QuoteStock markets have terrible day; Dow drops 500 points
Fear factor soars as worries about economies in US, Europe slam stocks
NEW YORK — Any way you cut it, it was a terrible day for the stock markets.
Worries about the state of the economy in the U.S. and around the world slammed stocks on Thursday, driving the Dow Jones industrial average to close down more than 500 points. It was the Dow's worst drop since October 2008.
The Dow and the S&P 500 shed more than 4 percent; the Nasdaq more than 5 percent. All three major indexes are down more than 10 percent from their previous highs, putting them into correction territory. In addition, all three indexes have erased their gains for the year.
The market's so-called "fear index," the CBOE Volatility Index (VIX), rose above 30 in its biggest daily percentage move since May 2010.
More than 13 billion shares changed hands, the busiest trading day in more than a year. Decliners beat advancers on the New York Stock Exchange by about 19 to 1.
In terms of lost treasure, the day's drop slashed (on paper) about $800 billion, as measured by the Wilshire 5000 Total Market Index. The Wilshire has lost about $1.9 trillion in the last nine days.
The Dow Jones industrial average was down 512.46 points, or 4.31 percent, at 11,383.98. The Standard & Poor's 500 Index fell 60.21 points, or 4.78 percent, at 1,200.13. The Nasdaq Composite Index lost 136.68 points, or 5.08 percent, at 2,556.39.
"People are throwing in the towel because they can't find relief on any front. There are a lot of worries about the economy," said Milton Ezrati, market strategist at Lord Abbett Co. in Jersey City, New Jersey, which manages $110 billion in assets.
Analysts predicted further losses even though stocks have fallen on nine of the last 10 days. Two-year Treasury yields fell to a record low as investors sought safety in short-term government bonds.
Investors are now nervously focused on the crucial monthly jobs data to be released Friday by the Labor Department. Expectations are not high.
Nonfarm payrolls likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June. The unemployment rate is expected to hold steady at 9.2 percent.
Earlier, the Labor Department reported that weekly initial jobless claims totaled 400,000, less than the 405,000 that was forecast. Investors were disappointed they didn't see more improvement in the labor market gauge.
The market's recent malaise stems from a number of factors. U.S. economic data has worsened, suggesting slowing growth from already sluggish pace in the first half. Europe's sovereign debt crisis has defied remedies and threatens to engulf large euro-zone economies Spain and Italy.
"The debt troubles in Europe, especially with the yields on Italian and Spanish government bonds soaring, are making investors gather as much liquidity as possible," said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.
European Commission President Jose Manuel Barroso urged eurozone leaders to make further changes to their bailout fund — including boosting its size — to ensure it can effectively stem the debt crisis that has rocked the currency union for 21 months.
Officials moved to calm markets and ease volatility around the world, with the largest move coming from Tokyo, where the government spent an estimated 1 trillion yen ($13 billion) to stem the strength of its currency.
"They're trying to fight a futile battle," said Ankita Dudani, currency strategist at RBS. "It won't have a lasting impact so long as the euro-zone crisis continues and the global (economic) outlook deteriorates."
Spain's benchmark stock market index plunged 3.9 percent Thursday, marking its biggest one-day loss this year yet, and Italy's stock market also plummeted, with Milan's FTSE MIB index down by 5.16 percent.
Germany's DAX index of blue chip companies fell by 3.4 percent, and France's CAC 40 lost 3.9 percent.
Yep, things look pretty shitty. I dunno, do we need something like the Bretton-Woods again? Some grand bargain?
If everything goes to shit...again I'm moving the business to Norway.
Meh, don't worry about it; the sharks will be out buying up the losses in a few days.
:weep:
Quote from: CountDeMoney on August 04, 2011, 07:18:39 PM
Meh, don't worry about it; the sharks will be out buying up the losses in a few days.
See, this scares the shit out of me, you're Mister Happy Honey-Glazed Rainbow and I'm the grumbling Grouch? :huh:
Well, at least I've got a couple more stop loss orders in place for tomorrow in case the massacre continues.
Quote from: Caliga on August 04, 2011, 07:43:18 PM
Well, at least I've got a couple more stop loss orders in place for tomorrow in case the massacre continues.
Can't we just hustle the crowd taking bets either which way on those last 2 guys actually engaging in real economic activity onto some Facebook game?
That's a panic-based economy at work for you.
