Friday, November 21, 2008

Obama treasury secy pick rallies stocks

After a disastrous week on global markets, Wall Street has ended higher regaining much of the value lost in the last few days. However, the news is far from good. Citigroup has seen shares plummet. The company lost 83% of its value this year, 50% this week alone [BBC]. And there are fears that a collapse of the US car market could trigger a domino affect in Europe.

In the UK car sales have fallen significantly over the year. Several car manufacturers have made cuts in staff. Renault are laying off 6,000 employees as are Volvo, and Peugeot are cutting 3,500 jobs. Even Rolls Royce announced job losses this week of around 2000 employees, though it did not say whether this would be amongst its car manufacturing sector [BBC]. The debate in the US Congress over whether to bail out the US car industry has divided opinion, but President-elect Barack Obama has pledged not to allow America's iconic auto industry to collapse. The credit crunch is also affecting the construction industry. The latest victim is the Russia Tower, designed by Norman Foster. All building work has stopped on the 600 metre sky scraper which towers over Moscow’s business district [CNN].

While the Dow and Nasdaq ended over 5% higher on the end of Friday’s session, Europe’s indices continued to fluctuate. The FTSE fell by 2.43% on Friday while the Dax dropped 2.2%. The CAC fared the worst falling by 3.33%. The rally on American markets came shortly after the Wall Street Journal announced that President-elect Barack Obama had chosen Timothy Geithner as his Treasury Secretary. Geithner, who is the President of the New York Federal Reserve and has worked at the IMF.

John Authers of the Financial Times, speaking on CNN, said that the rally may not have been only down to Geithner’s choice for Treasury Secretary. Geithner is however said to be well respected in Wall Street and may well have boosted confidence, if for a short time, in an otherwise volatile market which has lost over $10 trillion in the last few weeks [CNN].
The financial crisis has taken its toll at a more personal level as thousands of families are put out of work. Foreclosures have increases and it has put not only families on the streets but also their pets. Animal shelters across the US are reporting record numbers of cats and dogs being placed in their hands as more and more people struggle with the costs of veterinary bills and pet food [CNN].

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