Stocks spiraled downward Thursday as investors buckled under the strain of the global economic slowdown and the failure of policy makers to stabilize financial markets.
The selling began in Europe and continued in the U.S., where stocks plunged from the opening bell. The Dow Jones Industrial Average posted its worst point drop since the financial crisis in December 2008, falling 512.76 points, or 4.31%, to 11383.68. Oil and other commodities were also hammered. Even gold was a safe haven no more as prices fell. Asian markets slid on Friday morning, with Tokyo, Australia, South Korea and Hong Kong markets all falling more than 3% in early trading.
Just joking about the debt ceiling, of course. I'm sure if DC remained gridlocked, things would have been even worse. As it stands, it was (temporary) good news that a US default was averted, even if the threat of default was only due to the unilateral acts of our destructive Executive Branch. But with the threat of default gone, everyone could focus on the fundamentals: namely, that Europe has a cascading series of debt crises infecting it; that the US has spent an ungodly amount of $$ on useless stimulus; and, worst of all, that US policy leavers are in the hands of ideologues who would rather go down in flames, rather than pursue pro-growth policies such as tax cuts and a true reduction in government spending. If I was still in the market (I got out at the same time QE2 ended), I'd sell, too
Everybody's got their tipping point and mine came with the announcement that 1Q had been revised downward to 0.4%. Like everyone else, I thought things had been picking up in the early part of the year, so to learn that the opposite is what was going on was disappointing to say the least. Economically, we are on the road to nowhere.
UPDATE: if there's one good thing about the latest down-turn, it's that this feels more like a "regular" recession, and not the on-set of a depression as was the case with the Crash of '08. Supposedly, there's a general fear out there that the US government and the Fed are out of policy arrows. If that's the case, things are looking up!
