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Markets the world over were hammered on Monday by bad economic news out of Europe, Japan and the United States. All of the world’s largest stock indexes plummeted, with the U.S. S&P 500 closing down 3.85 percent, the British FTSE plunging 7.85 percent, Germany’s DAX dropping 7.07 percent and Japan’s NIKKEI falling 4.25 percent. Even crude oil lost $5 a barrel.
Most eyes remain on the United States, and U.S. financials certainly are the trigger, but it is time to start looking elsewhere for the effects. Despite being in the grip of an unpopular presidency and a bitter election campaign, the U.S. system has proven capable of generating a national plan to deal with the credit crunch in the form of a $700 billion bad asset rehabilitation program. Flawed and unproven the plan may be, but it is a plan that is not just on the table but now has been signed into law. Very soon it will take effect.
But that is not what is happening elsewhere.
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