Topic: World in shockwave.

[Pugnate]

http://edition.cnn.com/2008/BUSINESS/03/17/world.markets/index.html

LONDON, England (CNN)  -- Shares in Wall Street are down as the bailout of U.S. investment bank Bear Stearns continues to send shockwaves through financial centers worldwide.
art.bear.stearns.gi.jpg

The deal to buy Bear Stearns is worth an estimated $236 million.

In early trading Monday the Dow dropped 103.72 to 11847, a fall of 0.87 percent, while the Nasdaq fell 1.99 percent to 2168, losing 44.06. Later both indices rallied somewhat and were down only 0.14 percent and 1.71 percent respectively by 1850 ET.

The tumble came as major markets from Tokyo to London plunged at the start of the week following the collapse of Bear Stearns, one of the United States' most venerated financial institutions. The nervousness was not softened despite attempts by the U.S. Federal Reserve over the weekend to instill confidence.

In Europe Monday, the FTSE 100 fell by 3.86 percent to 5,414 and the French CAC 40 fell to 4,431, losing 3.51 percent. The German Dax suffered most, dropping 4.18 percent to 6,182.

The European banking sector was particularly hard hit, with UBS -- whose stock has dipped 62 per cent in the last year -- down 13.9 percent, AP reported, while Credit Suisse fell 8.6 percent and Deutsche Bank dropped 4.3.

Sound off: What do you think about the market situation?

In Asia Japan's Nikkei closed 454.09 down at 11788, losing 3.7 percent, while the Hang Seng fell 1,152.5 to 21085, a fall of 5.18 per cent.

The jitters followed the announcement Sunday that Bear Stearns had been bought by rival JP Morgan for an estimated $236 million. The sale values the bank at $2 per share -- compared to nearly $70 per share last week and a high last year of $159 per share.

JP Morgan and the U.S. Federal Reserve Friday bailed out Bear Stearns Friday after it finally succumbed to the credit crunch, suffering major cash flow problems.

Also Sunday the U.S. Federal Reserve took the unusual decision to slash its discount rate -- which determines the rate at which it borrows funds to financial bodies -- by 0.25 percent to 3.5 percent, ahead of markets opening for the new week.

U.S. Treasury Secretary Henry Paulson said Sunday that the decision to rescue Bear Stearns had been the right one and that the U.S. government would do similar again to stabilize markets.
Don't Miss

    * Asian stocks tumble on Bear Stearns
    * Latest data:  World markets
    * Web site:  CNN Money
    * Blog:  Todd Benjamin

But the action failed to avert sharp drops from Sydney to London -- and the fear among many traders around the world is just who or what will next be hit.

"We are worried about what comes next," said Shim Jae-youb, a strategist at Meritz Securities in Seoul, in comments reported by The Associated Press.

Alan Greenspan, former chair of the U.S. Federal Reserve, writing for The Financial Times Monday, said that market conditions were "the most wrenching since the end of the second world war."

Meanwhile gold -- which at times of crisis is regarded by investors as a safe haven -- continued its record gains of last week, pushing on to a bid price of $$1,023.50 an ounce in London and $1,021.55 an ounce in Zurich, AP reported.
Gold has risen 20 percent in the past year, helped by the fact that it is traded in dollars -- something which traders in other currencies hold much of thanks to the greenback's recent nosedive.

The dollar continued its fall in Asia Monday, plunging to its lowest for 12 and a half years against the yen at at ¥95.72. It also suffered against the euro, trading at one dollar to €0.629

Oil which rose dollar by dollar last week, again passed another record during Asian trading, with light, sweet crude spiking at $111.80 per barrel, according to AP, before falling back to $104.94 then settling at $105.68.
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Alan Greenspan, former chair of the U.S. Federal Reserve, writing for The Financial Times, said that market conditions were "the most wrenching since the end of the second world war"

CNN International's Financial Editor Todd Benjamin said: "People are afraid that Bear Stearns may not be the last financial institution to get into trouble. They are waiting for the other shoe to drop." Read Todd's blog

"Confidence is in short supply right now, and there's a growing unease that neither aggressive easing by the Fed, or keeping a major Wall Street securities firm afloat, will end the crisis."

Alan Greenspan, former chair of the U.S. Federal Reserve, writing for The Financial Times Monday, said that market conditions were "the most wrenching since the end of the second world war."

That's a wake up call if there ever was one. Greenspan has an almost rabid following, and people seem to take is word as god's.

[Xessive]

If there's ever been a reason to collapse the economy (again), this is it.

This is solely based on how little I actually understood from your post.

[Ghandi]

...and maybe Americans are beginning to realize why electing an idiot to be president may not be such a good thing after all. Not to say that this is all his fault, but he called the current economic situation "an interesting moment" during a speech in front of an economic group on Friday. His optimism is absurd given the circumstances.

[Quemaqua]

Nobody else would be any different were they in power.  They'll go on and on about it when trying to get in, but once there it's all about damage control to them.  They're all idiots, and make no mistake, all of them and their kin are a big part of the reason we're in this situation.

But yeah, I've been doomsaying about all this for probably over 2 years now, and toward the middle of last year the general consensus seemed to be that 2008 would be it.  It's going to be very interesting to see how this all works out.  And frankly, scary as all get out.

[WindAndConfusion]

Oh crap.

[Cobra951]

Don't you hate being right sometimes, Que?  It sucks, doesn't it?  God, how I wish I had been so wrong that people would point at me and laugh.  That would have been so much sweeter.

[Quemaqua]

Absolutely.  There's a lot of pain now that we won't be able to avoid.  Let's just hope we can suffer through it.