Relief? Dow only drops 120 points
Stocks finish worst week ever as panic spreads
By Jeannine Aversa, The Associated Press | Posted: Saturday, October 11, 2008
NEW YORK -- Stock markets jolted still lower in the U.S. and around the world Friday despite all efforts to slow the selling stampede, and the globe's industrial powers urgently debated forceful new steps in Washington to prevent a worldwide economic catastrophe.
A sign of how bad things have gotten: A drop of more than 120 points in the Dow Jones industrials was greeted with sighs of relief after the index had plummeted much further earlier in the day.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with their counterparts from the world's six other richest countries as the rout of financial markets sped ahead in the face of dramatic rescue efforts in the U.S. and abroad.
Stock prices hurtled downward in the United States, Europe and Asia, even as President Bush tried to reassure Americans and the world that the U.S. and other governments were aggressively addressing what has become a near panic.
"We're in this together and we'll come through this together," Bush declared at the White House as finance ministers and central bankers from around the world gathered nearby. "Anxiety can feed anxiety, and that can make it hard to see all that's being done to solve the problem."
On Wall Street, the Dow Jones industrials, already down 21 percent for the week, dropped nearly 700 points more in the opening minutes but made up much of that fresh loss in the last hour of trading. The index finished down 128 points for its worst week ever.
It was no better overseas. Great Britain's FTSE index ended below the 4,000 level for the first time in five years; Germany's DAX fell 7 percent and France's CAC-40 finished down 7.7 percent. Japan's benchmark Nikkei 225 index fell 9.6 percent, also hitting a five-year low. For the week, the Nikkei lost nearly a quarter of its value. Russia's market never even opened.
Bush made it clear the United States must work with other countries to battle the worst financial crisis that has jolted the world economy in more than a half-century.
"We've seen that problems in the financial system are not isolated to the United States," he said. "So we're working closely with partners around the world to ensure that our actions are coordinated and effective."
The Dow dropped a little over 100 points while he was speaking.
Fear has tightened its grip on investors worldwide even as the United States and other countries have taken a series of radical actions including an unprecedented, coordinated interest rate cuts by the Federal Reserve and other major central banks.
Besides the United States, the other members of the G7 -- the Group of Seven -- meeting in Washington are Japan, Germany, Britain, France, Italy and Canada. Finance officials also planned to meet with Bush Saturday at the White House.
Separately, the United States is exploring ways the government might inject billions into banks in exchange for ownership stakes. Earlier in the week, Britain moved to pour cash into its troubled banks in exchange for stakes in them -- a partial nationalization.
The idea behind these ideas -- as well as bold steps previously announced in recent weeks -- is to get credit flowing more freely again.
In the United States, hard-pressed banks and investment firms are drawing emergency loans from the Federal Reserve because they can't get money elsewhere. Skittish investors have cut them off, moving their money into safer Treasury securities. Financial institutions are hoarding whatever cash they have, rather than lending it to each other or customers.
The lending lockup -- which is making it harder and more expensive for businesses and ordinary people to borrow money -- is threatening to push the United States and the world economy as a whole into a deep and painful recession.
In Europe, governments have moved to protect nervous bank depositors. Germany pledged to guarantee all private bank savings and CDs in the country, and Iceland and Denmark followed suit. Ireland went even further by also guaranteeing Irish banks' debts. The United States will temporarily boost deposit insurance from $100,000 to $250,000 in cases where its banks or savings and loans fail.
Some economists have suggested the United States move to temporarily cover all deposits.
The Fed, meanwhile, has repeatedly tapped its Depression-era authority to be a lender of last resort, not only to financial institutions but also to other types of companies. Earlier this week, the Fed said it would buy massive amounts of companies' debts, in another unprecedented effort to break through the credit clog.
Not everyone favors such drastic actions. Critics worry that the Fed and the Bush administration are putting billions of taxpayers' dollars at risk.
Associated Press Writers Harry Dunphy, Desmond Butler, Martin Crutsinger and Deb Reichmann contributed to this report.
A sign of how bad things have gotten: A drop of more than 120 points in the Dow Jones industrials was greeted with sighs of relief after the index had plummeted much further earlier in the day.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with their counterparts from the world's six other richest countries as the rout of financial markets sped ahead in the face of dramatic rescue efforts in the U.S. and abroad.
Stock prices hurtled downward in the United States, Europe and Asia, even as President Bush tried to reassure Americans and the world that the U.S. and other governments were aggressively addressing what has become a near panic.
"We're in this together and we'll come through this together," Bush declared at the White House as finance ministers and central bankers from around the world gathered nearby. "Anxiety can feed anxiety, and that can make it hard to see all that's being done to solve the problem."
On Wall Street, the Dow Jones industrials, already down 21 percent for the week, dropped nearly 700 points more in the opening minutes but made up much of that fresh loss in the last hour of trading. The index finished down 128 points for its worst week ever.
It was no better overseas. Great Britain's FTSE index ended below the 4,000 level for the first time in five years; Germany's DAX fell 7 percent and France's CAC-40 finished down 7.7 percent. Japan's benchmark Nikkei 225 index fell 9.6 percent, also hitting a five-year low. For the week, the Nikkei lost nearly a quarter of its value. Russia's market never even opened.
Bush made it clear the United States must work with other countries to battle the worst financial crisis that has jolted the world economy in more than a half-century.
"We've seen that problems in the financial system are not isolated to the United States," he said. "So we're working closely with partners around the world to ensure that our actions are coordinated and effective."
The Dow dropped a little over 100 points while he was speaking.
Fear has tightened its grip on investors worldwide even as the United States and other countries have taken a series of radical actions including an unprecedented, coordinated interest rate cuts by the Federal Reserve and other major central banks.
Besides the United States, the other members of the G7 -- the Group of Seven -- meeting in Washington are Japan, Germany, Britain, France, Italy and Canada. Finance officials also planned to meet with Bush Saturday at the White House.
Separately, the United States is exploring ways the government might inject billions into banks in exchange for ownership stakes. Earlier in the week, Britain moved to pour cash into its troubled banks in exchange for stakes in them -- a partial nationalization.
The idea behind these ideas -- as well as bold steps previously announced in recent weeks -- is to get credit flowing more freely again.
In the United States, hard-pressed banks and investment firms are drawing emergency loans from the Federal Reserve because they can't get money elsewhere. Skittish investors have cut them off, moving their money into safer Treasury securities. Financial institutions are hoarding whatever cash they have, rather than lending it to each other or customers.
The lending lockup -- which is making it harder and more expensive for businesses and ordinary people to borrow money -- is threatening to push the United States and the world economy as a whole into a deep and painful recession.
In Europe, governments have moved to protect nervous bank depositors. Germany pledged to guarantee all private bank savings and CDs in the country, and Iceland and Denmark followed suit. Ireland went even further by also guaranteeing Irish banks' debts. The United States will temporarily boost deposit insurance from $100,000 to $250,000 in cases where its banks or savings and loans fail.
Some economists have suggested the United States move to temporarily cover all deposits.
The Fed, meanwhile, has repeatedly tapped its Depression-era authority to be a lender of last resort, not only to financial institutions but also to other types of companies. Earlier this week, the Fed said it would buy massive amounts of companies' debts, in another unprecedented effort to break through the credit clog.
Not everyone favors such drastic actions. Critics worry that the Fed and the Bush administration are putting billions of taxpayers' dollars at risk.
Associated Press Writers Harry Dunphy, Desmond Butler, Martin Crutsinger and Deb Reichmann contributed to this report.
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