Financial Update for Feb. 18, 2009

Markets skid lower from widespread pessimism

The latest turbulence to hit markets comes after a weekend meeting of G7 finance ministers and central bankers failed to reassure investors. Gavin Graham, director of investments at BMO Asset Management, said the markets are reacting to the sudden fall of economies around the world. Further concerns about the financial sector were sparked after two leading agencies, including a report from Moody's Investors Service, warned about growing risks to European banks as the recession deepens.

· TSX -299.40 (Reuters) to its lowest level in 7 weeks as pessimism about the global economy took a big bite out of bank stocks and investors worried about the survival of General Motors Corporation as it sets out to cut 47,000 jobs globally
· DOW -297.81 to 7,552.6, a fraction of a point away from its low reached in November.
· Dollar -1.27c to 79.13USD
· Oil -$2.58 to $34.93US per barrel.
· Gold +$25.50 to $967.00 USD per ounce The lone sector in positive territory was the resource-laden materials group, up 0.5%, as gold prices got a boost as investors sought refuge from economic gloom.
· Canadian 5 yr bond yields -.11bps to 2.00
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html

Obama launches stimulus package

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U.S. president says it may mark 'the beginning of the end' of the country's economic woes
February 18, 2009

Liz SidotiThe Associated Press

DENVER

President Barack Obama signed a massive $787 billion package to revive the economy yesterday, saying the measure represented the "essential work of keeping the American dream alive in our time.''

The stimulus plan of spending programs and tax cuts is at the heart of Obama's effort to turn the economy back into a job-creating machine. It comes with a huge price tag for taxpayers and lingering doubts about whether the plan's results will match all the lofty promises that its supporters have made.

Obama signed the bill in Denver, the city where he accepted his party's presidential nomination last summer and a leader in the so-called "green'' clean energy jobs that the legislation supports.

The president now turns his attention to a plan to help struggling homeowners who are trying to fend off foreclosure.

"I don't want to pretend that today marks the end of our economic troubles,'' Obama said before signing the legislation.

"Nor does it constitute all of what we are going to have to do to turn our economy around. But today does mark the beginning of the end.''

Meanwhile, the White House isn't ruling out a second economic plan, although none is in the works right now, spokesperson Robert Gibbs said yesterday.

The legislation is the most sweeping economic overhaul plan put forth in decades.

It pumps money into infrastructure projects, health care, renewable energy development and conservation, with twin goals of short-term job production and longer-term economic viability.

There's a $400 tax break for most individual workers and $800 for couples, including those who do not earn enough to pay income taxes.

It dishes out tens of billions of dollars to states so they can head off deep cuts and layoffs.

It provides financial incentives for people to start buying again, from first homes to new cars.

And it provides help to poor people and laid-off workers, with increased unemployment benefits and food stamps, and subsides for health insurance.

Ahead of Obama's arrival in Colorado, the White House went live with a website, www.recovery.gov, that will allow people to track where the money is being spent.

The White House press office also promoted the projected job growth for each state and congressional district.

The failing economy continues to dominate Obama's time.

Today in Arizona, Obama will unveil his plan to halt home foreclosures.

The unemployment rate is now at 7.6 per cent, the highest in more than 16 years.

Analysts warn the economy will remain feeble through 2009.

Republican legislators, meanwhile, largely balked at the economic package.

It drew no Republican votes in the House and only three in the Senate, albeit vital ones.

Many Republicans said it was short on cutting taxes and the spending measures didn't target the vast sums of money well enough toward short-term job creation, which was the major goal of the bill.

Republican National Committee chair Michael Steele derided the plan, saying in a statement that "the Democrat plan focuses on putting Americans on the public dole, while the Republican plan focuses on putting America back to work.''

But with the economy shedding jobs, there was widespread consensus in Washington for some sort of stimulus, and fast.

Yet the government's action comes at a cost down the line.

Many private economists are forecasting that the budget deficit for the current year will hit $1.6 trillion, including the stimulus spending.

That's about three times last year's shortfall, and such year-to-year deficits contribute toward a mounting national debt.