World Markets Plummet Despite Bailout

Investors Stay Scared As Europe Shows Lack Of Unified Response, U.S. Economy Keeps Souring

(CBS/AP)  Asian markets plunged during Monday trading and European stocks opened on the same downward slope, as global investors took scant comfort from Washington's passage of a $700 billion bank bailout and focused instead on deepening financial turmoil in Europe that threatens to slow global growth.

Japan's stock market sank to its lowest finish in 4 1/2 years as worries about growing fallout from the credit crisis overwhelmed any relief over passage of the U.S. bailout.

The benchmark Nikkei 225 index lost 465.05 points, or 4.25 percent, to close at 10,473.09 - its lowest finish since February 2004.

Traders were spooked by Germany's announcement Sunday of a new bailout package totaling 50 billion euros ($69 billion) for Hypo Real Estate, the country's second-biggest commercial property lender, part of a scramble by European governments to save failing banks.

Adding to European uncertainty, leaders failed to unite at a weekend summit on a joint approach to shore up confidence in the markets - a show of unity pleaded for by French President Nicolas Sarkozy and, before him, U.S. Treasury Secretary Henry Paulson.

Despite her earlier and vocal support for such a pan-European approach, Chancellor Angela Merkel reportedly announced that Germany's government would guarantee at least part of all deposits in the nation's banks.

Ireland was the first to adopt a bold, unilateral approach by guaranteeing all deposits in Irish banks last week. The move frustrated other European leaders, bringing pressure on them to institute similar, costly guarantees - or risk a mass-flight of investors.

CBS News correspondent Richard Roth said the fear gripping European leaders is that a plan to prop up banks in one country could spark a run on banks in the rest of Europe, despite U.S. Treasury chief Henry Paulson's call for coordination to rescue the world economy.

It was unclear Monday morning exactly what Merkel had promised. CBS News partner network Sky News in Britain reported that sources said the German plan was not a full government underwriting of all German deposits.

Britain's treasury issued a statement Monday morning saying it was seeking "further clarification" on Merkel's plan to underwrite German deposits.

"Instead of answering Hank Paulson's request for an international, coordinated approach to match their $700 billion dollar package, actually what you've seen is Europe acting in a complete and utter lack of coordination - cats in a sack is probably a good way to try to describe it," London investment analyst Justin Urquhart Stewart told CBS News.

Alistair Darling, Britain's treasury chief, said during the weekend that he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.

Amid the uncertainty, London's FTSE exchange dropped nearly 6 percent during morning trading.

In Austria, shares on the Vienna Stock Exchange plunged 8.4 percent in early trading, and officials said it was the deepest drop since May 2005.

Vienna's benchmark ATK index fell 237.3 points to 2,579.25 at the opening bell. The nosedive at one of Europe's smaller stock exchanges showed how the global economic crisis was rattling markets big and small.

Austria's government has been pressing to increase the mandatory minimum euro20,000 (US$27,545) insurance on bank deposits.

Russia's stock markets also fell precipitously in early trading, with the benchmark index of the RTS exchange down more than 7 percent in the first 20 minutes. The index of the MICEX exchange took an even steeper dive, falling about 10 percent Monday morning before authorities halted trading on the exchange. Russia's markets are shut down when they are deemed to be gaining or losing value at too quick a pace.

A dismal report on the U.S. job market released Friday added to the gloom in Asian markets, fanning worries about U.S. consumer demand for the region's exports.

Hong Kong's Hang Seng index slid 3.4 percent to 17,089. Markets in mainland China, Australia, South Korea, India, Singapore and Thailand also fell sharply. Indonesia's key index plunged more than 5 percent.

"This credit crunch looks like it's not going away any time soon," said Alex Tang, head of research at brokerage Core Pacific-Yamaichi in Hong Kong. "Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy."

"We haven't seen any positive developments in Europe or the U.S., apart from the rescue plan," Tang said. "But even with the rescue plan, investors are focused on the slowing economy."

Investors were processing a series of developments out of Europe over the weekend. Belgian Prime Minister Yves Leterme said Sunday that France's BNP Paribas SA had committed to taking a 75-percent stake in troubled European bank Fortis NV.

