Fear of more government intervention in market sends stocks tumbling
Posted by iusbvision on May 21, 2010
It was government intervention in the mortgage industry and interest rates that by and large caused the mortgage crash. It was the governbment of Greece that had a welfare state with 1 worker in 3 working for the government that caused its collapse so what is the answer? More government of course!
Markets take fright at political moves
By Brooke Masters and David Oakley in London and Aline van Duyn and Michael Mackenzie in New York
Fears of a disorderly regulatory crackdown on banks and financial markets triggered a crisis of confidence among investors on Thursday that sent share prices reeling in a global flight to safety.
US, European and Asian shares all tumbled in the wake of Germany’s partial ban on naked short selling and ahead of a crucial vote on the US financial regulation bill. The S&P 500 fell 3.9 per cent, bringing its losses since late April to 12 per cent and pushing it into “correction” territory.
Most Asian stocks, which this week slumped to their lowest levels in nearly nine months, continued to suffer on Friday. In Tokyo, the Nikkei 225 index dropped 2.45 per cent to 9,784.54, while Sydney’s S&P/ASX 200 index declined 0.26 per cent to 4,305.40. The Shanghai Composite, the worst-performing market in the region this year, rebounded 1.08 per cent to 2,583.52. The Hong Kong market was closed for a public holiday.
“The lack of clarity from the politicians has shattered confidence,” said David Owen, chief European financial economist at Jefferies.
Disappointing US jobless data revived fears that the economic recovery could prove short-lived, helping push Treasuries higher and German bond prices to a record. And in Greece there were protests over wage cuts.
Angela Merkel, Germany’s chancellor, fanned fears of further political intervention in the markets after Berlin’s unilateral ban on naked short selling – the practice of selling securities such as shares and bonds that are not owned or borrowed.
Gee there is that same issue with investor and risk taker confidence that we here at IUSB Vision have been talking about for a year. With such regulatory uncertainty who is going to be taking risks in such an environment?