Les Bourses européennes continuent de plonger
The European Stack Exchanges continue t0 plunge
Des doutes sur la solidité des banques et de la croissance
Doubts about the solidity of the banks and growth
Les banques centrales tentent d'endiguer la crise financière
The central banks try to shore up the financial crisis
The Daily Telegraph - England
Global stock markets tumble as sub-prime contagion spreads
Market volatility hits highest since 2003
Deutsche Well - Germany (in English)
ECB Fund Injection Leaves Investors in a Fog
Germans Wary of Stock Market
International Herald Tribune
Shaky markets prompt rumors of who's in trouble
Central bankers take action as the rout in global markets deepens
Europe slammed by U.S. credit crisis
and, finally, Paul Krugman's OpEd from today's New York Times
Very Scary Things
- What’s been happening in financial markets over the past few days is something that truly scares monetary economists: liquidity has dried up. That is, markets in stuff that is normally traded all the time — in particular, financial instruments backed by home mortgages — have shut down because there are no buyers....
- The origins of the current crunch lie in the financial follies of the last few years, which in retrospect were as irrational as the dot-com mania. The housing bubble was only part of it; across the board, people began acting as if risk had disappeared....
- When liquidity dries up, as I said, it can produce a chain reaction of defaults. Financial institution A can’t sell its mortgage-backed securities, so it can’t raise enough cash to make the payment it owes to institution B, which then doesn’t have the cash to pay institution C — and those who do have cash sit on it, because they don’t trust anyone else to repay a loan, which makes things even worse.
And here’s the truly scary thing about liquidity crises: it’s very hard for policy makers to do anything about them....
- But when liquidity dries up, the normal tools of policy lose much of their effectiveness. Reducing the cost of money doesn’t do much for borrowers if nobody is willing to make loans. Ensuring that banks have plenty of cash doesn’t do much if the cash stays in the banks’ vaults.
on a brighter note, the Dow Jones Industrial average is only down -77.64 as of 1:15 pm EDT.
rebounds can come in small packages...