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Dow Falls 512 Points: Worst Day For Stocks Since 2008

Dow Falls 512 Points: Worst Day For Stocks Since 2008

The Dow Jones Industrial Average plummeted 512 points on Thursday as the European debt crisis spread to Italy and Spain and the US seemed on the verge of falling back into recession. It was the single worst day for stocks since October of 2008. All three major indexes fell by more than 4 percent, with the Dow off 4.31 percent, the Nasdaq down 5.08 percent and Standard & Poor’s down 4.78 percent, in the biggest percentage drop since 2009.

The US stock market is now in a “correction,” having dropped 10 to 20 percent after its last peak. In the New York Times, Sam Stovall, chief investment strategist at Standard & Poor’s, said that “We could have another couple of weeks to go before it bottoms.” The market was last in a correction in the summer of 2010 when it fell 16 points before it recovered.

In Asia, markets have already started to fall on Friday. Japan’s Nikkei 225 was down by 3.6 percent within 30 minutes of opening in Tokyo. The Japanese government has  intervened to weaken its yen while the European Central Bank has started buying bonds in an effort to calm the market.

On Wednesday, rather than taking serious action to address Italy’s growing debt crisis — the country’s debt is 120 percent of its GDP, the second largest in the euro zone after Greece — Prime Minister Silvio Berlusconi said that current measures were sufficient to sustain growth. On Thursday, European Commission President Jose Manuel Barroso warned that, despite a second bailout of Greece and bailouts of Portugal and Ireland, the eurozone’s sovereign debt crisis was spreading to Spain and, indeed, Italy.

On CNN, Bob Doll, chief equity strategist at the world’s largest money manager, BlackRock, said there is “total fear” in the markets. Adding to the pressure is anticipation of Friday’s job report: CNN Money analysts predict the report will show the US economy created 75,000 jobs in July. That’s far more than the 18,000 net new jobs created in June, but still short of the 100,000 jobs needed to keep the unemployment rate — currently at 9.2 percent — from rising.

The US could well be headed for a double-dip recession, a situation that last occurred 30 years ago, writes Floyd Norris in the New York Times. The political consensus in “Great Recession I” was to stimulate the economy. But “Great Recession II” follows on the heels of protracted Congressional “squabbling” that produced a bill calling for reductions in spending over the next decade. Can President Obama — described  now as “capitulating” to Republicans and surrendering — and Congress — whose disapproval rating is at a record 82 percent — overcome partisan divisions to take action, create jobs and stabilize the economy?

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Image of the Dow falling 450 points in September of 2008 by YoTuT

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6:51AM PDT on Aug 6, 2011

Cutting spending on, so called, entitlements is ineffective for addressing the deficit. Cutting programs that support the low and middle class will further strain both who don’t even receive lower prices as a result of the U.S. job losses and create a disconnect that will end in another financial collapse. The justification for attacking government benefits as opposed to raising taxes is the creation of jobs. But where?

Corporations have over-powered our government which now believes that out-sourcing and off-shoring of U.S. jobs is inevitable and necessary with expectations that the middle class should fall on their swords. It is the underlying cause of the financial collapse and borders on national security with the loss of our middle class tax base. Yet, this nation does nothing, not even demand it be restricted by whatever method. International businesses are doing the UN-AMERICAN activity of destroying U.S. salaries, U.S. businesses that hire in the U.S., and as an end result, destroying the U.S. marketplace while still demanding BUSINESS ENTITLEMENTS and protections for themselves.

Infrastructure spending and tax breaks will not replace enough jobs to keep up with the hemorrhaging loss of U.S. jobs from out-sourcing over seas. Neither party will do anything about it unless we begin grass roots efforts to protest out-sourcing and off-shoring of U.S. jobs. If nothing is done we will deserve what we get and it will get a lot worse before it gets better

12:32AM PDT on Aug 6, 2011

Yes, but did you see that Boner and the House Teapublicans are going to defend DOMA and fight the repeal of DADT. I'm glad they are keeping the focus where it belongs - on my bedroom, and not on the economy.

I get really nervous when people start looking for 'real leaders' from out side of the political system. The U.S.'s situation is very similar to what happened in Germany during the Weimar Republic. We really do not need a Führer of our own.

10:03PM PDT on Aug 5, 2011

A day like yesterday just makes me nervous.

7:52PM PDT on Aug 5, 2011

@ paul c—“we'll elect real leaders to get us out of this.” What a great idea ! Why has no one thought of that before ? Two questions; how do we find them, and how do we recognize that they are real leaders ?


7:02PM PDT on Aug 5, 2011

Its all rigged.

5:43PM PDT on Aug 5, 2011

Sadly I doubt the super rich will be losing much money here - unfortunately they are probably making it. For you can guarantee someone is. The losers will be small time shareholders and the rest of us. So much for democracy with the IMF etc. dictating to governments what they will have to do in terms of cuts and selling off of assets etc.I don't remember voting for any members of the IMF or any other powerful financial institutions. Cutting government and cutting back on spending is not the only way out of a recession, putting money into the economy and spending on projects that employ people and put money back into the economyare a valid alternative but the big financial institutions do not want that - wonder why? - now who do we now who wants less government and less social spending .... I wonder......

2:17PM PDT on Aug 5, 2011

I agree with Angela R. the greedy rich Republicans screwed themselves. Hope they lose all their money and have to live like the rest of the 95% American people. Save you precious tax breaks and loose all you money in the market. Karma as it's best!

1:58PM PDT on Aug 5, 2011

I'm writing this on Friday the 5th. Stocks should have fallen again sharply today, because I read just last night on the web that the consumer index numbers, the unemployment numbers, and the economic growth numbers for last month were all bad. Strangely these things got not so bad over night, isn't that remarkable. So the stock market goes back up. People get out of all these markets while you can. They have been lying about all these numbers for several years now while the rich quietly slide their money out slow so the markets don't tumble as they are doing it. They don't invest in gold, only in gold futures, they will make money when it free falls. All these things are bubbles that eventually pop, you just have to pay attention enough to have seen it before. The last gold bubble, it lost 3/4 of it's value over night. Read report yesterday that said the rich are stock piling cash as they get out of risky investments. Get out while you still can.

1:06PM PDT on Aug 5, 2011

I had long considered myself an opponent of capital punishment, and still am. But when I studied Delaware corporation law, I wondered if I had really not been narrow minded. From a retributive perspective, capital punishment makes no sense. If someone has murdered another, I do not want to stoop to his/her level. But if you consider works serialized in the Philadelphia Inquirer like, "America: What went wrong?" and "America: Who stole the dream?" capital punishment might make sense from a utilitarian perspective. After all, death, a necessary end for us all, will make nonsense of all the wealth accumulated by those who caused the mortgage crisis, by bankers, by arbitragers who impaired America's industrial capacities through leveraged buyouts. But of course, this is he way communist countries used to think, executing speculators rather than murderers. My point is that some day, people like George W. Bush with his tax cut for the rich (in line with his dad and Ronald Reagan), the real estate bubble, the bankers who bit the had which rescued them (too bad Obama could not nationalize some banks) and now the speculators may produce a revolution. I remember 1968, and it may not be very nice at all.

12:44PM PDT on Aug 5, 2011

Thanks

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