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Stock Markets Drop Sharply Worldwide

The Dow Jones Industrial dropped 416 points today, the worst plunge since September 2001, after the Chinese market fell 9 percent. Jim Lehrer talks with an economics professor about the worldwide decline in stock prices.

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    And, now, that plunge in the stock markets today. The Dow Jones' drop of more than 400 points led to the index's largest losses since September 2001.

    And here to help us understand what happened and why is James Angel, who studies financial markets at Georgetown University. He has previously served as chair of the Nasdaq's Economic Advisory Board.

    Professor Angel, a simple question, difficult, I realize, but what did happen? Why did this happen?

  • JAMES ANGEL, Georgetown University:

    Well, the markets dropped substantially today all over the world. The sell-off started in China, where the Chinese index fell 8.8 percent. And when the U.S. markets woke up, they go, "Whoa, something bad happened in China."

    Now, China is so closely linked to the United States — they're a major trade partner, they're a major supplier of manufacturing goods, they're a major holder of U.S. government debt — if something bad happens to China, something bad is going to happen to the United States.