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The nation’s economy slammed into reverse in the third quarter and suffered its biggest decline in seven years, according to a government report Thursday.

The gross domestic product, the broadest measure of economic activity, fell at an annual rate of 0.3%. That compared with a 2.8% growth rate in the second quarter, when growth was boosted by economic stimulus checks and strong exports.

The third quarter decline wasn’t quite as bad as experts had forecast. Economists surveyed by Briefing.com had estimated GDP would fall 0.5%.

Still, the latest report is yet another warning sign of recession and marked only the fifth quarter in more than 17 years in which GDP did not increase. The report, which covers the three months that ended Sept. 30, did not reflect the full impact of the recent crisis in financial and credit markets.

Commerce Secretary Carlos Gutierrez told CNNMoney.com Thursday that the nation is likely looking at a couple of difficult quarters ahead, although he wouldn’t comment on whether the economy has already fallen into a recession.

"I won’t get into the labeling debate," he said, while conceding that a negative GDP reading is a worry.

"It is what it is," he said. "It’s not what we like to see."

The White House issued a statement pointing to numerous factors that contributed to the weakness, including record high energy prices, housing and credit concerns, two major hurricanes, and a prolonged Boeing strike.

"While we continue to face serious challenges, the United States remains the best place to do business, and we’re positioned to bounce back," said White House Press Secretary Dana Perino.

There was a hearing on Capitol Hill Thursday after the report on whether there should be a second economic stimulus package. Rep. Carolyn Maloney, D-N.Y., spoke in favor of new help to consumers, the unemployed and local governments, while Rep. Kevin Brady, R-Texas, criticized the idea, saying the economic stimulus package passed earlier this year had not done the job.

Gutierrez said the administration stands ready to discuss a possible stimulus plan with Congressional leaders but it wants to make sure that any help be short-term in nature. He said the administration would like to give the $700 billion Wall Street bailout passed earlier this month a chance to work.

"That is the single biggest stimulus we can do for the economy," he said. "We are already beginning to see indicators that the credit market is beginning to thaw a bit."

As bad as the GDP number was, deeper economic problems loom. Strong exports, spurred by a weak dollar, helped to mitigate the third-quarter downturn. Even Gutierrez conceded the recent rise in the dollar’s value and the slowdown of foreign economies will likely dampen gains from exports going forward, although he said he’s hopeful that exports can continue to stay strong.

"I would expect that looking down the road, that trade will be a significant part of our future unless we put in place policies that restrict trade," he said.

The report also showed that gross domestic purchases fell 1.3% - the worst reading in 17 years and the third quarter in the last four that has been negative freecreditreports. Spending on durable goods, such as automobiles, showed the biggest decline in 24 years. Meanwhile, spending on nondurables, such as gasoline and food, fell by the most in 58 years when adjusted for inflation as consumers, businesses and governments cut back in the face of higher prices.

Spending by consumers dropped by the largest amount since early 1980. The decline dragged the overall GDP down by 2.25 percentage points - worse than what occurred in the last three recessions in 1982, 1991 and 2001.

"We look at consumers being at 70% of growth and now they’re the engine of decline," said Jeoff Hall, chief U.S. economist for Thomson Reuters-IFR Markets.

At Thursday’s hearing, New York University economics professor Nouriel Roubini said the GDP report is the clearest sign yet that the country is in a recession and that there needs to be quick congressional action on a new stimulus plan.

"If it walks and quacks like a recession duck, it is a recession duck," he said. He added that the sharp fall in consumer spending is of particular concern.

"Everybody out there feels it," he said. "It’s obviously a recession. The only debate at this point is how severe, how protracted."

Roubini called for a stimulus plan that would increase government spending rather than give a new round of tax rebates and business tax incentives like the previous stimulus passed earlier this year.

"If the private sector does not want to spend, the government can spend. If we don’t do anything we’ll have most severe recession we’ve had in decades," he said.

But several Republican members of the committee, as well as Ohio University economics professor Richard Vedder, argued that government spending plans have a poor record at spurring the economy and that it’s more important to keep deficits under control.

Vedder said that spending as much as $400 billion on a second stimulus package on top of the more than $1 trillion already committed by the Federal Reserve and Treasury Department to address the credit crunch would not be a good idea.

"I think it’s a dangerous and somewhat fiscally irresponsible thing to do. In the long run it will inspire a decline in confidence," Vedder said.

Both presidential candidates said the report’s weakness was a further argument for their economic proposals and against those of their opponent.

