Economic tsunami

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This isn’t pretty. Financial markets all over the country, battered yesterday on a U.S. holiday, got another chance to weigh in on President Bush’s economic stimulus plan overnight. And, again, all the markets tanked bigtime.

Around 7:30 this morning, the Fed saw the writing on the wall and cut a key interest rate by 3/4 of a point.

Lehmann Brothers said earlier this morning the U.S. is just “one shock away” from a recession. Is this it? The Hong Kong market has lost 15% of its value in two days. Japan’s market had its biggest drop in 17 years. And Wall Street, of course, was bracing for a slap in the face.

First, a few handy sites for the overnight carnage.

Financial Times

The Street.com

Bloomberg

Updates

5:10 p.m. – MPR’s Tom Weber samples the local investor community and finds them relatively calm.

3:39 p.m. – The day that dawned looking like the beginning of the end, now looks like the end of the beginning. The Dow closed off about 128 points. The sun is just coming up in Japan, and now the big players will watch the Tokyo Stock Exchange all night. How does anyone sleep in that business?

2:58 p.m. – Democrats announce they intend to move quickly on an economic stimulus plan. They say they’re confident they can work with President Bush. It only took 7 years and a global stock market meltdown to reach this point. Robert Samuelson of Newsweek discussed this a couple of days ago. Dow off 128.

1:35 p.m. – The London Stock Exchange closed higher. The Toronto Stock Exchange is en fuego (up 3%). Dow is down 122.

11:42 a.m. – Dow is down only 143. Alan Sloan at the Wall Street Journal levels criticism at “The Big Four” — Citigroup, Merrill Lynch, Morgan Stanley and UBS — for frittering away billions by ignoring simple rules of investing.

11:20 a.m. – A discouraging word — or so it seems to me — on the very fine Twin Cities blog, Behind the Mortgage where Alex Stenback says about the fed cut: “There is a credible view that a cut like this may add to inflationary pressures, thereby forcing mortgage rates upward.”

11:12 a.m. – An important post by The Atlantic’s James Fallows on his blog. He’s living in China now and just returned to the U.S. “I know that America is on the verge of disastrous recession and that China is dynamic power of tomorrow, etc etc. But, my lord, life can be good here,” he writes..

10:38 a.m. - CNN posts video: what does the fed rate cut mean to you.

9:45 a.m. – Change in plans for MPR’s Midmorning. They shift to an analysis of the economic situation today. Chris Farrell and the Fed’s Art Rolnick weigh in. Rolnick says the probability of recession has increased, but he doesn’t think there’ll be one. “It doesn’t mean the economy is broke,” he said. Audio here.

9:36 a.m. – Silver Lining Department checks in. Oil prices are now below $90 a barrel. Grey Cloud Department counters: Twin Cities gas prices are up 3 cents today. The Other Side of the Coin Department chimes in: Statewide, gas prices are falling.

9:22 a.m. President Bush has signaled that he might go higher on his economic stimulus plan. The Dow is down 231 points; not great, but it puts today in the category of “just another January 2008 day on Wall St.” How do you like us now, Asia? The Toronto Stock Exchange is up at this hour. At least Canada still loves us.

8:47 a.m. Jim Jubak at MSN Money has posted “5 rules for surviving a bear market.”

8:30 a.m. – New York Stock Exchange opens. First number on the screen: Down 233. Ugh. Two minutes later: Down 450.

8:20 a.m. – A cheer goes up on Wall Street. A couple of New York Giants come out to ring the opening bell. As a Patriots fan, I hope this is somehow indicative of their ability to sway the course of events.

(Photo by China Photos/Getty Images)

  • b2

    So sorry for my children whose retirement accounts depend on the market in part at least. I never had any $$ to invest, now it doesn’t seem so bad. Both my kids bought a home – big house in Mpls., small apartment in Brooklyn. At least they can live in those investments…as long as jobs hold.

  • bsimon

    Ride it out.

    My annual retirement portfolio rebalancing is coming up, which can be difficult to wait for with the significant daily market fluctions we’re seeing. The instinct is to go in there & move it all to bonds or blue chips, or even just cash out. But, the plan is to override the emotions and rebalance according to our target allocations, so that is what I’m going to do. We (wife and I) are overweighted in foreign markets & we’re going to keep it that way. Even with yesterday’s big drops, our foreign stuff did very well over the last year. We’ll rebalance, taking foreign profits & reinvesting in US funds to return to our target allocation. This should be a good year to buy, particularly in the US, as the markets are low.

    Buy! Buy! Buy!