In yet another blow to Japan's contracting economy, the dollar tumbled to a 13-year low against the yen Friday on investor dismay over the U.S. Senate's rejection of a bailout for the ailing American auto industry.

The dollar's fall to as low as ¥88.12 - the lowest since August 1995 - puts additional pressure on Japan's exporters, whose overseas earnings shrink as the dollar weakens against the yen. Already, major manufacturers like Toyota and Sony have slashed earnings forecasts amid waning global consumer demand, and Sony and Sharp have announced job cuts.

News of the demise of the $14 billion auto industry bailout and the yen's surge together triggered a big afternoon sell-off on the Tokyo stock market and once again underscored Japan's vulnerability to foreign exchange volatility.

The dollar later recovered to above 90 yen, but remained under the ¥91.43 mark from late Thursday. The benchmark Nikkei 225 stock average shed 5.6% to 8,235.87.

Alarmed, Japanese authorities warned that Tokyo might intervene in the currency market to buy dollars if the yen fails to cool off.

A senior financial ministry official described foreign exchange fluctuations as "too volatile," according to Kyodo news agency. "We will closely monitor the situation in the market and take appropriate actions," Kyodo quoted the unnamed official as saying.

Japan's export-oriented economy is inextricably tied to the U.S., and investors have been closely following the political developments in Washington.

"The automobile sector is a fundamental industry for both the U.S. and Japan, and a failure would be a major blow to Japan as well," said Nagayuki Yamagishi, an equities strategist at Mitsubishi UFJ Securities in Tokyo.

The rescue package sought by Detroit's ailing automakers was earlier approved by the House of Representatives but unraveled in the Senate. Bipartisan talks broke down over Republican demands that the unions agree to steep wage cuts by 2009 to bring their pay into line with U.S. plants of Japanese carmakers.

The breakdown left the fate of the auto industry -- and the 3 million jobs it touches -- in limbo at a time of growing economic turmoil. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse.

The yen's surge comes days after Japan said its economy -- the world's second-largest -- fell into a deeper recession in the third quarter than first thought. The economy shrank at an annual pace of 1.8% in the July-September period, compared with its original estimate of a 0.4% contraction.

Companies are feeling the pain. Earlier this week, Sony Corp. announced plans to slash 8,000 jobs around the world, or about 5 percent of its global work force in a bid to bolster its bottom line. The consumer electronics giant recently lowered its full-year earnings projection to 150 billion yen ($1.5 billion), down 59% from the previous year.

Toyota has also cut its net profit forecast for the year ending March 2009 to 550 billion yen ($5.5 billion), a third of the previous year's earnings.

The dollar has fallen about 20% against the yen this year and could be headed lower if the Federal Reserve cuts interest rates again and investors flee for higher-yielding currencies, analysts said.

Oil prices jumped above $64 a barrel Monday in Asia as regional stock markets rallied on a massive Chinese economic stimulus plan, which could underpin demand for crude.

Light, sweet crude for December delivery was up $3.59 to $64.61 a barrel in electronic trading on the New York Mercantile Exchange by noon in Austria. The contract Friday rose 27 cents to settle at $61.04.

China's $586 billion stimulus package announced Sunday helped lift Asian stock markets Monday. The Shanghai Composite Index surged 7.3%, Japan's benchmark Nikkei 225 index rose 5.8% and Hong Kong's Hang Seng index gained 4.8%.

Oil traders have been looking to equity markets for signs of how severe the current global economic slowdown will be. Crude oil prices were also bolstered by a falling dollar. Investors often use commodities such as oil as a hedge against inflation and a weaker dollar. The euro gained to $1.2848 on Monday from 1.2715 on Friday while the dollar rose to 99.00 yen.

"Oil has been highly correlated to stocks and the dollar," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "The spending plan may increase crude demand, which is already strong in China."

Another production cut by OPEC may also boost prices. The Organization of Petroleum Exporting Countries could further reduce oil output if a decision last month to slash production doesn't bolster plummeting oil prices, the group's president Chakib Khelil said Saturday. Khelil, who is also Algeria's energy minister, said OPEC seeks prices between $70 and $90 per barrel.

"If we go toward $55, I expect OPEC to call an emergency meeting and announce another cut," Chu said. "The market expects them to cut again in December at the latest."

Oil prices have fallen about 56% since reaching a record $147.27 in mid-July. In the long-term, rising demand in the developing world will likely push prices higher, the International Energy Agency said last week.

According to a summary of the agency's World Energy Outlook report due to be published in full this week, the IEA has hiked its forecast for the price of a barrel of oil in 2030 to just over $200 in nominal terms, compared to last year's estimate of $108 a barrel.

In other Nymex trading, heating oil futures rose 5.66 cents to $2.04 a gallon, while gasoline prices gained 5.10 cents to $1.40 a gallon. Natural gas for December delivery rose 27.6 cents to $7.03 per 1,000 cubic feet. In London, December Brent crude rose $2.45 to $59.80 a barrel on the ICE Futures exchange.

Hartford Financial Services Group Inc. said it will cut 500 jobs, or about 2%, of its total work force this month, citing losses in its investment portfolios and declining revenue.

The Hartford, Conn.-based insurer said Tuesday the layoffs were announced internally on Monday. It employs about 31,000 people.

After reporting disappointing third-quarter results last week, the company said it would slash jobs and other expenses to save $250 million in annual costs by the end of 2009.

The company reported a loss of $2.6 billion, or $8.74 per share, compared with a profit of $851 million, or $2.68 per share, a year ago.

The news sent Hartford Financial's (HIG, Fortune 500) shares plummeting 58% during the week to close at $10.32. Shares fell as low as $8.23 during the week.

Its stock rebounded Monday, closing up 57.8% to $16.28.

Spokeswoman Shannon Lapierre said 500 employees around the country -- including nearly 125 in the Hartford region -- in life and property-casualty insurance operations and corporate staff will be notified by the end of this month that they will be laid off. No layoffs will take place in December, she said.

Less than 1% of the company's 12,600 Hartford-region employees will be affected, including those in Hartford, Southington, Windsor and Simsbury.

In Tuesday morning trading, shares of Hartford rose $1.24, or 7.5 percent, to $17.51.

The Federal Reserve announced Tuesday that will start buying commercial paper - a crucial short-term funding mechanism that many companies rely on for day-to-day operations - from money market mutual funds.

It's the latest effort by the central bank to break through a credit clog that has hobbled lending and threatens to plunge country into a deep and painful recession.
New Fed facility

The Fed is tapping its Depression-era emergency powers and creating a new facility to buy a vast array of commercial paper from the funds.

Money market mutual funds have been under pressure as skittish investors demand withdrawals. Many companies rely on commercial paper to pay workers and buy supplies.

The situation has led to an intense credit crunch for companies depending on commercial paper.

"The short-term debt markets have been under considerable strain in recent weeks as money market mutual funds and other investors have had difficulty selling assets to satisfy redemption requests," the Fed explained.

The Fed plans to buy an array of commercial paper from the funds.

By doing so, the Fed hopes to improve conditions so that banks and other financial institutions will be more inclined to lend to each other and to consumers and businesses.