"The decline in our GDP didn’t happen by accident - it is a direct result of the Bush administration’s trickle-down, Wall Street-first, Main Street-last policies that John McCain has embraced," said a statement from Democratic candidate Barack Obama.

The McCain campaign said Obama’s proposals represented change the economy could not afford.

"Obama’s ideologically-driven plans to redistribute income will impose higher taxes on families, small businesses, and investors; expensive, rigid, job-killing health mandates on employers," said the statement from McCain economic adviser Douglas Holtz-Eakin. 

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Judging from a leaked ad for day-after-Thanksgiving sales, major stores will tempt shoppers - whose help is desperately needed to bolster the economy - with huge discounts.

Brad Olson, founder of Gottadeal.com, a Web site that markets itself as one of many "official" Black Friday deals sites, said he recently received a copy of Sears’ circular.

His reaction: "The deals are definitely better than last year."

That’s not surprising given that most retailers -including Sears - have struggled all year with slumping sales amid a weak economy. Retailers are counting on a spending pick-up in the weeks ahead to salvage their year.

Sears, in a statement late Monday, said it was aware that its day after-Thanksgiving specials "are already creating tremendous buzz online" and that consumers should expect more deals to follow.

Black Friday - which falls on Nov. 28 this year - is one of the busiest shopping days for the nation’s retailers. It also sets the tone for the November-December holiday shopping period, which can account for more than half of merchants’ annual profits and sales.

Consumer spending accounts for about two-thirds of the nation’s economy.

Details about Black Friday sales, which Sears (SHLD, Fortune 500), Wal-Mart (WMT, Fortune 500) and other retailers typically don’t officially unveil until mid-November, are awaited with great expectation by consumers.

Among the surprises in Sears’ ad are "doorbuster" deals, offered for a limited number of hours, on home appliances such as washer-dryers, a category that the retailer hasn’t heavily promoted in the past 1 hour cash loans.

According to the ad, Sears will offer early-bird shoppers a Kenmore high efficiency front-load washer-dryer set for $599.99 on Black Friday. That’s as much as 50% off the price of the individual washer and dryer.

"This really is an incredible deal, and it indicates how nervous retailers are about the season," said Britt Beemer, retail analyst and chairman of America’s Research Group.

The ad indicates the department store chain is also slashing clothing prices by as much as 50% to 60%, and has set doorbuster sales on flatscreen TVs such as a Panasonic Viera 42-inch 720P for $699.99, down from its original price of $999.99, and a Samsung Blu-Ray disc player for $199.99.

"If retailers don’t have shoppers bursting through their doors on Black Friday then they’ll be in big trouble by the end of January," said Beemer.

Even with Sears’ hefty discounts, Beemer said it’s Wal-Mart’s Black Friday discounts that he and many other consumers will be waiting for.

"Wal-Mart’s prices will set the floor on where prices will be on toys, electronics and other holiday items," he said. 

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Mounting job losses. Nations trying to avoid defaulting on their debt. A possible global recession.

Despite massive intervention by governments to stem an international credit crunch that has destabilized the global economy, markets this week experienced historic turbulence with mounting evidence that the contagion is spreading to Main Street and Joe the plumber.

"No country has been spared. Previously healthy emerging markets have seen years of gains brushed aside," said Doug Porter, deputy chief economist at BMO Nesbitt Burns. "Similarly, Canada has been dragged alongside."

Yesterday, the Toronto Stock Exchange rebounded after a bungee-jump drop in early morning trading, as North American markets fared better than their global counterparts.

The S&P/TSX composite index ended relatively flat at 9,294, down 37 points or less than a percentage point after a nail-biting plunge of almost 700 points, or 7.5 per cent earlier in the day. The TSX lost 2.8 per cent during the week and is down 21 per cent so far this month.

Energy and financial stocks led the drop, countered in part by gains in materials stocks such as gold.

In the U.S., the Dow Jones Industrial Average fell also fell sharply in early trading, but rebounded to end the day down by 312 points, or 3.59 per cent.

Globally, this was one of the roughest weeks yet as investors fear the worst is yet to come.

Pakistan sought help from the International Monetary Fund to avoid defaulting on billions of dollars of debt. In Asia, markets took a huge hit with Sony Corp. falling 14 per cent after the electronics giant cut annual sales and profit forecasts.

In the past two days alone there has been a deluge of job cut announcements in the United States, including Chrysler LLC saying it would slash 1,825 jobs after losing $1 billion (U internet payday loans.S.) in the first half of the year and Xerox Corp. announcing job cuts of 3,000 in a "tough business environment."

