The price of oil jumped from $16 to $120.92 today, the largest one-day increase ever recorded. The BBC reports that traders believe that the Wall Street bail out will help the economy and increase demand for oil.
The Federal Reserve on Sunday approved the request by Goldman Sachs and Morgan Stanley, the last two major investment banks in the United States, to change their status to become bank holding companies. The move will enable them to create commercial banks that take deposits.
Economists are hoping that a $700 billion federal plan to bail out the real estate market will alleviate home prices and end foreclosures. Treasury Secretary Henry Paulson over the weekend outlined a plan to buy bad real estate assets held by financial institutions.
Consumers have been cutting back spending on health care, a sector that many thought would be unaffected by the recession. The National Association of Insurance Commissioners found last month that 22 percent of 686 survey participants said that they were going to the doctor less often due to the poor economy.
A judge approved over the weekend a plan for Lehman Brothers to sell its investment banking and trading branches to the British bank Barclays in a deal worth about $1.35 billion. Lehman filed for bankruptcy on Monday after Barclays decided not to buy the entire company.
Local authorities in Galveston, Texas, say that the area remains dangerous in the aftermath of Hurricane Ike, although businesses have begun to reopen and cell phone and electric power capabilities are beginning to improve.
South Africa on Monday picked deputy president Kgalema Motlanthe to serve as the country’s leader for seven months until elections are held. The previous Prime Minister, Thabo Mbeki, resigned Saturday.
In response to the Bush administration’s plan to bail out Wall Street, Ariz. Sen. John McCain expressed concern that it would give Treasury Secretary Henry Paulson “the unprecedented power to spend $1 trillion without any meaningful accountability,” while Barack Obama blamed the current crisis on what he called the Republican philosophy of deregulation. “They said they wanted to let the market run free but instead they let it run wild,” he said. “We are in this mess because of a bankrupt philosophy that says we should give more and more to those with the most and hope that prosperity trickles down to the rest of us.”
In addition to the Wall Street bailout effort, Congress is looking to pass legislation regarding the Pentagon budget, disaster aid for flood and hurricane victims and $25 billion in loans for Detroit automakers.