The Shock Felt All Around the World

The United States equity markets had taken a battering, sell offs had been the order of the week.  It started with concerns about the debt ceiling in the United States, it progressed to worries about the larger European countries and finally perception grew that the world was heading back into recession. When the markets closed on Friday there was relief that a difficult week was over.  Then the unthinkable happened Standard and Poor (S&P), one of the ratings agencies, downgraded for the first time ever the US credit rating from AAA to AA+.

Suddenly the world shook, the investors tottered, and the markets came tumbling down.  It started in Israel with a fall of 6.5 per cent, progressed to Asia with a fall of 4.5 per cent then onto Europe with falls of 4.7 per cent and finally Monday morning it reached New York.  The Dow Jones opened down 200 points or 1.6 per cent and then there was a recovery to about minus 150 and as the day wore on the resolve of the American people seemed to fade like a bubble bursting in the air.  The financial gurus tried to down play the effect but still the market fell, the great prognosticator buffet chastised the ratings agency but still the market fell and finally the hopeful President Obama tried to reassure investors that yes America can pay their bills but still the market fell.

It was brutal watching, the market was savage, first it would plunge then it would partially recover bringing false hope and then it would plunge again.  It was down 200, then 250, 300, 350 there seemed to be no end in sight.  The minutes seemed like hours, the hours like days and the market seemed like it was open for an eternity.  But still the stocks fell, 400, 450, 500 and no sign of the bottom.  Finally as the market closed it plunged one last time ending down 632 points.  Only then could one survey the damage done by this summer storm.  The Dow looked like a wasteland covered with the corpses of stocks strewn throughout.  The pounding was severe and the damage was devastating, nothing could escape its grip.  Oil stocks plunged as the price of oil retreated to as low as $80.00, bank stocks experienced a run as memories of the financial crisis resurfaced, Tech stocks were decimated and even the mighty apple got bruised.

At the end investors were relieved to hear the final bell on what had been a one sided fight.  The American people had put up little resistance and the ratings agency had won by a technical knockout.  When at last it was all over just one thought remained on the hearts of those who watched hopelessly – What will tomorrow bring?