"The markets are realizing that despite all the fixes and intervention, that this is going to take time," said Rhonda Chang, vice-president and senior portfolio manager at MFC Global Investment Management. "You still have to deal with a slowing economy globally."

Major corporations are issuing reduced forecasts suggesting the start of a major slowdown, said Chang.

"They are giving guidance much lower for next year with no visibility."

In Japan, the Nikkei closed down 9.6 per cent yesterday, while the Hang Seng in Hong Kong fell by 8.3 per cent

The FTSE 100 in London slid by 5 per cent after a report that showed the U.K. economy shrank in the last quarter, the first time since 1992.

The German DAX was down 5 per cent after Daimler, maker of luxury automobile brand Mercedes-Benz, scrapped profit and revenue guidance for 2008.

Meanwhile, the Canadian dollar is on its way to its largest annual decline on record, ending the day yesterday down 1.08 cents at 78.56 cents. It started the week at 84 cents.

Bruised investors are showing less appetite to get back into the rocky market. But given the intense spate of bad news, it may be a good time to invest if it’s for the long term, said Chang who sees the U.S. market as having the biggest upside.

With files from Star wire services

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Alton Pointe Apartments opened several months ago on the former site of Sullivan Homes, a 1950s-era public housing complex that was decried in its latter years by police, community leaders and residents alike. Sullivan Homes was razed in early 2005.

The new development in Alton has drawn rave reviews from residents and community leaders. It looks like a neighborhood of tidy two-story houses, nothing like the run-down, crime- and drug-plagued public housing complex it replaced.

Developed by Gundaker Commercial Group of Chesterfield in cooperation with the Madison County Housing Authority, Alton Pointe is a collection of 28 triplex structures, each having two apartments and one townhouse.

Gundaker officials expected the development to be attractive, but the results exceeded expectations, said Greg Lee, a senior vice president with the company.

"It’s kind of majestic," he said.

Andrew Koenig of Rosemann & Associates in St. Louis was the project architect.

"We like to do affordable housing because we’re serving a demographic that needs great housing but doesn’t have much of it," he said.

Koenig said Alton Pointe was the firm’s first apartment project reflecting the "big-house" design trend.

Thirty-eight of Alton Pointe’s 84 units are designated for low-income tenants with the rest renting at market rates. The development also includes a clubhouse with management offices, computer and community rooms and a playground.

The $12.4 million project was financed with a combination of loans from the Illinois Housing Development Authority and about $9.4 million in tax credit equity. Gundaker will lease the 8.92-acre site from the county housing authority for 99 years and will maintain and manage it for at least 15 years.

John Hamm, the housing authority’s executive director, said Alton Pointed was a dramatic improvement for its residents and the larger community free credit report and score.

"It has worked out great" he said.

James Gray, president of the Alton Branch of the NAACP and a commissioner of the housing authority, called it "the best thing to happen in Alton for a long time."

He said the authority had replaced a "hellhole" with attractive, quality housing.

Mayor Don Sandidge said: "I think they’re great. Compared to what was there, what a difference!"

Sandidge said he thought the development would stimulate improvements in the surrounding neighborhood, which has been in decline, and said the city planned to repair and upgrade streets in the area.

Shannon Davidson, 34, was among the first residents of Alton Pointe, moving there in April after two years in a nursing home. She said she had heard about how bad the old project was.

"It’s definitely not like that now," she said. "It’s a wonderful area. The people are great."

Lee said Gundaker wants to keep it that way. He said the company conducts criminal and credit checks of prospective residents and talks to their employers and former landlords.

Lee said the company hopes to replicate the triplex concept in other communities and is in "quiet discussions" with other municipalities in Illinois and Missouri.

The county housing authority is also replacing another old public-housing project, Lee Wright Homes in Venice, with new, affordable housing.

The planned 78-unit development, Meachum Crossing, will be owned by a private entity called Meachum Crossing Limited Partnership and managed by the authority.

Completion is expected next year.

thillig@post-dispatch.com | 618-624-2526

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ConocoPhillips, the third-largest U.S. oil company, says third-quarter profit rose 41% due largely to record oil prices this summer. The results easily topped Wall Street forecasts.

The Houston-based company said net income for the July-September period rose to $5.18 billion, or $3.39 per share, from $3.67 billion, or $2.23 per share, during the same period a year earlier guaranteed cash advance.