The outlook for the U.S. economy worsened after figures released Friday showed that 159,000 jobs in the U.S. were lost last month, the fastest pace in more than five years.

Economists were also predicting many more months of bank failures in the United States, suggesting the $700 billion bailout would help control the losses, but the banking industry enfeebled by huge losses on risky home loans was still on very shaky ground. (Read more analysis of banking industry's blues.)

Such concerns overshadowed any investor optimism over the U.S. House of Representatives' approval Friday of a massive bailout plan that will allow the U.S. government to buy distressed mortgages and securities backed by mortgages from banks and other financial institutions.

Investors questioned how long it would take for the package to unfreeze credit markets, restore bank lending and generally shore up the U.S. economy.

"The market had already figured in the package's passage," said Yukio Takahashi at Shinko Securities Co. in Tokyo. "There are strong doubts about its implementation."

U.S. stock index futures were down more than 1 percent, suggesting Wall Street would open lower Monday morning. The Dow Jones industrial average fell 157.47, or 1.5 percent, to 10,325.38 on Friday.

Meanwhile, oil prices fell to an 8-month low Monday below $90 a barrel on speculation that the spreading financial crisis would exacerbate a global economic slowdown and cut demand for crude oil.

Light, sweet crude for November delivery was down $4.69 to $89.19 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.

Oil prices have tumbled nearly 40 percent since peaking in July.

[Pickinpackinmama]

QUIT BLAMING BUSH,WHO DO YOU THINK YOU ARE? ALL OF THIS IS DUE TO SO MUCH SIN IN THE WORLD. GOD IS TAKEN OUT OF OUR TEXTBOOKS,NO MORE PRAYER,SO MANY UNBORN BABIES ARE KILLED EVERY YEAR,NOW WE HAVE TO PUT UP WITH *** RIGHT TO MARRIAGE.THAT IS AN ABOMONITION TO HOLY SCRIPTURES. NOW GOD''S WRATH IS AT HAND FOR THIS NATION. WE ARE LIVING IN THE LAST DAYS BEFORE THE SECOND COMING OF CHRIST RETURNS. REPENT FROM YOUR SINS AND ACCEPT JESUS INTO YOUR LIFE OR ELSE SUFFER GODS JUDGEMENT

[talk2chief]

When are we going to have hearings on Fannie Mae and Freddie Mac''''s role in the financial crisis?

Contact your congressman and demand a hearing. Let''''s see which politicians really represent the American taxpayer and the middle class.

[benice6]

ALL TOGETHER EVERYBODY,...

LET''S All HUM THE TUNE TO ''THE WALTONS.''



YES SIR,..IT''S ABOUT TO BE THE 1930''S ALL OVER AGAIN.

I JUST GOT LAID-OFF ATER 13 YEARS AT THE SAME PLANT. MY UNCLE,..ONLY TWO MONTHS FROM RETIREMENT WILL HAVE TO QUIT BY THE END OF THIS MONTH.

[trillion1]

The world sees this "bailout" for the scam it is. Just look at the people in charge of handling it.

[leftyintexas]

Nonsense, I think we shall have a 200 point gain today.

Posted by gop_will_win at 09:25 AM : Oct 06, 2008

See what happens when republiCONS ''think''?

[leftyintexas]

They work with people who can read and write. Did you mean "adds" as in computation or advertisments as in advertising. Perhaps I should write this in Spanish.

Posted by willymack4 at 09:51 AM : Oct 06, 2008

Too bad the republiCONS don''t teach their trolls how to spell before turning them loose on these web sites.

[leftyintexas]

Sorry I can not stay longer today to help educate dummiecrats. I have to go to the bank and deposit a lot of money, and then go see my broker and buy a lot of those rediculously low priced stocks in American companies. Shush.....don''''t tell the democrats what all us rich republicans are doing! Bye!

Posted by willymack4 at 10:04 AM : Oct 06, 2008

Folks, what he means to say is he has to go deliver his newspapers or his momma is going to get pi$$ed.

