Another Afternoon of Worry Sends Stocks Plunging
Until 3 p.m. on Thursday, it seemed as if the stock market might escape another dark day.
Then the selling hit — and hit and hit again, mimicking trading on Tuesday and Wednesday. What had been a moderately down day ended in a rout, with the Dow Jones industrial average closing down 679 points, or 7.3 percent, leaving it below 9,000 for the first time in five years.
In the busiest day in New York Stock Exchange history, panicky investors dumped stocks en masse. Almost no corner of the market was spared, with 1,754 stocks falling and just 87 rising on the Big Board.
Despite unprecedented steps by policymakers around the world to defuse the financial crisis, fear is spreading that a deep global recession is at hand. The credit markets, the heart of the financial system, remained in near-paralysis.
Keeping a Wary Eye on Crime as The Economy Sinks
It is the question on the minds of New Yorkers, once they stop pondering the fate of their 401(k)s: If the city’s economy sinks to depths not seen in decades, will crime return with a vengeance?
Expert opinions differ, but the question is hardly illogical. The last time stocks on Wall Street fell hard, in 1987, crime was exploding, and the city saw historic highs in murders in the following years.
Before that, the fiscal crisis of the 1970s helped lead to the abandonment of neighborhoods, failing schools and startling crime rates: Robberies built through those years to a high in 1981, when there were 107,495 of them, for an average of 294 a day. (Last year’s total reported robberies, 21,787, was the lowest figure in modern history.)
“Every recession since the late ‘50s has been associated with an increase in crime and, in particular, property crime and robbery, which would be most responsive to changes in economic conditions,” said Richard Rosenfeld, a sociologist at the University of Missouri-St. Louis. Typically, he said, “there is a year lag between the economic change and crime rates.”
Congress Considers New Stimulus Package
The Federal Reserve and Congress are pushing out close to $1 trillion to repair the nation’s financial system and to encourage lending. But that is not enough to revive the economy. Spending has to resume.
Consumers, however, have cut back sharply on their spending, in what will be the first quarterly decline in 17 years when the government tally is in for the third quarter. Business, in response, is shrinking its outlays for equipment, supplies and personnel. And now dozens of state and city governments, their tax revenue falling short of expectations, are engaged in yet another round of cost-cutting.
To offset this shrinkage, and head off a severe recession, the Democratic leadership in Congress is “seriously considering” a large fiscal stimulus proposal, which would send a significant amount of money to states and cities. “We have to prop up consumption,” Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said in an interview in which he revealed some of the details the party leadership was discussing.
The new proposal would be far greater than the $60 billion stimulus package that the House passed in late September, Frank said.