No one really knows where the bottom of this bottomless pit is:
"Stocks Down 10% From Recent High" by VIKAS BAJAJ
Concerns that problems in the credit market could push the economy into a recession drove investors to the safety of Treasuries yesterday and led to a sell-off of stocks.
In a significant move, the yield on the 10-year Treasury note, which moves in the opposite direction of its price, hit its lowest point in more than three years, suggesting a weakening in investor confidence from levels that were already low.
All three major stock indexes have now dropped more than 10 percent from their highs, the generally accepted definition of a market correction. Market specialists say investors are increasingly concerned that they still do not know how bad the fallout in the mortgage market will be, nearly a year after problems surfaced.
Sam Stovall, chief investment strategist at Standard & Poor’s:
“The uncertainty is in the hidden land mines, if you will.”
For the broader economy, the danger from the rush into Treasuries is that it will further limit the availability of credit to consumers and businesses, possibly slowing the economy even more. Banks and investors have already become more strict about lending to customers with blemished credit histories and are charging much higher rates to businesses with ratings below investment grade.
Stock markets were also down in Europe and Latin America, with Mexican and Brazilian indexes falling about 3 percent. Stocks opened sharply lower in Japan this morning.
Earlier in the day, the Federal Reserve Bank of New York tried to ease some anxiety by saying that it would offer a longer term for financing in the money market than it does usually. It will start with $8 billion tomorrow and the Fed said it would lend as much as is needed to keep overnight bank lending rates at its target of 4.5 percent. The bank also increased the amount of money securities dealers could borrow.
All that cash infusion hasn't helped a lick, and won't!
This financial system is a Ponzi scheme that is collapsing in front of our eyes -- as it was designed to do!
American and European central bankers have been trying to keep capital flowing smoothly in the main arteries of the world’s financial system. But they have been stymied by the uncertainty surrounding the quality of the investments that banks and brokerage firms created, sold and held during the credit boom.
Each time investors think that policy makers have effectively come to the rescue, another large institution reveals a portfolio tainted with shaky bonds.
Douglas Peta, chief market strategist at J.& W. Seligman, an investment firm in New York, said of the Fed and other central banks:
“What they have done so far isn’t really fixing the problem.”
And they can't since they created the problem!
Yesterday, investors appeared to be focused on news that Citigroup, the world’s largest bank, is considering more layoffs. Banks have already written off about $50 billion in bonds tied to home loans, and some economists estimate the total losses could be $400 billion.
Shares of finance companies and discretionary consumer products have taken the biggest beatings recently. But other sectors like technology where companies, especially semiconductor makers, have reported slowing growth have also started to slip.
Scott Black, president of Delphi Investments, an investment firm in Boston:
“Nobody wants to own financial stocks.”
Nobody wants to own any stocks these days!
Not in the crumbling AmeriKan economy!
