Another wild day in the stock market, as indexes gyrate wildly once again, with the Dow putting in its worst week since the bull rally got started back in March 2009 amid growing fears that Greece’s debt crisis is spiraling into something much worse for Europe and the rest of the globe (and that’s not just hyperbole.)
DJIA loses 141 today, down 1.4% at 10380; index lost 5.7% in the week, the worst since the week of March 6, 2009, and is down 7.4% since hitting a high in April. S&P 500 loses 17 today, closing at 1111, Nasdaq Comp drops 54 to 2266. The Nasdaq’s 10% drop from the April highs put it in correction territory.
It’s especially telling that the bulls couldn’t rally despite getting the best jobs report since before the recession started. The economy added 290,000 jobs in April, and only about 60,000 of them were from the Census Bureau, meaning the private sector added 230,000 jobs. That really is the single-best piece of data we’ve gotten since the whole recession started. But it positively run over by the Europe story.
And it’s no longer just little old, we-invented-democracy Greece anymore. The Greeks are going to have a long, hard depression with a lowercase D, but the real story now is the renewed credit crisis that washing over the borders. It’s the European banks that are exposed to Greek debt, and the fear that out of fear they will stop lending to each other.
This is something that needs to be stopped now, before it gets out of hand. Because we saw over here in 2008 how quickly this kind of stuff can spiral out of control.
The bank connection is how this thing jumps the pond, because while U.S. banks may not be directly exposed to European sovereign debt, they are directly exposed to European banks, and if the credit mechanisms over the seize up, there good reason to fear the same could happen here.