Tax Debt Relief

The good mood returned to the U.S. markets: The closing bell the Dow Jones rose by 2.3% to 7924 points. The S & P 500 also gained 2.3% to 832 meters. The Nasdaq Composite actually rose by 3.8% to 1587 points.

The U.S. gross domestic product declined in the fourth quarter, an annualized projected at 6.3%. That was the end of February figure is 6.2% downward revision, analysts had, but even minus 6.5% expected. The reason for the worst recession in the United States for more than 26 years, falls in exports, consumption and investment. With consumer spending accounting for more than two-thirds of total economic performance. “There is obviously a trend. Finally, all the news is worse than expected, now they are not as bad as feared,” said Stephanie Giroux of TD AMERITRADE.

Investors were also relieved that a sale of U.S. government bonds smoothly went. The day before the low demand at an auction who are worried the U.S. government could be problems in financing the economy get packages.

Even from the rising number of unemployed could be the U.S. investors do not confuse the number of unemployment claims rose last week more than expected to a new record. In the past week were 5.56 million U.S. citizens unemployment assistance – 122,000 more than a week before.

Market participants hope that the bear market rally until the next reporting season continues. Then, the weak corporate results for a definitive end of the series make my experts.

In the meantime, announced the U.S. government tightened rules for financial companies. With the help of new rules of the game should be prevented that a poorly regulated financial system once again threatens the entire economy, said Finance Minister Timothy Geithner before the Financial Services Committee U.S. House of Representatives. The mistakes of the past year and a half have shown that one regulator for all financial market participants was necessary.

Among the winners were yet again a song from the financial industry: papers of the Bank of America rose by 2.2%, shares of JP Morgan gained 1.5%.

Among the biggest winners was the largest U.S. electronics chain Best Buy, whose papers by 11.6% above soared. Best Buy in the fourth quarter recorded a profit of $ 570 million, exceeding their earnings estimates of analysts, and stirred the hopes that consumer spending is not quite as strong as feared limit. In the wake swam with more retailers to the top. Wal-Mart shares were significantly increased by 2% of the biggest winners in the Dow. The soft drink manufacturer Dr Pepper Snapple Group exceeded its quarterly figures are also the market expectations. Its title is more expensive by 14 percent.

Hope for GM
The title of General Motors is more expensive by 12%. The group announced, 7500 by the union UAW represented workers have a severance pay offer accepted. This is equivalent to twelve percent of workers in U.S. manufacturing plants. Furthermore, since the car company hopes to further support the U.S. government to make. Specifically for the rescue of the industry working group was set up new state funds for the struggling car company in view. It was clear that more assistance was on its way, said Senator Carl Levin from Michigan State Auto. Even the Wall Street Journal reported, relying on members of the Working Group that the Committee make a recommendation for additional help preparing. In response, Ford also slips to 5.4%.

The U.S. government is working flat out on comprehensive reforms of the financial system. Next week will be circles that a three-pronged program to deal with bad securities are presented. In addition to the U.S. banks also appear next to all the other financial institutions greater control. On Wall Street will detail how the U.S. government to domestic banks toxic securities will decrease with voltage expect.

Approximately five weeks had Finance Minister Timothy Geithner only rough outline for acceptance lazier papers presented. Geithner fell on the weekend because of controversial bonus payments to managers of state-backed insurer AIG increasingly under pressure. President Barack Obama has strengthened him demonstratively back.

According to districts with the help of the U.S. deposit insurance (FDIC) in low-interest loans to private investors will be forgiven, then with the money to buy up bad securities. This could be the banks’ balance sheets of the toxic free papers and the institutions to submit to be preserved. With mortgage-related documents after the collapse of U.S. real estate market massively in value and huge holes in the balance sheets of the money left behind houses.

Second pillar of the project should be that the Treasury investment managers to manage public-private fund hires, in the mortgage papers to invest, the prospect of profit. The third pillar of the program aims to extend the recently announced by the U.S. central bank issued credit program (TALF) show. It is difficult to $ 1000 billion. The Wall Street Journal indicates that the increase from 75 to 100 billion dollars or more. This is “legacy” – that is older with mortgage-related securities – will be bought up.

The detailed plans will be districts that are already presented on Monday, which the Finance Ministry, however, not confirmed. Officially Geithner wants first basic outline of the project on Thursday before a conference committee to explain.

