Pessimism Over U.S. Sweeps World Markets

Asian, European Markets Plunge As Investors Doubt Bush Plan To Curb Recession Will Work

(CBS/AP)  Overseas investors, gripped by fears of a U.S. recession, dumped shares over skepticism that an economic stimulus plan U.S. President George W. Bush announced on Friday would shore up an economy battered by problems in its housing and credit markets.

The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

Stock markets across most of Asia fell Monday, following declines on Wall Street last week, and the bad news swept westward as European investors reacted.

France's CAC 40 plunged 6.1 percent, but it was not the only European market to see a significant drop.

Germany's DAX was down 6 percent in morning trading, while Britain's FTSE 100 dropped 5.1 percent.

"There's a lot of panic selling today," said Christoph Schmidt, analyst at N.M Fleischhacker Trading Bank in Frankfurt. "Most investors worked on the wrong foot. We expected some because of the holidays in the U.S., markets are closed. We are on a very close KLAPP year, no bad news from the U.S. But the Asian markets were pretty weak this morning. And all the selling pressure came over to Europe. And traders began to react emotionally to the markets.

"The next days are pretty decisive because we would all like to know how are the U.S. markets [are] going to react to this selling pressure we have in Asia and Europe," said Schmidt.

"Let's say that today, the markets across the world, and especially the French market, are undergoing a phenomenon of distrust in the markets that are leading them downward," Alain Crouzat, president of Montsegur Finance, told AP Television.

"Without a doubt the element that sparked this was in August with the sub-prime crisis which hit the assets linked to real estate loans by dubious creditors. Today we see that the liquidity and the need for liquidity are hitting all of the markets especially the stock market with a scenario looming of an economic crisis that can only amplify the phenomenon," he added.

An analyst in London says investors there have been following the Asian markets, which he says "have not been impressed" by the U.S. government's economic stimulus plans.

Foreign investors aren't wondering so much if a recession's looming, reports CBS News correspondent Richard Roth; they're now worrying how deep and how long it may be.

Asian markets were slammed this morning.

India's benchmark stock index tumbled 7.4 percent, while Hong Kong's blue-chip Hang Seng index plummeted 5.5 percent to 23 thousand 818.86, its biggest percentage drop since the September 11, 2001 attacks.

China's Shanghai Composite index plunged 5.1 percent. Markets in South Korea, Australia, Singapore, Taiwan and the Philippines also sank.

The general manager at Fulbright Securities in Hong Kong, Francis Lun, calls it "another horrible day." He says there's the feeling that the stimulus package in the U.S. is "too little, too
late."

A contraction in the American economy would likely hurt profits at Asian exporters, although rising trade and investment within the region has made Asia less dependent on the U.S. than in the past.

"People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world," said David Cohen, Director of Asian Economic Forecasting at Action Economics in Singapore.

"Maybe there's still some wariness that politicians are able to come up with a compromise and act sufficiently quickly," Cohen said. "I think the impact would be marginal anyway."

On Friday, the Dow Jones industrial average slid 0.5 percent to 12,099.30, and some analysts warned that the U.S. market could be in for a period of protracted declines.

Investors also have shrugged assurances from Federal Reserve Chairman Ben Bernanke that the U.S. central bank is ready to act aggressively - which means a likely big interest rate cut later this month - to help support an economy pummeled by devastation in the housing and credit markets.

Japan's benchmark index is at its lowest close in more than two years.

"The Japanese market is probably the second-largest economy in the world but it is tied very closely to the United States," said CBS News correspondent Barry Petersen in Tokyo. "The fall of Japanese stocks is really a vote of 'no confidence' twice-over: once, a sense that the plan proposed by President Bush is not going to make any difference soon in the American market, and also a sense that with America slowing down, Japan's going to be in trouble as well."

Petersen said the Japanese market was already having problems of its own: "Prices for condominiums are coming down, [and] the national bank warning that perhaps the economy could be sluggish. Now it's a double whammy with what's going on in the United States."

The up-shot: The Japanese market is reacting to both factors - and is heading south.

