NYSE( NewYork Stock Exchange) and financial crisis

In the midst of the global financial crisis, the US mining industry and the energy resource sector continues to outperform the market and remains as an investment hotspot for many institutional investors from Asia. NYSE resources sector remains investment hotpsot depsite financial crisis. Apart from strong demand for commodities in China and other still growing economies like India, the Chinese government also plays an important role in encouraging its business and nationals to invest in overseas market.

Wall Street

A series of monumental bank and investment firm failures precipitated by a massive increase in foreclosures, panic in the global financial markets, and a staggering $700 billion bailout proposal that was still being fine-tuned over the weekend in Washington. The collapse of so many financial companies is the culmination of the subprime crisis, which came to light in 2006 and 2007 but was in reality brewing for quite some time. Up through the late 1970's, home mortgages were heavily regulated. A complex process which bundles, sells and repackages loans into bonds to be sold to investors allowed lenders to spread the risk and frees them from reliance on deposits and capital reserves, securitization was key to sub-prime lending because it diffused the potential of risks and default for lenders and removed rational incentives for prudent lending.

Dow Jones

The Dow Jones index fell 678.9 to 8579.2, its biggest percentage drop since Black Monday in October 1987 and its third biggest points decline in history.America’s mortgage crisis has spiraled into “the largest financial shock since the Great Depression” and there is now a one-in-four chance of a full-blown global recession over the next 12 months, the International Monetary Fund warned today.

Lehman Brothers Bankruptcy

Lehman Brothers, one of the most prestigious players on Wall Street, filed for bankruptcy protection this morning after a frenzied weekend of negotiations failed to find a way of saving the company. The collapse of Lehman – one of the biggest financial shocks in years - puts tens of thousands of jobs around the world at risk. It also sent shockwaves around the banking world, with commentators predicting that the damage could be felt across the industry and could help to push the UK into recession. The collapse of Lehman sent traders rushing into government treasury bonds – seen as a safe haven in troubled times. The dollar fell against both the euro and the yen.

IMF (International Monetary Fund)

The IMF is helping countries address the fallout from the devastating economics crisis. In recent months, it has provided loans worth more than $50 billion to emerging market countries.

The IMF's lending to low-income countries has also been stepped up as developing countries start to feel the effects of the crisis.

he IMF has urged the Group of Twenty (G-20) industrialized and emerging market countries to take more decisive policy action to combat the corrosive global financial and economic crisis by bolstering demand and cleaning up the financial sector.

Housing Market Declined

The housing slump set off a chain reaction in our economy. Individuals and investors could no longer flip their homes for a quick profit, adjustable rates mortgages adjusted skyward and mortgages no longer became affordable for many homeowners, and thousands of mortgages defaulted, leaving investors and financial institutions holding the bag. This caused massive losses in mortgage backed securities and many banks and investment firms began bleeding money. This also caused a glut of homes on the market which depressed housing prices and slowed the growth of new home building, putting thousands of home builders and laborers out of business.

Market instability

The recent market instability was caused by many factors, chief among them a dramatic change in the ability to create new lines of credit, which dried up the flow of money and slowed new economic growth and the buying and selling of assets. This hurt individuals, businesses, and financial institutions hard, and many financial institutions were left holding mortgage backed assets that had dropped precipitously in value and weren’t bringing in the amount of money needed to pay for the loans. This dried up their reserve cash and restricted their credit and ability to make new loans.

World Bank

Developing countries resultantly has to face a new challenge from the global financial crisis, which is rapidly becoming an unemployment crisis. The World Bank Group is helping with the financial rescue but believes that we must remain focused on the human rescue for the many millions left behind. As many as 53 million more people could be trapped in poverty as economic growth slows around the world, according to Bank forecasts. This is on top of the 130-155 million people pushed into poverty in 2008 because of soaring food and fuel prices.Sharply tighter credit conditions and weaker growth are cutting into government revenues and their ability to invest to meet education, health and gender goals, as well as the infrastructure expenditures needed to sustain growth. Almost 40 percent of 107 developing countries were highly exposed to the poverty effects of the crisis and the remainder was moderately exposed, with less than 10 percent facing little risk, according to new World Bank Group estimates.