Quote from: Legbiter on August 04, 2011, 07:40:18 PM
Quote from: CountDeMoney on August 04, 2011, 07:18:39 PM
Meh, don't worry about it; the sharks will be out buying up the losses in a few days.
See, this scares the shit out of me, you're Mister Happy Honey-Glazed Rainbow and I'm the grumbling Grouch? :huh:
As there's nothing I can do about it--Wall Street is the playground for the wealthy, my 401k is just along for the ride for a few crumbs--I can't really be bothered with the 1%'s problems they've sown for themselves.
For over the last year and a half, everyone's been pointing to the DJI as the barometer of economic health, proving we were comnig out of the recession. Yay, we're up over 13,000! Yeah, sure. "We". What bullshit.
Since nobody wants to accept the truth that the only numbers that matter are unemployment and the Consumer Confidence Index, and not the stats of Duke & Duke on the Street with their shareholder dividends, they might as well learn the hard way.
Oh, boo hoo hoo, a shitload of millionaires and billionaires lost some imaginary money they didn't fucking have anyway. Fuck 'em.
I buy stocks. I don't sell 'em. This isn't bad news to me personally.
I understand the psychological harm it does for business and consumer confidence, but I also agree with Neil that this is a result of businesses and consumers abandoning common sense in favor of panicky emotions. In reality, as Seedy notes, this is all imaginary money lost for the vast majority of people who aren't selling stocks.
It feels like there's an ouroboros effect going on; a lot of these same people complaining about the lousy weeklies on employment are the ones refusing to hire because stocks aren't showing strong enough markets.
I took an explosi-dump some days ago. I hate it when you have to clean the upper part of the bowl.
Quote from: CountDeMoney on August 04, 2011, 08:33:06 PM
Quote from: Legbiter on August 04, 2011, 07:40:18 PM
Quote from: CountDeMoney on August 04, 2011, 07:18:39 PM
Meh, don't worry about it; the sharks will be out buying up the losses in a few days.
See, this scares the shit out of me, you're Mister Happy Honey-Glazed Rainbow and I'm the grumbling Grouch? :huh:
As there's nothing I can do about it--Wall Street is the playground for the wealthy, my 401k is just along for the ride for a few crumbs--I can't really be bothered with the 1%'s problems they've sown for themselves.
For over the last year and a half, everyone's been pointing to the DJI as the barometer of economic health, proving we were comnig out of the recession. Yay, we're up over 13,000! Yeah, sure. "We". What bullshit.
Since nobody wants to accept the truth that the only numbers that matter are unemployment and the Consumer Confidence Index, and not the stats of Duke & Duke on the Street with their shareholder dividends, they might as well learn the hard way.
Oh, boo hoo hoo, a shitload of millionaires and billionaires lost some imaginary money they didn't fucking have anyway. Fuck 'em.
Apparently the US unemployment rate is 9.1%. Poland's (according to Eurostat) is 9.4%. Never thought I'd live to a day when the US and Poland would have such similar unemployment rates. :showoff:
Quote from: Martinus on August 05, 2011, 09:05:51 AM
... Never thought I'd live to a day when the US and Poland would have such similar unemployment rates. :showoff:
"Never thought" is redundant, in your case.
Quote from: The Brain on August 05, 2011, 08:56:11 AM
I took an explosi-dump some days ago. I hate it when you have to clean the upper part of the bowl.
Taco night?
Quote from: Martinus on August 05, 2011, 09:05:51 AM
Apparently the US unemployment rate is 9.1%. Poland's (according to Eurostat) is 9.4%. Never thought I'd live to a day when the US and Poland would have such similar unemployment rates. :showoff:
Though it happened a couple years ago, nobody in Canada ever thought our dollar would be worth more than the US Dollar. :showoff:
Quote from: HisMajestyBOB on August 05, 2011, 10:09:20 AM
Quote from: The Brain on August 05, 2011, 08:56:11 AM
I took an explosi-dump some days ago. I hate it when you have to clean the upper part of the bowl.
Taco night?
No. Don't remember.
