Snowballing sell-off spreads worldwideBy TIM PARADIS and MARTIN CRUTSINGER
AP Business Writers
Originally published 10:38 a.m., October 10, 2008
Updated 11:02 a.m., October 10, 2008 NEW YORK — Stock prices careened lower Friday Asia and Europe, extending a stampede of selling that began in on Wall Street a day earlier, deepening a global financial crisis that has defied all efforts to stop it. President Bush tried to reassure Americans afraid for their life savings and their jobs. "Anxiety can feed anxiety," Bush said Friday, "and that can make it hard to see all that is being done to solve the problem." This week's coordinated interest rate cuts by the world's central banks to thaw frozen credit markets and boost investor confidence have fallen flat as markets remain gripped by fears about the scale and depth of the likely global recession. Stock prices were swinging sharply on Wall Street. The Dow Jones industrials fell nearly 700 points soon after trading began, regained all of that deficit to show an advance — and then turned lower again. 
AP A pedestrian in Paris stops to view a screen displaying stock market news Friday. European stock markets slumped in early trading Friday following massive sell-offs on Wall Street and Asia as lending rates between banks continue to rise despite this week's efforts by central banks to break the logjam in credit markets. The Wall Street Journal reported that government officials are considering temporarily guaranteeing all U.S. bank deposits and billions of dollars of bank debt, in addition to possibly buying stakes in individual banks. The New York Times also said officials are reviewing a British proposal that also includes repayment guarantees for certain types of loans. Administration officials told The Associated Press that several financial rescue plans are being reviewed, but no announcements are likely before finance ministers from the seven biggest industrial nations meet Friday in Washington. The $700 billion federal bailout legislation enacted on Oct. 3 cleared the way for the government insurance limit for bank deposits to be temporarily raised from $100,000 to $250,000 in cases where bank or savings and loans fail. That guarantee covered $5.2 trillion of deposits, but another $1.8 trillion is not presently covered, according to the Wall Street Journal. But a Treasury Department official, who spoke on condition of anonymity because of the sensitive nature of market conditions, said covering all deposits is not now being considered. "We raised the limit one week ago and have no plans to remove the limit," the official said. A spokesman for the Federal Deposit Insurance Corp., however, didn't appear to rule out the possibility that such a plan might be considered. The Treasury had earlier requested from Congress authority for the FDIC to change deposit insurance limits to respond to disruptions in the banking system, in addition to the increase to $250,000 that was part of the bailout legislation, FDIC spokesman Andrew Gray noted in a statement. "We believe that we have significant latitude, in consultation with Congress, under the systemic risk exception — which carries the threshold of approval of the Federal Reserve and Treasury Secretary in consultation with the president — to protect depositors and adopt other measures to support the banking system," Gray said. Thursday's anniversary of the U.S. stock market peak turned into one of the worst days in Wall Street history, with the Dow Jones industrials loosing a breathtaking 679 points, or 7.3 percent. Asian markets followed Wall Street's cue, as key market gauges dropped 9.6 percent in Japan, 8 percent in India and 7.2 percent in Hong Kong. European stocks slumped by midday with key market barometers losing 7.3 percent in London, 7.7 percent in Germany and 7.5 percent in Paris. A stream of selling forced exchanges in Austria, Russia and Indonesia to suspend trading, and the rout in Australian markets caused traders to call it "Black Friday." "Overall it's the fact that despite the huge firefighting efforts of central banks worldwide we still haven't seen any thawing of interbank lending that is going to be causing the most concern now," said Matt Buckled, a dealer at CMC Markets in London. The late burst of selling Thursday on Wall Street sent the Dow Jones industrials down to 8,579, crashing through the 9,000 level for the first time in five years and wiping out $872 billion of investment value. As bad as the day was, even worse was the cumulative effect of a historic run of declines: The Dow suffered a triple-digit loss for the sixth day in a row, a first, and the average dropped for the seventh day in a row, a losing streak not seen since 2002. "Right now the