Greater control of all financial institutions
Analysts stress that the Plan was an essential building block for the rest of the U.S. economy. One of Obama’s economic advisers, Christina Romer, was confident that the reforms introduced by the President within a year will lead to success. The mood on Wall Street, however, fluctuated between hope and fear. “There must be a well-elaborated and credible program so that this problem will be solved,” John Praveen invited dealers.

According to a government representative also urges Obama to major financial institutions such as AIG better monitor, if necessary, easier to intervene and under state administration to be able to. Unlike insurance companies and funds are available at U.S. commercial banks a clear jurisdiction. They are controlled by the FDIC. Advised them in difficulties, closed the bank and the authority is usually in the region a buyer for the branches and deposits of the collapsed over rivals.

The U.S. government wants the financial markets significantly stricter control – and is preparing to reform, which are the most radical since the 30-years could be. Finance Minister Timothy Geithner on Thursday presented before the Congress plans, among other things, a strict control over systemically important financial groups and provide hedge funds and credit derivatives, the first time under federal supervision would.

The U.S. would be the worst global financial crisis since generations, Geithner said: “That tackle, requires comprehensive reform. None modest repairs on the edge, but new rules.”

This is the starting shot for a – probably a long and tough – the debate about how the confidence in the U.S. financial system can be restored. Gaps in oversight will be closed, incurring excessive risks are avoided. The proposals come a week before the summit of the world’s 20 most industrialized and emerging countries (G20) in London, where on the future regulation of financial markets is discussed.

Geithner outlined the plans before the Financial Services Committee of the House of Representatives. The relevant laws should be in cooperation with the Congress will be drawn to the many questions his own reform plans. “We now have the opportunity,” said Geith, “and we must act.”

The reforms are expected to power the government, the Federal Reserve and other regulators to expand significantly. They run parallel to efforts to stabilize the banking sector and the economy.

For risks to the financial system as a whole better observe and be able to want the government system-related businesses strictly supervise. This could be a new independent authority will be created. It is also debated, the Fed Fed this role.

Geithner said no to the question of who takes over this task, but made it clear what powers the regulator should have. Thus, the Authority issues are forcing companies to their capital base or to enhance the borrowing limit. Should the institutions in serious trouble, they under state administration can be made.

Among the regulated entities could, for example, bank holding companies, insurance conglomerates and certain hedge funds belong. Whether an enterprise system is relevant, inter alia, be based on the size, degree of indebtedness and dependence on short-term financing on the capital to be determined.

Hedge funds and private equity firms over a certain size will be in the SEC to register and you must provide certain information, such as their business partners. The companies must also focus on inspections by SEC staff members lie in wait. If problems are encountered, the SEC may be the company to the new regulator transfer. “We do not propose that they be regulated like banks,” said Geithner, however, hedge funds. This position could be at the G20 meeting conflicts with countries that are such a widespread call for regulation.

Light in the trading of credit derivatives

Even the market for credit derivatives, the buttons government. The focus is on credit derivatives (credit default swaps, CDS) is particularly in focus. The papers with which investors against payment defaults of securities to hedge, the future only on so-called clearing house transactions. Until now runs most of the trade off, the market is so opaque. If a major market participants fails, as the U.S. investment bank Lehman Brothers last autumn, a number of trading partners being in danger. One or more clearing houses is to absorb counterparty risk by acting as a buyer and seller for each player gets. In the EU until the end of July is such a processing facility to be established.

Geithner called for regulators to consider new rules to consider the banks require, in boom times extra reserves to defend Wirtschaftsflauten upon them. “We must balance our requirements check and see if we – in line with the interests of investors – from companies require that they advance reserve for credit losses are,” said Geithner.

Treasury and FDIC will take care of non-banks

Work is already on a new legal basis by which the government will collapse before the standing Finance Institute, the banks are not under state administration can provide. For these institutions, in future, the Ministry of Finance and the FDIC deposit insurance jointly responsible. They are the companies abgewickeln or in part can sell. Was triggered by the controversy surrounding the insurer AIG, which the state with up to $ 180 billion is based – on the government but still little-through rights. So the group poured millions of dollars in bonuses, leading to a public outcry resulted.