Conoco’s (COP, Fortune 500) revenue rose nearly 52% to $70 billion from $46.1 billion a year ago.

Analysts polled by Thomson Reuters had been expecting earnings, on average, of $3.06 per share. 

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A broad measure of the economy’s health rose unexpectedly in September after declining for two consecutive months, the Conference Board announced Monday.

The New York-based business research group said its index of leading economic indicators rose 0.3% in September. Economists were expecting the index to have declined 0.1%, according to a survey conducted by Briefing.com.

In August, the index fell a revised 0.9% after a 0.7% decline in July.

Economic conditions started deteriorating this summer, and the recent volatility in the stock market and the credit crunch will "no doubt weaken the economy further," Ken Goldstein, a Conference Board economist, said in a statement.

"But latest data suggest that conditions in the non-financial economy are not falling apart," Goldstein said. "Data on hand reflect a contracting economy, but not one in free fall."

The "non-financial" economy consists of all businesses outside the financial services industry, including manufacturing and retail businesses, according to Frank Tortorici, a Conference Board spokesman.

The index registered growth in real money supply, consumer expectations, the interest rate spread and supplier deliveries. But its measures of building permits, stock prices and initial jobless claims remained weak last month.

"That was not the ‘all clear’ signal you heard," Tim Quinlan, economic analyst at Wachovia Economics Group wrote in a note to clients payday loan cash advance loan.

The surprise gain was boosted by "an outsized contribution from an increase in the money supply." And Quinlan says September’s data does not change his forecast for slower economic growth in the months ahead.

Over the last year, the overall economy has continued to show signs of moderate growth. But the "wild gyrations on stock market" are beginning to take a toll on the "non-financial" or real economy, Quinlan said.

"People are reading headlines about financial Armageddon and they’re putting their personal budgets on lock down," he said.

With consumer spending making up two-thirds of the nation’s gross domestic product, the outlook for overall economic growth is bleak as nervous consumers cut back.

"It becomes a self fulfilling prophecy," Quinlan said.

The index is designed to predict economic activity six to nine months into the future. It incorporates a variety of economic data including jobless claims, manufacturers’ new orders and personal income.  

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For years, some Missouri casinos have been pushing the Legislature to get rid of that quirky, only-in-the-nation remnant of this state’s riverboat gambling days: The $500-in-two-hours loss limit.

They never quite succeeded.

Now, the casinos are asking you, the voters, to get rid of it, and in exchange offering to pay higher taxes for schools.

That’s the crux of Proposition A, formerly the "Schools First Initiative," which would end the loss limit and card requirement at Missouri casinos, prevent any new gambling facilities from being built in the state and boost the tax on gambling revenue by 5 percent.

The loss limit was born as a compromise when Missouri legalized gambling in 1992 and has hung on stubbornly since, even as other states like Iowa have eliminated theirs. It’s a law that hurts no one, its supporters say, and helps protect problem gamblers from themselves. But casinos say the loss limit hurts them, and by extension the state, which taxes them heavily, because it makes Missouri casinos less competitive with facilities elsewhere. So they’ve targeted it time and again.

This push has the support of some education, civic and

business groups. But the muscle behind Proposition A has been two of the biggest gambling companies in the state — Ameristar Casinos and Pinnacle Entertainment — which have poured a combined $14 million into the effort, according to filings with the Missouri Ethics Commission.

That has bought them yard signs, TV ads and a forest of billboards, urging people to vote "Yes on A. For our schools. For our economy."

But just how much money schools will get from the deal is in some dispute.

Proposition A backers say it will create between $105 million and $130 million in new school revenue, plus funding for veterans and childhood development programs and new tax revenue for the cities that house casinos.

Those numbers don’t include the new Lumi

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Democratic presidential candidate Barack Obama on Friday proposed emergency assistance for small business endangered by America’s financial crisis, calling for a "small business rescue plan" of tax incentives and loans.

"Small businesses employ half of the workers in the private sector in this country, and account for the majority of the job growth. But we also know that a credit crunch has dried up capital and put these jobs at risk - shops can’t finance their inventories, and small firms can’t make payroll," Obama said at a rally in Chillicothe, Ohio. "If we don’t act, we’ll be looking at scaled back operations, shuttered shops, and laid-off workers."

Obama’s campaign platform already featured pledges aimed at small businesses, including proposals for eliminating capital gains tax on gains from investments in startups and for a tax credit for businesses that offer workers health care. What’s new is his call for an emergency lending facility run by the Small Business Administration to shore up struggling companies imperiled by the credit crunch.

