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European markets finished at a 26-month low on Thursday, as markets plunged around the world amid mounting fears of a global economic recession. Judy Woodruff reports.
Investors worldwide had a rough ride today. Sell-offs hit all the major markets amid downbeat reports from Asia, Europe and the U.S. Federal Reserve. At one point, on Wall Street, the Dow Jones industrial average was down well over 500 points. It finished with a loss of just under 400.
Traders at stock exchanges around the world sat glued to their many screens, as they watched shares skid down, down, down. When the closing bell clanged at the New York Exchange, the Dow Jones industrial average had lost 391 points, or 3.5 percent, to finish under 10,734. The Nasdaq gave up 82 points to end at 2,455.
Overseas, after Asian stocks fell on weak manufacturing reports, European markets sank to 26-month lows. The German DAX fell almost 5 percent. And the main French index dropped even more, 5.25 percent.
A fund manager in France cited multiple causes.
JULIEN QUISTREBERT, KBL Richelieu (through translator):
First of all, there was last night's expected decision from the U.S. Federal Reserve. So the lack of surprise created a lack of support on the market. There was also some other negative news, like the downgrading of some American banks' debt.
That Federal Reserve decision will shift $400 billion into long-term securities to lower interest rates and boost investment and spending.
Just as important to investors, the Fed underscored long-term risks that may delay a complete recovery for years.
In Washington today, Treasury Secretary Tim Geithner agreed, the U.S. faces a combination of economic problems.
TREASURY SECRETARY TIMOTHY GEITHNER:
But the two other clouds still over us are the European crisis and the deep concern you can see across the world and around the country about whether the political system in the United States is up to the challenges we face, not just the near-term challenges of supporting an economy still healing from crisis, but the long-term challenges of growth and competitiveness and fiscal sustainability.
But Speaker of the House John Boehner complained the Fed's new stimulus efforts will make things worse. Republican leaders had warned against any such move.
REP. JOHN BOEHNER, R-Ohio speaker of the House: We continue to have concerns with the activities of the Fed, because it appears to us that they're taking actions because they don't believe the political system can do what needs to be done.
Frankly, I think that's enabling the political process, rather than forcing the political process to do what it should do, and that's to deal with our deficit and our debt, which is imperiling jobs and imperiling the future for our kids and grandkids.
Meantime, the president of the World Bank, Robert Zoellick, acknowledged that kind of fear for the future, even though he doubted that a new downturn is coming.
ROBERT ZOELLICK, World Bank:
I still think that a double-dip recession for the world's major economies is unlikely, but my confidence in that belief is being eroded daily by the steady drip of difficult economic news.
Some of that difficult economic news continued in Greece, where protesters staged another 24-hour strike against new austerity measures. Greece needs international bailout payments, or it will run out of cash by mid-October and face default.
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