Old car trade-in value

When bring a car to a Dealer to trade-in, the Dealer is going to get online to check the prices actually paid for that particular vehicle during the last few days at the Dealer auctions. He won't pay more than he could buy one for at the auction. Dealer lingo for this number is "MMR".

Get values from Kelley Blue Book, NADAGuides and Edmunds.com. Discuss these valuations with the Dealer if his offer looks out of whack. How can he explain his low offer? These pricing guides can be off by thousands of dollars depending on the condition of your car, the location, and time of year.

No change of status on Currency Conversion Fee Antitrust Litigation (MDL 1409)

Last update was in 2/2009, and no new status.
========================================================
12/2009:
There has been no change of status to the case.

Honda Toyota new and used car price

With current global economy situation where there are high unemployment rate, falling real estate value, and negative stock market performance, etc., Toyota announced will lose money this year; and Honda has lowered its profit estimates.

Would anyone who is familiar with the U.S. car retail business comment on how this will be reflected on Honda and Toyota new and used car price?

I would imagine for new car, there will be higher incentive or rebate to customers. For used car, the price would probably go lower.

================
2009 Honda CRV:
1/6/2009 - 2/2/2009 - $500 cash to dealer (marketing support)

2009 Toyota Matrix:
1/8/2009 - 2/2/2009 - $1000 cash to customer

2009 Toyota RAV4:
1/8/2009 - 2/2/2009 - $1500 cash to dealer (marketing support)

=================
1/24/2009 update:

All 2008 and 2009 Chrysler, Dodge and Jeep vehicles will be available at prices similar to those Chrysler employees pay -- typically thousands of dollars below the sticker price.

In addition, customers will receive discounts of up to $3,500 on 2009 vehicles and $6,000 on 2008 models.

=================

Unemployment rate continue rising

Nonfarm payroll employment rates rose in 9 states and fell in 41 states and D.C., the department said.

Unemployment:

Michigan: 9.6%
California: 8.4%
Oregon: 8.1%

Unemployment rates continue to rise for about a year after a recession ends.

===================
1/24/2009 update:

California: 9.3%

===================
2/6/2009 update:

Nationwide: 7.6%

===================
2/27/2009 update:

California: 10.1%

===================
3/5/2009 update

Santa Clara County in CA: 9.4% (where Intel, Google, Yahoo, Cisco are.)

Simple ways to save money now

. Save gas money. In the past five months gasoline prices have dropped 56%, from an average price of $4.11 to $1.80 a gallon. Also, combine multiple errand trips to one trip, and don't drive your big 4x4 SUV unless necessary.

. If a couple dines out four times in a month the expense is close to $300 in low-cost areas and $600 in higher-cost regions. Cut back on dinning-out to fewer times will save money.

. Get lower cost phone services. Cancel landline long distance service and use phone card or Skype. Reduce cable bill costs by choosing cheaper program package.

. Better insulate your home to reduce winter energy costs.

. Shop smart by doing comparative shopping online, by looking for coupon, by looking for free shipping or lower cost shipping, etc.

. Keep receipt for returning the merchandise, or to get the lower price if the store lower the price further.

Simple case study of nest egg change from 12 months ago

This is a made up case study in considering a household's assets, for 12 months change. This is to compare with the stats published in the news of 4.7% change in a quarter. I found using the numbers in my case study the asset is down 18.3% for the year and is comparable with the 4.7%/quarter number.

12 months ago:

100,000 cash savings
100,000 stock/bond investment
80,000 IRA (baby boomer average)
207,000 home, no outstanding mortgage (U.S. median price), or consider this as home equity
--------------
487,000 Total nest egg

12/2008:
104,000 cash savings
62,000 stock/bond investment
50,000 IRA
182,000 home (U.S. median price change, down 12.1% from 12 months ago)
---------------
398,000 Total nest egg (or down 18.3% from 12 months ago)

U.S. car makers bail out

NEW YORK (CNNMoney.com) -- President Bush announced a rescue plan for General Motors and Chrysler LLC Friday morning that will make $13.4 billion in federal loans available almost immediately.

The money will come from the $700 billion fund set aside to bail out Wall Street firms and banks in October.

Madoff scandal and Ponzi scheme

Bernard Madoff, founder and president of Bernard Madoff Investment Securities, a market-maker for hedge funds and banks, was charged by federal prosecutors in a $50 billion fraud at his advisory business.

Madoff, 70, was arrested today at 8:30 a.m. by the FBI and appeared before U.S. Magistrate Judge Douglas Eaton in Manhattan federal court. Charged in a criminal complaint with a single count of securities fraud, he was granted release on a $10 million bond guaranteed by his wife and secured by his apartment. Madoff’s wife was present in the courtroom.

"It’s all just one big lie," Madoff told his employees on Dec. 10, according to a statement by prosecutors. The firm, Madoff allegedly said, is "basically, a giant Ponzi scheme." He was also sued by the Securities and Exchange Commission.

====

Ponzi scheme

A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business. It is named after Charles Ponzi. The term "Ponzi scheme" is used primarily in the United States, while other English-speaking countries do not distinguish in colloquial speech between this scheme and other forms of pyramid scheme.

A snapshot of the layoffs - 11/2008 and follow up

Circuit City	7,300	11/3/2008	Retail
Hartford Financial	500	11/4/2008	Financial
GlaxoSmithKline	1,000	11/5/2008	Pharmaceuticals/Healthcare
Fidelity	1,300	11/6/2008	Financial
Mattel	1,000	11/6/2008	Toy
Borgata Hotel Casino	375	11/6/2008	Hotels Casinos Resorts
La-Z-Boy	850	11/6/2008	Retail
Avis	700	11/6/2008	Auto services
Ford	2,600	11/7/2008	Auto
General Motors	3,600	11/7/2008	Auto
DHL Express	9,500	11/10/2008	Logistics
Nortel	1,300	11/10/2008	Technology
Circuit City	700	11/10/2008	Retail
General Motors	1,900	11/10/2008	Auto
Altria	unspecified	11/10/2008	Tobacco
Horizon Lines	70	11/11/2008	Logistics
Marietta Corp	130	11/11/2008	Manufacturing
Yum Brands	several hundred	11/12/2008	Food Service
Morgan Stanley	8,360	11/12/2008	Financial
Cessna	665	11/13/2008	Aerospace
ADT	380	11/13/2008	Security
University of Texas	3,800	11/13/2008	Education
Sprint	unspecified	11/13/2008	Telecommunications
U.S. Steel	677	11/13/2008	Steel
OfficeMax	245	11/13/2008	Retail
Sun Microsystems	6,000	11/14/2008	Technology
Fidelity	1,700	11/14/2008	Financial
Citigroup	53,000	11/17/2008	Financial
Pepsi Bottling Group	3,000	11/18/2008	Beverages
Louisiana-Pacific	200	11/18/2008	Construction
Time Inc.	600	11/19/2008	Media
HSBC Mortgage	325	11/19/2008	Financial
Pilgrim's Pride	335	11/19/2008	Food Products
Boeing	800	11/19/2008	Aerospace
Rolls-Royce Group Plc	2,000	11/19/2008	Aerospace
Akamai Technologies	110	11/19/2008	Technology
Bank of New York Mellon	1,800	11/20/2008	Financial
Wendy's	59	11/20/2008	Food Service
The Associated Press	400	11/20/2008	Media
Washington Mutual	1,600	11/20/2008	Financial
Washington Mutual	7,600	12/1/2008	Financial
U.S. Steel	3,500	12/2/2008	Steel
City of Atlanta	222	12/2/2008	Government
State Street	1,800	12/3/2008	Financial
Jefferies Group	358	12/3/2008	Financial
Adobe Systems	600	12/3/2008	Technology
Carlyle Group	100	12/3/2008	Financial
Credit Suisse Group	5,300	12/4/2008	Financial
AT&T Inc.	12,000	12/4/2008	Financial
DuPont	2,500	12/4/2008	Chemicals
Viacom	850	12/4/2008	Media
NBC Universal	500	12/4/2008	Media
Avis Budget Group Inc.	2,200	12/4/2008	Auto services
Cummins	500	12/5/2008	Industrial Equipment
Newsday	100	12/5/2008	Media
General Motors	2,000	12/5/2008	Auto
Gentex	400	12/5/2008	Technology
Pratt & Whitney	350	12/5/2008	Aerospace
Paetec	222	12/5/2008	Technology
3M	1,800	12/8/2008	Miscellaneous
Dow Chemical	5,000	12/8/2008	Chemicals
Anheuser-Busch InBev	1,400	12/8/2008	Beverages
Sony Corp	8,000	12/9/2008	Technology
Danaher Corp.	1,700	12/9/2008	Scientific Equipment
Wyndham Worldwide	4,000	12/9/2008	Hotels Casinos Resorts
Novellus	367	12/9/2008	Scientific Equipment
National Football League	150	12/9/2008	Entertainment, Sports
Principal Financial Group	550	12/9/2008	Financial
Rio Tinto	14,000	12/10/2008	Mining
Electronic Arts	unspecified	12/10/2008	Technology
SKF	2,500	12/10/2008	Industrial Equipment
Office Depot	2,200	12/10/2008	Retail
National Public Radio	85	12/10/2008	Media
Stanley Works	2,000	12/11/2008	Household and Personal Products
Sara Lee	700	12/11/2008	Food Products
Total:	199,450

==========================================
Update: 2/10/2009

NEW YORK (CNNMoney.com) -- General Motors announced Tuesday it is cutting 10,000 workers, or 14% of its salaried jobs worldwide. A third of those job losses will be in the United States.

