Stock Gains from China Economic Plan evaporate in Afternoon Trade

In this continuing seemingly unprecedented global crisis the next stimulus injection attempt is being carried out by the Chinese. China announced a $586Billion US stimulus package it will use to try to guide that nation through the perils of today and tomorrow's economic pressures. The package, which was designed to boost business and consumer confidence, and hence bolster the economy was seen as a light for Asian markets.

US stocks began the day climbing about 2% at the open, but those gains were short lived as the realities of the harsh conditions facing many of America's most fundamental and historic firms flew across the news wires.

AIG (AIG), which was the recipient of an already large bailout from the Government, got a revamped agreement that bolstered it's rescue package up to $150Billion. This coming on the reports that AIG's quarter swung from $3Billion in profit last year to a $24Billion loss in the current frame. Not to be outdone by the atrocious market conditions and poor financial performance of its peers the now-infamous mortgage house Fannie Mae (FNM) posted a $29Billion loss for its quarter and reported the need to tap into the Government funding that it had earlier received.

Things are just as rosy for the American Automakers, with Ford (F) struggling operationally, posting a quarterly loss of $3Billion and having its financial future in jeopardy. Economic pressures are keeping buyers away from big ticket items, and Ford's formerly successful fleet of gas-guzzling SUVs and Trucks now sit on lots unable to be sold at today's gasoline prices.

If Ford's troubles were the only problems facing GM (GM), management may be able to crack a smile or two, however General Motors is much worse off from an operational standpoint. The company says it may run out of cash by the end of the year and it just had a Deutsche Bank analyst downgrade the stock and set a price target of $0. The analyst projected a path for GM that ended with little option other than bankruptcy. GM stock fell to its lowest levels in over 60 years after getting trimmed by nearly 30%.

The American consumer is facing tremendous pressure and these type of headlines flying through the business pages just add to the hurt. With unemployment in the US at its highest in 14 years and the election behind the Country a new direction is needed, and needed quickly in order to restore some confidence and needed stability to the markets.

Disclosure: Author holds no position in the above mentioned companies.