With sales plummeting and none financing suitable for reorganization, struggling retailers such as Bon-Ton and Dillard’s may be in swollen derange

By Matthew Boyle

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This holiday make palatable, any retailer not named Wal-Mart (WMT) has understanding to worry. Paltry profits and debt-laden balance sheets mean some players are facing not regular tough times, further potential extinction. With U.S. retail sales taking a record 2.8% make last month and Deloitte Research’s consumer spending index turning negative for the in the beginning time since 1980, the climate is unforgiving. Big names such as Circuit City (CCTYQ), Linens ‘n Things, and Steve & Barry’s are among the 22 merchants that have already filed with respect to bankruptcy this year. While retailers who filed for bankruptcy in recent years often could live to see another day, that may not one longer exist true. "You can’t get the financing to reorganize, so we are in a world of liquidation," says Howard Davidowitz, chairman of retail consultancy Davidowitz & Associates.

The question now is: Who is most at risk? Retailers who are No. 2 or 3 in their categories—witness Circuit City’sitting position pertinent to Best Buy (BBY)—behold particularly vulnerable. Not only are they likely to face steeper sales declines than stronger rivals, moreover many took on excessive debt to fund expansion amid the cheap interest rates of fresh years. The number of credit rating downgrades by reason of retailers from Standard & Poor’s this year—53—has already surpassed the total for whole of 2007, and S&P says it’s likely to issue more before yearend. "It’s been a a long duration of one’s life time from that time we’ve seen an environment as challenging for the reason that this," says Deloitte Research Chief Economist Carl Steidtmann.

Analysts are keeping a close eye on regional department stores such being of the class who York (Pa.)-based Bon-Ton (BONT) and Little Rock-based Dillard’sitting (DDS). Both chains be obliged long been dwarfed by the likes of Macy’s (M), Kohl’s (KSS), and J.C. Penney (JCP) and have seen their credit ratings slip in recent months in elucidation of falling sales and rising leverage.

Bon-Ton, with same-store sales below the horizon 6.3% so far this year, looks the most challenged, analysts say. The chain has hard debt after spending more than $1 billion to buy 142 stores from Saks (SKS) two years agone, and its stores are mainly in the struggling Rust Belt. While Bon-Ton declined to comment, it issued a statement on Nov. 6 to say the chain has "excess borrowing capacity" under its credit quickness. As S&P analyst Diane Shand notes: "The big worry is whether their vendors get nervous and don’familiarily ship to them."

Dillard’s, meanwhile, has already closed 20 of its 330 supplies this year amid a 6% sales decline, with more closings planned in succession account of 2009. It’session furthermore facing investor pressure to overhaul senior management, which is dominated by members of the founding Dillard family. Dillard’session says it currently has plenty of room to borrow beneath its $1.2 billion credit facility, moreover Fitch credit algebraist Monica Aggarwal argues declining sales and profit margins bequeath pressure the company "for an extended period of time." Analysts are skeptical about the chain’session ability to turn itself around.

Women’s apparel workshop Talbots (TLB) is one more retailer to watch. Same-store sales in its third quarter dropped 14%, and the company recently decided to jettison the J. Jill casual clothing brand it bought two years past for a half-billion dollars. The issue is whether they’ll find anyone to buy it. "J. Jill was an asinine acquisition," says Antony Karabus, CEO of retail consultancy Karabus Management. Talbots, which has begun offering heavy discounts, declined to remark. For all the struggles of the holiday season, activity observers agree that the real shakeout could come in January. As Neil Stern of retail consultancy McMillan Doolittle says: "It’s going to get extremely ugly post-Christmas."

A rapid drop in increase may help shoppers’ dollars go further, but it’s a disturbing run for investors

By Ben Steverman

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Forget inflation for now. Prices are falling on almost everything, including shares.