A paper detailing Obama’s proposed "Small Business Emergency Rescue Plan," released by his campaign on Friday, expands on the remarks Obama made in Chillicothe.

Obama’s new plan calls for the SBA’s loan guarantee programs to temporarily eliminate the fees they charge lenders, and for the agency to increase the guarantees it offers to banks that lend to qualifying small companies. Additionally, he wants the SBA to expand its facility for directly lending money to small companies through its Disaster Loan Program.

How disaster loans work

The SBA Disaster Loan Program usually assists businesses affected by natural disasters: Its recent disaster declarations have covered floods, wildfires and an earthquake. But the program does occasionally offer loans to help with nontraditional disasters. For example, it offers loans to companies unable to meet operating expenses because an essential employee who serves in the military reserves has been called up to active duty.

For companies that can’t get credit anywhere else, interest rates for the SBA’s disaster loans are capped at 4%, and the loan term can stretch as long as 30 years. Those are lower interest rates and longer terms than are offered through the SBA’s much bigger and better known 7(a) loan program. Also, the SBA directly funds its disaster loans; under the 7(a) program, businesses need to secure loans from banks, with the SBA offering a guarantee for part of the loan.

The Disaster Loan Program is significantly smaller than the 7(a) program. Last year, the SBA backed $12.7 billion in small-business 7(a) loans, while its disaster program granted $825.8 million in loans to 15,128 applicants. However, only $289.5 million of that total went to businesses - the loans are also extended to homeowners and renters affected by disasters. Home disaster loans accounted for 65% of the total lent through the program in the 2008 fiscal year, which ended last month.

Echoes of Sept. 11

Obama compared his "rescue plan" to steps the government took after Sept. 11 to rush financial assistance to affected small companies.

"Main Street needs relief and you need it now," Obama said. "It’s what we did after Sept. 11, and we were able to get low cost loans out to tens of thousands of small businesses."

The government’s primary small business relief program after Sept. 11 was the Supplemental Terrorist Activity Relief (STAR) loan program enacted in January 2002 cash till payday advance. That STAR program reduced the fees paid by lenders who made SBA-backed 7(a) loans to companies adversely affected by the terrorist attacks, and set aside a special pool of cash to fund STAR loans. During its yearlong existence, the program made 7,000 loans, totaling $3.7 billion.

But the STAR program later drew widespread criticism for its flawed structure and insufficient oversight. A 2005 review found that many of the loans went to businesses with little apparent connection to the terrorist attacks in Washington, D.C. and New York City. Only 15% of the cases reviewed by the Senate Committee on Small Business & Entrepreneurship showed evidence of adverse effects from the attacks; the rest had insufficient or questionable documentation. Recipients included a Nevada tanning salon, a liquor store in Georgia and a golf course in Texas.

Auditors pinned the blame not on the companies, many of which were unaware they’d been given loans categorized as STAR loans, but on weak SBA supervision of how lenders implemented the program.

An Obama campaign spokesman said Obama’s program would not be susceptible to the ills that plagued the STAR program because it would have much broader eligibility requirements. Unlike the Sept. 11 attacks, the current financial crisis is hitting small companies in all locations and industries; any business struggling for working capital has a legitimate claim of being adversely affected by the crisis.

Obama’s spokesman estimated the program’s price tag at $5 billion. Eliminating loan fees for the SBA’s guarantee programs would cost $1 billion, he said, and $4 billion would go toward direct funding of disaster loans.

Would it work?

Obama’s plan relies on lower fees and higher guarantees to entice banks to open their vaults and lend more cash. But it’s unclear if those inducements would make a difference. As financial conditions worsen, banks have grown more reluctant to offer financing to small companies.

The Federal Reserve’s July Senior Loan Officer Opinion Survey found that 65% of banks polled had tightened their lending standard for small-business loans within the past three months, and the SBA said last week that the number of loans made through its 7(a) program in the 2008 fiscal year dropped 30% from 2007. As global financial markets continued roiling over the past few weeks, financial institutions clamped down further on their lending.

Obama’s proposal also calls for more direct lending through the SBA’s Disaster Loan Program. That program has a flexible budget, and the SBA consistently gets as much money for it as it requests from Congress.

But a rash of disaster-loan requests could overwhelm the SBA; after Hurricane Katrina, the agency staggered to keep up with an onslaught of more than 400,000 disaster applications. The SBA has since drafted new plans for dealing with a major nationwide disaster, training reserve staffers and strengthening its technology systems.