The troubled automaker also said it will cut the pay for its remaining U.S. salaried staff.

===========================================

Update: 2/13/2009

Hit by expectations of further financial losses, Pioneer Corp. has announced 10,000 job cuts, plant closings in the US and UK, and plans to leave the plasma display market. Job cuts will include 6,000 full-time salaried employees and 4,000 contract workers both in Japan and other countries.

In a move resulting in some 350 job layoffs, the company will shut down two overseas plasma display assembly plants, located in Pomona, California, and Castleford, Britain. Pioneer plans to exit the plasma display business entirely by March of this year, according to wire reports.

=========================

2/24/2009 update:

Employers cut nearly 600,000 jobs in January, the biggest loss since 1974. That sent the unemployment rate to 7.6 percent, the highest in 16 years. Since the recession began in December 2007, companies have cut a net total of nearly 3.6 million jobs. Home Depot Inc., Boeing Co., Pfizer Inc., Caterpillar Inc., Micro (2000), Spansion (3000) each announced job cut.

==========================

3/5/2009 update:

Northrop Grumman to cut 750 jobs.

Household worth drops by $2.8 trillion

The government reported Thursday that household debt in the third quarter fell for the first time ever. Meanwhile, net worth dropped by the largest amount on record based on data going back to 1951.

Consumer debt fell an annualized $30 billion, or 0.8% in the third quarter to $13.91 trillion, according to the Federal Reserve's flow of funds report.

Americans holding less debt may sound like a positive, but it also means consumers are spending less, as debt has become more expensive and harder to come by.

Furthermore, the U.S. economy has shed 1.9 million jobs so far in 2008.

Consumers watched their net worth fall for the fourth quarter in a row as it dropped by $2.8 trillion, or 4.7%, to $56.5 trillion, dragged down by huge drops in home values and in the stock market. It was the largest decline in the 57-year history of the report.

When to start collecting social security benefits?

Figuring out whether to take Social Security at 62 -- the earliest age you can collect -- or waiting until you're older has always been one of the most important questions retirees and wanna-be retirees face.

But making this call is even more critical today. The reason: working and saving a few extra years combined with the larger check you would receive by postponing Social Security can help you rebuild retirement accounts that have been devastated by the bear market.

Of course, some people may have no choice but to collect as soon as they can. If you're forced into early retirement by a layoff or health problems before you have a chance to build an adequate nest egg, taking Social Security benefits ASAP may be the only option you have.

But if you're approaching age 62 in good health and you're in reasonable financial shape as well, waiting a few years can significantly boost the size of your monthly check for the rest of your life, not to mention pass on a larger payment to your spouse, if he or she receives a survivor benefit based on your work record.

So the take-it-now-or-later question essentially comes down to this: Will you (and your spouse, if you're married) be financially better off collecting payments for more years even if they're smaller? Or will you come out ahead with payments that may be larger by 25% or more even if you don't start getting them until you're a bit older?

The answer largely depends on how long you expect to live. If you think you'll be around long enough so that the total amount you collect from the bigger but later payments will be larger, then you're better off postponing.

If, on the other hand, you don't think you'll live long enough to overcome the late start in collecting benefits, then you're better off claiming Social Security sooner.

You can get a rough sense what size benefit you would qualify for at three different ages -- 62, your full retirement age and age 70 -- by going to the Quick Benefit Calculator on the Social Security site. For a more accurate estimate that calculates the size of your check using your actual work history, you can check out Social Security's new Retirement Estimator.

By comparing the size of the total amount you would receive year by year by claiming benefits at different ages, you can see how long it would take for you to break even under different scenarios.

Or you can get a very quick and easy estimate of whether you're better off starting at age 62 or your full retirement age by going to Met Life's Social Security Decision Tool.

Just plug in your age, gender and your most recent annual salary, and a neat little graph will pop up that shows your break-even age (76 in the 62 vs. full retirement age scenario), your odds of reaching that age and how much more you'll receive in total benefits if you live until 85 or 92.

This tool doesn't factor in any investment value for your Social Security benefits, however. Why, you may ask, does that matter if you just plan on spending the money anyway? Well, think of it this way. If you receive, say, $1,000 a month in Social Security benefits, that's $1,000 you don't have to withdraw from your retirement investments. Which means that $1,000 can continue to earn a return. If you assume a conservative rate of return on your retirement savings -- say, 4% to 5% after taxes each year -- your break-even period increases by roughly three years. For most people, especially someone in decent health -- that still usually makes postponing a good deal.

Married couples

The analysis gets more complicated for married couples. The idea is to maximize the amount a couple will collect as long as at least one of them is living. Recent research shows that the best strategy for many couples is for the wife to take Social Security at 62 and the husband to wait until he's 66 or older.

The reasoning is that husbands usually earn more than their wives -- which gives them a larger check -- but they die sooner. By having the wife start at an earlier age, the couple can collect more of her benefits while they're both living. And by the husband holding off to a later age for a larger check, the wife can then qualify for a larger survivor's benefit after her husband dies.

The best age for a husband and wife to begin collecting their respective benefits depends on the difference in their ages and earnings. To see what the ideal ages would be in your situation, check out Table 4 in a Boston College Center For Retirement Research paper titled "Why Do Women Claim Social Security Benefits So Early?". Or you can crunch the numbers on your own by downloading the "Start Social Security at 62, 66 or 70" program at the Analyze Now! site.

One final note: Recent research by T. Rowe Price shows that working, saving more and collecting Social Security later can be an especially powerful combination for increasing your income in retirement. For example, if you retire at 65 instead of 62 and save 15% of salary during those three years, you may be able to increase your combined income from investments and Social Security by more than 20%.

Bottom line: If your retirement accounts have taken a big hit in this crisis, you've probably already begun taking a closer look at your investing strategy. That's fine. But since you have little control over the financial markets, you may be able to improve your retirement prospects a lot more by re-thinking when you plan to retire and at what age you'll begin collecting Social Security.

Record high foreclosure

One in 10 borrowers in America are either delinquent or in foreclosure. 1.35 million homes were in foreclosure in the third quarter.

Many of those troubled borrowers are in California and Florida, which have among the highest delinquency rates in the nation.

Forbes 2008 Best and Worst performing cars

Based on predicted reliability, recalls and rate of depreciation: (source: Forbes)

(not in particular order)

Best:
. Acura TSX
. Honda Civic
. Honda CRV
. Honda Accord
. Scion xD
. Toyota Camry Hybrid
. Toyota Rav-4
. Toyota Prius
. Toyota Yaris
. Lexus IS 250

Worst:
. GMC Acadia
. Hyundai Vera Cruz
. Saturn Vue
. Jeep Liberty
. Ford Explorer
. Hyundai Santa Fe
. Nissan Xterra
. Jeep Grand Cherokee
. Chrysler Sebring
. Dodge Avenger


========
from Consumer report:

Best
-------------------
Toyota Prius
Lexus LS
Toyota Highlander
Lexus IS
Toyota RAV4 (4-cyl.)
Honda Civic
Honda Accord (4-cyl.)
Toyota Corolla
Mazda MX-5 Miata
Honda CR-V

Worst
--------------------
Buick Terraza
Chevrolet Uplander
Saturn Relay
Land Rover Discovery & LR3
Volkswagen Touareg
Pontiac Aztek
Nissan Armada (4WD)
Chevrolet S-10 (4WD)
GMC S-15 (4WD)
Chevrolet Blazer
Volkswagen Cabrio
Buick Rendezvous (AWD)

Regulators ignored warnings about risky mortgages, delayed regulations on the industry

Who are responsible for the mortgage meltdown? U.S. economy, and so many peoples' investment/savings and jobs are ruined by a few greedy people again? When will the majority of the people be freed from hurting by a few rotten apple? The government and the congress who are elected by us the people can turn their back so easily, and they make compromise to the special interests...

