Oct. 23 Update: Markets Down, Jobless Claims upMore bad news on the economic front, as the U.S. stock market on Thursday faced a third day of downturn. The market plunged on Wednesday -- the Dow closing down 514 points, recording its seventh-worst point loss in history.
The fears sparking these drops are the repercussions from the two bubbles that have burst recently - the housing market crisis with the subprime mortgage meltdown and the subsequent global credit crunch that shut off the valve of credit even among interbank lending. The sound of the third bubble bursting is the dismal earnings reports of companies across every sector renew fears of a global recession. Third-quarter earning reports from major manufacturers, transportation industry and healthcare showed murkier forecasts as the economy's woes begin unraveling around the globe.
Jobless Claims Rise
Investment bank cum commercial banker Goldman Sachs is one many companies making job cuts. The company will cut about 10% of its 33,000 staff because of the downturn in the credit and lending markets. The Labor Department's weekly report on jobless claims rose to 478,000, which is worse than predicted. Economists had expected that number to rise only to 465,000.
Realty Trac, the online marketer of foreclosed properties, says that 851,000 homes have been repossessed by mortgage lenders since August 2007. In September, more than 81,000 homes were foreclosed, with another nearly 266,000 troubled homeowners getting foreclosure filings. A total of more than 765,500 foreclosure filings were recorded on U.S. properties in the third quarter, up 71% from the same period in 2007. Realty Trac says it has never seen a foreclosure cycle like this one before.
Credit Still Tight
The second bubble - the credit crisis - was showing signs of loosened purse strings, but banks are keeping a tight rein on lending, as fears that the global economy is entering a prolonged recession spooked lenders. Three major indicators of the credit market showed no real increase in interbank and corporate lending from Wednesday, reversing the recent increase of credit and lending between banks.
Chase Letters Under Investigation
The threatening letters that began showing up at Chase bank branch offices around the nation on Monday have increased from 30 to more than 45. The FBI says on Wednesday that banks in at least 11 states have received the threatening letters, with some containing a mysterious white powder over the last three days.
Law enforcement say the letters have been sent to financial institutions in Colorado, Oklahoma, New Jersey, New York, Virginia, Illinois, Texas, Ohio, Georgia, California, Arizona and the District of Columbia.
While many of the letters were sent to Chase banks, the Federal Deposit Insurance Corp. in Dallas, TX and the Office of U.S. Thrift Supervision in nearby Irving also have received the threatening letters.
Also on Wednesday, five U.S. Senate offices got phoned-in bomb threats. The threats are under investigation by Capitol Police didn't merit an evacuation. Shortly after the 9-11 attacks anthrax-laced letters sent to lawmakers and news media invoked a lengthy FBI investigation.