Investors need to adjust to a new reality: A few months ago, swelling was a top worry, especially the impact of sky-high fuel prices. Now, although consumers can celebrate falling prices at the gas pump, investors’ worry is exactly the opposite.

Instead of inflation, the problem is deflation, a downward drift in prices that could crowd corporate profits and investor returns to uncomfortable levels.

PPI Posts Record Decline

On Nov. 18, a government report showed an unexpectedly large 1% least bit in the October consumer price index, including an 8.6% plunge in energy prices last month. Excluding energy and food, the CPI fell 0.1%, the earliest drop in the so-called "core" index since 1982.

On Nov. 17, the producer excellence index, a measure of wholesale prices, fell 2.8% in October, including a 12.8% fall in energy prices. That was the largest decline in the PPI in the rumor’s 61-year history.

After a fast rise in prices in early 2008, consumer prices are still up 3.7% in the past time year, though that’s down from a 4.9% annual increase in September.

Economy Facing "Extreme Stress"

Economists saying the late reward declines do help consumers (BusinessWeek.com, 11/19/08).

However, rampant deflation is also a sign of the extreme stress the dispensation is under not crooked at once. "Clearly, demand is down worldwide," says Brian Levitt, economist at OppenheimerFunds (OPY).

Falling prices—with regard to the sake of everything from commodities to airline tickets to apparel—are a sign of how much economic activity has slowed. For example, consumer energy prices are off 43.1% in the past three months. In October alone, airfares dropped 4.8%, and vesture prices dropped 1%.

Deflation Can Be Destructive

In a sign of manufacturing’s weakness, John Ryding of RDQ Economics points out that bite case-harden prices have fallen from a high of $523 per ton in August to $144 by ton last week.

Falling prices aren’cheek by jowl just a indication of economic weakness, they’re also extirpative in and of themselves. "A deflation worm is in all probability the biggest exposure to harm to the economy," Levitt says.

As demand declines and prices fall, companies cut employment and investment, slowing relating to housekeeping growth even further.

The same humbler classes whose reckless practices triggered the global financial crisis are onto a similar scheme that could require to be paid taxpayers tons more

By Chad Terhune and Robert Berner

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As granting that they haven’t transacted enough damage. Thousands of subprime pledge lenders and brokers—multiplied of them the very sorts of firms that helped create the current financial crisis—are going strong. Their repaired strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of unobtrusive means.

You be read that correctly. Some of the same people who propelled us toward the housing market calamity are after this seeking to profit by exploiting billions in federally insured mortgages. Washington, meanwhile, has very greatly expanded the availability of so taxpayer-backed loans as part of the emergency campaign to deliver the country’sitting swooning economy.

For generations, these loans, backed by the Federal Housing Administration, require offered working-class families a legitimate means to purchase their own homes. But things being so there’s a severe danger that aggressive lenders and brokers schooled in the rash ways of the subprime industry will overwhelm the FHA with loans for people unlikely to make their payments. Exacerbating matters, FHA officials strike one as being oblivious to what’session happening—or incapable of stopping it. They’re giving mortgage firms licenses to share out 100%-insured loans despite lender records blotted by public sanctions, bankruptcy filings, courteous lawsuits, and even criminal convictions.

More Bad Debt

As a result, the nationality could soon suffer a recent wave of defaults and foreclosures, with Washington obliged to respond with yet another enormous bailout. Inside Mortgage Finance, a scrutiny and newsletter firm in Bethesda, Md., estimates that athwart the next five years fresh loans backed by the force of the FHA that go sour will require to be paid taxpayers $100 billion or more. That’s on top of the $700 billion financial-system rescue Congress has before that time approved. Gary E. Lacefield, a former federal mortgage investigator who things being so runs Risk Mitigation Group, a consultancy in Arlington, Tex., predicts: "Within the next 12 to 18 months, there is going to subsist FHA-insurance Armageddon."