Petersen said there is not much belief that China's booming economy would cushion the blow if America is in trouble.

With U.S. markets closed for the Martin Luther King Jr. holiday, it will be another day to see how the bad news sweeping westward will affect Wall Street. But today, in Canada, the news was not good. The Toronto stock market was down more than 600 points.

ScotiaMcLeod analyst Gareth Watson says what we're seeing today will be an ongoing theme through this reporting season in North America, calling it a "show me" market.

He says investors aren't willing to look at anything until they see proof that results are good and expectations going forward are at least reasonable.

For things to improve, he says credit markets have to return to normal and borrowing has to become easier.

Watson says we're going to have to see corporate data coming in that's less than disastrous, but that will only happen over time.

He says that's making it hard to predict where the bottom is for the market.

Watson adds the market lacks confidence and it could take a minimum of six months to get it back.

Until that happens, he says people aren't expecting a sustainable rally.

But some strategists say Asian markets are now oversold and will rebound as investors snatch up stocks that have fallen to attractive levels.

"We hold our view that the rapid correction in the past two weeks is offering a good opportunity to buy quality stocks," Taifook Research in Hong Kong said in a note.

[g-gfather]

Good morning, or should I say dawning.
brianbwb--You do voice insight well and thoughtfully. I would caution you not to suggest violence for it is injurious to those we do not wish to hurt. Anger is debilitating of reason, and intelligent responses. We are as a people at fault as much or more for having elected leaders of known immoral character and motives for our self serving reasons. To turn our wrath upon one another is savagery undeserving of innocence victims.

IF WE ARE TO BE AFFECTIVE WE WILL DO NOTHING--ABSOLUTLY NOTHING--SHUT HER DOWN--DEMAND THE RESIGNATION OF THE ENTIRE BUSH REGIME. WE DO NOT HAVE TIME FOR AN UNWILLING CONGRESS TO ACT ON IMPEACHMENT. IT IS WE THE PEOPLE THAT MUST ACT TO SAVE OUR COUNTRY -NOW! ! DO NO HARM TO OUR COUNTRY BY VIOLENCE. ACT WITH DETERMINDED UNITY TO RETURN AMERICAN CONSTUTIONAL GOVERNMENT AND ENFORCE THE DECLARATION OF INDEPENDENCE. BRING ALL OUR YOUNG MEN AND WOMEN HOME TO REBUILD AMERICA AS A PRODUCTIVE AND PROUD NATION. LET US SHOW OUR CHILDREN WHAT REAL AMERICANS ARE MADE OF...Great-grandfather.

[sparks224]

jake20076,
I think you might be one of those guys who doesn''t like girls (If you know what I mean).

[brianbwb-2009]

"...Its just the end of a decade long game of musical chairs as everyone begins to realize that the bubble has finally burst on a decade of contrived, manipulated and false housing and share values." Posted by strewthmate

You underestimate the level of real and justified anger of most Americans at having to endure 30 years of working harder for ever diminishing returns, the rising true unemployment levels, and many other real miseries suffered by the real American people, while the elite say "let them eat cake".

The streets of every major American city is filled with those who tried to "work hard and play by the rules", but were then kicked to the curb. People who cannot afford food, or to work their way back into a humane standard of living, who sell everything from drugs to their own bodies, because for them it is the only way to survive.

This human energy is growing ever more angry, and if it is ignored much longer, will explode, and all the police and military in the US will not stop it.

You can sit back and look at contrived numbers if you wish, then claim surprise when you see the angry mobs burning their way down your street.

[mediapreachr]

''Cheer up. Its just the end of a decade long game of musical chairs as everyone begins to realize that the bubble has finally burst on a decade of contrived, manipulated and false housing and share values.

Posted by strewthmate at 01:35 AM : Jan 22, 2008''
Yep..Sanity will make a comeback.

[strewthmate]

"Realism Over U.S. Sweeps World Markets" would be a better title imho.

Professor Schiller from Case-Schiller Housing Index fame said last November that a 50% fall in housing prices wouldn''t surprise him before things settle down to the historical 3-4 to 1 multiplier between mean salaries and mean housing prices.