Private equity firm CVC has joined with reinsurance giant Swiss Re in a bid for control of the insurance arm of the Royal Bank of Scotland, a British newspaper reported Sunday.

The Sunday Times said Luxembourg-based CVC Capital Partners and the Swiss Reinsurance Co. have made a more than 3 billion pound ($5.2 billion) offer to buy a 51 percent stake in the Royal Bank of Scotland's insurance business. The paper did not identify a source for its report.

Swiss Re's London-based spokesman Tim Dickenson and CVC spokesman James Olley both declined to comment. A call to the Royal Bank of Scotland Group was not immediately returned.

Like other leading British banks, RBS was battered by devastating write-downs connected to the global credit crisis.

On Monday, the government announced it was buying or guaranteeing 20 billion pounds ($34.6 billion) worth of shares in RBS, a move which could leave taxpayers with a majority stake in the Edinburgh-based bank.

RBS has also been trying to shed other assets, including its insurance business, in an effort to raise cash. The Sunday Times said RBS, which controls the Direct Line and Churchill brands, is Britain's second-largest general insurer. The paper also identified

American International Group, which tapped another $12 billion in emergency government funding in the past week, agreed Thursday to curb millions of dollars of spending on junkets, perks and executive compensation.

The troubled insurer has come under fire in recent weeks from lawmakers and regulators for planning to spend big on corporate trips and events even as the government had lent it more than $120 billion.

AIG agreed Thursday to curb certain expenditures after criticism from Congress and New York State Attorney General Andrew Cuomo. The company canceled 160 conferences and events - some that carried price tags of as much as $750,000.

"We know that the attorney general shares our commitment to rebuilding AIG's business and paying back the U.S. taxpayer, and we will address the attorney general's concerns expeditiously," said Edward Liddy, AIG's chairman and chief executive.

Liddy was installed last month to replace the company's previous management after the Federal Reserve extended an $85 billion loan as AIG (AIG, Fortune 500) was on the verge of collapse. In return, the government took a 79.9% stake in the company.

Fed officials said that an abrupt collapse of AIG could have had dire consequences for the already strained financial markets.

On Oct. 8, the Federal Reserve Bank of New York said it would lend AIG another $37.8 billion. In exchange, AIG said it would give the Fed investment-grade, fixed-income securities as collateral.

So far, AIG has borrowed a total of $82.9 billion, according to data released by the Federal Reserve on Thursday. Taken together, the two loans $122.8 billion.

The government loan comes with a steep interest rate. AIG has said it plans to hold onto its property-and-casualty insurance businesses, while selling off the rest of the company to pay the massive debt.

"We have many remarkable businesses and a flexible plan that will allow us to repay the Federal Reserve loan as quickly as possible under our current arrangement," the company said in a statement. "All AIG insurance companies remain financially healthy."

In a letter to AIG directors on Wednesday, Cuomo criticized the company for "unwarranted and outrageous expenditures." The taxpayer support "makes such expenditures even more irresponsible and damaging," Cuomo wrote.

On Thursday, the company and Cuomo said in a joint statement that AIG has agreed to give Cuomo records related to executive compensation and will work with state officials to recoup "any illegal expenditures."

AIG also said it will establish a committee to give the company's board more oversight of salaries, bonuses, stock options, severance payments, gratuities, benefits, junkets and perks.

Additionally, AIG will not make payments under an employment agreement with outgoing CFO Steven Bensinger. According to company filings with the SEC, Bensinger was entitled to receive nearly $10 million in severance, among other payments.

An AIG spokesman declined to comment on the issue of Bensinger's severance.

Bensinger has left AIG, the company announced Thursday. AIG announced that the new CFO would be David Herzog, who has been with AIG since 2001 and served as comptroller since 2005.

Recently minted commercial bank Goldman Sachs Inc. has applied for a New York state banking charter, state officials said Monday.

Governor David Patterson praised the decision, calling Goldman Sachs the "bedrock" of New York's financial community and that it reflects the state's ability to "effectively regulate" banks.

"We look forward to working with [Goldman Sachs] as they transition a substantial portion of their business from an investment bank to a new regulatory scheme," Patterson said in a statement.

Goldman Sachs (GS, Fortune 500) and fellow brokerage Morgan Stanley (MS, Fortune 500) were the last remaining investment banks on Wall Street before federal officials granted the firms' requests to become bank holding companies last month.

The decision to become commercial banks came as rival brokerages Bear Stearns and Lehman Brother collapsed in the fallout of the nation's credit crisis.

As commercial banks, Goldman and Morgan have the ability to purchaMorgan Stanley wrapped up plans to sell a part of itself to Mitsubishi UFJ for $9 billion, the two companies said Monday, reviving hopes that the Wall Street firm will be able to survive the credit crisis.

Shares of Morgan Stanley (MS, Fortune 500), which plummeted in recent days on speculation that the deal could fall apart, staged an impressive rally, surging more than 85% Monday.

As recently as last week, investors feared that Mitsubishi (MTU) might pull out of the investment altogether, putting Morgan Stanley at risk of suffering the same fate as Lehman Brothers, which collapsed just weeks earlier.

Mitsubishi's decision to renew its commitment to the deal, however, provided some assurances to investors about Morgan's survival.

"A $9 billion pad to their balance sheet doesn't hurt." said Ken Crawford of Argent Capital Management in St. Louis, which manages about $800 million in assets but does not own shares of Morgan Stanley.

The New York City-based bank reportedly spent much of the weekend engaged in talks with Mitsubishi over the terms of the proposed $9 billion stock sale, which was first announced just three weeks ago.

Under the original terms, Mitsubishi had agreed to buy a mix of preferred and common stock of Morgan Stanley but reportedly wanted a better deal as Morgan's market value plummeted in recent weeks.

Still, Monday's announcement revealed that the conditions of the deal did not change all that much.

Under the revised terms, Mitsubishi will acquire a 21% ownership stake of Morgan Stanley in exchange for $9 billion, with the majority of that investment coming in the form of both convertible and non-convertible preferred stock both of which pays Mitsubishi a 10% dividend.

Some experts said that reported behind-the-scenes involvement by U.S. government officials may have played an important role in keeping the original terms of the deal intact.

U.S. government officials allegedly intervened in the weekend talks, offering assurances to the Tokyo-based bank about its investment. There were fears that a decision by Mitsubishi to walk away would not only put Morgan Stanley at risk of failure but aggravate the already anxious mood in financial markets.

"There is an interest larger than both entities in creating some sense of calm," said Douglas Ciocca, a managing director at the Leawood, Kansas-based Renaissance Financial Corp., which manages over $1.6 billion.

In recent weeks, some of Wall Street's biggest players have virtually vanished as a result of fear in the market. In mid-September, Lehman Brothers filed for bankruptcy and Merrill Lynch (MER, Fortune 500) sold itself to Bank of America (BAC, Fortune 500).

Morgan Stanley and rival Goldman Sachs (GS, Fortune 500) were already forced to reevaluate their way of doing business amid the market turmoil, asking the Federal Reserve last month to be reclassified as bank holding companies.

The Fed agreed to the request, which means the two firms are allowed to create commercial banking operations that can take deposits.