====

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

"Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying -- along with assurances from banks that the troubled mortgages were OK -- regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

"These mortgages have been considered more safe and sound for portfolio lenders than many fixed-rate mortgages," David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.

The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.

In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Today, in the midst of the worst housing recession in a generation, the proposal reads like a list of what-ifs:

--Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

--Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

--Regulators proposed a cap on risky mortgages so a string of defaults wouldn't be crippling.

--Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

--Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

Those proposals all were stripped from the final rules. None required congressional approval or the president's signature.

"In hindsight, it was spot on," said Jeffrey Brown, a former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending.

Federal regulators were especially concerned about mortgages known as "option ARMs," which allow borrowers to make payments so low that mortgage debt actually increases every month. But banking executives accused the government of overreacting.

Bankers said such loans might be risky when approved with no money down or without ensuring buyers have jobs but such risk could be managed without government intervention.

"An open market will mean that different institutions will develop different methodologies for achieving this goal," Joseph Polizzotto, counsel to now-bankrupt Lehman Brothers, told U.S. regulators in a March 2006.

Countrywide Financial Corp., at the time the nation's largest mortgage lender, agreed. The proposal "appears excessive and will inhibit future innovation in the marketplace," said Mary Jane Seebach, managing director of public affairs.

One of the most contested rules said that before banks purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes. Some bankers now blame much of the housing crisis on brokers who wrote fraudulent, predatory loans. But in 2006, banks said they shouldn't have to double-check the brokers.

"It is not our role to be the regulator for the third-party lenders," wrote Ruthann Melbourne, chief risk officer of IndyMac Bank.

California-based IndyMac also criticized regulators for not recognizing the track record of interest-only loans and option ARMs, which accounted for 70% of IndyMac's 2005 mortgage portfolio. This summer, the government seized IndyMac and will pay an estimated $9 billion to ensure customers don't lose their deposits.

Last week, Downey Savings joined the growing list of failed banks. The problem: About 52% of its mortgage portfolio was tied up in risky option ARMs, which in 2006 Downey insisted were safe -- maybe even safer than traditional 30-year mortgages.

"To conclude that 'nontraditional' equates to higher risk does not appropriately balance risk and compensating factors of these products," said Lillian Gavin, the bank's chief credit officer.

At least some regulators didn't buy it. The comptroller of the currency, John C. Dugan, was among the first to sound the alarm in mid-2005. Speaking to a consumer advocacy group, Dugan painted a troublesome picture of option-ARM lending. Many buyers, particularly those with bad credit, would soon be unable to afford their payments, he said. And if housing prices declined, homeowners wouldn't even be able to sell their way out of the mess.

It sounded simple, but "people kind of looked at us regulators as old-fashioned," said Brown, the agency's former deputy comptroller.

Diane Casey-Landry, of the American Bankers Association, said the industry feared a two-tiered system in which banks had to follow rules that mortgage brokers did not. She said opposition was based on the banks' best information.

"You're looking at a decline in real estate values that was never contemplated," she said.

Some saw problems coming. Community groups and even some in the mortgage business, like Welch, warned regulators not to ease their rules.

"We expect to see a huge increase in defaults, delinquencies and foreclosures as a result of the over selling of these products," Kevin Stein, associate director of the California Reinvestment Coalition, wrote to regulators in 2006. The group advocates on housing and banking issues for low-income and minority residents.

The government's banking agencies spent nearly a year debating the rules, which required unanimous agreement among the OCC, Federal Deposit Insurance Corp., Federal Reserve, and the Office of Thrift Supervision -- agencies that sometimes don't agree.

The Fed, for instance, was reluctant under Alan Greenspan to heavily regulate lending. Similarly, the Office of Thrift Supervision, an arm of the Treasury Department that regulated many in the subprime mortgage market, worried that restricting certain mortgages would hurt banks and consumers.

Grovetta Gardineer, OTS managing director for corporate and international activities, said the 2005 proposal "attempted to send an alarm bell that these products are bad." After hearing from banks, she said, regulators were persuaded that the loans themselves were not problematic as long as banks managed the risk. She disputes the notion that the rules were weakened.

In the past year, with Congress scrambling to stanch the bleeding in the financial industry, regulators have tightened rules on risky mortgages.

Congress is considering further tightening, including some of the same proposals abandoned years ago.

U.S. Recession Started since 12/2007

The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .

Schwarzenegger on Monday declared a fiscal emergency

California Gov. Arnold Schwarzenegger on Monday declared a fiscal emergency, calling for fast legislative action to alleviate the state's $11.2 billion shortfall in revenue.

"Without immediate action our state is headed for a fiscal disaster and that is why with more than two dozen new legislators sworn in today - I am wasting no time in calling a fiscal emergency special session," Schwarzenegger said in a news release.

CA jobless benefits extended

As of 11/21/08, CA unemployment rate is at 8.2%.

Federal legislation enacted in July provided up to 13 weeks of extended benefits for workers who exhausted their regular UI benefits in California and across the country. The new legislation adds up to seven weeks to the earlier extension, a total of up to 20 weeks of extended benefits. The new legislation also includes an additional extension of up to 13 weeks for high unemployment states. Workers in those states will be eligible for a total of up to 33 weeks of extended benefits.

If you are affected by the additional extended benefit weeks or the second extension, the EDD will notify you by mail.

WHO IS ELIGIBLE FOR THE FIRST EXTENSION

The first extension can be filed on or after July 6, 2008. You may be potentially eligible for the first extension if you:

• Are fully or partially unemployed on or after July 6, 2008,
• Have exhausted their entitlement to a regular UI claim,
• Are not qualified to file a new regular claim,
• Have had a valid claim that began on or after May 7, 2006, AND
• Meet all eligibility criteria.

If you already have an extended benefit claim, refer to the “WHO IS ELIGIBLE FOR THE SECOND EXTENSION” section below for more information.

SECOND EXTENSION

Once you have collected all extended benefits on your first extension claim, you will be eligible to file a second extension claim. The Department will automatically file the second extension and send you additional continued claim forms. No action is required on your part.

WHO IS ELIGIBLE FOR THE SECOND EXTENSION

You may be eligible for a second extension if you:

• Were eligible for the first extension,
• Have no benefits remaining on the first extension,
• Are not qualified to file a new regular claim, AND
• Meet all eligibility criteria.

S&P sinks to 1997 low

Wall Street slumped Thursday, with the S&P 500 plunging to an 11-1/2 year low as fears of a prolonged recession sparked a massive selloff.

Treasury prices rallied as investors sought the comparative safety of government debt. The dollar was mixed versus other major currencies. Oil prices plunged

The Standard & Poor's 500 (SPX) index lost 6.7% and closed at its lowest point sine April 14, 1997.

The Dow Jones industrial average tumbled (INDU) 5.6% and the Nasdaq composite (COMP) slumped 5.1%. Both the Dow and Nasdaq closed at their lowest points since March 12, 2003, which was just above the low of the last bear market.

11/20/2008 Congress Extends Unemployment Benefits

The Senate voted to provide seven additional weeks of payments to people who have exhausted their benefits. Those in states where the unemployment rate is above 6% would be entitled to an additional 13 weeks above the 26 weeks of regular benefits. Benefit checks average about $300 a week nationwide.

Last week there were half million new jobless claims filed. Companies reporting layoffs in past week include Citigroup, which slashed 20% of its workforce, or 50,000 jobs, the biggest cut by a corporation in 15 years. Financial services firm Fidelity Investments announced that it will cut 1,700 jobs, and Sun Microsystems reported that it would lay off 6,000 people, or 18% of its work force.

2 more banks failed

Franklin Bank, a Houston, Texas-based bank and Security Pacific Bank, a Los Angeles, Calif.-based bank were shut down by state regulators Friday, marking the 18th and 19th bank failures this year.

7 ways car dealers make you pay extra

Narrated from Consumer Reports:

Your goal is to get the best car at the best price.

Mixing negotiation - Salespeople like to combine the vehicle price, trade-in, and/or financing negotiation, often asking you what you can afford to pay per month. This gives them more latitude to provide a favorable figure in one area while inflating figures in other areas. In the end, this could cost you more overall.

Avoid this trap by negotiating one thing at a time, starting with the price of the car. Approach this as if you were paying cash, with no trade-in. To get the best deal, you should go in with a starting price thats based not on the vehicles sticker price but on how much the dealer paid for it.

