Stock markets across Europe and Asia plunged Monday on fears that President Bush’s emergency economic stimulus plan won’t ward off recession in the USA.
At one point during the day, stock indexes in London, Germany and France faced their biggest drops since the Sept. 11, 2001 terror attacks on the World Trade Center in New York.
Monday’s sell-off, which started in Asia and spread to Europe, followed the worst week for U.S. stock markets in five years, as investors registered their forecast for the world’s biggest economy.
U.S. financial markets were closed Monday for the Martin Luther King Jr. holiday, but U.S. stock index futures were down sharply, suggesting investors don’t have much hope of Wall Street leading a rebound when it returns to business Tuesday.
Update: There is more here, including this:
“There is indeed some panic,” said Thomas Mayer, the chief European economist at Deutsche Bank in London. “What we’re seeing, in Europe and Asia, is that the markets are pricing in a recession.”
[i] Quel horreur! La bourse est en retraite. C’est comme l’armee francaise! [/i]
The stimulus plan may (whatever its authorship or content) end up heightening panic abroad. Proposing and enacting the plan acknowledges the gravity of the problem. Yet the plan can’t solve the problem.