[leftyintexas]

Gosh, Willymack got "rich" and he can''''t even spell "ridiculous". Here''''s one "dummiecrat" who''''s glad Willy''''s not around to "educate" me. Hey Willy, guess what? I''''m SMARTER THAN YOU. That would explain why you''''re a GOP supporter ... and I''''m not. In a nutshell.
Posted by jaydee102 at 11:17 AM : Oct 06, 2008

willymack4 is also a big fat liar. He claims among other things: He attended law school and was an officer in the Viet Nam war. No wonder, we lost Viet Nam.

[stratus666]

I really love it when people say that if Obama wins the stock market will crash even farther. It is even more entertaining that some people are actually blaming the stock market crash on his rise in the polls. It just goes to show how utterly ridiculous the right wing of this country is. Wow, I never imagined a group of people could be such mindless sheep. They are blaming Obama and he has not even won yet! Certainly the GOP presidency and the control of congress for the majority of the last decade has nothing to do with any of the problems America is facing. It is a fact that the American Economy statistically does BETTER under democratic leadership. The stock market does better as does the GDP. You can look at the charts yourself. Oh, but wait, the media is a leftwing conspiracy so anything like that published can not be true. My God, I hope this sorry brainwshed group of fundamentalist right wingers wake up someday. The prognosis is not good.

[seafang]

What bailout, all those crooked bankers are now waking up to the fact that there isn''t any real money to bail their sorry arses out. They should be jailed for fraud or counterfeiting; or both. They loaned people non-money that they just made up in their head, and charged interest on it that some vicims actually paid with real money; and they did this so many layers thick, that they have forgotten how much non-money they loaned out.

So now they find out there isn''t any real money left to bail them out.

I''m willing to contribute towards their bread and milk meals in a maximum securtiy prison.

[rational_1]

Hint to presidential candidates - want to get tons of votes?

Propose to spend a few billion of our dollars (what''s a few billion more at this point?) to thoroughly dig through the finances of all of these failing financial institutions and then prosecute to the fullest extent of the law any malfeasance found. Nothing will make the public feel better about wasting hundreds of billions of our dollars than knowing the cretin executives responsible for this debacle will be jailed and their assets seized.

[ethiopia93]

Lord, it''s painful watching all our chickens come home to roost. Everyday is a rain of frogs. I sure hope whoever is president graphs himself to Warren Buffett for advice on what to do each and everyday he perches himself in the Oval Office. I think Warren Buffett should be our shadow President. Let McCain or Obama be Buffett''s Sock Puppet. I also hope one of the first actions the new President takes is to chuck out the current head of Fed. Where''s he been these last few years? His specialty is the Great Depression. We need someone whose specialty is Boom Times.

[lovesamerica]

Didn''t the article also say that Germany was going through the same thing? It is not all republican''s fault,it is the way we live,materialistic,greedy,thinking we are owed all the best and it has finally catching up to us. some ,like myself,sooner than others.

[cyberdjs4]

Hey George, John and Sara:

This kinda makes your "War On Terror" and "The Surge" a little irrelevant.

[inketolstoy]

noloyalisti - a good start, but your still pointing fingers at others. Let us start slow. What am I doing wrong? What can I do at a local level to help fix this? Not "they made us do it!" Capitalism, Communism, Facism, Socialism all fail despite being different because humans usually respond the same way. Blame the others, take the most you can get for yourself and scream bloody murder when your world crashes down on you. It is the same whether you are a corporate leader, a welfare recipiant, or middle class member. The only difference is the number or zeros in the dollar amount.

[noloyalisti]

Inketolstoy in correct, it was not the evil Cons themselves. It was us buying into the ugly lie that was Reaganomics. It was us being fooled by the privatizers and the "free-market" fools. Basically us putting fascist corporations and their rich right wing CEOs on some kind of pedestal and praying to them.

[noloyalisti]

I knew that the corporate welfare would not work. It was just another money grab scam by the Bush neocon and the rest of the right wing fascists. Even many from the Government of Pigs (GOP) party knew this. And most of the people of the US too.

[stevex47]

"World Markets Plummet Despite Bailout"

Mission Accomplished

[smirk5]

"The fundamentals of our economy are strong."
John McCain
Sept. 15, 2008

[inketolstoy]

jntlw - the problem is who will be the "we" you refer to? Our government? Professional moneymen? An international committee? Who is going to watch the watchers?