market is just panicked," said David Whys, chief economist at Standard & Poor's in New York. "Nobody wants to take on any risk. Everybody just wants to get their money and put it under the mattress." Thursday's sell-off on Wall Street took place one year to the day after the Dow closed at its record high of 14,164. Since that day, frozen credit, record foreclosures, cascading job losses and outright fear have seized the market and sapped 39 percent of its value. Paper losses for the year though Thursday add up to an staggering $8.3 trillion, according to preliminary figures measured by the Dow Jones Wiltshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in America. It was the second straight day that Wall Street was rocked by a final-hour sell-off, but this one was particularly shocking. Most of the day was relatively calm, and the trading floor was quieter than usual because of the Jewish holiday of Yom Kippur. Wall Street awoke to news the federal government was brandishing a new weapon against the financial crisis — considering seeking an equity stake in major U.S. banks in order to stabilize them. But that step appeared to be as ineffectual as the others Washington has rolled out in recent weeks, including a $700 billion bailout of the financial industry, a coordinated interest rate cut by central banks around the world and direct lending by the Federal Reserve to private companies to provide them with short-term cash. Acquiring a stake in the banks would be yet another startling intervention by the government in the free market, but economists said Bush was left with little choice because of the credit markets, where tight lending has choked off the everyday cash that is the lifeblood of the economy. "In normal times, this would be out of the question, but in the present dire situation, I think the government should be employing all the powers that it can," said Sung Won Shone, an economics professor at California State University, Channel Islands. Wall Street has been teetering on the brink of panic for a month now, vulnerable to any bad news. Thursday's sell-off was triggered when a major credit rating agency put General Motors Corp. and its finance affiliate under review to determine whether it should be downgraded. Stock in GM, one of the 30 components of the Dow Jones industrials, lost 31 percent of its value and closed at $4.76 — its lowest level since the Korean War began more than a half century ago. For the Dow, it has been nothing short of a free fall: —The point decline Thursday was the third-worst in Dow history. The worst, 778 points, came less than two weeks ago. —Of the last 19 trading days, there have been 11 triple-digit losses — including the unprecedented six straight. The six gains have all been triple-digits, and only one of them was enough to make up the losses of the day before. In percentage terms, Thursday's drop in the Dow exceeded the day the markets reopened after the Sept. 11, 2001, terrorist attacks. It was not close to the 22.6-percent decline on Black Monday in 1987, the last stock market crash. Still, it is becoming increasingly clear that Washington has ever fewer places to reach in its toolbox to stop, or perhaps even slow, the crisis. Among the options still left are buying up foreclosed properties and making direct loans to homeowners, both of them hard for free-market supporters to swallow. AP Economics Writer Martin Crutsinger reported from Washington. Associated Press writers Tom Raum in Washington and Patrick Rizzo in New York contributed to this story. |
Article tools |
|
Notice about comments: Charleston.net is pleased to offer readers the ability to comment on stories. We expect our readers to engage in lively, yet civil discourse. Charleston.net does not edit user submitted statements and we cannot promise that readers will not occasionally find offensive or inaccurate comments posted in the comments area. Responsibility for the statements posted lies with the person submitting the comment, not charleston.net. If you find a comment that is objectionable, please click "suggest removal" and we will review it for possible removal. Please be reminded, however, that in accordance with our Terms of Use and federal law, we are under no obligation to remove any third party comments posted on our website. Full terms and conditions can be read here. |
Comments
This article has 23 comment(s)
Posted by whome on October 10, 2008 at 12:10 p.m. (Suggest removal)
Holy mother of god. The DJIA opened down 700 because all of the pre-market sell orders and recovered to turn positive. Now back -400.
The global unwind of the decade yen-carry trade is brutal. It's gonna destroy many, many countries and several countries (e.g. Iceland).