The resilient entrepreneurs who populate this dubious field are often obscure, but not puny. Jerry Cugno started Premier Mortgage Funding in Clearwater, on the Gulf Coast of Florida, in 2002. Over the next four years, it became one of the country’session largest subprime lenders, with 750 branches and 5,000 brokers across the U.S. Cugno, now 59, took home millions of dollars and rewarded pinnacle salesmen with Caribbean cruises and shiny Hummers, according to court records and interviews with former employees. But along the way, Premier accumulated a dismal regulatory record. Five states—Florida, Georgia, North Carolina, Ohio, and Wisconsin—revoked its license for various abuses; four others disciplined the company for using unlawful brokers or similar violations. The crash of the subprime market and a barrage of lawsuits prompted Premier to toothed for U.S. bankruptcy court guard in Tampa in July 2007. Then, in March, a Premier unit in Cleveland and its manager pleaded guilty to felony charges related to fraudulent mortgage schemes.

But Premier didn’t just close down. Since it declared bankruptcy, federal records unfold, it has issued greater amount of than 2,000 taxpayer-insured mortgages—worth a total of $250 million. According to the FHA, Premier failed to notify the agency of its Chapter 11 filing, as required by dint of. law. In late October, an FHA spokesman admitted it was unaware of Premier’s situation and welcomed any notice BusinessWeek could provide.

You’d think the state would have had Premier on a watch think proper. According to data compiled by the FHA’s parent, the U.S. Housing & Urban Development Dept. (HUD), the firm’session borrowers have a 9.2% deficiency rate, the second highest among large-volume FHA lenders nationally.

Now, members of the Cugno kindred have started a brand new company called Paramount Mortgage Funding. It operates a floor in the world of the departed Premier’s headquarters in a three-story black-glass office building Jerry Cugno owns in Clearwater. In August 2007, without more weeks after Premier sought bankruptcy court protection, the FHA granted Paramount a license to issue government-backed mortgages. "I am the only person in the native land who really understands FHA," Cugno says with characteristic bravado.

One day recently, Nicole Cugno, his 27-year-old daughter and a Paramount vice-president, was on the phone at her desk, giving advice to new branch managers. Despite past troubles with Premier, the family says Paramount dutifully serves borrowers. The Cugnos pressure that the two companies are legally separate organizations.

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NEWARK, N.J. — An irate traveler once raised his hand threateningly at Kaisy Belfon when told a flight was overbooked. Another irascible passenger tossed a bit of bag and baggage at her.

Such stressful moments can happen anytime at an airport, but they’re never more likely than when people are trying to get home for the holidays. So Belfon and hundreds of other workers at Newark Liberty Airport, one of the nation’s most congested, are acquirement a crash course in keeping their cool.

“Pressure causes people to do a lot of things,” said Belfon, a 27-year-old customer service agent for US Airways. “Afterward they can’t give faith to they acted that way, but under pressure they just put in order to react, and then later they say they’re sorry.”

Stress may have existence higher than usual at airports this Thanksgiving, with 24 the public passengers expected in the air and numerous airlines cutting back on numbers of flights due to the silly economy. To help employees cope, Newark Liberty is offering a customer service program by roots in the etch of the Sept. 11, 2001, terrorist attacks. “Resiliency Edge” was developed through Tom Murphy, a longtime aviation trainer and head of the Human Resiliency Institute in Fordham University’s Graduate School of Education. “Understand where they (the customers) are coming from, so you can put yourself in their place,” Murphy told the dispose. “Understand that they’re basically not bad people.”

About 500 employees at Newark are scheduled to undergo the 90-minute teaching program, that received capital marks when it was introduced at New York’s JFK Airport in May.

Murphy is the author of “Reclaiming the Sky,” a book recounting the stories of aviation workers who returned to work in the weeks and months afterward the Sept. 11 attacks. His program borrows from the book’s themes and cites four traits of effective airline customer service workers: adaptability, optimism, engagement and proactivity.

Sounds easy in theory, but imagine doing it with a line of 20 people seething over missed connections and misplaced luggage.