Citing an internal memo to employees, the Wall Street Journal reported that John Mack, Morgan Stanley's chairman and CEO, was looking to build up the company's deposit base through acquisitions with the capital from the Mitsubishi deal.

Either way, the $9 billion investment is considered to be a life-saving deal for Morgan Stanley and will arguably broaden the reach of both firms domestically and overseas.

"Today's investment further bolsters our strong capital position and, together with our strategic alliance, will accelerate our transition under our new bank holding company structure and help us realize opportunities created by the continuing dislocation in the financial markets," John Mack, Morgan Stanley's chairman and CEO said in a statement. se other retail banks, which could give them a more steady foundation of cash. It also gives them access to loans from the Federal Reserve that were not available to brokerages.

But it also puts Goldman and Morgan under the Fed's supervision, increasing the agency's regulatory oversight and possibly forcing them to raise additional capital. As banks, Morgan and Goldman will be forced to take less risk, which will mean fewer profits.

A call to Goldman Sachs requesting comment was not immediately returned Monday.

The decision to apply for a New York state charter will not preclude Goldman from expanding its business or opening branches outside of the state, according to Bert Ely, principal of Ely & Co., a financial institutions and monetary policy consulting firm in Virginia.

"Banks can have multiple charters," Ely said. Having a New York charter "does not bar them from having other charters," he added.

The Dow has shed thousands of points and the global economy is in crisis.

So who wants to buys a house right now? Not many people, it turns out.

The National Association of Home Builders, for instance, has seen its contract cancellations spike recently to as high as 30%, compared with an average rate of about 20%. During the housing boom, as few as 5% of sales were cancelled.

"The events of the past couple of weeks have people's heads spinning," said Steve Melman, NAHB's director of economic surveys.

The National Association of Realtors estimates that about 25% of the clients its members are working with are staying on the sidelines. They're looking at homes and intend to buy at some point, but right now they're worried about their jobs, their declining investments and falling housing prices.

"You have to have a lot of confidence to make this kind of big-ticket purchase in the current environment," said NAR spokesman Walter Molony.

Real estate agent Bob Rose was helping one couple look for an investment property in battered Contra Costa County, Calif., hoping to find a bargain that they could sell in a few years.

Then, on Sept. 29 the Dow dove nearly 800 points and the couple decided not to buy. "They told me they had lost about a quarter of their retirement portfolio," said Rose, and that they could no longer afford it.

Even some buyers who are already in contract are managing to pull out of sales amidst all the economic turmoil.

Deal or no deal
Two weeks ago, one Washington state couple, Sharif Tai and Gaby Ghafari, went into contract on a new $450,000, three bed, three bath, house in central Seattle. Soon afterwards, the stock market began its steep descent.

"It wasn't that we lost money [in the market] or that we were worried about our jobs," said Tai, a software developer in his mid-20s. "We thought we could get a better deal, so we decided to wait."

The couple backed out of the deal by citing problems with the inspection, but they haven't given up on making a purchase.

"We're keeping our eyes out," said Tai. "We want to see how things shake out. If we see a great deal, we'll take it."

Other buyers are demanding sweeteners before they close a deal during such a rocky time. San Francisco agent Jim Holt had clients go into contract on Sept. 29, on a $750,000 home in town. But by the end of the week the Dow had lost over 800 points and the buyer demanded a whopping $50,000 price cut.

"Buyers are seeing the [market implosion] as an opportunity to get concessions," said Holt. In the end, the seller only agreed to reduce the price by $5,000 - but that's better than nothing.

Other house hunters are managing to wring more concessions out of sellers even on top of existing discounts.

Rich Machado, an agent with the Smart Homebuyer Team in New Bedford, Mass., had already helped one buyer get a seller to take $9,000 off the price of a house listed for $229,000, and throw in $6,000 in closing costs, $1,800 for an electric upgrade and $400 for a home service contract.

The deal went into contract two weeks ago. Despite that impressive array of incentives, "the buyer is balking," said Machado. "He's asking for another $10,000 off the price."

The seller hasn't caved in yet - but with demand drying up, he may be forced to come around.

As the losses mount on Wall Street - the Dow lost 678 points on Thursday alone - things will undoubtedly become even more difficult for sellers.

"In the midst of such chaos, everyone is just shaking their heads," said NAHB's Melman.

Efforts by governments worldwide to stop a slide in financial markets haven't worked yet and the Federal Reserve and the U.S. Treasury may have to consider more dramatic measures.

This week the Fed has moved to pump potentially trillions of additional dollars into the nation's banks and leading corporations. And it led the way on emergency interest rate cuts by central banks around the globe Wednesday morning.

As the global selloff continues, the U.S. government is now said to be considering steps that include taking direct investments in banks, as well as guaranteeing their debt and insuring all deposits.

But experts say the Fed's actions may not be enough to stop the global economy from plunging into the worst downturn seen in at least 25 years, if not since the Great Depression.

Even those praising the Fed say it's not clear what it would take to calm markets.

"I think they've been pretty inventive and pretty unrestrained," said Tom Schlesinger, executive director of the Financial Markets Center, a think tank that follows the Fed. "But I'm not sure what it would take to stem the fear in the markets. It's such a contagious and irrational phenomenon, and feeding on itself and compounding itself day by day."

What the Fed has already done....
On Tuesday, the Fed unveiled a plan to lend directly to the nation's major companies by buying up an unlimited amount of the $1.3 trillion in commercial paper, short-term loans that businesses use to operate day-to-day, on the market.

The Fed also announced it was doubling the size of its term auction facility, a program the Fed created last year to lend banks money for up to 85 days at a time, to $300 billion. The Fed added it was prepared to boost the term auction facility to $900 billion by year's end.

Despite this, banks still appear to be reluctant to lend money and stock markets around the globe have continued to fall. On Thursday, the Dow industrials plunged nearly 700 points to a five-year low and markets worldwide plunged.

Experts say there are worries that the global economy is now sliding towards recession and that there is relatively little that the Fed or other central banks can do to stop that. The International Monetary Fund warned Wednesday that the world's economy will slow sharply this year and next.

"They're looking a bit more impotent with each action," said Lakshman Achuthan, managing director of the Economic Cycle Research Institute, about the Fed.

Achuthan said that since major banks around the world are cutting back on their lending, that dwarfs the economic muscle of the world's central banks and governments.

But in a speech Tuesday, Federal Reserve chairman Ben Bernanke vowed that the Fed would do whatever it takes to try to fix the credit crunch.

"To support growth and reduce the downside risks, continued efforts to stabilize the financial markets are essential," he said. "The Federal Reserve will continue to use the tools at its disposal to improve market functioning and liquidity."

Experts say they don't think Wednesday's global rate cuts are the last steps the Fed plans to take. And many have suggestions as to what the Fed might do to get banks in the business of lending again.

More cuts on the way?
The first step is probably the most traditional one - further rate cuts.

According to closely watched interest rate futures, investors are pricing in an 84% chance of another quarter point cut at the Fed's next meeting, a two day session that concludes on Oct. 29. That would leave the central bank's key fed funds rate at 1.25%.

