Panic sets in (Headlines from the Meltdown)
Global economic crisis ‘serious’: IMF chief – Associated Press, Jan. 21, 2007
The head of the International Monetary Fund called the global economic situation “serious” and said markets worldwide had responded skeptically to a U.S. stimulus plan.
Dominique Strauss-Kahn stressed that a U.S. recession would affect economies across the globe.
“The situation is … serious,” said Strauss-Kahn following a meeting in Paris with French President Nicolas Sarkozy. “All the countries in the world are suffering from a slowdown in growth in the United States.”
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Fullblown Panic – James Howard Kunstler, Jan. 21
A whole closet full of “other shoes” is now waiting to be dropped. Surely the biggest clodhoppers in the closet belong to the hedge funds, representing trillions and trillions of dollar-denominated “positions” which, however hallucinatory, had previously yielded enough real “money” year-by-year to keep all the realtors and Humvee dealers in the Hamptons goose-stepping to Goldman Sachs’s drumbeat. These “positions” can’t help now from moving into counterparty crisis territory, especially as the bond insurers such as MBIA and Ambac go up in a vapor, and if that happens the damage could be so colossal globally that Stephen Hawking might have to be brought in to run the Federal Reserve.
This is going to be a rough week. Fastening your seat belts may not be enough for this ride. Better superglue yourselves to the floorboards and pray for God’s mercy.
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Wall Street set to plunge – CNNMoney.com, Jan. 22
Wall Street looked set to join the global market rout early Tuesday, as the threat of a U.S. recession battered sentiment worldwide.
At 7:48 a.m. ET, futures were indicating a disastrous start. Dow futures were down 4.5 percent while S&P futures lost 5 percent. Such a decline would mark the sharpest drop at the open for U.S. stocks since the first session following the Sept. 11 terrorist attacks.
“It’s going to be a very rough ride this morning for U.S. equities,” said Art Hogan, chief market analyst at Jefferies & Co.
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Hong Kong Index Plunges 8.7% – Yahoo! Finance, Jan. 22
Hong Kong Index Plunges 8.7 Percent Amid Second Day of Global Sell-Off
Hong Kong shares plunged Tuesday, with the benchmark index tumbling as investors dumped shares on fears a U.S. recession will spark a global slowdown.
The Hang Seng Index dropped 2,061.23 points, or 8.7 percent, to 21,757.63. That’s the most points the blue chip index ever lost in a single day, but just shy of the 8.8 percent it plummeted after the Sept. 11 attacks on the U.S. in 2001.
….Markets across Asia fell sharply on Tuesday for a second straight day amid investor pessimism over the U.S. government’s stimulus plan to prevent a recession. China’s benchmark Shanghai Composite Index fell 7.2 percent, and Japan’s Nikkei dropped 5.7 percent to a two-year low.
“You can see investors have lost confidence in the U.S. government’s ability to handle the subprime situation,” said Pang with Sun Hung Kai.
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Bank of America net sinks 95 percent – Yahoo! Finance, Jan. 22
Bank of America Corp, the second-largest U.S. bank, said on Tuesday fourth-quarter profit sank 95 percent, hurt by more than $7 billion of losses tied to poor trading decisions and mounting credit woes.
…. It was the latest in a series of earnings declines among the largest U.S. banks as the nation’s housing crisis and a slowing economy lead to a growing number of consumers falling behind on their bills.