It's all about fear. Wall Street was in full panic mode yesterday as a wave of terror washed over investors, who couldn't hit the sell button fast enough during the last hours of trading. It marked the seventh consecutive day of losses on Wall Street as the Dow Jones industrial average plunged 679 points, or 7.3 percent, closing below 9,000 for the first time since 2003. This means all the gains from the last bull market have been effectively wiped out. The New York Timespoints out it was the "busiest day in New York Stock Exchange history," and the Wall Street Journal notes that the 11th largest plunge in the history of the Dow "put the stock market either in, or nearly in, a crash."
USA Todayhelpfully churns out several statistics to put the recent declines in context and points out that Standard & Poor's 500 index "is on track for its worst year since 1931." Looking for a particular reason for all this selling is bound to be a futile effort because, as the Washington Post highlights, it "could not be blamed on any single piece of horrible news." Rather, as the Los Angeles Timespoints out, many think it indicates that many investors who had resisted selling in the last few weeks "were now throwing in the towel." The pain is unlikely to stop there as Asian markets plunged today—Japan's Nikkei dropped 9.6 percent and was down 24 percent for the week—and European markets followed suit in early trading. Pressure is now higher than ever for government leaders to come up with a unified strategy to deal with the mounting crisis. The NYT leads with a look at how the British and American governments seem to be "converging on a similar blueprint" that will likely be at the center of talks between President Bush and key finance ministers this weekend.
The NYT takes pains to highlight that the British and American plans are "far from identical," yet they have two key elements in common that involve pumping government money into banks and issuing guarantees for different types of debt. The fact that the Treasury seems willing to directly inject cash into banks marks a stark change—"Putting capital in institutions is about failure," Treasury Secretary Henry Paulson said on Sept. 23—and illustrates how government officials are ready to alter plans now that the crisis seems to be expanding.
Another example of how the U.S. government is looking beyond the $700 billion bailout plan for solutions can be found in Page One of the WSJ, which reveals that officials are discussing whether to issue a blanket guarantee of all bank deposits. This move would aim to help out financial institutions, including small and regional banks, "some of which are buckling under the strain of nervous customers," notes the WSJ.
If the move is approved, it would mark another attempt at a national solution, which a growing number of economists say is simply not enough. Many are now pushing governments to infuse cash directly into the banking system, but they emphasize that governments need to act in unison to "maximize the punch of their actions," notes the NYT. But as senior economic policy-makers gather in Washington today, the Bush administration has been careful not to raise expectations that a deal will come to fruition. So far, leaders haven't been able to come up with a comprehensive global plan of attack beyond dealing with interest rates. Still, pressure is mounting for governments to adapt quickly not just to deal with the current crisis, but, as the LAT notes in a Page One piece, "head off potential crises in the future."
In the United States, it seems there's no end in sight for how far stocks can drop. Several of the papers highlight the plight of General Motors, which saw its shares plunge 31 percent to their lowest price since 1950. "I've never seen a panic like this," one economist tells the WP. Of course, no one knows what to believe, so investors are trying to play it safe. "Right now, you can take economic fundamentals ... and throw them out the window," a market strategist tells the LAT. "This is mass liquidation at the point of a gun."
Even some who were optimistic that we were close to capitulation, or the point where there's so much selling that the market is near bottom, are throwing their hands up in frustration. "So many signs say we are getting to that ultimate capitulation," an investment strategist said. "But I thought that on Monday too." The WSJ attaches a label to the current trends, saying that it looks like we're in what is known as a secular bear market, or a prolonged weak period, that follows much of the same patterns of the 1970s and 1930s. During those long downturns, the markets also rallied sporadically but eventually ended up losing the gains. Why? Because the higher values are seen as opportunities to sell since no one thinks they will last.
As government officials try to wage war against the financial crisis, John McCain is waging his own war against Barack Obama's rising poll numbers. And things are getting heated. In a piece inside, the WP takes a look at how the McCain campaign "has found itself at the center of an outpouring of raw emotion rare in a presidential race." While addressing supporters, McCain and Sarah Palin are encountering people who are increasingly angry at the media and scared at the possibility that Obama will win in November. And as his supporters seem to show a declining willingness to hear talk of bipartisanship, McCain has responded in kind by spending most of the time at his rallies criticizing Obama.
The NYT talked to several people who were involved in the so-called Troopergate scandal and publishes a revealing Page One piece that sheds some new light into whether Palin pressured Alaska's public safety commissioner to fire Michael Wooten, a trooper who went through a nasty divorce with the governor's sister. Today, the NYT reveals that Palin, her husband, and members of her administration contacted the commissioner and his aides "three dozen times over 19 months." The commissioner contends he was fired for refusing to dismiss Wooten. Of course, no one ever directly ordered Wooten to be fired, but their focus on that one trooper was greater than has been revealed. In fact, the commissioner's successor says that Palin's aides mentioned Wooten twice when he was angling for the job, even though none of the other troopers were discussed. Palin has said she was just issuing complaints against someone who could be a danger, emphasizing that he made a death threat against her father.
The WP takes a look at how the newbie governor of an obscure state managed to get such a big national spotlight so quickly and says it was at least in part due to a successful public-relations effort. Alaskan officials tried to position Palin as an expert on oil and gas issues so she could speak to the national media about Alaska's natural gas pipeline project, and they hired an outside public-relations expert to help. She was then quickly billed as an "upstart governor" who was unafraid to take on Big Oil. Some lawmakers contend Palin was so preoccupied with media coverage that she ignored the state legislature.
The NYT analyzed Barack Obama's campaign finance records and found almost 3,000 donations "with apparently fictitious donor information." Of course, they represent a mere fraction of the hundreds of millions Obama has raised, and the amount that hasn't been refunded as of the campaign's last filing amounts to a mere $40,000. But since the NYT only picked up on the most obvious—a contributor who used the name "Jgtj Jfggjjfgj," for example—it raises questions about whether the Democrat's campaign is "adequately vetting its unprecedented flood of donors." There's no evidence of fraud, and surely any concerted effort to skirt contribution limits would have been more sophisticated than the person who listed his employer as "Loving" and his occupation as "You."
The LAT fronts, and everyone mentions, two military linguists saying that they listened in on personal phone calls from Americans overseas and their families back home. Sen. John D. Rockefeller IV called the allegations "extremely disturbing" and said the Senate intelligence committee would investigate. The linguists said that recordings of intimate conversations were shared among analysts. "I observed people writing down, word for word, very embarrassing conversations," one of the linguists told the LAT. "People would say, 'Hey, check this out, you're not going to believe what I heard.' " The two former intelligence analysts were interviewed for a book that will be released next week and spoke to ABC News last night.
Count the NYT's Paul Krugman as one of the big fans of the British plan to help out its financial sector. "The United States and Europe should just say 'Yes, prime minister,' " writes Krugman. "The British plan isn't perfect, but there's widespread agreement among economists that it offers by far the best available template for a broader rescue effort." And there's little time to waste. "You may think that things can't get any worse—but they can, and if nothing is done in the next few days, they will."