Wall Street tumbles amid global sell-off

Stocks decline amid global worries credit crisis is spreading; Dow falls below 10,000

NEW YORK (AP) — Financial markets took a bleak view of the future Monday, seeing contagion in a credit crisis that threatens to cascade through economies globally despite government efforts to provide relief. The Dow Jones industrials skidded more than 500 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.

Investors around the world have come to the sobering realization that the Bush administration’s $700 billion rescue plan won’t work quickly to unfreeze the credit markets. Global banks, hobbled by wrong-way bets on mortgage securities, remain starved for cash as credit has dried up.

That has sent stocks spiraling downward in the U.S., Europe and Asia, and driven investors to sink money into the relative safety of U.S. government debt. Fears about a global recession also caused oil to drop below $90 a barrel.

“The fact is people are scared and the only thing they’re doing is selling,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. “Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working.”

The selling was so extreme that only 98 stocks rose on the NYSE — and 3,114 dropped. That’s a telling sign considering the stock market is considered a leading economic indicator, with investors tending to buy and sell based on where they believe the economy will be in six to nine months.

Monday’s steep decline on Wall Street indicates that investors are becoming more convinced that the country is leading a prolonged economic crisis that is spreading to other nations. Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits.

As the U.S. tries to repair its battered banking system, the German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG. And France’s BNP Paribas agreed to acquire a 75 percent stake in Fortis’s Belgium bank after a government rescue failed.

SNIP

Well as they say, “I hate to tell you I told you so, but I did tell you so as early as late last year the whole house of cards was racing toward collapse and now it is collapsing .”

I’ve said for sometime that Wall Street is way overvalued, property prices were overvalued, and credit was far to easy to obtain.  This is what the pundits like to call a ‘major adjustment’ and its been a long time in coming and might be a long time in correcting itself.  And it looks to me like we’ve just thrown $900 + billion away on a failed plan.  A plan that was vetted by many of the very same people who told us last year and right up to July of this year that the economy was sound and secure.  Strange how we’ll take the word of people who just been proven not to know WTF they’re talking about isn’t it!

And here’s a little tidbit for y’all.  The 1929 Depression hung on into the mid 1930′s and showed no signs of ever really turning around until events in the late 1930′s showed that another world war was in the offing.  And in fact some historians are of the opinion that the crash of 1929 would never have turned around unless there had been a major world war.

So my advice is look for some kind of major war to break out in the very near future.