Quote from: Barrister on August 05, 2011, 10:30:06 AM
Quote from: Martinus on August 05, 2011, 09:05:51 AM
Apparently the US unemployment rate is 9.1%. Poland's (according to Eurostat) is 9.4%. Never thought I'd live to a day when the US and Poland would have such similar unemployment rates. :showoff:
Though it happened a couple years ago, nobody in Canada ever thought our dollar would be worth more than the US Dollar. :showoff:
Yay collapse of manufacturing jobs :P
Quote from: HVC on August 05, 2011, 11:28:51 AM
Quote from: Barrister on August 05, 2011, 10:30:06 AM
Quote from: Martinus on August 05, 2011, 09:05:51 AM
Apparently the US unemployment rate is 9.1%. Poland's (according to Eurostat) is 9.4%. Never thought I'd live to a day when the US and Poland would have such similar unemployment rates. :showoff:
Though it happened a couple years ago, nobody in Canada ever thought our dollar would be worth more than the US Dollar. :showoff:
Yay collapse of manufacturing jobs :P
Yay increased global demand for raw materials! :showoff:
Quote from: Barrister on August 05, 2011, 11:36:29 AM
Quote from: HVC on August 05, 2011, 11:28:51 AM
Quote from: Barrister on August 05, 2011, 10:30:06 AM
Quote from: Martinus on August 05, 2011, 09:05:51 AM
Apparently the US unemployment rate is 9.1%. Poland's (according to Eurostat) is 9.4%. Never thought I'd live to a day when the US and Poland would have such similar unemployment rates. :showoff:
Though it happened a couple years ago, nobody in Canada ever thought our dollar would be worth more than the US Dollar. :showoff:
Yay collapse of manufacturing jobs :P
Yay increased global demand for raw materials! :showoff:
Screw you alberta! Share the oil :P
Quote from: HVC on August 05, 2011, 11:39:47 AM
Quote from: Barrister on August 05, 2011, 11:36:29 AM
Quote from: HVC on August 05, 2011, 11:28:51 AM
Quote from: Barrister on August 05, 2011, 10:30:06 AM
Quote from: Martinus on August 05, 2011, 09:05:51 AM
Apparently the US unemployment rate is 9.1%. Poland's (according to Eurostat) is 9.4%. Never thought I'd live to a day when the US and Poland would have such similar unemployment rates. :showoff:
Though it happened a couple years ago, nobody in Canada ever thought our dollar would be worth more than the US Dollar. :showoff:
Yay collapse of manufacturing jobs :P
Yay increased global demand for raw materials! :showoff:
Screw you alberta! Share the oil :P
Don't forget mining in Yukon. :showoff:
And you now live in a have not province. We are sharing the oil money. :cool:
Quote from: Barrister on August 05, 2011, 11:47:00 AM
Don't forget mining in Yukon. :showoff:
And you now live in a have not province. We are sharing the oil money. :cool:
Please sir, can i have s'more?
Quote from: HVC on August 05, 2011, 11:28:51 AM
Yay collapse of manufacturing jobs :P
They were on life support anyways. It's cheaper to ship from the satanic mills.
:lol: That's a good reference.
Quote from: Neil on August 05, 2011, 11:54:00 AM
Quote from: HVC on August 05, 2011, 11:28:51 AM
Yay collapse of manufacturing jobs :P
They were on life support anyways. It's cheaper to ship from the satanic mills.
I think a lot of people don't understand that truism. Nothing happened to fundamentally change the relationship between the cost of US labor and the cost of Chinese labor. What happened was that transportation got cheaper, and so more and so the cost of more products became driven by labor costs and not transportation costs. Nothing is going to reverse that trend any time soon, so a resurgence in US (or Western) unskilled manufacturing isn't going to happen in any foreseeable future.
Quote from: grumbler on August 05, 2011, 12:42:00 PM
Quote from: Neil on August 05, 2011, 11:54:00 AM
Quote from: HVC on August 05, 2011, 11:28:51 AM
Yay collapse of manufacturing jobs :P
They were on life support anyways. It's cheaper to ship from the satanic mills.
I think a lot of people don't understand that truism. Nothing happened to fundamentally change the relationship between the cost of US labor and the cost of Chinese labor. What happened was that transportation got cheaper, and so more and so the cost of more products became driven by labor costs and not transportation costs. Nothing is going to reverse that trend any time soon, so a resurgence in US (or Western) unskilled manufacturing isn't going to happen in any foreseeable future.
What will happen is Chinese labor will go up eventually, because the people there will want to start consuming instead of just producing. But then probably we will ship from cheap factories in Somalia.