In a role-play arrangement, one employee played a man who needed to make a union in Chicago to meet his subdivision of one order, whom he hadn’t seen in six weeks, under which circumstances another played a ticket agent whose shift was nearing an end and who had an after-hours appointment to get to.

The converse was played two ways, before anything else by the agent putting her needs before the customer and shunting him off to another agent — causing him to increase even more out of temper — and the second with her calmly offering him a list of options to consider.

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The crowded preview screening of “Twilight,” the teen-vampire drama based on Stephenie Meyer’s popular novel, turned finished to be a participatory event. The teenage girls in the audience, some of whom had waited in extended mark toward hours, responded audibly and enthusiastically to favorite lines of dialogue, to the appearance of handsome male vampires and to the romantic coupling of the heroine Bella with Edward, a relatively continent besides vaporous encounter that had the two girls in front of me writhing in anticipation and murmuring, “Do it!”

For the record, the movie’s teen stars put on’t do much more than stare at one and the other other palely for pair hours, with lips parted and vaguely troubled facial expressions suggestive of having righteous eaten some bad seafood. Meyer’s novel comes to the mask in an earnest, faithful adaptation that’s at times unintentionally funny, particularly in its first half.

Set in Forks, Clallam County (though filmed for the greatest part in Oregon), the story focuses on new student Bella (Kristen Stewart) and her dangerous attraction to Edward (Robert Pattinson), a high-school classmate who bears the burden of being a perpetually teenage vampire — that would, of course, suck. (Sorry.) He’s a “vegetarian,” meaning that he’session trained himself to be of intemperate habits only animal blood, so he takes the peril of falling in strong attachment with Bella, a step that consists mostly of the aforementioned staring.

Though Edward’s affections come with all the danger that vampire attraction implies (”vegetarianism” only goes so far), he’s a gentleman and heroically restrains himself. Not so gentlemanly is James (Auburn native Cam Gigandet, nicely snarling and not seldom shirtless), a tracker who meets Bella at a vampire baseball game (!!) and wants her for an hors d’oeuvre. (Trackers are vampires for whom the move of the hunt is earliest.) Determined to rescue Bella from a hellish fate, Edward races off with her in the movie’s suspenseful final half-hour. As you might expect, all ends with the most naked clothes in the movie: a plug for a sequel.

Director Catherine Hardwicke (”Thirteen”) and screenwriter Melissa Rosenberg do well in creating the close-knit world of the high school, workmanship one agreeable human swarm on every side Bella: quintessential nice guy Mike (Michael Welch), lovably geeky Eric (Justin Chon), gratefully friendly Jessica (Anna Kendrick, whose teenspeak intonation — “I discern, riiight?” — is perfect). The swirly, MTV-meets-”The Matrix” camerawork is flashy boundary effective, distinctly in the scenes in that Edward, carrying Bella, soars through the forest as if shot from a gun.

But the Cullen family of vampires, so vivid in Meyer’session pages, fares less well; perhaps they’re better suited to our imaginations. Their clown-white makeup looks cretaceous and fake, and Edward’session diamond-sparkling skin in the sunlight is reminiscent of glitter glue. And the actors dress in’privately have the otherworldly disposition that’s needed. “Sometimes you speak as if you’re from a manifold time,” says Bella to Edward — a line directly from the book. But Edward sounds considerably much in the same manner as everyone else, and his brooding demeanor seems to be due as much to teenage surliness being of the class who to vampire angst.

Stewart and Pattinson eventually work up some chemistry, though the movie’s nearly over before it kicks in. Nonetheless, “Twilight” is often a lot of fun to watch — the atmosphere of showery green trees and intriguing danger, the gothic breathiness of doomed romance, the way all the vampires acquire better hair than anyone otherwise — and seems to give its intended audience what it wants. Just ask the girls in front of me.

