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Stocks Plunge Worldwide

Wow. Lots of nervousness out of there about the stimulus package Bush is proposing.

From AP:

Britain’s benchmark FTSE-100 slumped 5.5 percent to 5,578.20, France’s CAC-40 Index tumbled 6.8 percent to 4,744.15, and Germany’s blue-chip DAX 30 plunged 7.2 percent to 6,790.19.

In Asia, India’s benchmark stock index tumbled 7.4 percent, while Hong Kong’s blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Canadian stocks fell as well, with the S&P/TSX composite index on the Toronto Stock Exchange down 4 percent in early afternoon trading. In Brazil, stocks plunged 6.9 percent on the main index of Sao Paulo’s Bovespa exchange.

Investors dumped shares because they were skeptical that an economic stimulus plan President Bush announced Friday would shore up the economy that has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

So if this is how the world reacts to just the IDEA of it, what happens when we actually get it put into action?

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  • Jimmy the Dhimmi

    The honest-to-god reason for this is because the stimulus package doesn’t go far enough to, how would you say, “cut taxes for the rich.”

    Time and time again you write how you don’t want to see the investor class retain more of the wealth they earn, so you really shouldn’t complain about this, Justin.

  • Elisabetta

    The fact that investors don’t like this package should make some people here happy.

  • David

    Gee, the way we got in this mess was by borrowing a billion a day from red China so let’s borrrow some more and give it out to people that will fix it! Jimmy thinks we need to borrow a whole lot more and give it to all of the billionares so the market will always go up. That’s his idea of “Free Markets”. Very conservative of you.

  • mw

    It seems a bit of reach to suggest that GWB’s 1% US GDP stimulus plan could trigger a world wide stock market meltdown. Some guys on CNBC’s Fast money show were predicting a major meltdown in the US markets on Tuesday (tomorrow), for a combination of technical and sentiment reasons. I am not a stock market technician, but my understanding of the rationale, was something like this ~

    Friday was an option expiration day, and a lot of institutional portfolio hedges (in the form of puts) expired, without evidence of them being reapplied to the same degree in future months. If there is fear of continued downturn, those hedges will be reapplied on Tuesday which could fuel a major downdraft. The same analyst said this could signal the market bottom if there is high enough volume.

    If the big downdraft occurs, I’m stick my neck out and guess the market will be 20%+ higher at end of the year than the prices at end of day tomorrow. They say the time to buy is when there is “blood in the streets” I’ll probably do some buying. Probably.

  • Joshua

    Volokh Conspiracy’s Russell Korobkin has weighed in on the stimulus package too, and he seems to think it’s pretty daft. As do most of the commentators there, and as do I.

    Actually it’s more than daft. As some of the aforementioned VC commentators pointed out, one-time tax rebates are political ploys above all else. One, it’s a way for elected officials to give the appearance of doing something about a tanking economy. Two, it’s a direct economic payoff to their constituents. You might even call it pork taken to the individual voter level.

  • Jimmy the Dhimmi

    Gee, the way we got in this mess was by borrowing a billion a day from red China so let’s borrrow some more and give it out to people that will fix it!

    Cash in all the treasury bonds owned by China and then blockade all their future foreign investment; watch the stock market then, dude.

  • David

    Wow Jimmy, way to completely throw out a ridicules strawman! Just keep voting to bankrupt America while claiming to be a patriot, OK? BTW, we don’t get to decide when the bonds get cashed in, they do, and if they do, we are truly screwed. You however, choose to trust the communists to play nice because the morons you keep voting for tell you that borrowing trillions from communists and Arabs is better than paying taxes. It’s coming home to roost now, maybe you could at least admit that it’s your fault for being a gullible fool.