China announces $586 bn stimulus plan

China announced a US $586 billion economic stimulus plan Monday boosting stock markets around the world.

The new plan will help bolster manufacturing and is stabilizing commodity prices and strengthening confidence in countries that supply raw materials for manufactured goods.

Beijing will concentrate most of the money into new construction, which uses large quantities of commodities.

Japan recently announced a $277 billion stimulus plan, and US President-elect said that one of his first priorities upon taking office will be to implement a new stimulus package.

Sydney Morning Herald

China stimulus plan to bolster regional economies Sydney Morning Herald, Australia - 3 hours ago BEIJING'S mammoth economic rescue package will focus overwhelmingly on construction, raising hopes China can help to stabilise global commodity markets and ... China's stimulus package to be felt worldwide RTE.ie China Stimulus Plan Will Boost Stocks Sentiment (Update1) Bloomberg $US586b Chinese stimulus package good news for NZ National Business Review

Boston Globe

Asian, European stocks surge on China stimulus plan Business Standard, India - 3 hours ago ... 2008, 18:12 IST Asian and European stocks surged more than five per cent, as investors cheered China's mammoth $586 bn economic stimulus package, ... European shares higher in early trading MarketWatch European indexes seen up 2.9-3.6 pct -bookmakers Reuters UK

Comment: Oil Barons see reversal of fortunes

The oil industry hit the jackpot with the Bush administration. Prices went through the roof almost reaching $150 a barrel. Companies like Exxon made unprecedented profits. How much they owe such success to the Bush family's oil connections is a matter of debate.

Now, in less than a month, things have dropped off the cliff for the oil barons. As I write this oil is trading at $70.47 a barrel, off less than half its highs from July. Stocks also plummeted for most of the oil companies. Texas-based Exxon lost 20 percent of its value so far this year it's worse drop since 1981. Houston-based ConocoPhilipps was off 35 percent, while Chevron of San Ramon, California was down 25 percent.

However, the oil industry is still expecting profits for this year because of the record high oil prices before the financial meltdown.

No doubt, though, that companies are preparing for declining demand as the world economy slows down.

Unfortunately, for consumers, gas prices cannot be expected to follow oil prices in a precise manner. Although gas prices have been going down, they probably will never equal the cuts in oil prices. The problem is that oil refinery capacity still probably will not be able to keep up with demand evem as the economy slows.

Washington Post
From $140 a barrel to $70: How oil prices halved in a matter of weeks
MyWestTexas.com, TX - 11 hours ago

Natural gas prices did not suffer as much as the other facets of the energy sector primarily due to a less-than-expected rise in supplies, but declined ...
Falling oil prices give consumers a break Los Angeles Times
Gas Prices Dropping: The Good News and Bad News TIME
San Diego Gas Prices Continue To Slide KGTV, 10News.com

Bailout and Philippines Real Estate Boom

The mortgage-related problems causing the present US financial crisis can provide a few lessons for the Philippines, which is still in the midst of a real estate boom.

In fact, housing sales in the country starting heating up about the same time as the US real estate boom, and to this day is still one of the world's hottest markets.

The big difference between the Philippines and real estate in the United States and Japan, which also suffered from an earlier industry meltdown, is that homes and even many larger real estate purchases are most often purchased with cash.

Banks and other lending institutions are much less involved in this market. Many homes, in fact, are not only payed in full but often in advance even before the building project has started.

Therefore, unlike and Japan and the US were a real estate bust also greatly impacted the financial industry, there is much less of the same type of exposure in the Philippines.

However, lately there has in a significant increase in the number of people buying homes and other real estate simply for investment purposes. These investors are more inclined to dump their property at any sign of a housing slowdown that would depress prices.

The government could take measures to control such possibilities by limiting speculation in the real estate market.