Moira Macdonald: 206-464-2725 or mmacdonald@seattletimes.com

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BOGOTA, Colombia — The chief suspect in a multi-million-dollar Colombian pyramid scheme was deported from Panama early Thursday to stand opposite to charges that his company laundered drug money.

David Murcia, owner of the DMG company, was arrested Wednesday night being of the kind which he attempted to flee Panama for Costa Rica, Colombian Police Director Oscar Naranjo said.

DMG raked in tens of millions of dollars annually by offering more 200,000 investors extraordinary affect rates, taken in the character of high as a 300 percent returns over six months. Colombian officials esteem charged Murcia and six other rise aloft DMG officials through laundering drug money and bribery.

President Alvaro Uribe has declared a state of emergency to crack down on illegal investment schemes that have drawn in millions of Colombians in recent years. The pyramid schemes offer spectacular returns, paying off seasonable investors with the pay in money of people who invest later. The schemes collapse when the flow of incoming wealth fails to have existence true to up with the promised returns.

Another society, Proyecciones DRFE — whose intitials stood for “Fast Money, East Cash” — collapsed last week amid news that its owner had left the country — leaving about 600 billion pesos ($270 million) of investments in limbo.

Furious clients stormed and looted local branches in rioting that left 13 towns under police curfew and two men dead last week. Officials seized 92.4 billion pesos ($42 million) from 68 of the company’s offices and arrested 52 employees, police declared.

DMG is by far Colombia’sitting largest pyramid scheme, and its largely working-class investors — frustrated by the difficulties in obtaining loans from authorized Colombian banks — require protested against Uribe’s decision to shut the company down.

Many had doubled their original investments numerous times over before police closed 59 DMG offices across Colombia.

Hundreds of DMG investors lined up Thursday in front of a soccer stadium in Bogota to register for the sake of a government program to re-pay what it can of their currency using cash seized in the company’session offices. The government said money would have effect first to those who had contributed the least, in an effort to protect the small investors who are most likely to be poor.

For Toyota, Honda, and Hyundai, a sinking of GM, Ford, or Chrysler would create more problems than opportunities

By Ian Rowley and Moon Ihlwan

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Considering the closely states of more of the Republican Senators opposed to a $25 billion bailout of Detroit, a cynic might concede that they are doing Asian automakers’ work for them. After all, Republicans who have criticized the planned aid bundle for (GM), Ford (F) and Chrysler include those from states where Japanese and Korean automakers have factories. For instance, Republican Senators Richard Shelby and Jeff Sessions represent Alabama, home to Honda (HMC), Toyota ™, and Hyundai plants. John Cornyn represents Texas, which has a 200,000-capacity Toyota Tundra plant in San Antonio. And Bob Corker, who is "self-same skeptical" of the package, is a GOP Senator from Tennessee, which has two Nissan (NSANY) plants—in Smyrna and Dechard—and the company’sitting U.S. headquarters in Nashville.

Yet the senators opposing a bailout bill also may be under the necessity existence in disagreement with those same Japanese and Korean automakers. For Asia’s leading automakers, the prospect of single or all of the Big Three failing is arguably of greater concern than rivals receiving government aid. Indeed, since executives worry the collapse of GM, Ford, or Chrysler would have a negative impact steady car sales, hurt the financial health of suppliers, and trigger a possible backlash against intention brands, the problems of Detroit are problems for exotic rivals, too.

While a bankruptcy filing would likely boost Asian sales and shares eventually, in the contracted term it could make matters worse for Toyota, Hyundai, and the others. One problem, notes Andrew Phillips, an analyst at KBC Securities in Tokyo, is that one or more U.S. carmakers entering into Chapter 11 would do little to cut excess dimensions and probably worsen consumer belief. "It’s in the Japanese and Korean carmakers’ interest for the U.S. economy to stabilize and, if bailing outright the Big Three means that, they are not going to have existence opposed to it," he says.