AIG revised plan

American International Group, Inc. (AIG) today announced agreements with the U.S. Treasury and the Federal Reserve to establish a durable capital structure for AIG, and facilities designed to resolve the liquidity issues AIG has experienced in its credit default swap portfolio and its U.S. securities lending program. The $85 billion emergency bridge loan was essential to prevent an AIG bankruptcy, which would have caused incalculable damage to AIG, our economy and the global financial system. Thanks to decisive action by Congress, Treasury and the Federal Reserve, there are now additional tools available to create a durable capital structure that will make possible an orderly disposition of certain of AIG's assets and a successful future for the company.
The actions announced include both ongoing financing facilities and one-time transactions designed to address AIG's liquidity issues. The ongoing financing facilities include:

• Preferred Equity Investment
• Revised Credit Facility
• Resolution of U.S. Securities Lending Program

AIG bail out plan doubles

The AIG bailout plan just got bigger. The US government has scrapped the original $85 billion bailout plan for American International Group and signed a new $150 billion deal that it hopes will be more likely to save the from going belly up.Under the terms of the new AIG bailout plan, the company will get lower interest rates and $40 billion of new capital from the government to help ease the impact of four straight quarterly deficits, including a $24.5 billion third-quarter loss.Days before the new taxpayer-funded AIG bailout plan, the company treated a small group of independent financial planners to a resort stay at the lavish Pointe Hilton Squaw Peak resort in Phoenix. AIG reportedly spent $343,000 for the resort vacation. This is the second time since September that AIG was involved in a six-figure event at a resort.

AIG bail out plan doubles

The AIG bailout plan just got bigger. The US government has scrapped the original $85 billion bailout plan for American International Group and signed a new $150 billion deal that it hopes will be more likely to save the from going belly up.Under the terms of the new AIG bailout plan, the company will get lower interest rates and $40 billion of new capital from the government to help ease the impact of four straight quarterly deficits, including a $24.5 billion third-quarter loss.Days before the new taxpayer-funded AIG bailout plan, the company treated a small group of independent financial planners to a resort stay at the lavish Pointe Hilton Squaw Peak resort in Phoenix. AIG reportedly spent $343,000 for the resort vacation. This is the second time since September that AIG was involved in a six-figure event at a resort.

AIG bail out plan

In a bid to save financial markets and the economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion US emergency loan to rescue the huge insurer AIG.
The Federal Reserve said in a statement it determined that a disorderly failure of American International Group could hurt the already delicate financial markets and the economy.
It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said. The Fed said in return for the loan, the government will receive a 79.9 per cent equity stake in AIG. The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.

AIG bankruptcy

AIG known as American International Group had been on the brink of bankruptcy as a private market solution to the nation's largest insurer's problem failed to materialize. Shares of AIG slumped 30% to $2.60. AIG suffered a liquidity crisis following the downgrade of its credit rating. The AIG Financial Products had entered into credit default swaps to insure $441 billion worth of securities originally rated AAA.On September 14, 2008, AIG announced it was considering selling its aircraft leasing division, in an effort to raise necessary capital for the company. But on September 16, AIG's stock dropped 60 percent at the market's opening.

Reasons of the Global Financial Crisis

A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. The origins of the current credit crisis lie in a loose monetary policy and excessive capital flows used by banks. Furthermore, other weaknesses in the global financial system have surfaced.Borrowing bought more borrowing, fuelling price increases in financial assets -- debt, equity, property, infrastructure. Major banks have reported losses of around $45 billion on their investments. The major regulatory response had been cut down in the US Fed funds rate and the discount rate. The credit problems required a substantial reduction in the level of borrowings and leverage in the global financial system.