October 6, 2008
US Bailout Failed to Calm Market: Stocks Tumbled across the World
6 Oct 2008 is to be remembered as another black Monday.
Despite US Congress passing the bailout plan last Friday, stock market tumbled across the globe.
| Moscow | -19.1% |
| Jakarta | -10.0% |
| Paris | -9.04% |
| London | -7.85% |
| Frankfurt | -7.07% |
| Bangkok | -6.48% |
| Singapore | -5.61% |
| Shanghai | -5.23% |
| Hong Kong | -5.0% |
| Seoul | -4.3% |
| Tokyo | -4.25%% |
| Taipei | -4.12% |
Although US lawmakers passed the US$700 billion bailout package to save the financial sector on Friday, the market saw that the measures won't be enough to avert a global recession. Adding to the pessimistic outlook, bad news extended to Europe when Germany's government guaranteed all private-account deposits at German banks to stave off a panic after a rescue plan for Hypo Real Estate, a big mortgage lender, collapsed on Sunday.
Interbank lending rates remain high reflecting banks continuous risk-aversion despite assurance from respective central banks- sign that the credit crunch is deepening which is breeding a dangerously vicious cycle. As more banks are crippled by a lack of short-term funding, the surviving banks become increasingly nervous about lending to one another, which starves banks that depend on wholesale markets to stay afloat, triggering more failures.
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