Make it clear to the salesperson that you want the lowest possible markup over your starting price, and that youll visit other dealerships selling the same vehicle and will buy from the one with the best price.

0 down, 0 interest, 0 payment for the first year - Be sure you know what the interest rate will be after the first year, and compare with rates that are currently available. Keep in mind that many buyers dont qualify for zero-percent loans and other low rates. Knowing the current rates can also help you avoid being talked into a rate thats higher than what you could get elsewhere.

Lease a car - Many leasing customers assume that the monthly payment the salesperson quotes is a nonnegotiable figure. Thats not true. The figure is often based on a vehicles sticker price with no discount, and can be negotiated just as if you were buying the car. In fact, to keep the transaction simple, you can negotiate the vehicle price before mentioning that you want to lease.

Other negotiable lease items include the down payment, annual mileage limit, and purchase-option price. Just as when buying, you can have dealers compete against each other, giving your business to the one that offers you the best deal.

Financing - Dealers like to arrange the financing for your vehicle because it gives them another source of profit. But the interest rate they offer may be higher than you could get elsewhere. Dont make financing a purchase-time decision. Before visiting the dealership, make sure you know how youll pay for the vehicle. Call ahead to find out what the dealers rate is, and compare it with what you could get from banks, credit unions, or other lending institutions. If you are preapproved for a loan, you can keep the financial arrangements out of the negotiations.

Knowing your credit score can also protect you if a disreputable dealer tries to give you a higher interest rate than you deserve. Any score over 700 should ensure you the lowest rates.

Add-ons and options - Salespeople will sometimes try to make up for a low price on a vehicle by talking you into a lot of optional equipment. Do your homework, so you know what options you want and which you can live without. Many options are available separately, but others can only be bought as part of a package. Consider these carefully. Option packages can make you pay for features you dont need to get a few you want. Its best to choose a vehicle trim level that gives you most of the options you want, then add other options separately. If a model doesnt have the features at the price you want, consider another.

Other extras gimmicks - fabric protection, rust protection, etc.

Extended Warranty - Consumer Reports does not recommend buying an extended warranty unless you plan on keeping a trouble-prone vehicle for an extended time after the original warranty runs out. Most manufacturer warranties are sufficient, with bumper-to-bumper coverage of at least three years or 36,000 miles and powertrain coverage thats often longer. If you want an extended warranty, ones offered by the auto manufacturer are typically better than those offered by third-party companies.

Mass layoffs at the highest level since 9/11

NEW YORK (CNNMoney.com) -- The number of layoff announcements involving at least 50 workers rose in September to the highest level since the Sept. 11 terrorist attacks seven years ago, the government said Wednesday.

There were 2,269 mass layoff actions, up 497 from August, according to statistics released by the Labor Department. That was the most mass layoffs since the 2,407 in September 2001.

China's Exposure to Wall Street Financial Crisis

NPR: Stephen Green, head of research at Standard Chartered Bank in Shanghai, speaks with host Liane Hansen about how the global financial crisis has hit China. China has close to $1.3 trillion invested in U.S. debt with up to $500 billion in agency securities.

According to web source, five banks: ICBC, BOC, CCB, CITIC, CMB invested USD $25B in Fannie Mai and Freddie Mac debt.

Repost "That Hissing Sound" by Paul Krugman

Krugman has just won 2008 Nobel prize. He warned about housing bubble in 2005. See detail.

Krugman said Monday that the global financial crisis is "terrifying," but expressed cautious hope that a corner is being turned.

Dutch government pledges $273 billion to EU meltdown plan

THE HAGUE, Netherlands (AP) -- Prime Minister Jan Peter Balkenende said Monday the Netherlands will guarantee 200 billion euros ($272.78 billion) in loans between banks to help ease the financial crisis.

The Dutch pledge is part of a raft of proposals to unblock frozen credit markets agreed on Sunday in Paris with other governments sharing the euro currency.

Individual packages already announced by the governments of Germany, France, Britain and others add up to well over 1 euro trillion.

Balkenende said the Dutch measure would be operational within days and should help the financial sector return to normal.

"Nearly all banks, however strong their position, are having trouble with liquidity," Balkenende said, blaming the problem on a lack of confidence.

"The government is prepared to guarantee a part of the loans between banks and between financial institutions and banks so that the money stream starts running again," he said.

The Dutch guarantee comes on top of a 20 billion euros fund the government set up last week to support financial institutions in the Netherlands.

Finance Minister Wouter Bos said last Thursday that money would be available to any "essentially healthy" company that requests it.

After the nationalization of the Dutch operations of Fortis NV and ABN Amro earlier this month, the only remaining large Dutch financial companies with stock market listings are bank and insurer ING Groep NV and insurer Aegon NV.

House GOP objects to spending in $150 billion stimulus package

WASHINGTON (CNN) -- House Republicans on Monday objected to new spending measures that congressional Democrats are considering as they draft a $150 billion economic stimulus package.

n a letter to House Speaker Nancy Pelosi, Ohio Rep. John Boehner, the top Republican in the House, called the proposed spending "an irresponsible, business-as-usual approach that has earned this Congress the lowest approval ratings ever recorded."

A Democratic leadership aide said the stimulus package Democrats were drafting would include "a heavy emphasis on help to state and local governments."

But in their letter to Pelosi, Boehner wrote, "nothing currently being discussed by the majority as 'stimulus' will stabilize the economy long-term."

"Nothing being discussed will ease the uncompetitive nature of our nation's tax rates. Nothing being discussed will bring a single dollar of private capital into our markets, which would help stabilize and restore American families' savings and retirement accounts. And nothing being discussed will help small businesses compete and thrive," Boehner wrote.

Instead, House Republicans proposed a number of measures that, they say, will "turn the corner towards real economic growth," including:

Removing legal barriers to speed up new offshore oil drilling. A law banning offshore drilling expired October 1, but Republican lawmakers say lawsuits could block new offshore rigs and want judges to quickly rule on the cases.

Lowering taxes on income that U.S. corporations earn from their overseas subsidiaries.

Eliminating capital gains taxes on the sale of homes up to $500,000 for a couple.

Suspending capital gains taxes on securities purchased during the next two years.

Extending government deposit insurance to business transaction accounts.

Directing the government to guarantee inter-bank loans.

The GOP letter was released as Pelosi met Monday morning with a group of economists, including Larry Summers, a treasury secretary in the Clinton administration, and Nobel Prize-winning economist Joseph Stiglitz.

After meeting with the economists, Pelosi, a California Democrat, said the goals of the stimulus package would be "to provide relief for the middle class, to encourage consumer confidence and to have regulatory reform by re-writing the rules for financial institutions."

Congress passed a $170 billion stimulus package in February after the economy showed signs of weakening. That package included a measure that sent a stimulus check of up to $600 to taxpayers who made less than $75,000 a year. The checks were mailed out this summer.

The stimulus package the Democrats are now working on would work differently: It could provide states with funds to cover mandatory Medicaid spending, which would help state governments avoid cuts to education and other programs, Democratic leadership aides said.

The aides also said the stimulus package could provide funds to help states struggling with their own budgets, as well as infrastructure money, an extension of unemployment benefits, food stamps and more money for low-income energy assistance -- all measures that have passed the House before.

Rep. Barney Frank, D-Massachusetts and the chairman of the House Financial Services Committee, said government jobs were one of the few bright spots in the economy.

"The only good sign on jobs for the year has been that state and local governments have been adding jobs, which only mildly offset the great loss in the private sector," Frank said. "If we do not go to the aid of state and local governments now, they will now become an added factor to the job loss rather than something of a mitigating factor."

The stimulus package would be separate from the $700 billion bailout package passed by Congress this month to help solve the credit crisis in the financial sector that has disrupted credit markets worldwide.

A Senate Republican leadership aide on Friday said Senate Republicans are skeptical of a second stimulus but did not suggest there is outright opposition to one.

Dutch government injects cash

AMSTERDAM, Oct 10 (Reuters) - Dutch banks and insurers on Friday welcomed the Dutch government's plan to set aside 20 billion euros ($27.5 billion) in capital to protect the country's financial sector, but reactions among them were mixed.

The following are the reactions from the nation's financials:

- ING said it welcomed the plans as "important and necessary steps to restore confidence and bring stability", adding that as a financially solid company it will assess the plan and the possible implications once more details are available.

- A spokesman for Aegon gave no comment on whether the insurer would tap into the Dutch government's funding, but said the group welcomed the measures. Aegon reiterated Thursday's statement that it is taking steps to enhance its capital position and reduce risk. The insurer had also said it expected to maintain a level of capital above AA requirements and a strong liquidity position.