Many experts believe the Fed would not want to take rates below 1% - which is where they were for 12 months in 2003 and 2004. Some have blamed those low rates for helping to create an environment of easy lending that contributed to the housing bubble.

Yet, the Bank of Japan's key interest rate is already at 0.5%. And some argue that it would be justified for the Fed to lower rates to that level, or even to 0%, because of current conditions.

"Why not? If you're facing a situation where you need to lower the rates all the way to zero to keep the economy from going over the precipice, why wouldn't you do that," said Lyle Gramley, a former Fed governor now working as an economist for the Stanford Group.

Regardless of how far the Fed is willing to cut, more cuts are expected by other central banks, most notably the European Central Bank. That's because the ECB had not been cutting rates during the past year and have more room to lower rates.

Other options for the Fed
Bill Gross, the chief investment officer at giant bond manager Pimco, wrote this week that another step the Fed could take is to become a clearing house for trades of a variety of exotic and arcane financial instruments such as collateralized debt obligations or credit default swaps. These have traditionally been traded directly between two firms rather than in an open market.

"We believe that the Federal Reserve must now act as a clearing house, guaranteeing that institutional transactions clear," Gross wrote in his most recent commentary.

Schlesinger agreed, saying that while the Fed would normally never think to take such an active role in markets, these are far from normal times.

Gramley said he also believes that the Fed may supplement its efforts to help larger firms by starting to lend money to small and medium sized businesses as well.

The Fed could agree to buy small business loans from banks that are backed by collateral, such as inventories or equipment. Gramley said the loans could be purchased on a non-recourse basis, meaning the Fed, and not the bank, assumes the risk if the loan goes bad.

That would free the banks from the need to raise more capital if the loans sour and could make them more willing to make such loans once again.

"The Fed can work aggressively enough to break the logjam," Gramley said.

Can anything work but time?
Still, Schlesinger is worried that there is little that the Fed or other government entities can do to fix the current crisis of confidence gripping financial markets.

A painful recession may be the only way for the markets to work the problems out of the system - with further declines in housing prices and deeper job losses likely a result.

"I wish I had a silver bullet. But the fear is disconnected from underlying fundamentals at this point," said Schlesinger. "What will thaw it out is a sense among lenders that a modicum of trust has been restored in these complicated, opaque markets."

But Gramley said that even if recent or future actions by the Fed aren't enough to stop the economy from slowing further, they can still have a positive effect.

"Even if it's not going to prevent the recession from deepening, what it can prevent is a huge meltdown," said Gramley.

The U.S. dollar rose against the euro and the pound Thursday as investor's risk appetite was ruined by falling stock prices.

The 15-nation euro bought $1.3647, down from $1.3677 late Wednesday in New York. And the British pound slipped to $1.7158 from $1.7289.

The dollar was under pressure earlier in the session as European stock markets rebounded. But the buck started to gain ground against the euro and the pound after the U.S. stock market turned mixed.

"Now that stocks are down, it's generating some renewed interest in the dollar as a risk aversion trade," said Asharf Liadi, Chief FX Strategist at CMC Markets in New York. "The correlation between stocks and currencies remains in place."

Despite the economic turmoil in the U.S. economy, the dollar is still seen as a relatively safe haven by many currency traders. Hence, when stock prices fall, the greenback often rallies against the higher-yielding euro and pound.

But the dollar remained weak against the lower-yielding yen as investors remained wary of making risky trades. The U.S. currency fell to ¥100.69 versus ¥101.12 in the previous session.

The dollar's advance comes one day after central banks in Europe and North America collectively lowered interest rates in an attempt to stabilize shaky financial markets.

While the emergency rate cuts were a necessary step towards reestablishing confidence in world markets, the depth of the problems facing the global economy mean that their impact on the market may not be felt for some time, Liadi said.

Oil prices fell below the $90-a-barrel level Wednesday after the government reported a sharp increase in the nation's supplies of crude and gasoline, in another sign that demand for energy remains weak.

Light, sweet crude for November delivery was down $3.11 to $86.95 a barrel on the New York Mercantile Exchange. Oil had traded down about 75 cents just before the government figures were released. Prices have been under pressure amid anxiety over a global slowdown in demand.

Wednesday's report "feeds into the sense that the consumer is flat on their back," said John Kilduff, energy analyst at MF Global in New York. And with the global economic outlook darkening, "demand for energy is not going be perking up any time soon."

In its weekly inventory report, the Energy Information Administration said the nation's stockpiles of crude oil surprisingly rose by 8.1 million barrels last week. Analysts were expecting crude stocks to have dropped by 1 million barrels, according to a survey of industry experts by energy research firm Platts.

Gasoline supplies also increased by a bigger-than-expected 7.2 million barrels. Estimates had called for a more modest 2-million-barrel rise.

Also missing forecsasts, supplies of distillates - used to make heating oil and diesel fuel - fell unexpectedly by 500,000 barrels. Analysts expected supplies to rise by 1 million barrels.

EIA noted in its report that demand for gas over the last four weeks dropped 5.3% from a year ago, to average nearly 8.8 million barrels per day.

Meanwhile, refineries operated at 80.9% of their operable capacity last week, up from 72.3% the week before.

The price of oil edged above $90 earlier Wednesday after the Federal Reserve lowered its benchmark interest rate to 1.5% from 2%. The surprise emergency move was part of a coordinated effort by central banks worldwide to combat the credit crisis.

Oil prices have been closely following the U.S. euqity markets recently as investors look for signs of economic recovery that could signal renewed demand for oil and gas.

Stocks seesawed in the early going, with the Dow industrials trending in a range of 180 points higher and some 200 points lower, as investors digested the rate cuts.

Fewer troubled borrowers got help with their mortgages in August than in July, according to figures released Thursday.

Hope Now, the alliance of mortgage servicers, counselors, and investors assembled to combat foreclosures, said it helped 189,000 homeowners avert foreclosure in August, down 1.7% from the number of people helped in July.

"It's difficult to look at any one month and see a trend," said Faith Schwartz, executive director of Hope Now. "We're still outpacing the second quarter in total workouts."

The news comes as the government's plan to rescue the financial system returns to the House for a vote after it passed the Senate Wednesday night. The legislation would permit the Treasury to buy up $700 billion of bad assets - most of which are backed by mortgages - from banks in an effort to clean up their balance sheets so that they can resume lending.

But many experts and economists say that the U.S. credit crisis cannot be resolved until the housing market stabilizes, with foreclosures slowing and steep home price declines leveling off. But home prices are still declining; the Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3% in July from a year earlier.

"Hope Now is absolutely successful in that it is saving people from going into final foreclosure, and that won't change," said Schwartz. "But any further direction that helps homeowners offered by the government would be helpful," she added in reference to the bailout.

Different workouts
Hope Now said that nearly 79,000 at-risk mortgage borrowers had the terms of their loans permanently modified in August to make them more affordable, with lower interest rates, reduced principal or both.

Another 110,000 homeowners, about 58% of the total workouts, got repayment plans, which means that they'll have extra time to make up missed payments. That's down from the 112,000 who got repayment plans in July.

These workouts are generally considered to be less effective at helping homeowners because they don't reduce the borrowers' total monthly payments, and in fact often increase them.