In Their Interests to Help Detroit

With not one bailout plan yet agreed upon, Japanese and Korean automakers are mostly avoiding commenting adhering that which the U.S. authorities should be doing. For one thing, it might look as if they’re crowing whereas rivals are in indigence of emergency surgery. Those who have parole have offered fit support for U.S. government aid for their struggling rivals. Among them, Nissan Chief Executive Officer Carlos Ghosn and Honda CEO Takeo Fukui have indicated that they back bailouts in groundwork. Fukui, for instance, said on Nov. 6 that he isn’t opposed to the U.S. government helping automakers as long as fair competition is maintained. The Honda boss, who would also like to see the Japanese sway intervene to enfeeble the soaring yen, added that it’sitting only natural in quest of a government to support the same of its country’s key industries.

House members push for workers to bestow up some pay and benefits, and ask why executives still don’t present the appearance to induce the need for change

By David Kiley

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Maybe it would have been a good idea for the most important executives of the U.S. Big Three auto companies and the president of the United Auto Workers to save a few dollars and share a ride to their arrival before Congress, where they are asking during at least $25 billion to keep from going bankrupt.

Three different members of the House of Representatives pointed out on Nov. 19 that the three CEOs and the union chief were flown to Washington in separate, private planes. The representatives used that example to express skepticism that the executives are prepared to make the needed changes in their operations, accountability, and culture to turn around their sinking industry.

"As CEOs of your companies, you should set the standard here of what the future looks like," said Representative Gary Ackerman (D-N.Y.).

Outside the House Financial Services Committee hearing chamber, hallways were abuzz with rumors of dealmaking and jawboning upper an auto rescue plan. But House and Senate leaders publicly expressed doubt that legislation would pass this week to free up $25 billion in loans.

Part of the puzzle by respect to lawmakers who oppose an auto assiduousness bailout is their conviction that $25 billion won’t be enough. "I’m not convinced that this money won’t be throwing money at a point to be solved that won’t be fixed," said Representative Spencer Baucus (R-Ala.),

"Careful Deliberation"

Representative Paul Kanjorski (R-Pa.) said he would ponder voting for more provisional funds to the persistence. But he wants to take up to three months, into the next Congress, to debate a more detailed exchange kisses and caresses that would emphasize accountability, oversight, and conditions. "The American people anticipate and be entitled to careful deliberation from this body, rather than a blessing of last-minute expedient deals," said Kanjorski.

General Motors (GM) CEO G. Richard Wagoner Jr. called his company’s need for funds "more urgent than that." Both Wagoner and Ford (F) CEO Alan Mulally acknowledged they have run models with their companies entering Chapter 11 insolvency reorganization. Their upshot? "It’s not viable," said Mulally.

House Banking Committee Chairman Barney Frank reported he did not view Chapter 11 as an option for the automakers and admonished those who scan bankruptcy as a manner of breaking the UAW. "We already have also much union busting," reported Frank.

Despite the seizure in helping the auto industry, there is also a widely held assurance in Congress that a combination of deals will ultimately buttress the companies. "In the end, they [enough members of Congress and the Treasury Dept.] will rally and you will acquire what you want,” said Representative Maxine Waters (D-Calif.).

Wage Limits

At the same appropriated time, the outlines of stringent conditions on any loans are also taking shape. Some have called for new management atop the auto companies. After the House audience, GM’sitting Wagoner told Bloomberg Television he would be willing to step down if it was a state of getting federal aid. Besides a set bounds to on CEO compensation, there has been a spotlight on to what degree much the United Auto Workers and its retirees infer. Older UAW members make more than $70 per sixty minutes in combined compensation and benefits, vs. around $40 for the sake of workers at rival Toyota’s ™ U.S. plants. New hires for the Detroit Three favor wages about equal to those new workers for the Asian companies, in whatever manner. And starting in 2010, the UAW inclination be in attack of handling its own health-care means, albeit after billions of dollars in contributions from the automakers.

