As the polls in much of the country opened for Super Tuesday voting, American and European stock markets plunged. The Dow fell just under 3%, losing 370 points. The Nasdaq and the S&P 500 fared still worse in percentage terms.
While the European markets started their trading day down, the losses grew steeper as news was received of the sharp downturn in the U.S. markets. The Paris CAC 40 lost just under 4%.
The Federal Reserve has cut its prime lending rate by 1.25% in recent weeks, an amount suggesting panic. Both before and after the cuts it has auctioned off tens of billions of dollars, against questionable collateral, to U.S. banks in an attempt to replenish reserves and restart credit markets. The relief has been minimal, leaving U.S. market levels hovering after today's losses are factored in.
The word "recession," unutterable just a few weeks ago, is in the mouth of all but the blithest of financial advisors. For now it is modified by the adjective "mild," as the rule, but few voters are likely to be comforted by the fact.
Since the Fed began cutting rates U.S. markets had risen moderately. While knowledgeable market players are likely to have been impressed more by how little such a massive cut improved the situation, the average voter is more likely to have taken comfort. That comfort ended with today’s plunge.
The question arises, will the poor trading day affect the Super Tuesday outcomes? John McCain holds his lead over Mitt Romney by virtue of his credentials in the areas of military and international affairs. It is Romney who is generally considered to be more capable in economic affairs. Market losses could result in an unexpectedly strong showing by Romney.
There would seem to be less likelihood of an affect on the Democratic primaries. Should the general election be held in the midst of recession and market turmoil, however, association with such popular progressive programs as universal health care will suddenly be a considerable disadvantage to the Democratic candidate as he or she seeks to woo vital independent and cross-over voters.