Quote from: Martinus on August 05, 2011, 01:20:35 PM
Quote from: grumbler on August 05, 2011, 12:42:00 PM
Quote from: Neil on August 05, 2011, 11:54:00 AM
Quote from: HVC on August 05, 2011, 11:28:51 AM
Yay collapse of manufacturing jobs :P
They were on life support anyways. It's cheaper to ship from the satanic mills.
I think a lot of people don't understand that truism. Nothing happened to fundamentally change the relationship between the cost of US labor and the cost of Chinese labor. What happened was that transportation got cheaper, and so more and so the cost of more products became driven by labor costs and not transportation costs. Nothing is going to reverse that trend any time soon, so a resurgence in US (or Western) unskilled manufacturing isn't going to happen in any foreseeable future.
What will happen is Chinese labor will go up eventually, because the people there will want to start consuming instead of just producing. But then probably we will ship from cheap factories in Somalia.
Eventually - it is what happened to formerly cheap labour in Hong Kong, Taiwan and Japan after all.
But china still has an enormous source of rural poor to pull on.
And Somalia - they lack the basic security for any corporation to want to invest there.
Quote from: Martinus on August 05, 2011, 01:20:35 PM
Quote from: grumbler on August 05, 2011, 12:42:00 PM
Quote from: Neil on August 05, 2011, 11:54:00 AM
Quote from: HVC on August 05, 2011, 11:28:51 AM
Yay collapse of manufacturing jobs :P
They were on life support anyways. It's cheaper to ship from the satanic mills.
I think a lot of people don't understand that truism. Nothing happened to fundamentally change the relationship between the cost of US labor and the cost of Chinese labor. What happened was that transportation got cheaper, and so more and so the cost of more products became driven by labor costs and not transportation costs. Nothing is going to reverse that trend any time soon, so a resurgence in US (or Western) unskilled manufacturing isn't going to happen in any foreseeable future.
What will happen is Chinese labor will go up eventually, because the people there will want to start consuming instead of just producing. But then probably we will ship from cheap factories in Somalia.
When I was in the mental hospital, I found a book written in 1989 predicting that as the Japanese markets matured manufacturing would return to the US. The author also predicted that if George Bush held the line on taxes we could see the DOW Jones rise to 5,000 by the year 2000.
I realize now that my posts would probably be taken more seriously if they didn't start with the phrase "When I was in the mental hospital".
Quote from: Razgovory on August 05, 2011, 01:25:34 PM
Quote from: Martinus on August 05, 2011, 01:20:35 PM
Quote from: grumbler on August 05, 2011, 12:42:00 PM
Quote from: Neil on August 05, 2011, 11:54:00 AM
Quote from: HVC on August 05, 2011, 11:28:51 AM
Yay collapse of manufacturing jobs :P
They were on life support anyways. It's cheaper to ship from the satanic mills.
I think a lot of people don't understand that truism. Nothing happened to fundamentally change the relationship between the cost of US labor and the cost of Chinese labor. What happened was that transportation got cheaper, and so more and so the cost of more products became driven by labor costs and not transportation costs. Nothing is going to reverse that trend any time soon, so a resurgence in US (or Western) unskilled manufacturing isn't going to happen in any foreseeable future.
What will happen is Chinese labor will go up eventually, because the people there will want to start consuming instead of just producing. But then probably we will ship from cheap factories in Somalia.
When I was in the mental hospital, I found a book written in 1989 predicting that as the Japanese markets matured manufacturing would return to the US. The author also predicted that if George Bush held the line on taxes we could see the DOW Jones rise to 5,000 by the year 2000.
I realize now that my posts would probably be taken more seriously if they didn't start with the phrase "When I was in the mental hospital".
Hey Raz - have you ever detailed why you were in the mental hospital, or what your diagnosis was/is?
Don't mean to pry if you prefer to keep it private, but I did wonder. :)
Yes, I have. Schizotypal personality disorder. http://en.wikipedia.org/wiki/Schizotypal_personality_disorder There are other things the come from that, like Depression and anxiety, but that seems to the the root problem.
I see. Thanks for sharing. :)
Quote from: CountDeMoney on August 04, 2011, 08:33:06 PM
For over the last year and a half, everyone's been pointing to the DJI as the barometer of economic health, proving we were comnig out of the recession. Yay, we're up over 13,000! Yeah, sure. "We". What bullshit.