But since the Hope Now program began, the organization has succeeded in increasing the proportion of loan modifications that make up the total number of loan workouts.

For instance, only 17% of total workouts were modifications in the third quarter of 2007, compared to 42% in the second quarter of 2008. The ratio has held steady at 42% in the past two months.

"We're trying to tackle the broader issue for people who have the desire and capability to stay in their homes," Schwartz said. "That's why we try to restructure their loans."

Hope Now says it has helped a total of 2.3 million homeowners since its program launched in July, 2007. The group also reported that foreclosure sales fell to 86,594 in August, down 5.9% from July.

But a different report from RealtyTrac, an online marketer of foreclosure properties, showed that the number of homes lost to foreclosure rose 18% to 91,000 in August.

Subprime loans
Hope Now also issued the results of a separate study on subprime loans, which most economists believe are at the root of the housing crisis.

The coalition said it helped modify 91,000, or 8.3%, of the 1.1 million subprime adjustable rate mortgages that are scheduled to reset between January and August 2008. More than three-quarters of the modifications were for five or more years.

About 13,200 of the loans scheduled to reset went into foreclosure, while another 449,000 of them were paid off in full when the borrower was able to refinance the loan or sell the house.

Though a financial rescue plan was passed Friday, credit still remained tighter than ever.

The House voted in favor of the Treasury's $700 billion plan to buy up troubled assets from financial institutions. Those assets, mostly mortgage-related, have caused the credit markets to seize up.

The bill now goes to President Bush to sign into law.

But even with a rescue plan on the horizon that is designed to restore liquidity to the credit markets, banks still opted to hoard cash rather than lend to one another Friday.

Even if the bailout ultimately works to unlock credit markets, it would potentially take time. Institutions that sell their bad assets to the government could have to sell those securities at a huge discount, resulting in large writedowns. As a result, experts say it may be months after the legislation is enacted until banks start to see some relief.

"It will take some time for the markets to recover - this bill will not be an overnight cure," said Peter Cardillo, chief market economist with Avalon Partners.

Meanwhile, banks remained hesitant to take on more risky loans while dragging their anchors of their own troubled assets.

Credit measures at all-time highs
The 3-month Libor rate, or the London interbank offered rate, rose to 4.33%, up from 4.21% on Thursday, its highest level since January. The measure is a daily average of what banks charge other banks to lend money in London.

The difference between that measure and the Overnight Index Swaps rate rose to an all-time record 2.73 percentage points, up from 2.55 points Thursday, according to data reported by Bloomberg.com. The Libor-OIS "spread" measures how much cash is available for lending between banks, and is used by banks to determine lending rates. The bigger the spread, the less cash is available for lending.

Friday marked the sixth-straight record for the indicator, showing that banks are hoarding cash rather than lending to one another.

Historically, the typical Libor-OIS spread is about 0.11 percentage points, but it has averaged 1.66 points since the crisis began on Wall Street in mid-September, according to Merrill Lynch economist Drew Matus.

Another credit market indicator, the "TED spread," rose to yet another record high of 3.88 percentage points. The higher the spread, the more likely banks are risk averse. The TED spread was only 1.04 points on Sept. 5.

The TED spread measures the difference between 3-month Libor and the yield on the 3-month Treasury , considered by many investors to be the safest investment. The spread is a key indicator of banks' willingness to lend to one another.

With a wrench in the financial system's gears, many customers who need a loan to finance a home, car or tuition aren't able to get the credit they need. Others who can get a loan have to pay high interest rates. Frozen credit also affects companies' ability to make payroll, which can result in layoffs.

Treasurys
With credit tighter than ever, investors fear that the economy will continue to slump into a recession. Signs of a prolonged slowdown are evident. For instance, the U.S. Department of Labor is reported that the economy shed 159,000 jobs in September - the highest drop in employment since 2002.

"There's a growing unease about the recession," said Scott Anderson, senior economist with Wells Fargo. "It's pretty clear from the economic data from the past few days that the economic downturn has gotten worse in U.S. and globally."

As a result, banks and investors began to speculate that the Federal Reserve will cut its key funds rate by as much as a half of a percentage point to stimulate the economy.

The U.S. central bank uses its rate-cutting tool to encourage lending in an attempt to boost the economy. However, rate cuts tend to be inflationary, and bond investors worry that their assets will devalue over time as the dollar sinks.

"There is growing speculation that the Fed might cut rates," said Cardillo. "There's no inflation problem right now, but there may be down the road as the printing presses will be running at full speed."

The 2-year note, which fluctuates the most on rate changes, fell 2/32 to 100-12/32 and its yield rose to 1.66% from 1.63%. Bond prices and yields move in opposite directions.

Bond prices were down for the majority of the day Friday, as rumors of a rate cut took hold and stocks rose in anticipation of the House vote. But after the afternoon vote, the stock market refocused on the struggling economy and most Treasurys began to rise.

The benchmark 10-year note rose 2/32 to 103-1/32 and its yield held steady at 3.63%.

The "2-10 yield spread," or the difference between the 10-year and 2-year yields, fell to 1.97 percentage points from 2.02 points right before the bill was signed. That suggests a very slight easing of credit, as short term money is being made available at lower rates. But experts warned that it is way too early to declare victory for the credit markets.

"Spreads are coming down a little bit, but we have to wait and see how the plan works," Cardillo said. "It still won't be implemented for weeks."

The 30-year bond rose 21/32 to 106-18/32 and its yield fell to 4.12% from 4.15%.

The yield on the 3-month bill, which is considered by many to be the safest investment, fell to a measly 0.49% from 0.69% late Thursday.

"People just want good collateral because of the fear factor," Cardillo said. "They have no confidence in the credit markets."

Stocks slumped Friday, as a brutal week ended with President Bush signing the historic $700 billion bailout plan after weeks of contentious debate.

Credit markets remained frozen, despite the vote, with two measures of bank jitters rising to record highs. Investors also looked to Wells Fargo's planned purchase of Wachovia and a dismal job market report.

The Dow Jones industrial average (INDU) lost 1.5% Friday and 7.3% for the week. On a point basis, the Dow lost 818 points this week, its biggest weekly point loss in seven years and the third biggest weekly loss ever.

The Standard & Poor's 500 (SPX) index lost 1.4% Friday and 9.4% for the week. On a point basis, the S&P lost 114 points, the worst weekly point loss in seven years and the third biggest weekly loss ever.

The Nasdaq composite (COMP) lost 1.5% Friday and 10.8% for the week. The 10.8% decline was the worst in seven years and fifth worst ever. But the weekly point drop of 236 points fell outside the ten worst in history.

Wall Street rallied ahead of the early afternoon vote - with the Dow up as much as 313 points - as investors bet the House would pass the modified version of the bill after defeating a similar measure Monday.

But once the House voted 263-171 to pass the bill, which would buy illiquid securities in order to unfreeze credit markets - stocks gave up gains. News that President Bush signed it into law failed to stop the downtrend.

Wall Street was probably taking a classic "buy the rumor, sell the news" approach, analysts said. Additionally, markets may have implied that even with the new law, the economy remains under duress.

