From the AP:
Japan’s benchmark Nikkei 225 index was down 5.3 percent to 11,560.66 in mid-afternoon trading, while Hong Kong’s blue-chip Hang Seng Index shed 5.7 percent. Both markets — Asia’s two biggest — had been closed for holidays on Monday, when news first broke about the dramatic events on Wall Street.
Across the region, markets were all deep in the red. South Korea’s Kospi was down 5.4 percent, Taiwan’s benchmark was off 4.7 percent and China’s Shanghai index was down 3.2 percent.
I have warned, repeatedly, on this page about the impending global economic meltdown. If it has finally begun, we’ve just got to sit tight and get the bad blood out of the system. There is simply no way to avoid this, and stopgap measures really only prolong the pain. The problem underlying the whole mess is massive, poorly secured (if secured at all) debt. The financial industry is swimming in it.
But, in a sense, we are all at fault. America, and more generally, Americans, is up to its eyeballs in debt. We simply cannot afford to borrow more money to prop up public companies. Bear Stearn was a failed stopgap. Fannie and Freddie were really too big to fail. But now Treasury and the Fed have drawn the line. After all, with a $400 billion current budget deficit, $10 trillion in debt (not too mention the potential liabilities of Fan and Fred, which they are keeping off the books), and the money we are hemorrhaging in the strategic and financial disaster that is Iraq, we cannot shoulder an additional burden.
This has been building for a while, and it’s not going to be pretty, but we will recover. It’s just going to take a long, long while.
Try not to panic.
And, please, for the love of God and all that is holy, don’t dare but McCain/Palin (!) in charge of cleaning up this mess. An American default is possible. A Great(er) Depression is possible. Intellect counts.