After the Dow closed down by more than 600 points, Asian markets nosedived Tuesday morning amid growing fears of a second global recession.
The Federal Reserve will meet Tuesday in Washington to discuss possible new monetary easing measures.
We all know the triggers of this mess: the debt compromise, debt issues in Greece and Italy, the U.S. debt’s downgrade by Standard & Poor’s, and then the frenzied selling of stocks.
But now that the initial dust has settled, economists, analysts and journalists are looking at the big picture of what’s really going on. Here’s what people are saying:
Salon News Editor Steve Kornacki says the reason for the “carnage” on Wall Street is clear: The market has decided that “the prospect of meaningful economic growth in the near future is bleak.”
But the bad news, says Kornacki, is we may not be able to do anything about it, mostly because of the divisions plaguing Washington.
At the Daily Beast, economist and money manager Zachary Karabell says the market collapse has less to do with the debt deals, Europe, and the downgrades and more to do with the “ebb and flow of our new, uncontrollable financial system.”
The uneasy calm that followed market lows in 2009, writes Karabell, has meant that their are “no circuit breakers” to protect against events like those that happened last week.
So, he explains, “these moments create ripples of fear that build like tsunami waves until they crash with destructive force against the shoals of investor confidence, institutional balance sheets, and collective investing psyche. And more than ever, they race around the world unimpeded by national boundaries and uncontainable by central banks.”
If it sounds terrifying, it’s because it is.
Faster Times is also saying that Washington, not the U.S. debt, is the culprit of this week’s crash: “The market realized — due to last week’s weak GDP numbers, among other signs of low growth, and the debt ceiling ass-clownery — that the US is politically incapable of dealing with these problems, not financially incapable of dealing with them.”
At Bloomberg, James Holt, an Australian investment manager, said it is all about confidence now. “You’re seeing how effectively confidence and perception is overtaking reality, and that’s the big risk now for stock-market investors.”
While they remained volatile, U.S. stock futures jumped within two hours of the opening bell.
Stocks may have been buoyed by the news that a Federal Reserve meeting was announced Tuesday to discuss possible new monetary easing measures.