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American International Group [AIG 44.40 0.18 (+0.41%) ] has agreed to sell its Taiwan life insurance unit for $2.15 billion, a key step in its effort to raise cash after a U.S. government bailout last year saved the company from collapse.
The Fed's purchases of assets to increase this base automatically created deposits that positively charged the money supply growth to a 15.2% six-month growth rate (Chart 2). If the economy were operating near full capacity, a healthy banking system would take these deposits and multiply them roughly nine times; that circumstance could be inflationary. Unfortunately the banking system is not healthy, as evidenced by the fact that we have closed 95 banks this year, more than the cumulative total of the past 15 years, and another 416 banks are on a list destined to become extinct. With consumers' asset prices falling so rapidly and banks increasingly afraid of failure, banks are more interested in collecting loans than in lending. So with fewer consumers now credit worthy, loan volumes are collapsing. As loans are paid off, deposits are destroyed, and the money multiplier that should stand at nine has gone to zero. This is evidenced by the fact that the six-month change in M2 has fallen to a 1% growth rate, meaning that monetary stimulus is on hold. Get set for negative GDP in 2010.
Sales at U.S. retailers fell in September, hurt by a slump in motor vehicle purchases as government-sponsored incentives ended, but the decline was less than expected, a government report showed on Wednesday.
Stripping out the volatile autos component, sales increased for a second straight month in September, cementing the view that consumer spending recovered and the economy started growing in the third quarter after the worst U.S. recession since the 1930s.
The Commerce Department said total retail sales fell 1.5 percent in September, the biggest decline since December, after surging by a revised 2.2 percent in August. Sales in August were previously reported to have increased by 2.7 percent.
The second-biggest US bank made a net income of $3.6bn (£2.5bn), compared with $527m in the same period of 2008.
Strong performance in its investment banking division cancelled out losses on credit cards and consumer loans...
The consumer lending business posted a net loss of $1bn, up from $659m in the same period of last year...
...However the investment banking business made net income of $1.9bn...
"This is off-the-charts performance. This is stellar," said Michael Holland, president of the fund managers Holland & Co in New York.
The major stock markets were expected to gain at the open today – after the first hour they had, on average, gained nearly 1 percent each. Overnight futures and world market movements indicate that today could present big gains for investors. The Dow Jones began the day at roughly 9,871 points, and a solid day of trading could potentially push that index near or beyond the 10,000 point mark – after just one hour the Dow stood at 9,950 points.
This market optimism is being fueled by strong earnings reports from corporations like JPMorgan Chase. According to CNNMoney.com, JPMorgan Chase’s profits increased six-fold in the last fiscal quarter. The bailed out institution was once on the verge of collapse, but after tens of billions of government capital it is leading the charge in finance.