I haven't heard this a single time.
Quote from: Admiral Yi on August 05, 2011, 04:55:27 PM
Quote from: CountDeMoney on August 04, 2011, 08:33:06 PM
For over the last year and a half, everyone's been pointing to the DJI as the barometer of economic health, proving we were comnig out of the recession. Yay, we're up over 13,000! Yeah, sure. "We". What bullshit.
I haven't heard this a single time.
That's because you're not listening to anything else except the price of gold.
QuoteNEW YORK (Reuters) - Fear returned to Wall Street on Wednesday, sending the S&P 500 to another 4 percent decline, triggered by worries that Europe's debt crisis could engulf French banks and spill onto the U.S. financial sector.
Trading was once again marked by sharp moves on heavy volume. For a fifth straight day, the Dow industrials fluctuated in a range of more than 400 points.
"What you're seeing is a very short-term, direction-oriented market," said Eric Kuby, chief investment officer of North Star Investment Management Corp in Chicago.
Worries about the strength of French lenders, including Societe Generale, triggered a selloff in European and U.S. banks. Rumors about SocGen's financial health, which the bank denied, sent its shares tumbling 14.7 percent.
An index of European banks dropped 6.7 percent and the KBW index of U.S. bank stocks slid 4.9 percent as fear grew of a possible contagion of any French crisis. Bank of America Corp lost 10.9 percent to $6.77 and Goldman Sachs slid more than 10 percent to $110.34.
The Dow Jones industrial average lost 519.83 points, or 4.62 percent, to 10,719.94. The S&P 500 fell 51.77 points, or 4.42 percent, to 1,120.76. The Nasdaq Composite dropped 101.47 points, or 4.09 percent, to 2,381.05.
Wednesday's drop came a day after stocks rallied on the Federal Reserve's pledge to keep interest rates near zero for at least two more years.
Even after Tuesday's snap-back rally, the S&P 500 is down almost 18 percent from its 2011 closing high set April 29.
I LOL'd.
Quote from: Legbiter on August 04, 2011, 07:14:27 PM
Yep, things look pretty shitty. I dunno, do we need something like the Bretton-Woods again? Some grand bargain?
If everything goes to shit...again I'm moving the business to Norway.
Are you being lured with the promise of free daycare and contact with grandparents?
If it would make you feel better Seedy, I could post how much I've lost on paper these last 3 days.
I guess I'm glad I pulled my money out months ago and spent it.
: /
You missed the stock trade thread. We had two jumpers today.
Quote from: Ed Anger on August 10, 2011, 06:49:50 PM
If it would make you feel better Seedy, I could post how much I've lost on paper these last 3 days.
It would. It actually would.
Quote from: CountDeMoney on August 10, 2011, 08:55:12 PM
Quote from: Ed Anger on August 10, 2011, 06:49:50 PM
If it would make you feel better Seedy, I could post how much I've lost on paper these last 3 days.
It would. It actually would.
Around 63K.
That's nothing. Many people lost 401k.
Quote from: Ed Anger on August 11, 2011, 07:42:14 AM
Quote from: CountDeMoney on August 10, 2011, 08:55:12 PM
Quote from: Ed Anger on August 10, 2011, 06:49:50 PM
If it would make you feel better Seedy, I could post how much I've lost on paper these last 3 days.
It would. It actually would.
Around 63K.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fimages.free-extras.com%2Fpics%2Fp%2Fpeter_griffin-1117.jpg&hash=db546cc372283e127183a64eade96053da27cb9d)
Enough for 31 strollers and still have change to feed your family at a decent restaurant :o
Quote from: Richard Hakluyt on August 11, 2011, 08:23:09 AM
Enough for 31 strollers and still have change to feed your family at a decent restaurant :o
And Ed needs those 31 strollers. :(
Quote from: alfred russel on August 11, 2011, 08:57:36 AM
Quote from: Richard Hakluyt on August 11, 2011, 08:23:09 AM
Enough for 31 strollers and still have change to feed your family at a decent restaurant :o
And Ed needs those 31 strollers. :(
:lol:
Quote from: Ed Anger on August 11, 2011, 07:42:14 AM
Around 63K.
Man I am so poor. That is almost my family's entire annual income.
Quote from: Valmy on August 11, 2011, 09:41:47 AM
Quote from: Ed Anger on August 11, 2011, 07:42:14 AM
Around 63K.
