soon as its next meeting on Dec. 11.

Manufacturing output fell by 0.4 percent in October, the biggest drop since a 0.4 percent decline in August.

Output at the nation's utilities was down 1.6 percent. Mining output, a category that includes oil production, fell 0.6 percent.

The declines left factories, mines and utilities operating at 81.7 percent of capacity last month, down from an operating rate of 82.2 percent in September.

You're a cheery soul, hlyeo! :o)
There was me thinking that at least a week would go by without having to absorb bad news! I think I will stick to my 'fairly safe' mining stocks & hope that precious metal prices stay high.
Good luck to anyone holding NRK. Looks like there may be more bad news to come.

That'll be good news for Cynic then - at last the Rock is falling off its 150p ledge for you!

fell off that some days back ..... 132/133 is current level and slowly drifting south

BRITAINs economy could be heading for its worst year for 15 years. They say growth in 2008 could be weaker than at any time since the long upturn began in 1992. After the Bank of England downgraded its growth forecasts last week and warned of further risks, economists say growth next year will be below 2%, threatening a rise in unemployment. The weakest year of growth in the past 15 years was relatively recently, 2005, and saw the economy expand by only 1.8%. The latest compilation of forecasts from Consensus Economics shows that five forecasting groups already have 2008 predictions below that, and others are revising their forecasts.

If next year is looking so bleak why are the banks going to pay out huge bonuses? If they pay large bonuses then they cannot avoid paying shareholders their share of the profits by way of increased dividends. What is actually going on is bank shares are being shorted massively on the back of the governments totally incompetent mishandling of the NRK debacle.A great deal has been made out of this so called crisis about a small regional bank with only 73 branches and a balance sheet with assets of a mere 100 billion Dont be surprised to see a sudden reversal before long.

The larger banks are probably struggling too. Unlike Northern Rock though they have more options to get emergency funding (instead of going to the bank of England). An article in the Telegraph some time ago noted how activity in the FX market was pointing to possible borrowing in ECB land. LIBOR has jumped again, and I suspect it's only a matter of time before some other banks crawl out of the "credit crisis" woodwork. If not then credit could be tight for years as the banks slowly reduce their exposure.

In my opinion.

Strawbs.

If you are right then the real banks (not minnows like NRK) should not be paying large bonuses!

If any of them stop paying bonuses it would only start the rumours flying and that would hit the share price. NRK is the only one so far to admit it's struggling and look what happened there. I suspect they'll all struggle on with "business as usual", hoping things will work through the system eventually. It'll just mean tighter lending and lower profits for sometime to come. If markets continue to perform badly then bonuses won't be an issue going forward. It's also possible they don't fully understand there levels of exposure yet. Only yesterday Swiss Re (a re insurer) announced a 1.2 bln sfr loss, having said it would only be 104 mln sfr back in September. I think the picture keeps changing (for the worse so far) each month.

In my opinion....

Strawbs

To pay massive bonuses and at the same time have to make huge provisions is not good management and shareholders have the right to question the directors actions in this respect. If large bonuses are paid shortly this must confirm that the so called credit crunch has been blown up out of all proportion to the actual problem.

I think it's a case of "damned if you do, damned if you don't". If (it's all hypothetical) they come out and say we're not paying a bonus, the inference will be "money problems" and the share price will tank. If they pay a bonus and nobody finds out they've got a problem, they'll get through it and the share price will hold, even if the sensible option would be to save the money. Ironically it's probably the best option for share holders. Share prices are as much about confidence as fundamentals afterall.

Of course nobody really knows what state the banks are in. The balance of probabilities though, would suggest others are likely to be exposed in some way or another.

In my opinion.

Strawbs

freddie mac!

It is just like the almost bankrupt businessman trying to show off to his clients by buying a new Ferrari and a Rolex gold watch. Then things go BUST.

NEW YORK (MarketWatch) -- Mortgage investor Freddie Mac said its third-quarter loss more than doubled from year-ago levels as mortgage prices collapsed and credit tightened, forcing the firm to add to loss provisions and consider cutting its dividend in half. See full story.
Horton has fourth-quarter loss; market 'remains challenging'
Homebuilder D.R. Horton Inc. swung to a net loss in its fiscal fourth quarter as the company took more land-related write-downs amid the continuing downturn in the housing market. The company also expects the housing environment to "remain challenging."
Analysts worry that mortgage woes could spread to auto loans
Rising delinquency rates on car and truck loans have some industry analysts concerned that subprime mortgage troubles could spill into the automotive finance business.

Kesa Electricals has this morning reported sustained strong sales momentum in its third quarter.

Europe's third-biggest electricals retailer said this reflected continuing strong demand for multimedia goods and flat-screen TVs.

For the three months to October 31st, the group's total sales increased by 11.3% and were up 9.9% in local currency.

Like-for-like sales were up 3%, slightly below analysts' expectations.

'This was a solid third quarter performance. Against the high comparatives of last year, all our businesses delivered revenue growth,' said CEO, Jean-Noel Labroue.

The CEO said that despite continued strong demand for flat-screen televisions and good sales of multimedia equipment, particularly laptops, the negative mix effect on the margin observed at the end of the first half continued throughout this quarter.



just posted this as a reminder that people are still spending, and i bet sales in general will be very strong this Christmas on the high street. My prediction 3 months ago of a rate drop before Christmas could still ring true yet...

halifax - not sure about the reasoning re bonuses above. We've seen the heads of 2 of the largest banks in the world (US) resign and take monster payouts for building up massive debts which were written down. To add to that, we've known about fat cats for decades. Personally, the bigger the bonuses, the more these banks are worrying that they must grab it now IMO!!! ;-)))

Big Al thats fine if the bonuses are justifiable but if the shareholders dont see a relative increase in dividend or increased share buybacks then the directors will be on the line for not looking after the shareholders interests.

Seems to me that banking bonuses are calculated against profits and profits are to a large extent calculated against alleged value of derivative type products and the like held on the books. It is therefore in their interests to value these as highly as possible and we all now know that some of these historically were well away from reality. In my view any bonuses should be calculated primarily against cash profits.