So, what did we learn this weekend (besides the fact that Sarah Palin is the spiritual reincarnation of Richard Nixon and John Sidney McCain III has, according Howard Wolfson, jumped the shark)?
Well, the European banking crisis is spreading; US bank failures are expected to increase in ’09; US consumer confidence is next-to-non-existent, with a new CNN/Opinion Research Corp poll showing that 59% of Americans believe a depression is imminent and 84% consider the economy to be poor.
And now it’s Monday and the markets are open.
You know what that means:
We are fucked:
U.S. stocks plummeted in early trading today as economic turmoil rippled through Europe and investors questioned whether a bailout of the financial sector would be enough to prevent a global recession.
The Dow Jones industrial average fell more than 500 points by mid-morning but then retreated to more than 400 points lower by 11:18 a.m. It was the first time since October 2004 that the Dow fell below 10,000. The Nasdaq and Standard & Poor’s 500-stock index both fell by 6 percent but by 11:18 a.m. had come back slightly, down 5 percent and 4.7 percent, respectively.
The day started with a negative momentum that has turned into a global panic, said Art Hogan, chief market analyst at Jefferies & Co. “It is just a realization that the global economy is going to be stagnant for the next 12 to 16 months” even with the rescue plan, Hogan said.
Investors remain concerned that the $700 billion financial bailout plan enacted by the federal government last week is not enough to address the country’s fundamental economic problems, including rising unemployment and falling home prices. Banks remain reluctant to lend to each other, keeping the credit markets frozen, and overseas banks are increasingly facing problems of their own.
European officials are scrambling to bolster financial firms, and Asian investors have grown worried that a global recession will undercut their export-dependent economies. Europe has been forced to prop up other banks in recent weeks. Markets in Asia and Europe were down from between 4 and 6 percent.
“People realize that the [bailout] is not going to prevent a more serious economic downturn in the U.S., including a couple of quarters of negative economic growth,” said Marc Chandler, head of currency trading at Brown Brothers Harriman & Co. “The banking crisis spreading to Europe is another negative. It means the crisis is getting bigger.”
The price of oil fell as low as $88.89 a barrel in morning trading today, off its peak of $147 a barrel in July. The price of gold jumped as investors sought a safe haven from the market turmoil.
Glad I have today off, as I feel the need for a drink, to be quickly followed by another.
Oh, and memo to Uncle Steve: Canada is most definitely included in that aforementioned ‘we’. This is not simply a financial crisis for the US–it’s a global (yes, global) crisis.
A global crisis that, as Marc Chandler noted, is growing bigger.
We are fucked.
h/t James Curran for the vid
Related: Must read op-ed by David Rothkopf, visiting scholar at the Carnegie Endowment for International Peace and the author of Superclass: The Global Power Elite and the World They Are Making, who argues that the financial crisis is a paradigm-shifting event “bigger than 9/11”:
We now know that the costs to the U.S. government associated with this crash will surpass those associated with the wars in Iraq and Afghanistan. We also know that all such government cost estimates tend to be on the low side. We further know that the U.S. economy recovered quickly after 9/11 and that we are in the midst now of a global downturn that may last for many months and perhaps years. We know that there have been vastly more job losses — 600,000 recorded thus far this year in the United States — than were associated with the 9/11 shocks, and that the global job-loss totals that a recession is likely to bring will be measured in the millions. Among the poorest, the likely shocks to emerging markets caused by the United States’ inability to spend freely will take a devastating human toll.
By all the metrics available to us, then, the current financial crisis easily exceeds the post-9/11 war on terror in economic terms. Human costs are harder to measure, of course, and the tolls of both events have been devastating. But the financial crisis will certainly touch many more people in many more countries than did 9/11. And even greater crises may loom ahead, thanks to our unwitting creation of a financial Frankenstein’s monster of unregulated, risk-laden, global derivatives markets.
As the dithering U.S. governing class is grappling with the disposal of “toxic assets” in the U.S. economy, the world is moving on to debate what is widely seen as a toxic ideology: a form of market fundamentalism that promotes inequality.
As they say, read the whole damn thing.
Recommend this post at Progressive Bloggers