Noontime markets update
The markets are having a very bad day today. After we saw the Europeans were also vulnerable to this credit crisis, stock markets worldwide sold off, with many European markets seeing their largest drops since 1987. For Europe, today is as bad as last Monday’s 777 point fall was for the U.S.
Sectors being hit include oil, mining, commodities, and financial services as recession is widely anticipated and investors flee the banking sector. Signs of increased volatility include VIX, LIBOR-OIS Spread, and the TED Spread.
European currencies are getting slammed with both Sterling and the Euro down multiple big figures against the dollar and the yen. Investors are fleeing riskier assets and putting their money into relative safe havens like bonds and gold and silver. Below are links to commentary on the turmoil and charts of the various markets.
Articles
European Stocks Tumble, Stoxx 600 Has Biggest Slump Since ’87 – Bloomberg
Euro Falls Most Since 1999 as Credit Crisis Deepens in Europe – Bloomberg
Government Bonds Rise Worldide as Credit Freeze Prompts New Bank Bailouts
Money-Market Rates Climb as Banks Hoard Cash, Crisis Deepens – Bloomberg
VIX Jumps to Record, Topping 50, on Concern About Global Growth – Bloomberg
Brazil’s Bovespa Plunges 10 Percent, Trading Halted; Vale Sinks – Bloomberg
Mexico’s Peso Plummets to Record Low as Investors Fall Into `Fear Mode’ – Bloomberg
Charts
World Indexes – Bloomberg
Benchmark Currency Rates – Bloomberg
Commodity Futures – Bloomberg
CBOE SPX Volatility Index – Bloomberg
TED Spread – Bloomberg
S&P 500 Index – Bloomberg
Writedown rules changing certainly helped precipitate the current credit and banking crises. The 1977 CRA (forcing loans to low and moderate income homebuyers) is the underlying cause of the problem. Once the loans are made/created, the banks must treat them as a hot potato, selling to Fannie Mae or packaging and selling to investors, something for which they cannot take blame Of course the government is trying to cushion the effects by the bailout monies which are/will be derived by selling bonds or otherwise creating money, all of which will reduce interest rates. The downside is that the economic contraction and stock market contractions will result in significantly lower income taxes next april, leading to very much larger federal deficits. Can this lead anywhere except to devaluation of the currency??
Rubbish! That’s a canard that I cannot support. Selling to low and moderate income buyers is NOT the cause of the current credit crisis. Certainly, many homeowners that would be much better as renters are now fleeced as debtors in homes they could not afford.
The cause of the present crisis is too much debt and too much leverage, plain and simple. It is a credit crisis.
Why are housing markets declining in the UK, Ireland, Spain and Denmark. Why are home sales drying up in New Zealand, Australia, Canada and South Africa? Certainly not because low-income borrowers in the US can now buy homes. It is because they over-leveraged in the housing sector just as Americans did. This fact alone should cause people to question your statements.
Your thesis is absurd and is dangerous as many Americans believe this type of thing. I must reject it in the most categorical terms as what you are saying amounts to class warfare and it the last thing we need today.
Re: #1 anonymous
Stop watching Lou Dobbs. His anti-welfare talking point blaming the CRA has long since been debunked.
Thank you!