- Mid-cap SNS Reaal said it did not need to use the government's funding. "Our bank does not have liquidity or solvency problems," spokeswoman Erna van der Neut said, adding that SNS can also obtain 500 million euros in capital from an independent foundation if necessary.

- Thierry Schaap, the chief executive of online brokerage BinckBank, said the company did not intend to use the cash, a comment echoed by Floris Deckers, chief executive of Dutch private bank Van Lanschot.

- Unlisted Dutch bank NIBC, whose merger plans with Kaupthing Bank were scrapped earlier this year, said it had solved its problems. "We were one of the first to take action and we solved our US problem quite definitely," an NIBC spokesman said. "NIBC is not the one they should be worried about at the moment."

Citi drops out; Wells wins battle for Wachovia

Wells Fargo & Co. has won the battle for Wachovia Corp.

Citigroup Inc. has withdrawn from negotiations brokered by federal regulators that sought a compromise to the competing bids from Wells and Citigroup. Wachovia's brokerage business is in St. Louis and employs 4,800 people.

The issue is likely to go to court. But New York-based Citigroup (NYSE:C) says it will no longer seek to block Wells’ proposed $15.1 billion purchase of Wachovia.

Timeline of the finance crisis

Friday September 12

6pm BST: With Lehman Brothers facing collapse, US officials struggle to find a buyer for the distressed investment bank.

Saturday September 13

2pm BST: Teams of bankers flood the New York Federal Reserve building for the weekend to explore options for Lehman. Bank of America and Barclays head list of potential purchasers.

Sunday September 14

2pm BST: Talks run into a third day. Traffic in New York snarls up under the sheer weight of backed-up, blacked-out limousines transporting the stressed-out bankers.

8pm BST: Barclays pulls out of the bidding and Bank of America turns its attention to Merrill Lynch.

Monday September 15

4am BST: Bank of America agrees a $50bn rescue bid for Merrill Lynch.

5.30am BST: Lehman files for bankruptcy.

7am BST: 4,500 Lehman staff at its Canary Wharf HQ are told it's all over.

9am BST: Shares in HBOS, Britain's biggest mortgage lender, crash 34% in early trading.

12pm BST: Shares plunge in a panicked morning on the London Stock Exchange, where the FTSE sheds almost 400 points.

2pm BST: Cardboxes are in demand at Canary Wharf as Lehman workers pack up and leave.

4.30pm BST: FTSE 100 closes almost 4% lower at 5,202.4, a 210 point drop, wiping out £50bn of value.

8pm BST: US authorities trying to put a rescue package together for insurance giant AIG agree a $20bn lifeline.

9pm BST: On Wall Street the Dow Jones industrial average plunges 504 points to close at 10917.51

Tuesday September 16

1am BST: Asian markets, which were closed yesterday, plummet in early trading.

7am BST: Japan's Nikkei index closes 570 points down at 11,609.

7.30am BST: Barclays confirms that it is still talking to Lehman about buying some assets.

8.30am BST: The FTSE plunged almost 100 points in early trading.

10am BST: HBOS shares halve in value to a low of 88p. Spokesman insists it is strong and well capitalised.

1pm BST: Wall Street titan Goldman Sachs reports 70% drop in profits.

1.50pm BST: FTSE 100 falls through the 5,000-point mark.

3pm BST: Pressure piles on HBOS, whose shares are still down 30%, with a downgrade from Standard & Poor's.

4.30pm BST: FTSE 100 slumps 178.6 points to close at 5025.6, wiping another £42bn off leading shares.

9pm BST: Dow finishes up 141.5 points at 11,059 after zig-zagging around all day.

10pm BST: Barclays seals deal for Lehman's US assets.

Wednesday September 17

7am BST: Nikkei rallies to 11,749, up 140 points.

2am BST: US government agrees to give AIG $85bn to keep afloat, in return for control of the company.

9am BST: Lloyds TSB and HBOS are locked in merger talks.

10am BST: Russia suspends stock market trading.

11am BST: More volatile trading on the FTSE, but silence from Lloyds and HBOS.

Noon BST: Libor - the borrowing rate banks charge each other - hits a seven-year high as the panic escalates.

1pm BST: Barclays hints that it might buy Lehman's UK assets too.

1.30pm BST: Lloyds finally confirms it is negotiations with HBOS.

3pm BST: Bank of England extends its special liquidity scheme, after pressure from banks.

4pm BST: Morgan Stanley shares fall 30%, as it become the latest bank under fire.

4.30pm BST: FTSE closes below 5,000 for first time since May 2005, down 113.2 points at 4912.4.

6.30pm BST: Merrill Lynch's John Thain defends $200m bonus pool for top brass.

7pm BST: Reports emerge that regulators are probing the practice of "naked" short sellers.

9pm BST: In fresh gloom on Wall Street, the Dow sheds 449 points to close at 10,609.

9.30pm BST: HBOS takeover is finalised.

Midnight BST: Morgan Stanley looks for salvation through a merger with Wachovia.

Thursday September 18

6am BST : Russian stock markets remain closed for a second day. More panic in Asia, where the Nikkei drops 260 points to 11,489.

7am BST: £12.2bn takeover of HBOS is announced to the City, amid fears of massive job cuts.

8.30am BST: As the FTSE keeps falling, the chancellor, Alistair Darling, insists we can ride out the storm.

9am BST: Gold is at a six-week high as investors flee shares and pile into commodities.

10am BST: Central banks around the world pump $180bn into the system in a concerted effort to end the crisis.

11am BST: India's stock market fluctuates wildly - with shares plunging before recovering after the government promises to help.

Noon BST: The Lloyds CEO, Eric Daniels: "This is a unique moment in time when we could make it happen."

1pm BST: Gordon Brown vows to end "irresponsible behaviour" in the City.

2pm BST: Christopher Cox, America's most senior financial markets regulator, takes aim at short sellers.

3pm BST: Goldman Sachs and Morgan Stanley shares fall sharply again on Wall Street.

4.30pm BST: London's relief rally does not last, as the FTSE 100 closes 32.4 points lower at 4880.0.

5pm BST: With £2bn wiped off the value of Lloyds, analysts question whether the deal makes sense.

6pm BST: UK's Financial Services Authority announces a ban on the short-selling of bank shares.

9pm BST: Wall Street closes 410 points higher as the US Federal Reserve starts briefing on an ambitious plan to create a federal "bad bank".

Friday September 19

7am BST: Asia starts the recovery, with the Nikkei closing up 431 points at 11,920.

8am BST: FSA names the 29 firms it hopes to save by banning short-selling.

9am BST: FTSE roars back, up 315 points in early trading to 5,195 thanks to the short-selling ban and the US "bad bank" plan.

10.30am BST: Russian stock markets bounce back after the government pledges 500bn roubles to fight the crisis.

Government rushes through increase in guarantees for British bank deposits to £50,000.

Wells Fargo scuppers Citigroup's takeover of Wachovia.

US jobs data are worse than expected.

9pm BST: On Wall Street, the DJIA closes at 11388.44, up 368.75 points.

Saturday September 20

The US treasury secretary, Henry Paulson, spends the weekend trying to thrash out his $700bn "bad bank" plan.

Sunday September 21

The Financial Services Authority holds crisis talks over a possible bail-out of Bradford & Bingley, which has seen its shares plunge 90% this year so far.

The administrator PWC battles to sell Lehman Brothers' UK operations.

Monday September 22

Morgan Stanley and Goldman Sachs give up their status as investment banks and become traditional commercial banks that accept deposits from ordinary people and businesses, marking a dramatic change in the make-up of Wall Street.

Japan's Nomura buys Lehman Brothers' Asian operations.

Robert Willumstad, the departing head of AIG, gives up his $22m (£12m) golden parachute.

Alistair Darling tells the Labour party conference that the City's bonus culture cannot continue.

Tuesday September 23

New figures show UK mortgage approvals hit a record low in August.

Political opposition to the $700bn bail-out plan grows in Washington, pushing shares prices lower.

Nomura buys Lehman Brothers' UK operations, saving 2,500 City jobs.

The FSA starts to name and shame the bank short-sellers.

Gordon Brown tells the Labour party conference this is a time for experience, not a novice in No 10.

Wednesday September 24

Warren Buffett invests $5bn (£2.7bn) in Goldman Sachs and warns that failure to agree a $700bn bailout could result in an "economic Pearl Harbour".

The FBI starts an investigation into Fannie Mae and Freddie Mac, AIG and Lehman Brothers over their role in the sub-prime mortgage crisis

CBI figures show high street sales continued to decline in August.