Indexes sank to multi-year lows as the biggest drop in consumer prices in 61 years sparked deflation worries, and the Fed lowered its progress forecast

By David Bogoslaw and Will Andrews

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The ghosts of October’s dismal market returned to Wall Street on Wednesday, pushing major stock indexes to new lows, including the worst close for the Dow Jones industrial medium since March 2000.

U.S. stocks plunged as fears around economic contraction and revived concerns about the financial plan converged to despatch any lingering optimism of a short-term rally on what had been seen as oversold conditions. Wall Street eyed reports showing the biggest monthly drop in in the consumer price fore-finger (CPI) in 61 years in October. That, together with a record low in housing starts and permits in October, painted a picture of an economy in recession with deflation, according to S&P MarketScope.

But the impetus for the accelerated selling in the final hour of trading was the release of minutes from the Federal Reserve’s policy committee’s joining on Oct. 28 and 29, which revealed that the FOMC saw economic diminution when it met last month. The great bombshell from the minutes: the Fed’sitting significantly higher estimates beneficial to unemployment rates, above 6.5%, and dramatically lower growth projections out to 2011.

And the reports of job cuts kept approach, as Boeing Co. (BA) announced it was eliminating 800 jobs at a Wichita, Kans. refueling facility. The airplane manufacturer is also reworking its entire production schedule, adding as much as 10 weeks to the original delivery date for all 3,734 jetliners in its order backlog as it tries to regain the former state from a strike by its machinists, according to people familiar with the situation, the Wall Street Journal reported Wednesday.

Citigroup (C) shares tumbled nearly 23% to a 13-year low on new worries about the property on its balance sheet, that include $16.9 billion in commercial mortgage-backed securities, or CMBS, accounting for 11% of its total fairness. Values of CMBS began to plummet last week hinder Treasury Secretary Henry Paulson announced the TARP would not buy distressed assets as had been hoped.

Bonds were higher. The dollar was higher in volatile mercantile. Gold futures were up, but off session highs. Oil futures slid after the release of the U.S. Energy Dept.’sitting weekly inventory report.

On Wednesday, a drop in all 30 stocks on the Dow Jones industrial average caused the blue-chip index to fall 427.47 points, or 5.07%, to finish at 7,997.28. The broad S&P 500 index shed 52.54 points, or 6.12%, to polishing at 806.58, and the tech-heavy Nasdaq composite index lost 96.85 points, or 6.53%, to end at 1,386.42, below their October lows.

On the New York Stock Exchange, 30 stocks were lower in price instead of every sum of two units that advanced. The ratio on the Nasdaq was 25-3 negative. Trading was slow.

European stocks ended sharply lower Wednesday, with the FTSE 100 index in London down 4.82%, the CAC 40 index in Paris lower by 4.03%, and Germany’s DAX index slumping 4.92%. Asian equity markets finished mixed, with Tokyo stocks down 0.66%, Hong Kong lower by dint of. 0.77%, and Shanghai surging 6.05%.

In economic information Wednesday, U.S. CPI fell 1.0% in October, while the core rate, which excludes food and energy prices, slipped 0.1%. Those follow a frigid headline reading in September, and a 0.1% grow in the ex-food and energy component. On a year-over-year basis, headline CPI eased to 3.7% from 4.9% in September. The year-over-year core rate slowed to 2.2% from 2.5% previously. Declining strength prices have helped moderate price pressures significantly, says Action Economics.

U.S. housing starts dropped 4.5% to a 791,000 unit annual pace in October, from a revised 828,000 rate in September (from 817,000 before). Permits tumbled 12.0% to a 708,000 annual clip, from a revised 805,000 in September (786,000 beforehand). Weakness was widespread. Single family starts were down 3.3%, a fifth consecutive monthly decline. Multi-family starts fell 6.8%. Housing completions dropped 10.2%.

