U.S. stocks fall again, following plunge in Asia, Europe
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10/10/2008 -
WASHINGTON — Wall Street crossed another grim milestone Friday morning shortly after the opening bell of the New York Stock Exchange, with the Dow Jones Industrial Average falling almost 700 points to fall below the psychological threshold of 8,000 before stabilizing. Markets had plunged overnight in Asia and Europe.
Opening down sharply after seven consecutive days of steep losses, the Dow resumed the freefall, down more than 20 percent down over the past eight trading sessions in what has been a snowballing process. Within a half hour, the Dow bounced back but was still trading 200 points down in what was sure to be another volatile day.
Friday marked a stock sell-off around the world, as Asian markets suffered steep losses. Japan's Nikkei fell another 9.6 percent at the close of trading to lose a quarter of its value this week. Hong Kong's exchange was down 7.2 percent and Australia's down 8.3 percent.
Asia's plunge migrated to Europe, where stocks slumped in early trading. The exchanges in Britain, France and Germany were off by a respective 5.4 percent, 6.1 percent and 7.9 percent. Austria temporarily halted trading after the stock exchange fell by more than 10 percent.
"There is no safe haven," said Evariste Lefeuvre, an economist with the French investment bank Netixis, told the BBC.
President Bush came before the cameras Friday morning in a bid to calm both nervous citizens and jittery markets.
"We are a prosperous nation with immense resources and a wide range of tools at our disposal," Bush said, seeking to reassure Americans who have seen their retirement savings shrink and wonder how safe their money really is in the bank.
Bush offered no new solutions, but reminded of the wide range of steps taken in recent weeks by the Federal Reserve and Treasury Department.
"Fellow citizens, we can solve this crisis, and we will," he said.
The drops over the past week of trading are nearing the faster two-day 25 percent drop in 1929 that is widely viewed as the trigger to the Great Depression. The Federal Reserve and Treasury have taken a number of aggressive steps to avoid repeating the same mistakes of the last century, but some analysts believe a more coordinated approach between developed nations is needed.
"One of the biggest lessons of the Great Depression is that countries only acted in self-interest and if countries act in self-interest the chance of failure is much higher," said Jon Danielsson, an economist at the London School of Economics. "There is an increasing realization that the way out is for the large industrial nations to act with a single voice."
Finance ministers of the seven most industrialized nations — the so-called G-7 — meet today in Washington under great pressure to craft more than a communique and a photo opportunity.
Treasury Secretary Henry Paulson on Wednesday promised to call a meeting of the developed and rapidly developing emerging markets, who are sometimes called the Group of 20, or G-20. Traders around the world are hoping for more interest rate cuts and coordinated moves to shore up the global banking system.
Stock markets around the world have lost a quarter of their value or more as a global sell-off widens. While there is an increasing sense of urgency, there is still no agreement among world leaders over what strategies will work.
Britain's proposal to effectively nationalize some of its banks by taking equity stakes in them is now gaining credibility in the United States and around the world. But some economists say more needs to be done.