Posted by Riptide on October 10, 2008 at 12:57 p.m. (Suggest removal)
Spanky, DTM_Bro, and the other trolls on this board…
You think your clean and pure as the white driven snow, but I’ve seen your kind before. You guys are nothing new to me. In my years in the union, I needed a score card to keep you leftists and the organize crime bosses separate. To be honest I couldn’t see the difference only that you guys had a happy face when you put the screws to us. Both are corrupt, power hungry and tyrannical in your rule over the unions. I also remember the union goons that would come around, intimidate, coerce, bully, and if need be, break a leg or two if we got out of line against the union leadership or a simple thing like free speech at a meeting. I was lucky I got out when I did. I wish I can say the same for my older brother. He believed the unions were looking out for him and after all those years going from one shop to another and getting the screws put to him, left him high and dry when it came time to retire. It’s enough to make a skunk vomit.
The only thing blame the republicans for is their lack of backbone to stand up against the socialists in congress.
Posted by Riptide on October 10, 2008 at 1:37 p.m. (Suggest removal)
Who developed policies to extend credit the poor, the minorities and illegal aliens? Who is advocating for government takeover of the lending institutions? Who’s money are they using to take over these institutions? Socialist using taxpayers money …that’s who!
The Trolls on this board like Spanky, DTM_Bro, Johnq and others celebrate over the fact of seeing hard working Americans lose everything they work for so they can usher in more misery with their socialist agenda.
The choice we have in this election is either an outright Marxist (Obama) or FDR type (McCain). Either way the American people are screwed. Everything I ever worked for in life is about to disappear or at least most of it.
At least I know one thing, Spanky, DTM_Bro and others are celebrating over the collapse of our markets. What a sad bunch of people.
Posted by Riptide on October 10, 2008 at 1:37 p.m.
(This comment was removed by the site staff.)
Posted by nappyd on October 10, 2008 at 2:41 p.m. (Suggest removal)
No, they're just pointing out what they've been trying to warn people about for a while, that this mess was coming. Most people who are like that aren't socialists, but usually libertarians.
It's not even a left/right republicans/democrats problem, but people wish it was that simple. It's pretty much past whatever Bush says/does having an impact on it, people are scared & getting out, and getting out quickly, and it's going to be a while before it gets better.
So you can go cry over your Pabst about the good old days in your labor union (hey, aren't unions socialism? wow!), but no one likes seeing their retirement savings lost over the mistakes made by others.
Posted by mkris on October 10, 2008 at 2:51 p.m. (Suggest removal)
Reagan was the author of the loss of our retirements and 401k. Great idea to shift all the risks of investment of pensions to the average Mr six-pack so that corporations could cash in the defined benefit plans for thier cash values.
Losing your pensions, thank a republican.
Posted by Riptide on October 10, 2008 at 3:25 p.m. (Suggest removal)
This is not a simple correction in the market. This is something a lot bigger. As far as wealth is concern, only the market creates wealth. Governments can only live off wealth and the only thing they can do with any amount of efficiency is to tax people. .
Don’t worry mkris you’ll get your welfare check on time.
I’ve seen a lot of manufacturing jobs leave this country but we can’t have the liberals and unions share the blame for this can we? They are as pure as the white driven snow. If you don’t believe me ask any liberal. They’re not responsible for anything that happen in our lives. As far as I'm concern liberals and socialist are enough to make a skunk vomit.
What do we have left, a bunch of gutless republicans with the exception of Jim DeMint that want to reach across the aisle and give the liberals a big wet one across lips.
Posted by moonpie on October 10, 2008 at 3:45 p.m. (Suggest removal)
You know the more this goes on the more I believe we got hosed big time. By "we" I mean the american taxpayers. By both parties I might add. This can only explain why the republicans are not screaming from the roof tops about the lack of over sight by the democratic led committee's.
This is looking like a back door meeting of the feds and business to push loans through the system for everyone and a back door gurantee was made that business would get paid no matter what. And they did, right before the stock market crashed. Money is the root of all evil, isn't it? And the stock market has crashed!
