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pArrsnsow x **soo/ATss <br />Quarteriv Economic Report — 3rd Quarter 2@80 <br />Outlook and Strategy <br />The third quarter of 2008 auv/ an upheaval to the global economic mritcnri that is <br />unprecedented in scope and n|zo. Some of the oldest, most storied oumcm in fiuuocbJ <br />yco/iccs have cidzcr been acquired or failed and these pnah}oomo have spread to Europe <br />arid Asia. <br />/\uN, 1bouub/s o[tbu l"edc/o| Reserve Bunk tightening monetary policy have disappeared <br />as crocr�eocy p|noa have been implemented by both dbc US Treasury ui the Federal <br />Reserve to inject liquidity into the global banking systems. Failure in do au could have <br />left the banking, system damaged beyond repair. <br />At the coreofdbiy pooblmoniuu"dis1oast,`o[ the intrinsic value of/ouuy types offinancial <br />assets. These assets had been used to coUo1crmJizc loans arid when there was no |ou,erun <br />nudvc nnacbuoiono to provide o rnurkc{ vniuC for these assets, borrowers could not obtain <br />fundinL, for the loans. The hzi|ureo[scvcre] issuers ofUnuociu\dmbt,cspcciuUv|.chmzun <br />Brothers and 8emu Stearns, has uox cft'eotivc|y obo( down the credit oonrkc|s and <br />borrowers nutigiog in size from uunbi-hiUimo dollar cListoiners to one man businesses are <br />finding h impossible tnubtaio|mnuseitoboostooypnoo' <br />Consumer leodio� has suffered as n� -and this darkens the picture for auto dealers arid <br />odzeroeUczmuCbig\iokcti\ema.bbaabceoobservedihuioode/cuoen[lcod' standards <br />uF{C0 score of720orbi�bcriu required to get m car loan nA standard interest rates. This <br />credit rating im only achieved hv less thanl0 percent of all Americans. <br />Job }nsxex are another mcnu|t of the credit tightening. Thc monthly Non-Farm Payrolls <br />report has been negative 6or nine consecutive months arid on a year to clate basis,. we have <br />o«#n aocl 'oh loss o[almost 600,0(}0 jobs. lhc Ducozp\oymcot Rate has moved above <br />h% and is expected to rise significantly over the next few months. Currently, we are at a <br />inuiti-vear hii),,h on the number of people who are collecting unemployment benefits. <br />Cnu�usx buu cu1ud an �nr�cn�y xp�ui� p|uo which allocates over S.700 Billion <br />do||no for the US Treasury to acquire non-perfon-ning moocis from donies1ic Dnaoriu| <br />institutions. It is hoped this measure may improve liquidity and, if not xtinnulo(o growth; <br />ot least provide some measure nf stability tn stop the economic downturn. <br />The Federal Reserve Bank has shifted into crisis mode as well, They have created several <br />new and unusual processes to add funds toa bmukin�oystou�that has become frozen in <br />place. The longer term oudonk is clouded as the extent this will upzcmd beyond the L'S <br />markets is yet to be scco. It may ultimately take u u)uhi -national approach by all the U-Q <br />mcmohcry to cud the crisis. Tn this end. interest otca will probably decline over the next <br />xcrcru\ quarters' udzumu1iu change to the ou1look 'nm\o few weeks ago <br />/\xyeru/m& ,IxsociaVes, -lns/h/ 7l <br />