The Council of Mortgage Lenders admits that in the current turmoil it is "futile" trying to predict where house prices are headed.

Henry Paulson bows to intense pressure to include limits on what Wall Street bankers can be paid in his $700bn bail-out plan.

Gordon Brown tells world leaders in New York that an international regulator may be needed to stop the mess being repeated.

Thursday September 25

Dr Rowan Williams, the Archbishop of Canterbury, wades into the debate, calling for tighter regulation of a financial industry that has been allowed to run away with itself.

The owner of Canary Wharf sees the ongoing crisis knock a £500m hole in the value of its property portfolio, while Moss Bros predicts tough times ahead.

Ireland becomes the first state in the eurozone to fall into recession.

Jobless figures are up and orders are down in the US, signalling the dire state of the economy.

Even one of America's largest companies, GE, is not immune from the "unprecedented weakness and volatility" of the world's financial markets and profits slide

Bradford & Bingley axes 370 jobs, which adds to speculation that it is looking for a buyer.

HSBC adds to home owners' woes by raising its rates. Woolwich and First Direct follow suit.

Overnight the $700bn bail-out plan in the US appears to have stalled.

Friday September 26

America's biggest savings and loan company, Washington Mutual – or WaMu – is seized by federal regulators overnight and sold to JP Morgan for $1.9bn in a deal that sends shockwaves through Wall Street and main street alike.

In the UK, HSBC axes 500 investment banking jobs while home textiles retailer Rosebys calls in the administrators, putting 2,000 jobs at risk.

The Queen's dressmaker, Hardy Amies, teeters on the brink of collapse after its Icelandic backer stops funding it

In a speech at the UN, Gordon Brown calls for an end to the "age of irresponsibility".

Traders are worried about the possible failure of the $700bn bail-out plan and the FTSE 100 slides into the red again. The plan appears to be coming apart despite Paulson actually begging on one knee for the deal to be passed.

Saturday September 27

Desperate talks are held over the weekend between the FSA, Treasury and various banks to try and find a solution to the plight of Bradford & Bingley whose shares collapsed on Friday.

Sunday September 28

Spain's Santander buys Bradford & Bingley's 200 branches and £22bn savings book and the UK taxpayer gets lumbered with the mortgages.

MFI's managers ride to the rescue of the troubled furniture chain

In the US, the House speaker, Nancy Pelosi, pleads with representatives to pass the now 100-page plan to save Wall Street.

The Tory leader, David Cameron, tells the Conservative party faithful that Gordon Brown has "had your boom and now your reputation is bust".

Across the Channel, the storm clouds are growing over Belgian-Dutch financial group Fortis which is looking for a rescue partner.

Monday September 29

As news of the Bradford & Bingley rescue sinks in, the London stock market plummets in what will end up being one of the FTSE 100 index's worst ever trading days.

Banking shares plunge, putting the proposed rescue of HBOS by LloydsTSB in doubt.

Royal Bank of Scotland sees its shares lose a fifth of their value and remember: short selling is banned, this is not market spivs trying to make a packet but a growing realisation that no bank is safe.

As a result of the intense fear among bankers about which institution will be next to fold, the interbank lending rate goes through the roof despite desperate attempts by Central Banks to pump cash into the system.

New figures from the Bank of England show mortgage lending collapsed in August. Those people who do manage to sell are taking much lower prices for their homes.

In Iceland, the government is forced to take control of one of the nation's biggest banks.

The German government and other banks throw a €35bn (£28bn) lifeline to Hypo Real Estate, the second-largest commercial property lender in the country.

In the US, Citigroup snaps up troubled bank Wachovia.

Apple shares plummet as analysts worry about the lure of its gadgets at a time when consumers are facing home repossessions and fearing for the jobs.

George Bush takes the podium to urge the House of Representatives to pass the $700bn bail-out plan. His short speech falls on deaf ears and a few hours later the House of Representatives votes the bail-out down.

Wall Street has a fit. The Dow Jones plunges 777 points, its biggest ever fall in points terms.

Tuesday September 30

Asian stock markets are the first to react to the shock news that the $700bn Wall Street bailout has failed. When London opens it is carnage with banking shares clobbered.

The stock market's fall raises further questions about the LloydsTSB/HBOS deal.

The Irish government takes the unprecedented step of guaranteeing retail deposits for the next two years.

Dexia, the troubled Belgo-French municipal lender, has to be bailed out.

In the UK, the government's own statisticians admit that the economy has stalled, while a slew of banks slam the door shut on mortgage borrowers by pulling hundreds of packages.

It's worse in the US where July has reported the biggest ever fall in house prices.

Anyone who does have savings is trying desperately to find a safe haven with government-backed National Savings & Investments swamped by savers.

The banks themselves are finding it increasingly difficult to raise financing with the cost of inter-bank borrowing experiencing its biggest ever one-day rise.

Dominique Strauss-Kahn, the managing director of the IMF, believes a bail-out is the only option for the US economy.

Wednesday October 1

The FSA starts talks with the banks about raising its level of savings protection from £35,000 to £50,000 to stop the rot.

That may be too little too late for some people who are already moving their cash into gold.

Things are going from bad to worse at Fortis as the ailing Belgo-Dutch bank is forced to shelve the sale of around €3bn in shares because no one wants to buy them.

It's back to the 1970s in the UK as car manufacturers introduce reduced working hours and new data shows British manufacturing shrinking at the fastest rate since records began nearly 17 years ago.

Share traders are praying that a rescue package can still be put together in the US.

The high street fashion chain Miss Sixty goes under.

Reassuring words from Gordon Brown about the deal with LLoydsTSB help shares in HBOS recover.

Warren Buffett decides to snap up $3bn worth of General Electric as part of a $15bn fundraising by the industrial conglomerate.

Thursday October 2

The US Senate has voted in favor of the Wall Street bail-out.

European leaders are considering their own bail-out, which could cost up to €300bn (£237bn). The French president, Nicolas Sarkozy, leads the push.

Economists are certainly in favor of such a move.

Gordon Brown's imminent cabinet reshuffle is expected to create an emergency committee that will take charge of the government's response to the financial crisis.

Marks & Spencer becomes the latest retailer to feel the icy chill of the gloomy economic climate as it admits shoppers are going to cheaper rivals.

Hopes that the US deal may get through help shares prices recover somewhat in London.

But by the close of play, Wall Street still has the jitters.

Friday October 3

The government rushes through an increase to £50,000 of guarantees for British bank deposits.

Wells Fargo scuppers Citigroup's takeover of Wachovia.

US jobs data are worse than expected.

Saturday October 4

Brown attends an emergency summit in Paris to discuss the crisis with his French, German and Italian counterparts.

Sunday October 5

Angela Merkel, the German chancellor, says that deposits in German bank accounts will be secure.

Monday October 6

The FTSE sees its largest one-day points fall. Alistair Darling tells MPs he will do "whatever is necessary" to bring stability to the banking system, but does not announce specific new initiatives.

Tuesday October 7

Bank shares fall sharply. The Icelandic internet bank Icesave blocks savers from withdrawing money.

5pm BST: The prime minister, the chancellor, the governor of the Bank of England and the chairman of the Financial Services Authority hold talks at No 10. Darling says afterwards that he wants to "put the banks on a longer-term sound footing".

7.30pm BST: Darling confirms the government will make a historic announcement tomorrow on changes to the banking system. It is thought it will involve using £50bn of taxpayers' money to take a major stake in high street banks.

Wednesday October 8

7.30am BST: The Treasury announces what amounts to a £500bn bank rescue package to stop the country's financial system melting down. Most bank shares fall again.

8.30am BST: Darling confirms that the government will guarantee no retail depositor with the internet bank Icesave will lose their money.

12pm BST: The Bank of England, the US Federal Reserve and the European Central Bank all cut half a point off their key interest rates in the first unscheduled rate moves since the aftermath of 9/11.

12.15pm BST: Brown confirms at Commons question time that banks benefiting from the government's rescue package will be forced to accept strict conditions on bonuses.

Fed joins 5 central banks - cuts 1/2 point and cites 'intensification' of crisis

NEW YORK (CNNMoney.com) -- The Federal Reserve, working in coordination with other central banks worldwide, enacted an emergency interest rate cut on Wednesday.

The Fed lowered its fed funds rate by a half percentage point to 1.5%. The central bank's statement said the move was necessary because of the worsening crisis in global financial markets.

key provisions of the financial rescue plan

Source: money.cnn.com

Attacking credit crisis: The core of the plan the House voted on is the same as what it rejected on Monday: the Treasury's proposal to let financial institutions sell to the government their troubled assets, mostly mortgage-related. It will allow the Treasury access to the $700 billion in stages, with $250 billion being made available immediately.

