The bad news this morning is heading our way from Asia, where Tokyo is down by five percent and Hong Kong six as the markets digest the Lehman and Merrill news from the USA.
In just a few hours Europe’s markets open and there could be blood on the walls if this stumble turns into a rout.
Two very big dominoes have gone down. The fear is that others will now tumble, setting off a chain reaction:
“This just increases the fears that somebody else is next in line. You’ve got AIG (America International Group) sitting there. You’ve got Wamu (Washington Mutual) sitting there. There’s a lot of other candidates for the next person to take a fall,” is one analyst’s reading of the situation.
Avoiding a financial meltdown that could trigger world recession, or even depression, is seen as America’s job where the crisis first began.
“Well, as you know, we’re working through a difficult period in our financial markets right now as we work off some of the past excesses. But the American people can remain confident in the soundness and the resilience of our financial system.”
So says Treasury Secretary Henry Paulson, but what he and the other officials at the top of the business pyramid are hoping is that this crisis stays in the financial sector and does not break out into the wider economy and blow up a perfect storm. But with unemployment rising and growth and sales declining, that may be what we are all sailing into.