Fragile Global Economy Is Starting to Crack Up

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I woke up a little late this morning, but maybe that turned out to be a good thing. The Dow Jones plunged a thousand points within minutes of opening, but by the time I saw the news it had already recouped about half of that loss:

You can probably guess what triggered this:

The stock drop was fueled by what China’s state media is already calling “Black Monday,” in which markets there recorded their biggest one-day plunge in eight years amid growing fears over an economic slowdown.

On Friday, China reported its worst manufacturing results since the global financial crisis, a new sign of woe for the world’s second-largest economy, which surprised investors earlier this month by announcing it would devalue its currency. China’s benchmark Shanghai Composite index has fallen by nearly 40 percent since June, after soaring more than 140 percent last year.

Markets around the world are crashing, and as usual that means seeking safety in the good old US of A:

Investors stampeded into relatively safe assets such as U.S. government bonds, the Swiss franc and the yen. The yield on the 10-year Treasury note dropped below 2% during Asian trading and recently was 1.976%, the lowest level since April.

….“A lot of markets abroad have seen a low amount of liquidity so investors are turning to the U.S. market to hedge,” said Jeffrey Yu, head of single-stock derivatives trading at UBS AG….While the selloff began as an emerging markets story, with China’s stock market offering very little liquidity to investors due in part to technical stock-trading halts, investors have had to turn to the most liquid market to sell, which is the U.S., Mr. Yu said.

Now can we finally get a statement from the Fed saying that they no longer have any immediate plans to raise interest rates? Please?

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FACT:

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Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

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