Protecting taxpayers: The final law is also similar to the original House bill in that it includes a number of provisions that supporters say will protect taxpayers. One will direct the president to propose a bill requiring the financial industry to reimburse taxpayers for any net losses from the program after five years. And the Treasury will be allowed to take ownership stakes in participating companies.

In addition, over time, supporters say, taxpayers are likely to make back much if not all of the money the Treasury uses because it will be investing in assets with underlying value.

The law includes a stipulation that the Treasury set up an insurance program - to be funded with risk-based premiums paid by the industry - to guarantee companies' troubled assets, including mortgage-backed securities, purchased before March 14, 2008.

Curbing executive pay: The law will place curbs on executive pay for companies selling assets or buying insurance from Uncle Sam. For example, any bonus or incentive paid to a senior executive officer for targets met will have to be repaid if it's later proven that earnings or profit statements were inaccurate.

Oversight: The rescue plan will set up two oversight committees.

A Financial Stability Board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and the Treasury secretary.

A congressional oversight panel, to which the Financial Stability Board will report, will have five members appointed by House and Senate leadership from both parties.

Tax breaks: The Senate-version of the bill that the House passed on Friday included three key tax elements designed to attract House Republican votes.

It extends a number of renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels.

The law also continues a host of other expiring tax breaks. Among them: the research and development credit for businesses and the credit that allows individuals to deduct state and local sales taxes on their federal returns.

In addition, the law includes relief for another year from the Alternative Minimum Tax, without which millions of Americans would have to pay the so-called "income tax for the wealthy."

New accounting rules: The bailout plan underlines the Securities and Exchange Commission's power to change accounting rules on how banks and Wall Street firms value securities, and directs the agency to study the issue.

Some observers argue that tight accounting rules are a major reason for the credit crisis in the first place. Others contend that changing the so-called mark-to-market rules will just bury problems lurking beneath the surface and could further shake investor confidence in the already battered financial sector.

Shielding bank deposits: The law temporarily raises the FDIC insurance cap to $250,000 from $100,000. It allows the FDIC to borrow from the Treasury to cover any losses that might occur as a result of the higher insurance limit.

Federal bank regulators, who first floated the idea to Congress late Tuesday, said that bumping up the insurance limits will help improve liquidity at banks across the country. It may also provide a much-needed dose of confidence for consumers who may be worried about the health of their bank. (More about FDIC rules.)

The plan will also temporarily increase the level of federal insurance for credit union savings to $250,000 (note: expires in December 2009).

Mitigating foreclosures: The new law calls on federal agencies to encourage loan servicers to modify mortgages by a number of means - including reducing the principal or interest rate. It also extends a temporary provision that exempts from federal income tax any debt forgiven by a bank to a borrower in a foreclosure.

Cost: The law's tax provisions - the bulk of which come from the addition of tax breaks from other legislation - may reduce federal tax revenue by $110 billion over 10 years, according to estimates from the Joint Committee on Taxation. More than half of that is due to the one-year extension of AMT relief.

The Congressional Budget Office said it cannot estimate the net budget effects of the troubled asset program because of the many unknowns about that piece of the bill. However, the agency noted in a letter to lawmakers on Wednesday, it expects the program "would entail some net budget cost" but that it would be "substantially smaller than $700 billion."

Overall, the CBO said, "the bill as a whole would increase the budget deficit over the next decade."

A cruel September for 5 bank CEOs

WAMU: Alan Fishman; 18 days, signing bonus: $7.5M and $6M severance.
Wachovia: Robert Steel; 2.5 months so far.
AIG: Robert Willumstad; 3 months. Walked out and declined $22M severance.
Merrill Lynch: John Thain, 11 months. Bloomberg reported that Thain, the former head of the New York Stock Exchange and a Goldman Sachs veteran, and his top two deputies may exit with nearly $200 million.
Lehman Brothers: Richard Fuld, Jr., 15 years. Lehman gave him a $22 million bonus in March, and he pocketed about $500 million while leading the company

Source: money.cnn.com

JPMorgan buys WaMu

JPMorgan Chase acquired the banking assets of Washington Mutual late Thursday after the troubled thrift was seized by federal regulators, marking the biggest bank failure in the nation's history and the latest stunning twist in the ongoing credit crisis.

Under the deal, JPMorgan Chase will acquire all the banking operations of WaMu, including $307 billion in assets and $188 billion in deposits.

In exchange, JPMorgan Chase (JPM, Fortune 500) will pay approximately $1.9 billion to the Federal Deposit Insurance Corporation. Separately, JPMorgan announced plans to raise $8 billion in additional capital through the sale of stock as part of the deal.

S&P cut WAMU credit rating

SAN FRANCISCO (MarketWatch) -- Standard & Poor's Ratings Services on Wednesday lowered Washington Mutual Inc.'s counterparty credit rating to "poor quality" of CCC/C from BB-/B. "The downgrade was due to the increased likelihood that a potential sale of the company may not involve the whole company, which increases the risk of default for holding company creditors," said Victoria Wagner, an S&P credit analyst. S&P also lowered WaMu's preferred stock rating to "most speculative" grade of CC from B- to reflect the risk of default of these securities but affirmed Washington Mutual Bank's counterparty credit rating of BBB-/A-3. The outlook remains negative.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

Saving Social Security and Medicare: The cost

(Money Magazine) -- We'll go out on a limb and assume you've heard the rumor that Social Security and Medicare are headed for trouble.

You've seen alarming stats thrown around and maybe wondered what to make of them. (For example, the two programs are said to have a $43 trillion deficit payable over 75 years. Is that a lot? And if it's as big as it sounds, how is the government still running?)

Perhaps you've even slogged through one of the reform plans that politicians, academics and retired CEOs are always dreaming up. But what you really want to know is more basic: How am I supposed to plan for this?

Here's where politics meets your portfolio. And as tricky as it is to guess the direction of stocks, it's even harder to predict the long-run electoral fortunes of Republicans and Democrats or the compromises legislators will hammer out. That said, there are some things you can expect when you get to retirement:

• You'll have a significant Social Security benefit, especially if you're a boomer. The system's problems are quite fixable.

• Medicare, on the other hand, is headed for crisis. A total meltdown. And soon. For the health insurance program to survive, it will have to make huge changes, and you must start preparing for them.

• Both programs will be fixed with a combination of benefit cuts and higher taxes. Many of the higher taxes will be levied on your paycheck. But it's also possible that higher taxes on income and investments will hit you in retirement.

• Well-off retirees - and by that we mean people with pensions and biggish IRAs, not just former hedge fund managers - will increasingly pay stealth taxes on their benefits. And we're not talking about some far-off proposal here. This one's already a done deal.

No matter what happens, Social Security and Medicare (in some form) are still going to play a major role in your retirement. So even if your last day of work is 10, 20 or 30 years off, you need to have a basic grasp of the challenges these systems face and the price you'll be asked to pay to keep them alive and kicking. Getting ready is partly a matter of how much you save - but as you'll see, it also matters where you save it.

Social Security: How much trouble is it in?

Established back in 1935, when the U.S. was mired in the Great Depression, the Social Security program now replaces just under 40% of the average retiree's pre-retirement earnings.

Even for higher-paid workers, it represents a significant source of income: For people who currently earn $100,000 or more on the job, Social Security is expected to replace about 25% of their incomes, on average, in retirement. So it had better be there.

But thanks largely to the baby boom, there's a funding gap in the not-too-distant future. Social Security is a "pay as you go" retirement system - that is, the Social Security taxes that get deducted from your paycheck today are used to pay out benefits to today's retirees.

Right now the Social Security system is taking in more money in tax revenue than it is paying out in benefits, with the surplus being entered into the government's books as the system's "trust fund."

But with so many boomers headed into retirement, that situation is likely to reverse sometime around 2017. Benefits will exceed revenue, and Social Security will have to draw on that trust fund.

By 2041 the trust fund will be tapped out too. At that point Social Security payroll taxes will be enough to fund only about 78% of promised benefits. The oldest boomers will be 95 that year. The youngest will be 77, with perhaps another decade or two of retirement to fund.

The price you'll pay

As bad as this all sounds, Social Security could be brought into balance without extreme pain. None of the reform proposals that have gotten the slightest political traction, including President George W. Bush's effort, would touch benefits for anyone over 55 when enacted. Retirement ages could be increased, but with life expectancy rising, that may not be so terrible, at least in a white-collar job.