"It's like a heart that's had a heart attack and, while it's recovering, it's still dealing with muscle damage," said Scott Anderson, senior economist at Wells Fargo.

Anderson thinks the economy is in a recession now and will remain in one until at least this time next year.

"Over time, the Treasury will be buying the bad assets, and we'll see what kind of impact that has," said Stephen Stanley, chief economist at RBS Greenwich Capital. "But the damage has already been done to the real economy."

Stanley said banks won't be more willing to lend to each other or consumers anytime soon. The absence of ready capital has stalled the financial system and hurt consumers.

The Dow plunged Thursday as frozen credit markets added to fears that the House might shoot down the bill. After Monday's failed vote, the Dow ended down a record 777 points. (Full story)

"This bill should result in more confidence in the financial markets, but now that it's been passed, the hard work begins," said Ted Weisberg, NYSE floor trader at Seaport Securities.

Credit markets: Measures of bank nervousness hit record levels Friday, even after the bill was signed into law.

The 3-month Libor - the rate banks charge each other to borrow for three months - rose to 4.33% from 4.21% Thursday, the highest level since January, according to Bloomberg.

The difference between the 3-month Libor and the Overnight Index Swaps rallied to an all-time high of 2.86%. The Libor-OIS spread measures how much cash is available for lending between banks and is used by banks to determine rates. The bigger the spread, the less cash is available.

The TED spread, which is the difference between 3-month Libor and what the Treasury pays for a 3-month loan, briefly hit an all-time high of 3.88%, before settling at 3.87%.

The wider the spread, the more reluctant banks are to lend to each other rather than from the federal government. When markets are fairly calm, banks charge each other premiums that are not much higher than the U.S. government.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, fell to 0.49% from 0.68% late Thursday, with investors willing to take a piddling return on their money rather than risk stocks. On Monday, the yield fell to 0.14% as panic gripped the markets. Last month, the 3-month bill skidded to a 68-year low around 0%. (Full story)

Long-term government debt prices gained and the yields slipped. The benchmark 10-year Treasury note rose 6/32, sending the corresponding yield down to 3.60% from 3.62% late Thursday. Treasury prices and yields move in opposite directions.

Wachovia: Investors also eyed Wachovia (WB, Fortune 500)'s surprise news that it has accepted Wells Fargo (WFC, Fortune 500)'s $15.1 billion all-stock bid.

Earlier this week, Wachovia had pledged to sell just its banking operations to Citigroup (C, Fortune 500) in a deal that would have required the involvement of the federal government. But a deal that would keep Wachovia intact was better for the company, its CEO said. (Full story)

However, Citi appears to be ready to fight for Wachovia, issuing a statement that Wells Fargo should end the deal as it is in breach of Citi's contract.

Wachovia rallied 58.8% in active New York Stock Exchange trade, while Wells Fargo fell 1.7%. Citigroup fell 18.4% on investor disappointment that it couldn't seal the deal with Wachovia.

The broader financial sector tumbled, erasing gains accrued ahead of the vote.

Market breadth was negative. On the New York Stock Exchange, losers topped winners almost two to one on volume of 1.4 billion shares. On the Nasdaq, decliners beat advancers five to two as 2.55 billion shares changed hands.

Jobs report: The bailout focus and Wachovia news helped temper worries about a government report that showed the biggest drop in jobs since 2003.

Employers cut 159,000 jobs from the payrolls in September, far exceeding economists' forecasts for 105,000 net losses, according to Briefing.com. It was the ninth-straight month the economy has lost jobs, bringing the 2008 tally up to 760,000 jobs lost.

The unemployment rate, generated by a separate survey, stayed at 6.1%, unchanged from August and in-line with forecasts. (Full story)

In other economic news, the Institute for Supply Management's reading on the services sector of the economy fell to 50.2 in September from 50.6 in August. That topped forecasts for a drop to 50, which is the measure for expansion in the index.

AIG: The insurance company said it would sell some of its business to pay back the federal government the $61 billion in loans it has taken, after it narrowly avoided collapse last month. AIG (AIG, Fortune 500) shares gave up morning gains and ended 3.5% lower. (Full story)

Oil and gold: Oil prices were lower, with U.S. light crude oil for November delivery settling down 9 cents to $93.88 a barrel on the New York Mercantile Exchange. (Full story)

Oil prices have been choppy over the last few weeks amid the financial market crisis. Bets that a slowing global economy means slower oil demand have weighed on prices, following a peak of $147.27 a barrel on July 11. But the recent stock market turmoil has also made investors anxious for safer investments such as oil, gold and other commodities.

COMEX gold for December delivery fell $11.10 to $833.20 an ounce.

Other markets: In currency trading, the dollar gained against the euro and fell versus the yen.

Gas prices fell for the 16th day in a row, according to a nationwide survey of credit card activity.

In global trading, European markets rose, while Asian markets ended lower

Educational services, farms, utilities, stores and hospitals all saw their businesses expand in September, thanks to strong exports and deliveries, a private research group's survey showed Friday.

The reading of 50.2 from the Institute for Supply Management was down from 50.6 in August. A reading above 50 signals growth.

It beat economists' prediction of a reading of 50.0, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR.

Monday's manufacturing report by the same organization showed the worst reading since October 2001, following the Sept. 11 attacks, and economists called it a sign of recession.

According to the services report, which is based on a survey of the institute's members, educational services, agriculture, utilities, retail and health care are growing, while restaurants, real estate and wholesale are contracting.

In another sign that the financial crisis is not slowing the solar industry, Suntech, the giant Chinese solar module maker, made a big move into the United States market on Thursday. The company announced a joint venure with green energy financier MMA Renewable Ventures to build solar power plants and said it would acquire California-based solar installer EI Solutions.

Founded in 2001, Suntech (STP) recently overtook its Japanese and German rivals to become the world’s largest solar cell producer. The company has focused on the lucrative European market and only opened a U.S. outpost, in San Francisco, last year. The joint venture with MMA Renewable Ventures (MMA) - called Gemini Solar - will build photovoltaic power plants bigger than 10 megawatts.

Most solar panels are produced for commercial and residential rooftops, but in recent months utilities have been signing deals for massive megawatt photovoltaic power plants. Silicon Valley’s SunPower (SPWRA) is building a 250-megawatt PV power station for PG&E (PCG) while Bay Area startup OptiSolar inked a contract with the San Francisco-based utility for a 550-megawatt thin-film solar power plant. First Solar (FSLR), a Tempe, Ariz.-based thin-film company, has contracts with Southern California Edision (EIX) and Sempre to build smaller-scale solar power plants.

Suntech’s purchase of EI Solutions gives it entree into the growing market for commercial rooftop solar systems. EI has installed large solar arrays for Google, Disney, Sony and other corporations.

“Suntech views the long-term prospects for the U.S. solar market as excellent and growing,” said Suntech CEO Zhengrong Shi in a statement.

Other overseas investors seem to share that sentiment, credit crunch or not. On Wednesday, Canadian, Australian and British investors lead a $60.6 million round of funding for Silicon Valley solar power plant builder Ausra. “So far the equity market for renewable energy has not been affected by the financial crisis,” Ausra CEO Bob Fishman told Green Wombat.

