TOPICS > Economy

Stocks Markets Plummet Further in U.S. and Abroad

February 20, 2009 at 6:00 PM EDT
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Global markets sank and the Dow Jones industrial average sank to a six-year low on fears over bleak job reports and the fragile state of the economy. Kwame Holman reports.

JIM LEHRER: The financial markets continued their fall today. Stocks were down again, even as President Obama vowed to make sure the economic stimulus performs as promised. NewsHour correspondent Kwame Holman has our lead story report.

KWAME HOLMAN: The latest losses on Wall Street closed out the second week of a sell-off. It’s been fueled in part by concerns about big banks and fears that President Obama’s economic plans may not be enough.

Today, the Dow Jones industrial average fell another 100 points to finish at 7,365. That’s its lowest level in more than six years. The Nasdaq fell 1.5 points to close at 1,441.

The losses had been even worse before U.S. officials reaffirmed they oppose nationalizing troubled banks. Still, leading analysts pointed to a continuing fear factor, and the sell-off reached to Europe and Asia, with major indexes off 2 percent to 4 percent, or more.

The volatility led the president of the European Central Bank to call for reforming the global financial system.

JEAN-CLAUDE TRICHET, president, European Central Bank (through translator): Everything must change, in my opinion. Everything must change. We need to consider that it is the whole system which proved too fragile, not resilient enough.

Obama speaks to mayors

KWAME HOLMAN: In Washington, one change already was evident at the White House. President Obama warned he'll go to unusual lengths to win the confidence of the markets and the public in his economic stimulus efforts. He hosted a gathering of mayors, telling them they'll face fierce scrutiny over how they spend government funds they receive.

PRESIDENT BARACK OBAMA: The American people are watching. They need this plan to work. They expect to see the money that they've earned, that they've worked so hard to earn, spent in its intended purposes without waste, without inefficiency, without fraud.

If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it and put a stop to it. I want everybody here to be on notice that, if a local government does the same, I will call them out on it and use the full power of my office and our administration to stop it.

KWAME HOLMAN: Afterward, Miami Mayor Manny Diaz, an independent and head of the U.S. Conference of Mayors, welcomed the president's demands.

MANNY DIAZ, mayor, Miami: Absolutely. We get called out every day at the local level. We have plenty of constituents who will be doing that before the president does.

KWAME HOLMAN: Charlotte, N.C. Mayor Patrick McCrory, a Republican, said he, too, liked what he heard.

PATRICK MCCRORY, mayor, Charlotte, N.C.: I was very pleased with President Obama's comment regarding accountability, that he'll be watching the governors, which is very important to all of these mayors, and that he'll be watching the mayors to make sure the money is not seen as pork or not spent wisely. I share my other mayors' concern that we've got to make sure the governors transfer much of this money to metro areas.

Auto industry restructuring begins

KWAME HOLMAN: Several mayors warned the states must pass on the funds quickly if the stimulus is going to work.

Next door at the Treasury Department, the auto industry was the focus. A task force led by Secretary Timothy Geithner and Lawrence Summers, head of the National Economic Council, began work on restructuring plans from General Motors and Chrysler.

In the meantime, President Obama got some advice on reassuring the country from a predecessor. Former President Clinton spoke this morning on ABC.

FORMER U.S. PRESIDENT BILL CLINTON: It's worth reminding the American people that, for more than 230 years, everyone who bet against America lost money. It's a mistake to bet against this country over the long run. I just want him to -- to embody that and to share that.

But I actually -- I like the fact that he didn't come in and give us a bunch of happy talk. I'm glad he shot straight with us. I just want the American people to know that he's confident that we are going to get out of this.

KWAME HOLMAN: Mr. Obama gets a chance to make that point in a high-profile way Tuesday night, when he addresses a joint session of Congress.

White House press secretary Robert Gibbs.

ROBERT GIBBS, White House spokesman: I think, without, again, divining what it is the market is doing or why it is making those decisions, I think that we have to -- we have to do more, and the president understands that.

I think he'll begin to talk more about that. He did some today. He'll do some tomorrow, and certainly next week leading into the address, to discuss the number of things that we have that are challenges that we face.

KWAME HOLMAN: The president will also make his case to the nation's governors when he meets with them on Monday.