August 10th, 2011
08:15 PM GMT
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(CNN) – The topsy-turvy world of the stock markets continued Wednesday with the main indices all off very sharply. Today's serious falls came when Wall Street opened and tumbled sharply.

It was a classic case of the European market grumbling for most of the day, seeking direction from the U.S. - and then responding accordingly.

Behind the falls are real and growing worries about the economic health of the major economies.

The Governor of the Bank of England, Sir Mervyn King, said: "There are a number of headwinds to world and domestic growth ... and these headwinds are becoming stronger by the day."

The U.S. Federal Reserves statement yesterday said U.S. growth this year was "considerably slower" than expected, "household spending had flattened out" and the housing sector remained "depressed."

Most important of all, the Fed has announced for the first time that it will keep rates low until 2013: A remarkable admission of the weakness being faced.

This is the wider economic picture in which markets are trading.

Robert Dole, the chief equity strategist from Blackstone, told me yesterday that the future direction of markets was rooted in the economic numbers.

In that case, the outlook does not look too rosy. We can expect the markets to keep testing different low levels to see if buyers are there.

In the short term there is not a lot that can be done other than ensuring sufficient liquidity in the system for those banks that may find themselves under attack.

For instance today it was Societe Generale in Paris that lost more than 14% in value. The bank says it "denies all market rumors."

There is no obvious reason for this dramatic drop, but it's a fair guess that the central banks are getting ready to pump whatever money is needed into the financial system to prevent the gears from seizing up, as they did in 2008.

It may be the summer, but these are dangerous times and I don't think they are over yet.



soundoff (17 Responses)
  1. Angelique

    The future does seem bleak. Economic volatility will breed increased social unrest, which will cause more fear and physical, emotional discomfort. One has now to reconsider where his/her trust and hopes lie.

    August 10, 2011 at 9:04 pm |
  2. Erik

    I think that's a total croc. Central banks need to let the weak and poor performing organizations tank, especially those who are trying to cheat the market and keep causing this kind of turmoil through sketchy practices such as short selling and trading intangible assets that are so complex no one knows exactly what they are. It's time to fix the system, let it re-adjust to where it needs to be, let those banks and businesses that need to go away disappear, not put a band aid on it and continue with "business as usual". If the central banks inject our tax money to save the rich people on wall street again, my once moderate voting tendencies will become one of radical change. It's time for change, not time for more of the same.

    August 10, 2011 at 9:43 pm |
  3. ----

    this is true and sadly the greed is showing what it can do.

    August 10, 2011 at 9:55 pm |
  4. normsw

    It's about jobs, and no one has any confidence in the U.S. economy right now.
    It's also about massive govt. debt, and no confidence in the current administration's ability to deal with the situation.

    August 10, 2011 at 10:19 pm |
  5. Alex

    I truly hope America returns to its once performing economy.

    August 11, 2011 at 2:07 am |
  6. Jim456

    Yes, it's about jobs. As told once before, we have too much war and career driven politicians. Wall street right behind them. Look to the roads and bridges in this country. 50 years ago this country had the best infrastructure in the world. NOT ANYMORE! Build the infrastructure new, remodel them, rebuild them. This will put jobs out everywhere and across the country and pretty much in every niche. Work on social and health insurance plans and forget about the grandfathers way of enslave people and markets. Think big again!

    August 11, 2011 at 2:16 am |
  7. Naomi

    Americans should stop thinking about economy or money. They've got good laws with order, spacious land and man-power. Americans will be always all right unless they refuse to work. All they have to do is to work diligently with some wisdom and transparency. They care about economy too much. Get more smart immigrants.

    August 11, 2011 at 2:53 am |
  8. Naomi

    CNN, why won't you allow me to comfort the American people? They need encouragement.

    August 11, 2011 at 2:55 am |
  9. JG

    Bottom Line..is JOBS..
    Products Made in USA..which puts American back to work...simple..Stop sending money to 3rd world countries..also stop sending Money to the Middle East..Countries like Pak..and etc...Pull our Troops out of Iraq/Afgan..and lets take care of American First..Also term Limits on our Political leaders..Need a Vote of Confidence..if they fail out with there butts..Wake Up and smell the roses you political leaders...