Man I am so poor. That is almost my family's entire annual income.
Well based on the evidence from Languish, it is clear you should either forget this engineering nonsense and go to law school, or break your legs in a horrible workplace accident.
Quote from: Valmy on August 11, 2011, 09:41:47 AM
Quote from: Ed Anger on August 11, 2011, 07:42:14 AM
Around 63K.
Man I am so poor. That is almost my family's entire annual income.
That may just mean you aren't old/aren't a good saver/don't put lots of money in financial markets. If the market falls 10%, and you have 10 years salary saved up and in the market, you are going to lose a year's salary.
Of course, unless someone has taken particularly bad decisions, then these paper losses are merely reducing the paper profits made in 2009/10.
Quote from: Barrister on August 11, 2011, 09:48:50 AM
Well based on the evidence from Languish, it is clear you should either forget this engineering nonsense and go to law school, or break your legs in a horrible workplace accident.
I thought he was already pretty well up there in supply chain management by the time of the leg break, which wasn't actually that long ago. :unsure:
Quote
http://money.cnn.com/2011/08/11/news/international/europe_debt/index.htm?hpt=hp_t1
Europe pushes the panic button
NEW YORK (CNNMoney) -- The debt crisis that started in the outskirts of Europe took another step toward the continent's core economies on Thursday as lawmakers scrambled to put policies in place to stem the bloodletting.
European stock exchanges closed higher. But the trading sessions were volatile. And in a manifestation of the sky-high levels of fear pumping through the markets, speculation ran unchecked.
The result is a continent on edge.
"There is a great deal of nervousness, and a great deal of uncertainty in the markets," said Nick Matthews, a senior European economist at the Royal Bank of Scotland.
At its core, the crisis in Europe is the result of heavy debt burdens taken on by countries that are bound by a common currency and central bank. (Read: European markets surge, slump, and surge again!)
The high government debt loads threaten to trap countries in a vicious cycle: The debt weighs on economic growth -- and austerity measures aimed at attacking the debt only put a further drag on their economies.
Greece and Ireland stumbled last year, and billions of dollars were spent by their neighbors in an effort to contain the panic. The lending and bond-buying efforts undertaken by Europe's stronger economies prevented a default, but systemic reforms remain elusive.
And now, after evolving for more than a year, the crisis is knocking on the door of Italy and France, two of the continent's largest economies.
Arrivederci, rally! Why Italy is latest worry
France has a relatively high level of sovereign debt, and is one of the few remaining countries with a AAA rating -- a distinction that has been called into question in some quarters after Standard & Poor's downgrade of the United States' rating.
Despite affirmations from rating agencies, rumors that a downgrade to France's credit rating was imminent sparked an all out assault on the country's banking sector over the past two days.
Adding fuel to the flames, Reuters published a report Thursday citing anonymous sources that an unnamed Asian bank had suspended lines of credit to French lenders.
European policymakers, some of whom have already cancelled their summer vacations, have started to pull levers in a bid to turn the tide.
French President Nicolas Sarkozy and German Chancellor Angela Merkel said Thursday they were calling another emergency meeting to discuss the crisis.
And over the weekend, the European Central Bank signaled that it would begin buying Italian and Spanish bonds -- a move that has successfully lowered borrowing costs for the two governments.
But bond yields remain elevated across the region as investors demand higher interest rates in exchange for holding government debt.
The yield on Italian and Spanish 10-year notes is above 5%, while Greece sits above 15% and France's rate has spiked above 3%.
Coupled with weak growth, the sharp increase in interest rates only adds to the countries' debt and makes it even more difficult for them to dig out of their holes.
The chaos has led policymakers to consider extraordinary measures that would have been unthinkable only weeks ago.
would have been unthinkable only weeks ago.
European fear: The wolves are at the gate
http://money.cnn.com/2011/08/05/news/economy/europe_debt_crisis/?iid=EL
There was speculation that European regulators are considering a ban on short selling -- a bet against a stock that can quickly drive shares lower.
And Switzerland's central bank hinted it may temporarily peg the value of the Swiss franc to the euro in an effort to stem the franc's rapid strengthening -- an unprecedented move.
The Swiss franc is a safe-haven currency, and its value has been driven ever-higher by fear in Europe. A senior official at the country's central bank said the currency is now "massively overvalued" compared to the dollar and euro during an interview with Tages-Anzeiger newspaper.