One well-regarded proposal, by economists Peter Diamond and Peter Orszag, would reduce promised benefits gradually, with today's twentysomethings losing just 8.6% of their benefit. Payroll taxes would rise from 6.2% to 7.1% by 2055. That's hardly earth-shattering. And once you were retired, of course, you'd be off the hook for those higher payroll taxes.

But you may not be off the hook for all Social Security taxes. You see, Social Security has been in bigger financial trouble before. And the last time it went in for repair, lawmakers put in place some obscure new taxes on affluent retirees to shore up the system. Those taxes are automatically going to snag more and more people.

To understand these stealth taxes, you have to look back to the early 1980s. Ronald Reagan appointed a commission, chaired by future Federal Reserve chief Alan Greenspan, to come up with ways to keep Social Security solvent. The commission's recommendation: Make the wealthiest retirees pay partial taxes on their Social Security benefits. In 1984 that recommendation became law.

This tax is confusing, to put it mildly. When half of your Social Security benefit, plus all your other income, exceeds $25,000, or $32,000 as a married couple, some of your Social Security benefit starts to count as taxable income. That "other" income includes withdrawals from regular 401(k) accounts and traditional IRAs, as well as payments from a traditional pension plan and any employment income.

It also includes dividends, interest and capital gains on investments - even the interest on tax-free municipal bonds is thrown into the calculation. For each dollar of income over that $25,000 threshold, 50¢ of Social Security counts as taxable income until 50% of your benefit is subject to taxes. (Told you it was confusing.)

There's more. In 1994 the Clinton administration upped the ante. Now when half of your Social Security plus other income tops $34,000, or $44,000 for a couple, you have to add 85¢ of your Social Security to taxable income for each additional dollar of earnings.

And the pain doesn't stop until 85% of your benefits have been tossed into your taxable income. At first these rules didn't affect a lot of people. But here's the catch: Like the dreaded alternative minimum tax, those crucial income thresholds weren't indexed to inflation.

As a result, a third of all retirees are now paying federal income tax on their Social Security benefits. In 10 years, 43% of retirees will be subject to at least some of this tax.

For those caught in it, the tax makes the shelter of 401(k)s and traditional IRAs less valuable than you might have assumed. Let's say you get $24,000 a year from Social Security and draw $22,000 from a pension. That's enough to start moving you into the 85% zone.

Every additional dollar you withdraw or earn will have you reporting an additional $1.85 in taxable income. Hit the 25% tax bracket and that adds up to a 46¢ levy on what surely must have seemed like, and spent like, only a buck of income. Presto: You have an effective marginal tax rate of 46%. Unless, that is, you get your income from somewhere else - but more on that in a moment.

This tax is sticking around, says Andrew Biggs, a Social Security expert at the American Enterprise Institute. "If the government dropped the tax, they'd have to come up with something to replace it, which they don't have," he says.

Medicare: How much trouble is it in?

Three decades after Social Security was established, the federal government created Medicare to fund health care for the elderly. Today the government spends $10,000 every year, on average, on each person enrolled. And with healthcare costs growing at 2.5 percentage points faster than the economy, that number will keep climbing.

The conservative National Center for Policy Analysis notes that by 2050 more than 75% of federal income tax revenue will be soaked up by Social Security and Medicare if benefits and today's tax rates remain in place. It's Medicare that really drives that giant shift.

The Medicare system is several programs. Medicare Part A, which covers hospital care, is funded by payroll taxes and has a trust fund similar to Social Security's. But this is expected to run out much earlier, in 2019. To fix that, the system would have to double its payroll tax today, cut benefits by 50% or some combination of the two.

Part B, which covers doctor visits, and the new Part D, which pays for drugs, are funded by retiree premiums and the government's general revenue. They can't technically go insolvent, but as their costs grow, they'll have to raise their premiums even as they place a mounting burden on taxpayers as a whole.

The price you'll pay

First things first: Even if nothing else changes, your out-of-pocket medical costs are going to be higher than those of today's retirees. Not only will those Medicare premiums go up, but the many costs Medicare doesn't cover will rise as well.

According to the Employee Benefit Research Institute, a new retiree in 2016 will need to have saved more than $200,000 to cover retirement medical costs, assuming he or she lives to 90 and uses an average amount of prescription drugs. And that's assuming Medicare benefits aren't cut - not a safe assumption.

"There are going to be some major benefit cuts to Medicare in the next 10 years," says EBRI analyst Paul Fronstin. "You can't incrementally work your way out of the insolvency issue."

Benefit cuts could take a lot of forms. Modern health-care delivery is so inefficient that it's theoretically possible to cut out a lot of costs while delivering the same - maybe better - care. But it's just as likely that the Medicare system will do what private insurers have: thrust even more out-of-pocket costs onto you.

On the tax side, meanwhile, Medicare is going to be reaching into a lot of pockets in the coming decades. Since outpatient and drug coverage are financed from general government revenue, simply raising the payroll tax wouldn't fix the problem.

Income taxes could rise. Or capital gains and dividend taxes. Or the estate tax. Any way you slice it, the low rates of the Bush years aren't long for this earth, no matter who wins the November election.

Finally, there's "means testing" - that is, taxing affluent retirees. This has already begun in a small way. Part of the tax on Social Security benefits goes to Medicare. And starting in 2007, high-income retirees have had to pay bigger Part B premiums.

Once the system is fully phased in, retirees earning about $84,000 (or $168,000 as a married couple) will pay an extra $470 a year in premiums. The richest would pay $2,500 more. (The thresholds are adjusted for inflation.)

In the scheme of things, these aren't big bucks - yet. According to the Congressional Budget Office, only about 4% of Medicare beneficiaries pay the higher rate. Still, critics of means testing say the current income threshold is just the beginning.

"To raise any significant amount of money for Medicare, that will have to come down to the $40,000 range," says Maria Freese of the National Committee to Preserve Social Security and Medicare, a liberal advocacy group.

3 ways to plan for it

1. Set yourself up for tax-free income.

Your best defense against the coming entitlement tax grab is to generate as much retirement income as possible from sources that don't trigger the tax on Social Security benefits, or throw you over the Medicare means-testing threshold.

One way to accomplish this is to put at least some of your retirement money into a Roth IRA or Roth 401(k). With a traditional IRA or 401(k) you invest pretax dollars and pay taxes when you withdraw your money; with the Roth versions, you pay taxes on what you put in but nothing on your withdrawals.

And once you're retired, Roth withdrawals do not count as income when it comes to determining whether you'll owe taxes on your Social Security or have to pay higher Medicare premiums. "The Roth takes that issue off the table," says Roseland, N.J. accountant and planner Howard Hook.

What's more, a Roth also immunizes you from a rise in income tax rates. Now this doesn't mean Roths will always be the best tax move - for instance, you might fall into a lower tax bracket when you retire. Read here for more on how to use a Roth.

Paying down your mortgage can help too. If you sell your house and spend the proceeds, the IRS won't consider that income for Social Security taxation or Medicare means testing. Likewise, if you pay off your home and borrow against the equity in retirement, that won't get counted as income either.

2. Hedge against higher interest rates.

Of course, raising taxes and cutting benefits aren't exactly popular moves for any politician. They may just try to borrow their way out of the problem, says Laurence Kotlikoff, a Boston University economist who specializes in entitlements research.

But major credit rating agencies have already warned that the federal government's credit rating is at risk of being downgraded if the national debt is not brought under control. Borrowing more to pay for Medicare and Social Security would make this threat even more real. That means the government would have to pay higher interest rates on its debt.

Rising interest rates can hammer your portfolio returns, especially on bonds. And that's an argument for keeping your portfolio tilted to equities, even if you're close to retirement.

For example, at 30 you might aim for 75% in stocks and 25% in bonds. At 45 you'd shift to 70% in stocks, and at 60 you'd reduce your stock allocation to 60% of the portfolio.

3. Be realistic about saving and working.

Conventional wisdom holds that you can count on spending only 70% to 80% of your pre-retirement income in your golden years. After all, many of the big-ticket costs you incur during your working life, like commuting, contributing to your 401(k) account and paying off your mortgage, will disappear.

But taxes on your Social Security benefits and Medicare, combined with the likelihood of rising medical costs and possible benefit cuts, could easily outstrip those other savings.

To increase your odds of retiring well, start by assuming that you'll need 100% of your pre-retirement income to get you through your later years. To figure out how much you'll need to stash aside every year to get there, use our Retirement Planner calculator.

And if saving more is impossible, you may have to reconsider your retirement date. Working just one additional year increases your annual retirement income by 9%, on average, according to Urban Institute research. No, it's not a silver bullet - there simply isn't one. But every bit of ammunition will help.