So far, the SBA’s new disaster readiness capacity has not been tested. If the financial crisis continues spreading and Congress heeds Obama’s call, the agency and Acting Administrator Sandy Baruah, who joined the SBA three months ago, would face a dramatic test of their readiness to step in and shore up thousands of the nation’s struggling small businesses. 

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Bell Canada and Telus Corp. plan to jointly invest up to $1 billion in new network technology that promises to end Rogers Communications Inc.’s Canadian monopoly on devices such as the iPhone and BlackBerry Bold.

In a long-awaited move, the two phone companies said yesterday that they will "overlay" a third-generation, or 3G, wireless technology associated with the GSM (Global System for Mobile communications) standard onto their existing CDMA (Code Division Multiple Access) networks by 2010, in time for the Winter Olympic Games in Vancouver.

While both Bell and Telus already run high-speed CDMA networks that are classified as 3G, the move is an acknowledgment of GSM’s emergence as a global standard in much the same way as VHS overtook Betamax in the home video recorder market during the 1980s.

The shift gives current GSM carriers, including Rogers, a key advantage since handset makers tend to release their latest devices as GSM models months – or even years – before CDMA versions are introduced.

For example, Apple Inc.’s popular iPhone is so far a GSM-only device.

Wade Oosterman, the president of Bell Mobility, said in an interview the addition of GSM-based technology to existing infrastructure will put devices such as the iPhone within reach.

"I think the question is whether Apple would be interested in talking to other (carriers)," said Oosterman. "Right now, they’re only able to distribute to about a third of the Canadian market."

Bell and Telus, which already have a network sharing agreement in place across Canada, didn’t disclose exactly how much the effort would cost, but analysts estimate the total price tag would be about $1 billion, split between the two carriers.

The project comes at a time when many Canadian companies are holding off on big investments because of the global credit crisis. It also comes as Bell Canada parent BCE Inc. is being taken private in a deal worth $52 billion, including debt.

The Star first reported in January that Telus was exploring the possibility of adopting GSM-based technologies and that Bell faced a similar decision.

Darren Entwistle, the chief executive of Telus, said during a conference call yesterday that offering two 3G networks side-by-side will help to "future-proof" Telus as the entire wireless industry moves toward a common, fourth-generation standard over the next few years.

Entwistle stressed that Telus is not swapping its legacy CDMA network, meaning that Telus customers using CDMA-based devices won’t be forced to make a switch.

Instead, the phone company will build a second voice and data network using the same HSPA (High Speed Packet Access) technology that rival Rogers uses to run high-end devices.

Bell and Telus have selected Nokia Siemens Networks and Huawei to supply the necessary telecommunications equipment.

In addition to a wider selection of devices, Telus and Bell seek to take advantage of lower handset prices and increased revenue from international roaming.

However, analysts note the investment won’t yield instant dividends. That’s because HSPA devices tend to be expensive smartphones that offer thinner margins for carriers, and because most international roaming is still done with second-generation GSM handsets.

Even so, several observers have argued that Bell and Telus risked losing market share if they failed to act. Both face the prospect of more wireless competition in the Canadian market following a recent federal government auction of airwaves that was designed to encourage more competition in the sector.

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The world’s economic powers faced huge pressure on Friday to contain the financial crisis as panic selling swept through European and Asian markets amid growing fears of a global economic recession.

With financial policy makers from the Group of Seven (G7) major industrial nations due to meet later in Washington, bank bailouts, liquidity injections and coordinated interest rate cuts across the world have failed to quell investor fears.

In a bid to unfreeze bank lending and staunch massive losses in equity markets, the U.S. government is weighing guaranteeing billions of dollars in bank debt and temporarily insuring all U.S. bank deposits, The Wall Street Journal reported.

European shares traded down nine percent within minutes of the opening, having already lost more than 15 percent in the four days to Thursday’s close faxless payday loan guaranteed.

Japan’s Nikkei tumbled nearly 10 percent, registering its biggest one-day drop since a 1987 crash and losing nearly a quarter of its value in a week.

The global crisis also claimed its first Japanese financial institution — unlisted Yamato Life Insurance Co., which had $2.7 billion debts and the government looked to prop up smaller banks.

Focus was on the G7 meeting, which is under increasing pressure to come up with something new to save the global financial system.

“Politicians must be scared by now, looking at stock markets and the problems in the credit markets,” said Dariusz Kowalczyk, chief investment strategist at CFC Seymour Ltd in Hong Kong. 

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