The panic is not only manifesting in bond yields and currencies -- it's also hitting equity markets.
Shares trading on the main French (CAC40) and German (DAX) exchanges have lost almost 20% of their value over the past month, while even Britain's main exchange has dropped 14% over the same time period.
Matthews said the debt worries are one thing, but S&P's decision to downgrade the United States and economic indicators that point to a global slowdown are further complicating matters for investors.
"Given some of the indicators we've had, this is a justified concern," Matthews said. "There is a clear slowing down."
Getting even more worrisome. I figured we were all, (our respective nations), slowly stumbling along but gradually making slow recoveries. But seems that things are, or could, become a lot more problematic everywhere. :(
Quote
http://money.cnn.com/2011/08/05/news/economy/europe_debt_crisis/?iid=EL
NEW YORK (CNNMoney) -- A sharp drop in manufacturing, a towering debt-to-GDP ratio and a jaw-dropping decline in equity markets.
No -- not the United States. Europe!
Many of the underlying tremors that led to this week's steep sell-off in the U.S. have been festering in plain sight in Europe for a year or more.
Consider a few figures:
European indexes have been hammered over the past month, with the main exchanges of England (UKX) off 12.9%, France (CAC40) 17.6% and Germany (DAX) 16.7%.
The economies of Italy and France -- two of the continent's largest -- expanded by only 0.3% and 0.2% in the second quarter.
The problem?
Developed countries piled on massive amounts of debt during the recession.
Advanced economies worldwide increased their debt burden from $18.1 trillion in 2007 to $29.5 trillion in 2011, according to researchers at the Brookings Institution. And that's not the half of it. The number is projected to grow to $41.3 trillion by 2016.
Throw 3 coins in the fountain. Italy needs them
The bill collector has already come for some. Billions have been spent propping up Ireland and Greece, and investors have not been shy about sending yields through the roof when they smell blood in the water.
Investors lending money to Spain are now demanding interest rates of 6%, while Greek bonds carry a 15% rate and yields on Italian notes spiked this week to 5.5%.
Coupled with weak growth, the sharp increase in interest rates only adds to the countries' debt and makes it even more difficult for them to lower their debt-GDP-ratio.
There is some evidence that politicians are waking up to the scale of the crisis.
What's going on with Italy?
German Chancellor Angela Merkel and French President Nicolas Sarkozy planned to interrupt their summer vacations -- a hiking holiday in Italy and a three-week excursion to the French Riviera -- to confer by phone about the growing economic unease.
That's welcome news, because while the crisis started at the continent's periphery, it has now arrived at the gates of Italy and Spain.
And that, according to Domenico Lombardi, a senior fellow at Brookings and former International Monetary Fund executive board member, should worry policymakers in the United States.
"Italy has been hit," Lombardi said. "It's the third largest economy in the euro area, and there is no organization that can bail Italy out. It's just too big to swallow."
If the situation in Italy were to worsen, the impact could lead to weakening demand for U.S. exports, uncertainty in global currency markets, and consequences for U.S. banks that are exposed to the European banking system.
The timing couldn't be worse for the United States, which is about to engage in some fiscal belt-tightening as a result of the debt ceiling deal negotiated in Washington.
With the government pumping less money into the economy, policymakers need to find a way to increase demand for U.S. exports, Lombardi said.
"But this is certainly not going to come from Europe," he said.
The tremendous instability in Europe is yet another drag on an already weak U.S. economy and could increase uncertainly, spark a rush to safe-haven assets or delay major investments by American businesses.
"The economic recovery in the U.S. is inherently fragile," Lombardi said. "And this could have a dramatic effect on the job market outlook."
On Friday, EU Economic and Monetary Affairs Commissioner Olli Rehn tried to calm the swirl of rumors as markets bucked up and down.
"The market unrest witnessed in the last few days is simply not justified on the grounds of economic fundamentals," he said, having broken off his holidays to return to Brussels. "It is not justified for Italy. It is not justified for Spain."
But try telling that to bond markets.
Quote from: mongers on August 11, 2011, 09:36:52 PM
Asia is strongly up this morning. :hmm:
Sometimes I get strongly up for Asia in the morning.
Quote from: mongers on August 11, 2011, 09:36:52 PM
Asia is strongly up this morning. :hmm:
That's just the heat of the moment.