Traders work on the floor at Brazil's Mercantile and Futures Exchange in Sao Paulo.
It was a Maalox Monday on Wall Street as stocks plunged 600 points, stoking fears the U.S. economy is on the brink of a recession—if not already in one.
Three days after President Bush signed a historic $700 billion bailout aimed at saving troubled U.S. banks and easing a credit crunch, there was little sign the agreement was allaying fears of a massive financial meltdown.
The Dow fell below 10,000 for the first time since October 2004—stunning the trading floor into silence.
"There was a bunch of brokers standing around looking up at the board," said James, a 27-year-old trader who declined to give his last name.
"As soon it traded through 10,000, there was a moment of silence. You heard a whisper, a buzz, and then everyone was quiet. There are people definitely stressed in there."
The tumble appears to have been sparked by the realization that Bush's "rescue" plan was not going to unfreeze credit markets right away—or make it easier for banks to get their hands on cash.
"It's going to take a while," Bush conceded.
On Capitol Hill, Democrats held the first hearing into the financial market disaster, taking the opportunity to rake one of the top fat cats over the coals.
Lehman Brothers CEO Richard Fuld, whose high-flying company collapsed with stunning swiftness last month, was grilled about walking away from the wreckage with nearly $500 million.
"It seems like the system worked for you but it didn't seem to work for the rest of the country," said Rep. Henry Waxman (D-Ca.) "I have a basic question for you: Is this fair?"
Fuld squirmed, then began explaining that some of that was stock options and therefore he didn't really make that much.
"I would say to you the 500 number is not accurate," he said. "The amount I took out of the company is I believe a little less than $250 million."
He admitted that was "still a large number."
Fuld denied that Lehman investors were defrauded by any shenanigans, insisting the Securities and Exchange Commission was fully aware of everything going on at Lehman. "They were privy to everything as it was happening," he said.
Wall Street stocks began tumbling after governments across Europe rushed to prop up their own failing banks.
The German government agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, while France's BNP Paribas agreed to acquire a 75% stake in Fortis's Belgium bank after a government rescue failed.
Global stocks were nosediving. In Asia, the Nikkei closed 4% lower. Europe's stock markets also declined, with the FTSE-100 down 5%, Germany's DAX down 7% percent, and France's CAC-40 down 9% percent.
With News Wire Services
J of CA @ Oct 07, 2008 02:34:24 AM
n1njabot of CA @ Oct 06, 2008 18:35:03 PM