“There’s no relief in the beleaguered horse-cloth market,” says Action Economics.

The plunge in consumer prices, while certainly welcomed by U.S. households, “points to a deflationary sweep, and that’s what the market is really fearful of here,” says Peter Cardillo, chief market economist at Avalon Partners in New York. “It complicates the Fed’s work to stimulate the economy” with further interest compute cuts after having cut the Fed funds rate to 1.0% just three weeks ago.

“Once deflation sets in, it’sitting very difficult to battle [economic contraction],” he says.

Cardillo predicts the Fed will trim engage rates by another quarter-point at its December policy committee meeting.

Meanwhile, there was talk of accelerated efforts by Senate Democrats to prepare a fiscal stimulus package that could be favored with existence voted forward before the Senate adjourns for the year. If a bill isn’t passed by dint of. year-end, fiscal relief for the thrift will have to wait to the time when the new Congress takes position in January.

In a speech at the at the Cato Institute’s yearly record monetary conference in Washington on Wednesday, Fed Vice Chairman Donald Kohn said the debilitated frugality and fragile markets were likely to persist as the disruption from the current asset bubble break open is much more biting than past time episodes. Yet he corpse unconvinced that central banks can detect and check such bubbles with set a value on hikes early enough. Instead, he favors strengthening the regulatory universe.

Also speaking judgment the Cato Institute, Richmond Fed President Jeffrey Lacker warned that the dramatic rise in Fed lending is pushing past its supervisory reach and could destabilize the pecuniary order, with additional regulatory oversight needed to limit ideal hazard and reestablish the boundaries of Fed lending and public keep up. The non-voting inflation hawk argues it’sitting of influence to eventually history upper part this public safety trap and sometimes disappoint borrowers in order to withdraw from keep clear of stifling innovation.

Wall Street gloom was exacerbated at the same time that investors watched a support day of declaration on Capital Hill by the three big U.S. automakers, who, after core snubbed by the Senate on Tuesday, pleaded by the House for at least $25 billion aid in a petulant session. Ford Motor Co. (F) and General Motors (GM) told legislators they haven’t planned contingencies in case of bankruptcy, while Chrysler said it has made more plans.

Senate Democratic leaders said they had not been able to muster the help for legislation that would provide $25 billion to the troubled auto industry from the Treasury Department’s $700 billion economic rescue supply, reports The New York Times. There is still a possibility that riches may be freed up for Detroit from a previously approved loan program to help automakers retool their plants for in addition fuel-efficient vehicles.

Bloomberg reports U.S. regulators may require banks and insurers to disclose data about all credit-default swap trades to a central record to boost transparency in the $47 trillion market, a person by knowledge of the talks said. The New York Fed and SEC want information about credit-default swaps that don’t meet flag terms to be disclosed to a warehouse that would record all trades, uttered the person, who declined to subsist identified because the discussions are secluded.

In other U.S. markets Wednesday, the 10-year Treasury bonds were up in price at 103-20/32 beneficial to a yield of 3.32%, and the 30-year notes jumped to 110-11/32 without ceasing this account that a allow of 3.91%.

The dollar index was higher at 87.28.

December West Texas Intermediate crude oil futures settled were 77 cents lower at $53.62 per barrel after the Energy Dept. reported undressed oil inventories rose 1.6 million barrels to 313.5 million barrels, gasoline stocks increased 500,000 barrels to 198.6 million barrels, and distillate inventories fell 1.5 million barrels to 126.9 million barrels.

December gold futures were $3.30 higher at $736.00 per ounce.

Among other stocks in the information on Wednesday, BJ’S Wholesale Club (BJ) posted third-quarter EPS of 48 cents, vs. 35 cents, on 12% higher comparable-club sales and 13% higher total sales. The company raised its fiscal 2009 government to $2.20-$2.30 EPS from its prior $2.10-$2.20 forecast; BJ’s sees fiscal 2010 EPS of $2.27-$2.39.