    August 11, 2011 at 3:42 am |
  10. A P

    It is all smoke and mirrors. I like it when the markets fall because I can make money. I like it when the markets go up because I can make money. I do not care if no one in America works. I do not care if the the world economy tanks. It is all about movement. I can make money either way. If a market is stagnant, that is a problem. The markets should have tanked 4 months ago. The Fed keeps propping it up. Finally, the markets are headed in the direction they should be. DOWN. It will come back, but it is not going to be until QE4.

    August 11, 2011 at 4:20 am |
  11. Shistar

    I think the American people have every right to be scared and angry. Does that mean start wars and such? No, heck no. But the Americans are losing their faith in this system. The people they voted to represent them are not representing them at all and only filling their greedy pockets with their cash. This war is costing them quite literally...An arm and a leg, possibly even more. They are spending millions on aiding others when they can't even aide themselves. Losing jobs from left to right. Political leaders need shorter term limits if they are to keep this IMO stupid system. The medical care thing is just out of control.
    But I guess what can I say people are Sheeple they follow the leader with complete and utter trust even if their leader is filling them with poisonous food.

    August 11, 2011 at 4:25 am |
  12. daniel

    This is Biblico it will only get even worse smell new world order.

    August 11, 2011 at 4:35 am |
  13. C K Hui

    JG is right ... JOBS.

    One immediate and politically viable policy step is to reduce taxes on middle- and low-income groups to spur consumption. Then the big corps will invest and hire domestically, instead of investing and moving jobs to countries such as China where they are making profits e.g. Apple, GE etc.

    August 11, 2011 at 5:03 am |
  14. scott

    The issue is that the top is paid too much and the bottom is paid too little.
    I worked for a major employer in the state of Florida, and between 1991 and 2008, max pay for the majority of full time employees went up only $1/hr from $11.50 to $12.50 and the number of full time employees has dropped every year.
    Workers in other states who do the same jobs for companies in the same business are paid almost double that amount
    The company profit is huge, and their on hand cash is as well.
    The rich get FAR richer and the masses who(can not) support the economy cant afford to eat and buy gas to drive to work.
    The issue is clear.

    August 11, 2011 at 5:19 am |
  15. Brotherwolf

    Revolution...Get rid of the Federal Reserve, legalize hemp and marijuana!!!!!!!!!!! Viva Gia.

    August 11, 2011 at 5:32 am |
  16. Kme

    Congress and the president maintain policies which depress the economy via lack of jobs. Additionally, they have implemented additional job crushing policies.

    #1 "Free trade" has effectively removed a significant number of jobs from the US market
    a) By not taxing manufactured goods imported from foreign countries, the foreign workers who work for under $3/Hr. cause much damage to US jobs because the US workers legally are not allowed to work for under $3/Hr and even if they did, their living conditions would be awful.
    b) Forcing US companies to provide health insurance for their employees is so costly that the US companies are forced to scale down to a minimum number of employees.

    2) Not properly attending to the overspending by government employees is destabilizing the monetary system
    a) Continuing to overpay government employees
    b) Printing excessive quantities of USD which reduces the value of the USD.
    c) Giving away large amounts of money to whoever they please

    In summary, Obama and most of congress are destroying the economy of the US. Of course, there will be waves of improvement but, they won't last long and when you compare the improvement what we have now, it may seem good even though it is still quite ugly.

    August 11, 2011 at 6:20 am |
  17. BERNARD MWICHE

    FROM ZAMBIA

    Richard how come the IMF WORLD BAND and DEVELOPED COUNTRIES are just concentrating on mending the holes in this tube of lingering depression and yet most of the raw materials come from developing countries especially Africa? How do you solve the problem on top leaving out the suppliers of raw materials?
    I love the approach of china, Brazil and India. Please America learns from these countries.
    I tell you we can’t avoid it and in fact we are in a mini depression.
    These are times when we should change the way we do our economics and suit the modern day problems.
    Be inclusive when tackling these problems
    My questions to super powers are:
    What is it that you have for Africa in the case where this depression affects it?
    Where are you going to get the raw materials?
    Why promote consumption when consumers are out of employment?

    September 14, 2011 at 2:52 pm |

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