Posted by guidedbystewart on October 10, 2008 at 3:55 p.m. (Suggest removal)
Riptide,
You are a hypocrite! You are just as much a troll as any of the people you mentioned. The only difference is that you have different political views. Just like when you made a derogatory comment to mkris just because you disagree with them. FYI not everyone that is liberal is unemployed, on welfare or mooching of the government. Some of us are very successful, the only difference is we are not as short sighted or self adsorbed as most conservatives!
Posted by Riptide on October 10, 2008 at 4:21 p.m. (Suggest removal)
Guided….
Well I make it quite clear to mkris that government can not create wealth. You and mkris can disagree with that point but you don’t have any evidence to support otherwise. Usually people that have a vested interest in government programs or they feel government is the answer to all problems, then I can understand how they can see government as a source of wealth. They do print money.
I can live within my means even if I was poor which I was at one time in my life. Liberals need conservatives more than conservatives need liberals. You wouldn’t last to long supporting all those liberal programs without conservatives. Somebody got to work... right?
As far as a liberal like you calling me a troll doesn’t bother me a bit. You need me for the taxes. That’s all we’re good for in your eyes.
Posted by guidedbystewart on October 10, 2008 at 5:14 p.m. (Suggest removal)
Riptide,
I assure you that I pay taxes, am gainfully employed, live within my needs, and may even make more than you do. Like you (or so you have stated in the past) came from modest means. I bettered myself, received an education and became a professional. Yet the thing is it is not just poor people that benefits from what the government provides. If it was not for the government, I would have a difficult time being able to afford going to school, therefore having a tougher time at becoming more financially mobile. BTW, government has helped establish a middle class in this country, but as a conservative, I am sure you would disagree with that statement. I am not saying that I could not have bettered myself, but this way I have the financial independence to give more to society, without such struggle. Coming from modest means I know what it was like to struggle but it was not because of lack of work effort from my family. Unlike most conservatives, I empathize with the struggles of my fellow man and if they put the effort to better themselves (they at least have to do this), I do not giving back (again a major difference between us). I look at as investing in country, I know you conservative claim that we hate our country, but we do not. This is what makes us liberals different from you conservatives, besides you conservative are so self centered, you would know what altertism was if it bit you on your backside, you can not fathom wanting to help others if your are not personally gaining from it, so believe or not it happens!
Posted by Riptide on October 10, 2008 at 6:09 p.m. (Suggest removal)
Spanky…
I may be jaded in my views coming from the left coast and having spent almost my entire life around liberals, progressives, socialists, a few communists along with a assortment of nut cases, but they all have few things in common with each other on these issues that makes up the liberal democrat party today. Keep in mind I was once a democrat.
1. They are all anti-capitalism to various degrees.
2. Property rights issues and I only need to go the Supreme Court decision of Kilo vs. New London to prove my point on that one.
3. Second amendment issues.
4. Public schools, private schools, and home schooling.
5. Illegal aliens
6. Affirmative action
7. Abortion issues
And the list will go on and on until the cows come home.
I can weather this financial storm but it’s hard to see my brothers, friends, and my neighbors go through this when it wasn’t necessary.
This country is in a dangerous position since it lost a majority of it's manufacturing base. I’m not sure how this fits in on a global economy as oppose to a national economy. I do know that over 50% of the population receives a government check. That alone should be scary for what ever reason they collect it. All the indicators are there for the perfect storm in the financial markets. This country has accrue a huge debt and the government sector has grown to historical proportions that no way we can support. I was listening to an economist on Wall Street today and he thinks we might be heading to a version of the Weimer Republic. I do not like the idea of pushing a bunch of Deutschmarks in a wheel barrel to buy a loaf of bread.
I can understand labor being a partner to capital but this union of liberalism with capitalism is an unholy marriage .