The solar industry got more good news Wednesday night when the U.S. Senate passed a bailout bill that included extensions of crucial renewable energy investment and production tax credits that were set to expire at the end of the year.

Mortgage finance companies Fannie Mae and Freddie Mac, seized by the federal government last month, are rolling back fees imposed as they struggled to shore up their finances over the past year.

Freddie Mac (FRE, Fortune 500) said Friday it would not impose a fee increase scheduled to go into effect next month. The announcement followed a similar reversal by Fannie Mae (FNM, Fortune 500) Thursday night.

Freddie Mac, however, will raise fees next year for riskier loan products, including mortgages that allow interest-only payments for the first few years. Freddie also will require higher credit scores for "piggyback" loans that allow borrowers to make smaller down payments by taking out two mortgages.

Taken together, Freddie Mac said the changes would provide "some relief from the challenges in the current market environment," but added that it is following lending practices "that are prudent and largely applicable in all market conditions."

Both companies had announced plans to hike a fee on all loans purchased by the companies to 0.5% next month from 0.25%. For a $200,000 loan, that's a savings of $500.

The decision comes nearly a month after the companies, the largest buyer and backer of U.S. mortgages, were taken over by the government and saw their top executives ousted.

In recent months, Fannie and Freddie have hiked several fees for borrowers with blemished credit, while asking for bigger down payments. Real estate agents, mortgage brokers and homebuilders have all complained that the moves were stifling the housing market.

Fannie Mae Chief Executive Herb Allison said in a statement Thursday that the company is "evaluating all of our risk-management, underwriting guidelines, pricing and costs."

James Lockhart, director of the Federal Housing Finance Agency - which regulates Fannie and Freddie - said last month that any changes made by the companies should "reflect both safe and sound business strategy and attentiveness to the [companies'] mission."

Family Dollar Stores Inc. said Friday fiscal fourth-quarter profit rose 41%, above analysts' expectations as shoppers used their government stimulus checks to buy items like consumables in a softening economy.

The discount-store operator said profit for the period ended Aug. 30 rose to $53.2 million, or 38 cents per share, from $37.8 million, or 26 cents per share, a year earlier.

Sales rose 8% to $1.77 million from $1.63 million.

Analysts polled by Thomson Reuters expected earnings of 34 cents and sales of $1.76 billion.

"Fourth-quarter sales benefited from the effect of the government stimulus checks distributed this summer," Chairman and Chief Executive Howard R. Levine said in a statement. "Strong sales of consumables and effective management of inventory risk, combined with disciplined expense control resulted in robust earnings growth."

Same-store sales, or sales at stores open at least a year, rose 5.6% because of an increase in the average customer transaction value and higher customer traffic.

For the fiscal year ending Aug. 30, profit rose 2% to $233.1 million, or $1.66 per share, from $242.9 million, or $1.62 per share, a year earlier.

Sales rose 2.2% to $6.98 billion from $6.83 billion.

Looking ahead, Levine said, "While we are not immune to the current economic conditions, our strategy of providing customers with value and convenience positions us well within today environment."

For the fiscal first quarter, Family Dollar (FDO, Fortune 500) expects earnings between 38 cents and 42 cents per share, and sales to rise between 4% and 6%. Same-store sales are expected to rise 2% to 4%.

Wall Street expects 40 cents per share and sales of $1.75 billion.

For the fiscal year ending Aug. 29, earnings per share are expected between $1.58 per share and $1.78 per share and sales are expected to rise 3% to 5%. Same-store sales are expected to rise 1% to 3%.

Analysts forecast earnings of $1.70 per share and sales of $7.22 billion.

Sales at Ford Motor Co. plunged in September as tighter credit for buyers and dealers during the month combined with stubbornly high fuel prices to sharply curtail demand for its vehicles.

Ford (F, Fortune 500) reported that U.S. sales tumbled 35% from a year earlier. Sales tracker Edmunds.com had forecast a 25% drop in sales in the period.

Overall industry sales are expected to fall 20% from year-ago levels. Experts said many consumers were apparently reluctant to make big ticket purchases at a time of economic upheaval.

And for those who wanted to buy a car, some were unable to get a loan as the credit markets tightened during the mounting crisis on Wall Street.

In addition to auto loans being more difficult to get, a growing number of dealerships also have been hit by the credit crunch and have found it increasingly tough to get the cash they need to do business.

"Consumers and businesses are in a very fragile place," said Jim Farley, Ford group vice president. "An already weak economy compounded by very tight credit conditions has created an atmosphere of caution."

The run-up in gas prices earlier this year had already hurt customer demand for the SUVs and pickup trucks that were crucial to Ford's lineup of vehicles as buyers turned away from those models and to more fuel efficient cars. While gas prices have fallen about 12% from the record high levels hit in July, they are still about 30% higher than the same time a year ago.

But the sales decline for Ford in September was broad based. Sales for almost every model of car or truck offered by Ford, Lincoln, Mercury and Volvo fell at least 10% from the same period last year.

Ford's SUV models plunged 57%, while pickup and van sales tumbled 39%. But Ford even had a rough time selling more fuel efficient vehicles. Sales of so-called crossover vehicles, which are a more car-like SUV, dropped 30% despite a high-profile introduction of a new model, the Flex. Sales of car models were down 19%.

The other automakers are due to report later in the day. General Motors (GM, Fortune 500), the nation's largest automaker, is expected to report that sales fell 24% while Chrysler LLC sales are forecast to drop by 37%.

But it's not just U.S. automakers that are being hit by the credit squeeze. Toyota Motor (TM), Honda Motor (HMC) and Nissan (NSANY) are expected to post steep declines in U.S. sales as well.

The tightening of the global credit markets is crimping the world's largest telecommunications company.

AT&T Inc. (T, Fortune 500) Chairman and CEO Randall Stephenson said Tuesday that his company was unable to sell any commercial paper last week for terms longer than overnight. Commercial paper, which helps lubricate the flow of business operations, is a short-term IOU available to corporations that banks usually know are good for the money.

It's not that short-term borrowing is unreasonably expensive, Stephenson said. A shortage of buyers for the debt means such borrowing is not as readily available as it had been even three weeks ago, he said.

"It's loosened up a bit, but it's day-to-day right now. I mean literally it's day-to-day in terms of what our access to the capital markets looks like," Stephenson said. AT&T spokesman Larry Solomon said later that as of Tuesday, the company has ready access to the commercial paper market at reasonable rates and various terms.

But as a result of the recent volatility, managers at the Dallas-based phone company are more cautious.

"Your ability to plan for investment is obviously affected. You kind of don't know what your cost of capital six months from now is going to be," he said. "We'll just be very guarded, cautious in terms of where we invest, very guarded and cautious in terms of hiring and capital spending. We'll see where this situation goes."

AT&T has strong cash flow, which makes it less reliant on debt. But it's also paying for some big acquisitions of wireless spectrum this year. It had winning bids worth $6.6 billion in the latest auction by the Federal Communications Commission. By comparison, it had $1.6 billion in cash at the end of June.

Credit-ratings firm Moody's Investor Service said AT&T had $8.5 billion outstanding under its commercial paper program at the end of June.