That translates into HUNDREDS OF BILLIONS of write downs in the hocus-pocus smoke-and-mirrors world of financial securities.

Is it the end of civilization as we know it?

Nah, not really.

Cheer up. Its just the end of a decade long game of musical chairs as everyone begins to realize that the bubble has finally burst on a decade of contrived, manipulated and false housing and share values.

[sparks224]

I think we should continue to shift the tax burded away from the wealthy and onto the middle class because it''s obviously working so well. It''s what the "tax cuts" are all about.

[brianbwb-2009]

"Maybe I''''m being too subtle for you...I''''ll give you a hint-I''''m thinking of voting straight democrat this year." Posted by mediapreachr

Your idea is not, but the voting idea is, because I believe that in this day of vote rigging, it may very well be necessary to take this, as the Doobie brothers sang, "to the street",the incumbent "Democrats" are just as guilty of the "career politician" attitude that has us looking at economic collapse.

Strangely enough, having said that, I will also vote straight democrat, because the intolerance of the Republicans must not be allowed to continue.

America is at perhaps the most critical point in our 230 year history, and to effect real change might require the subtlety of Al Capone''s baseball bat.

[mediapreachr]

Maybe I''m being too subtle for you...I''ll give you a hint-I''m thinking of voting straight democrat this year.

[sparks224]

But..., But..., they said the "tax cuts" were working!

[brianbwb-2009]

Praying is asking the Lord for forgiveness for what you''''re about to do...
Posted by mediapreachr

If you will add your energy to upsetting the tables of the "corrupt money changers" then I am sure you will need no forgiveness...

[brianbwb-2009]

Posted by mcv57

I have been "spreading the word" and encouraging Americans to resist these criminals from the start. My name is already on the petition, My e-mails are in the offices of my reps, as are as many of my friends as I can convince.

Now I am on the other side of the planet, doing what I can in my small way to build bridges that Bush is trying his best to burn. If I have to come back, to help defend my family, I will be there.

[mcv57]

www.wexlerwantshearings.com

VOTE IMPEACHMENT OF CHENEY AND BUSH, RAH!


See you tomorrow, at the Wall Street morning bell!

[mcv57]

Posted by brianbwb
Posted by t_barr

YOUR TURN!!!

I GOT MOST OF THE ARTICLES ON CBS - "VOTE IMPEACHMENT OF CHENEY AND BUSH. VOTE OUT THE ROGUE WHITE HOUSE REGIME." PASS THE WORD!!!

[mediapreachr]

''Don''''t just pray, act.
Posted by brianbwb at 12:54 AM : Jan 22, 2008''
Praying is asking the Lord for forgiveness for what you''re about to do...

[brianbwb-2009]

"Interesting??you mean like this:
-roaring 20''''s.
-1929-1934-Great Depression.Al Capone et gang etc.
-World War 2.
I pray for a better fate."
Posted by mediapreachr

No, more like this

Collapse of US dollar, economy.
Mass rioting, looting, general anarchy
Genocidal local power struggles
multi-sided civil war
Worldwide economic ripple effects

Don''t just pray, act.

[mcv57]

www.wexlerwantshearings.com

VOTE IMPEACHMENT OF CHENEY AND BUSH, RAH!

[mcv57]

211,500 vote on the wix!

[mediapreachr]

We have bankrupted ourselves by funding others. We forgot to worry about home and now we face tough times ahead. Americans living on plastic, over extending themselves, just as the government has done, and now everyone worries, but it might be a little too late. It''''s gonna get interesting.
Posted by Edward1975 at 12:20 AM : Jan 22, 2008''
Interesting??you mean like this:
-roaring 20''s.
-1929-1934-Great Depression.Al Capone et gang etc.
-World War 2.
I pray for a better fate.

[mcv57]

Posted by t_barr

www.onlinepetition.com, I guess they have their own petition. I will go to this wix??

[brianbwb-2009]

Just online to vote for impeachment, only 41 votes that is sad.

Posted by mcv57

41? In the House, or senate? Either way, it is progress, more than Kucinich got shortly after Pelosi sold us out.