Worldwide financial fiasco

October 7, 2008

Markets were thrashed again on Monday, as the US credit crisis spreads worldwide. The Dow Jones lost another 370 points and closing at under 10,000 for the first time since October 2004. At one point the Dow was down 800 pts. But managed to recoup half. The day started with reaction to sharp declines in Asian and European markets. Tokyo's Nikkei index fell to its lowest level in four and a half years, sinking 4.25 percent. Hong Kong's Hang Seng index lost 4.3 percent. Markets in China, Australia, South Korea, India, Singapore and Thailand also fell sharply. In Europe the trading was halted twice in Russia with the market closing down 19.1 percent, the DAX in Frankfurt, Germany was down 7.1 percent, while the FTSE 100 index in the UK was down 7.9 percent. Stocks in Paris took a big hit losing 9 percent. Across the Atlantic Brazil lost 5.5 percent; Argentina was off 5.9 percent, while Mexico's index fell 5.4 percent, In Canada the TSX was down 5.3 percent. Faltering confidence in the financial system following a series of bank bailouts forced many European governments to offer deposit guarantees. Expectations are that the US Federal Reserve, the European Central Bank will have a coordinated interest rate cut as early as Monday, the first joint action since the September 11, 2001, attacks on the US.

Markets were thrashed again on Monday, as the US credit crisis spreads worldwide. The Dow Jones lost another 370 points and closing at under 10,000 for the first time since October 2004. At one point the Dow was down 800 pts. But managed to recoup half. The day started with reaction to sharp declines in Asian and European markets. Tokyo's Nikkei index fell to its lowest level in four and a half years, sinking 4.25 percent. Hong Kong's Hang Seng index lost 4.3 percent. Markets in China, Australia, South Korea, India, Singapore and Thailand also fell sharply. In Europe the trading was halted twice in Russia with the market closing down 19.1 percent, the DAX in Frankfurt, Germany was down 7.1 percent, while the FTSE 100 index in the UK was down 7.9 percent. Stocks in Paris took a big hit losing 9 percent. Across the Atlantic Brazil lost 5.5 percent; Argentina was off 5.9 percent, while Mexico's index fell 5.4 percent, In Canada the TSX was down 5.3 percent. Faltering confidence in the financial system following a series of bank bailouts forced many European governments to offer deposit guarantees. Expectations are that the US Federal Reserve, the European Central Bank will have a coordinated interest rate cut as early as Monday, the first joint action since the September 11, 2001, attacks on the US.



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Story Transcript

Worldwide Financial Fiasco

Producer: Carlo Basilone

CARLO BASILONE, (VOICEOVER), TRNN: Markets were thrashed again on Monday as the US credit crisis spread worldwide. The Dow Jones lost another 370 points, closing at under 10,000 for the first time since October 2004. At one point, the Dow was down 800 points but managed to recoup half. The day started with reaction to sharp declines in Asian and European markets. Tokyo’s Nikkei index fell to its lowest level in 4.5 years, sinking 4.25 percent. Hong Kong’s Hang Seng Index lost 4.3 percent. Other markets in China, Australia, South Korea, India, Singapore, and Thailand also fell sharply. In Europe, trading was halted twice in Russia, with the market closing down 19.1 percent. The DAX in Frankfurt, Germany, was down 7.1 percent, while the FTSE 100 in the UK was down 7.9 percent. Stocks in Paris took a big hit, losing 9 percent. Across the Atlantic, Brazil lost 5.5 percent, Argentina was off 5.9 percent, while Mexico’s index fell 5.4 percent. In Canada, the TSX was down 5.3 percent. Faltering confidence in the financial system following a series of bank bailouts forced many European governments to offer deposit guarantees.

ANGELA MERKEL, GERMAN CHANCELLOR (SUBTITLED TRANSLATION): I say very clearly: we do need financial markets in a modern, global economy. But we do not need untamed financial markets, in which profit is the only thing that counts—and greed. What we need are financial markets with rules that fit into the social market economy. That’s what it’s about. And this is what we must achieve.

BASILONE: Expectations are that the US Federal Reserve and the European Central Bank will have a coordinated interest rate cut as early as Monday, the first joint action since the September 11, 2001, attacks on the US. An article in The Independent said, "Talk of European ‘unity’ has been undermined by the unwillingness of Britain and Germany to take part in some form of overall, EU-wide banking rescue programme." At the same time, there are constant fears that self-interested actions taken by individual governments might pull a shrinking financial blanket in the form of billions of Euros and private savings away from other countries. Speaking to The Wall Street Journal, Brazilian economist Flavio Serrano said, "It’s a panic situation. . . . Everyone is looking at the international financial situation and coming to the conclusion that the only safe position is cash." The German newspaper Süddeutsche Zeitung wrote, "This is not about plugging gigantic financial holes but also about preventing the crisis of global capitalism from becoming a global crisis of democracy. The managers of the international financial markets have done a lot to make it so. They successfully tried to submit democratically elected government to their discipline. They put governments under pressure, forced them to dismantle controls while forming purpose-built companies that fled to parts of the world where they could hide their risky businesses even better."

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