AT&T backs up its commercial paper sales with two credit facilities, much like credit lines, totaling $13 billion. However, Lehman Brothers was one of the companies underwriting the facilities, and its demise has lopped about 6 percent from the amount AT&T can borrow, according to Bank of America analyst David Barden.

Stephenson was in North Carolina to celebrate the opening of a new call center for AT&T's broadband Internet service. The 400 jobs planned for the site in a former grocery store are part of 5,000 jobs AT&T decided to bring back to the United States after they were outsourced overseas.

In its last quarterly report, in July, AT&T reported profit of $3.8 billion on revenues of $30.9 billion. One disappointment in the quarter was that cable companies outpaced telephone companies in adding broadband Internet subscribers.

"The way this thing works is quarter to quarter. One group will have the share gain one quarter, we'll take the share back the next quarter," Stephenson said. "Last quarter, the cable guys had taken share from us, so we made some promotional changes, stepped up some advertising, made some tweaks to pricing in various markets to respond. But it's a hypercompetitive market. This is no big surprise. You see it in the wireless market all the time."

I have a couple of blogs and experimenting with google adsense. I'm in for only a couple of months, so i actually thought the main thing i need is great traffic.

Things changed when one of my posts (not from this blog) went to reddit top 5. it then appeared at fark and delicious tops also. i had something like 60000 visitors in two days, and earned... well, a dollar or so.


that's the moment i started thiniking about optimizing my pages for adsense.


I already had ads with no borders, and colors were matching my template. i searched web for some answers, and did a couple of things. after that, my CTR increased about 20 times. unfortunately, at that moment traffic was quite low, but i still have some everyday income that is about 20 times higher. here are the simple steps:
Instead of 468x15 Link Unit i put 300x250 Rectangle at the top of my page under it's header.
I made links blue. Yes, people simply expect free links to be blue.
I made ads urls color match text color.
As simple as that! If i did that before, i could get about 150$ in 2 days. So make the changes right now!. If you experience your CTR increase after doing this (belive me, you will!), let me know. Perhaps, next success story will be about you!

If you're just geatting started, there's a simple formula for you to understand how to earn money with google adsense:

Revenue = Traffic * CTR * CPC

You probably understand what traffic means.

So CTR is Click Through rate, and it means how many of your visitors are clicking ads. It actually depends on how your site is adsense-optimized.

CPC is Cost Per Click. Different words have different costs. Some can be about $0,01, some are over $10.

Google AdSense is the most popular form of advertisement on the internet. People can now distinguish them from other adverts and choose to ignore them without even paying them a second thought. This topic is regularly being discussed by Bloggers and other website owners. Adverts being ignored won't be clicked on, therefore no money can be made by the Bloggers. Google is being blamed for this because of their tactic to include text that says "ads by Google" beneath the adverts.

In order for Google AdSense to generate any income you can't have a website getting only 30 to 40 visitors a day. This small number of visitors will likely only make you about one dollar or less a day, not really worth the trouble or the hassle. Also Google AdSense doesn't really make your blog or website look good. It is typical to only get a 1.5% to 5% click through rate. Getting only $0.10 per click you can see that you would be making very little money. Although you can't blame Google for this. YOU must drive targeted traffic to your blog or website.

But you can blame Google for the look of the adverts. But they have been using them for so long and so effectively that you probably won't see a major overhaul anytime soon. Although, they have started to make much better looking ads for the bigger brands. But if your niche blog or website doesn't fall in that category you are left with the unattractive adverts.

Click fraud is when someone sets up a website and through a system or scheme automatically clicks on the Google AdSense ads and tries to get paid. Google is always on the lookout for click thru fraud and it has been reported that as much as 15% of click through contents are from fraudulent sources. This has meant the advertisers paying Google have either lowered the amount they would pay or moved away, driving down the price per click for the blog owner.

With less competition comes smaller revenues. Website owners who had previously gotten the majority of their income from Google AdSense are now having to find other revenue streams or rework their website content to match the adverts.

Google AdSense is going to have to address the new trend in advertising, graphically relevant adverts. They have yet to build a database of graphic adverts which other smaller companies are doing. Most likely Google will buy up their competition but as of now they are beginning to fall behind in this area. Many advertisers realize that they get a higher click through rate with a graphic and are moving in that direction. So the blog or website owner might start looking into carrying other advertisers for higher click through rates.

Last but not least is the complaint that the AdSense ads are the same every time a repeat visitor comes back, thus being even more of a reason not to click. The solution to that is to rotate ads but the problem is that the best adverts won't be showing all of the time, thus dropping the click through rate for the blog owner. Fortunately, this is not a perfect science so proving that you are losing money on rotating adverts is very difficult.

Although there are many issues with Google AdSense they are still the dominant player in this market. If you can get your traffic up to your site it is still possible to make a decent income from Google. Hopefully this will be the case for the next few years.

Have you ever wondering how some of the newspaper publishing houses generate funds for their operations even when they are not selling much copies per day? Doesn't it ever occur to you the reason why some of the newspaper publishing houses around never fold up even when there is no patronage from the public? Then, you are in for a surprise!

The simple reason is because they are generating cool dollars everyday from Google AdSense. If you doubt me, visit any of the newspaper website and you will see small advertisements that carries "ads by Google" Yes, that is the secrets you have be missing. I was introduce to Google AdSense program two years ago and over these years, I can confidently tells you that I have earn above a million naira and at the same time trained over 5000 Nigerians that are conveniently raking dollars from it.

What Is Google AdSense? It is advertising program run by Google that enable websites owners to enroll as publisher in order to place text, image and, more recently, video advertisements on their websites in order to generate extra income. These advertisements are administered by Google and the adverts generate revenue on either a pay per-click or pay per-pay-thousand-impressions view. See AdSense website here coolcashnet.com

Types Of Google AdSense: Google For Content: AdSense for content is displayed as a block of advertisement from Google helping other companies to popularize their website. The owner of the website get paid a percentage of the amount that Google receives from the advertiser anytime a visitor clicks on the adverts. The website owner is not charge any fee. And Google For Search: The AdSense for search is a great way of increasing your website revenue while helping your customers search your website at the same time.

Types Of Google Payments: Pay Per Click: This is a situation you are paid a certain amount whenever any visitor to your website click on the adverts And Pay Per View: This is when you are paid per 1000 visitors to your website

How Do You Promote AdSense Website? You can promote your AdSense website by submitting articles to forums, free reprint article websites, by newspaper advertisements, by leaflets, word of mouth, by search engine submission or posters

Warning If You Must Have A Google AdSense Website: You must never at any time click on your adverts or tell anybody to do same. That is what is called illegal clicks and it is very easy to locate illegal clicks.

How Do I Get Paid By Google? They send cheques as soon as your earnings get to a $100 by DHL and the cheque is paid into a domiciliary account with any bank. It cost a $100 to open a domiciliary account with any bank in Nigeria. Also, it takes 21 working days to clear a foreign cheque.

How Much Can I Earn With Google Website Per Month? This requires you to do the right thing by promoting your website sincerely and not by trick. By doing so, I can guarantee you above a $100 to $3000 monthly. But remember that your sincere effort will determine your earnings