A Global Recession?

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Not since 9/11 has the world seen markets tumble as quickly—or as dramatically—as they did today: While American markets were closed for the federal holiday, the MSCI World Index fell by 3 percent, and Europe’s Dow Jones Stoxx 600 Index plummeted by 5.7 percent.

This means a few things:

First of all, Bush and Bernanke’s attempt to prevent a recession by calling for a stimulus package didn’t quite do the trick. In fact, globally speaking, it probably made things worse:

The selloff followed falls on U.S. markets on Friday that ended the worst weekly performance on Wall Street for five years and a round of bloodletting in Asian markets yesterday, as investors were left underwhelmed by U.S. President George W. Bush’s package of measures aimed at stimulating the world’s largest economy.

Second, our little subprime mortgage crisis is not just our problem any more—it’s starting to affect the rest of the world as well:

Behind it all: Investors worldwide grew fearful that problems from massive losses on loans made to U.S. home buyers will cascade through the world financial system. For example, the Bank of China is now forecast to record a multibillion-dollar loss on U.S. mortgage investments.

And companies that insure bonds are incurring such massive losses on exotic securities based on mortgages that one is in receivership and others have had their credit ratings cut. That could cause financial institutions worldwide to mark down the value of a wide range of assets guaranteed by these insurance companies.

The biggest surprise, though, was the scope of today’s plunge. Back when “emerging markets”—like those in China, India, Russia, and Brazil—first entered the global scene, they were seen as a stabilizing force. Since Asia and Europe’s markets made up a big chunk of the global economy, a downturn in the U.S., the reasoning went, wouldn’t automatically spell trouble for everyone. Not so today: China’s Shanghai Composite Index plunged by 5 percent. India’s SENSEX was down almost 9 percent. Brazil’s Bovespa index fell by 6.6 percent, and Russia’s Micex Index dropped 7.5 percent.

There has been speculation that the Fed will cut interest rates by .75 points later this month. Even if it does, odds are it’s not a permanent solution; at best, it will only postpone what is beginning to look like an inevitable recession in the United States—and perhaps around the world.

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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