Posted by Riptide on October 10, 2008 at 6:35 p.m. (Suggest removal)
Guided…
I’m not totally anti -government. Government has a role to play but it has to remain limited in scope as to what it can do and what it can not do. I understand we need public services from the police, fire, water, sewer, road repair, parks etc. etc.. I also understand we need a department of defense but what I don’t understand is why we need a department of education on the federal level?
You may perceive yourself as a liberal but the characters I been around pretty much reflect what I see in Nancy Pelosi.
Posted by johnc on October 10, 2008 at 7:37 p.m. (Suggest removal)
This is a great opportunity. We're at or near the bottom of this mess as today's wild swings suggest to me. The selling is panic selling and the smart players are buying. Buy now for your future!
Posted by mkris on October 10, 2008 at 8 p.m. (Suggest removal)
Thanks Riptide,,,
gotta love those welfare checks every week.
Drinking anymore wing-nut Kool aide lately?
Posted by Riptide on October 10, 2008 at 8:06 p.m. (Suggest removal)
Spanky…
A label is a description, it defines what is inside something or tells me who the person is and what he believes in, his core values and viewpoints. The only thing I know about you is that you hate Bush, republicans, conservatives, Christians and any issue that is consider ring wing. So tell me, is there new label I missed.
I think you would be the first to agree that this world would be better off if there were no conservative republicans, except you need our tax money. That is a problem. Well since all the socialist societies are ruled by force we can remember what V.I Lenin once said: “One man with a gun can control a 100 men without one”.
Now you understand why liberals do not like the second amendment.
See I learn a few things from the left coast.
Posted by Riptide on October 10, 2008 at 8:15 p.m. (Suggest removal)
mkris...
Just think you could be that one man with a gun controling a hundred conservative men. Since Barack Obama is a Marxist, and his close friend Bill Ayers was a member of the weather underground you can't tell what opportunities might await you.
Posted by summervillechick on October 10, 2008 at 9:52 p.m. (Suggest removal)
well ya'll, good thing I am only in my early 30's, my retirement fund is not looking so hot right now!
One other thing SC is a red state, how can that be? We are a state of hard working middle class citizens! O...I forgot the holy-rolling, pro-life freaks still can not separate church and state! Let's try again on election day fellow dems!
Posted by summervillechick on October 10, 2008 at 10:03 p.m. (Suggest removal)
o and Ashley.....our poor Congress much choose the lesser of the evils with this dim-wit, mentally challenged leader of the free country! I am still trying to wrap my brain around who in THEIR RIGHT MIND voted for this guy? I can tell you my brother and sister in law did because of abortion issues! HELLO!!!!! THIS GUY RUINED OUR COUNTRY AND YOU STUPID PEOPLE DO NOT SEE IT!!!!!!! But you do agree on abortion...who give a crap that our industries have all gone overseas....our economy is the worst it has ever been since the Great Depression....Gas is off the charts??? Why? because good ole George W. is an OIL GUY...lining his pockets while the rest of our retirement funds are being flushed down the tubes!!!! We have to take control of our own lives here. The smart American would buy..buy..buy right now, stocks are going to rebound and you can laugh all the way to the bank....I am buyin' cheap and stackin'
'em deep!
Posted by buff_o_rilla on October 10, 2008 at 10:58 p.m. (Suggest removal)
I believe this was a planned move by the government to eliminate the petro dollars of the middle east, russia, venezuala, iran, etc. and the economic climb of china. So far the commodities have tanked and food is next on the list. Sometimes you hae to look for a ilver lining. They stoke fear in the market with a huge bailout and the rest falls into place.
Posted by buff_o_rilla on October 10, 2008 at 11:10 p.m. (Suggest removal)
Summervillechick, Have you ever had an Abortion?
Posted by buzzinlikealdrin on October 11, 2008 at 8:44 a.m. (Suggest removal)
We need to flush the toilet and start over. TERM LIMITS is the answer.
Posted by norv on October 13, 2008 at 7:46 p.m. (Suggest removal)
Follow this link for info on the financial crisis that the Democrats don't want you to know.
http://frontpagemagazine.com/Articles/Re...