The bad news just doesn't get any better...
The FTSE-100 index dropped below 5,000 for the first time since June 2005 at 1:39 p.m. in London as concern grew there may be further capital raisings at financial companies and commodity stocks fell with metals prices.
The FTSE 100 lost 213.6, or 4.1 percent, to 4,990.6 at 1.54 p.m., the lowest since June 6, 2005.
Many of the Asian markets were closed Monday. They made up for it today.
More, below the fold...
Japanese stocks closed at a three-year low...
Japanese stocks plunged to a three- year low after growing credit turmoil caused the failure of Lehman Brothers Holdings Inc. and endangered a plan to raise emergency capital by American International Group Inc.
Aozora Bank Ltd. tumbled 16 percent, the most since its listing, after a filing showed it was Lehman's biggest creditor. Tokio Marine Holdings Inc. led a gauge of insurers to the biggest drop since Oct. 20, 1987, the day after ``Black Monday,'' after AIG's debt ratings were cut as it sought fresh funding. Inpex Holdings Inc., Japan's biggest oil explorer, fell by a record after crude sank to a seven-month low.
The Nikkei 225 Stock Average dropped 605.04, or 5 percent, to close at 11,609.72 in Tokyo, a level not seen since July 2005. The broader Topix index fell 59.63, or 5.1 percent, to 1,117.57, the lowest since May 2005. All 33 Topix industry groups declined.
The Hang Seng Index in Hong Kong was at an almost-2-year low...
Share prices closed sharply lower, with the key index at a near 23-month low, as the collapse of Lehman Brothers and rating downgrades on American International Group (AIG) sparked fears of more troubles in the US financial sector.
China's surprise announcement yesterday that it is cutting benchmark lending rates failed to calm investors, as the US financial turmoil overshadowed everything else.
Large-caps, property developers and resources stocks took a heavy beating, while China banks also slumped in line with financials across the region.
The Hang Seng index closed down 1,052.29 points or 5.44 pct at 18,300.61, off a low of 18,019.20 and high of 18,538.51.
Today's closing level was the lowest since October 27, 2006, when it ended at 18,297.55. It also marks the index's biggest one-day points drop since March 17 this year, when it tumbled 1,152.50 points.
Back to Europe...
...the Cac 40 in Paris lost 3.78pct to 4,168.97, and the Dax 30 in Frankfurt lost 2.74pct to 6,064.16. The Mibtel also fell 3.49pct to 20.989 while the Smi in Zuich lost 3.83pct to 6,939.11. European exchange lists reached two month minimums at the end of the day with losses of over 3pct, pulled down by losses in the finance market.
It's true that this collapse isn't like 1929. In '29, there were no safeguards for the small saver. People literally lost every penny they had.
But in 1929, the world's markets weren't so intertwined. It used to be that one market would sneeze and another might catch a cold as a result. Now, all the markets are using the same tissue.
Nobody knows what repercussions will happen because of this. We don't know the future, but we know the past. We know who is responsible: Republican Senator Phil Gramm.
He routinely turned down Securities and Exchange Commission chairman Arthur Levitt's requests for more money to police Wall Street (when the workload at the SEC shot up 80 percent, but its staffing level grew only 20 percent).
He opposed an SEC rule that would have prohibited accounting firms from getting too close to the companies they audited.
He pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms.
He slipped in a 262-page measure to an omnibus spending bill called the Commodity Futures Modernization Act. A congressional aide familiar with the bill's history said, "nobody in either chamber had any knowledge of what was going on or what was in it." A Bill that contained a provision (lobbied for by Enron, who had Gramm in their pocket) that exempted energy trading from regulatory oversight. That allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. At the time, Gramm's wife Wendy was on Enron's board of directors.
If you're looking for a model of what will happen - look to Enron. And remember: everyone else in the markets all around the world has been sharing that same Republicanist tissue to some extent. We don't know what will eventually happen from all this: today we might see some early cashing in. Short sellers will be making sure they return the shares they borrowed (for a fee), but you can't build an economy on people playing the system like a coin-toss. You need proper industry. Real work. And that's not happening. The bubble is yet to completely deflate or burst.
I think it's fair to say that Reaganomics is officially dead. And it was the Republican Party that killed it.