The Washington Postand New York Timeslead with the continuing pains in the stock markets. The WP has a two-story lead, one looking at the general dismal state of the economy and another that examines how some of the country's largest companies have plunged in value, which is also the focus of the NYT's lead. The White House has been trying to sound optimistic on the economy this week, but it doesn't seem to be working. Markets around the world were down yesterday, and the Dow Jones industrial average plunged another 4 percent. The Dow has now fallen 25 percent this year, compared with 33 percent for the whole of 2008. More bad news is expected today, as the Labor Department will release February's unemployment numbers, which will almost certainly mark an increase from the 7.6 percent jobless level in January.
USA Todayleads with a look at how more than half of the foreclosures last year were in 35 counties. More than 1.5 million foreclosures took place in these 35 counties that are spread out across 12 states, suggesting that the ongoing crisis "may have begun with collapsing home loans in only a few corners of the country," notes the paper. The Wall Street Journalleads its world-wide newsbox with the White House Forum on Health Reform, where President Obama vowed to make a major push to overhaul the nation's health care system this year. The president insisted he is open to compromise on the issue but emphasized that the focus should be on bringing down health care costs. The Los Angeles Timesleads with the California Supreme Court making it pretty clear that it won't overturn Proposition 8, the measure that took away the right of gay men and lesbians to marry in the state. But the court is likely to rule that marriages performed before Proposition 8 was approved will remain valid. Even advocates of gay marriage, who hoped the court would rule that the measure amounted to an impermissible constitutional revision, seemed to acknowledge that they will be defeated.
The huge companies that were once considered safe investments and the foundation of the American economy are suffering, and their decline has come at a break-neck speed. "Blue-chip companies," notes the NYT, "are akin to penny stocks." It's gotten so bad that the New York Stock Exchange has suspended its rule that all listed companies must have a minimum share price of $1. The comparisons are incredible. You can now buy a share of General Motors stock for less than a gallon of gas and a share of Citigroup—worth $55.12 less than two years ago—for about half of what you'd pay to use an ATM. "The rout highlighted the apathy and pessimism that have seeped into all corners of the market as the global economic downturn deepens," declares the NYT.
The WP points out that the main reasons that people once saw these large companies as safe have actually sped up their demise. These companies had become reliant on providing their own financing to customers and are highly exposed to global markets. This diversification was once seen as a good way to minimize risk, but they're now suffering through the effects of a global downturn.
There are growing concerns that the economy still has a long way to fall before it stabilizes, mainly due to the continuing job losses. "Ninety-nine percent of the people I talk to are pessimistic," an analyst tells the NYT. "Everyone is sitting back and waiting for one more big implosion." There was a tiny bit of good news from retailers, which reported slightly better numbers in February than in January, but that was largely thanks to Wal-Mart's 5.1 percent increase in sales, its best performance in nine months. In a front-page piece, the WSJ says there is cautious optimism among some retailers that their losses are beginning to stabilize. No one is ready to declare that things have turned around, but "it seems that we are starting to see less negative trends," as one retail analyst put it. The WP isn't as optimistic and says that some analysts believe there might be "an even sharper contraction this quarter."
The WSJ goes high with word that top executives at General Motors are beginning to become more open to the idea of going through government-financed bankruptcy reorganization. Of course, the company still hopes to avoid that fate, but it seems executives are not as concerned as they once were that bankruptcy would immediately mark a death sentence for the auto giant. In news that everyone covers, GM's auditor declared yesterday that there is "substantial doubt" the company can survive without more federal help. The WSJ says that after conducting lots of research, GM's executives now seem to believe that they could successfully re-emerge from what is known as a prepackaged bankruptcy, a normally quick affair because all the parties agree to concessions in advance. "We'd have 60 days of havoc and chaos, but the view is ... we would be able to manage it," said the paper's source.
The WP fronts a look at how the government will try to thaw the frozen consumer-credit markets by joining forces with hedge funds and private-equity firms, the very same organizations "that most benefited from the bonanza preceding the collapse." These outfits would be offered the chance to buy up highly rated securities that finance consumer lending. The government could lend nearly $1 trillion to investors and calls this strategy a "public-private partnership," and the private part of the equation seems to be more than willing to participate. And why wouldn't they? After all, they get to keep the profits and would be responsible for only a fraction of any losses. This strategy could be used as a model for future efforts to rescue the credit markets, but "there is vigorous debate … over how the program should evolve and at what speed." Warning: Don't confuse this with a separate program that would seek to clear toxic assets from banks' balance sheets. That program, which the WSJ outlined a few days ago, will be announced in a couple of weeks and is expected to follow a similar structure.
Justice Ruth Bader Ginsburg tells USAT that she isn't going anywhere anytime soon and expects to be on the Supreme Court for several more years. Ginsburg, who will be 76 in a few days, underwent surgery for pancreatic cancer last month. But she seems to be "in fine form" and has now resumed her usual schedule.
In a story that will surely send a chill down the spine of any experienced journalist worried about layoffs (i.e., pretty much all of them), the LAT takes a look at Lois Draegin, a former editor at TV Guide who used to earn a six-figure salary but is now an unpaid intern at wowOwow.com. Draegin is using the opportunity to learn Web skills from her 24-year-old mentor.
The NYT's Paul Krugman declares that the plan to create a market for toxic assets "isn't going to fly." The latest version of the plan would increase the price of these assets, but that's simply because "it would offer a heads-you-win, tails-we-lose proposition." Even so, it won't actually revive the nation's financial system. It seems administration officials "still aren't willing to face the facts." The White House is reluctant to admit the extent of the problem "because it's very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over," writes Krugman. "And temporary nationalization is still, apparently, considered unthinkable."
In the LAT's op-ed page, Joe Queenan notes that every time the stock markets have plunged during the crisis, financial advisers have said that people shouldn't panic and warned against selling. "The best buying opportunity in years is now 14 months old," writes Queenan, who says he started panicking when the Dow was at 9,500. "I realize that I have come late to the panic mode, but as my father always said: No matter how bad you have been burned, it is never too late to try dousing yourself with water." And even as stocks keep getting lower, the advice that this is now a once-in-a-lifetime opportunity to buy cheap stocks persists. "There is a time for hysteria, and a time when cooler heads should prevail," Queenan writes. "This is the time for hysteria."