[NYTr] Booming Economy: Dow Falls another 280 Points

[All the News That Doesn't Fit]

[Just as there are real-world limits on the number of soldiers the US
can force into combat, so is there a real-world limit on the amount of
phony "recovery" and "growth" the governments of the world can attempt
to impose on the international financial collapse, no matter how much
governments ignore the opposition of the people and go blithely ahead
anyway.  Looks like both limits have been reached. Soon, even the
powers that be may recognize the obvious. -NYTr]

The New York Times - Aug 28, 2007
http://www.nytimes.com/2007/08/28/business/28cnd-stox.html


Dow Falls 280 Points on Economic Concerns

By JEREMY W. PETERS

As Wall Street tried to sort through some problematic readings on the
economy and new concerns surfaced about the safety of owning financial
stocks, investors pushed the market down sharply today.

Stocks had been in triple-digit loss territory for most of the day, but
the losses deepened after the Federal Reserve released the minutes of
its Aug. 7 meeting. The Dow Jones industrial average closed down
280.28, or 2.1 percent, at 13,041.85. It was the steepest one-day
decline in the Dow since Aug. 9, when it shed 387.18 points.

The Standard & Poor’s 500-stock index and the Nasdaq composite were
each down 2.4 percent.

There did not appear to be a single catalyst for the stock slump today.
Instead, investors found a number of developments bruising to their
confidence.

Merrill Lynch cut its ratings today on the shares of three Wall Street
powerhouses, Lehman Brothers, Bear Stearns and Citigroup, to neutral
from buy on concerns about their exposure to bad subprime loans. Their
stock prices all fell today.

Two separate reports showed that consumer confidence fell this month
and home prices in major metropolitan areas continued their slide in
June.

The Conference Board, in its monthly survey of 5,000 households, said
that its consumer confidence index dropped in August after surging in
July to the highest point of the year.

And a closely watched measure of home prices, the S&P/Case-Shiller
index, declined by 0.4 percent in June, faster than the 0.3 percent
rate of decline in May.

The minutes from the Fed’s last meeting showed that a growing
uncertainty about the direction of the economy prompted central bankers
to acknowledge that they might need to respond.

The minutes showed that Fed policy makers were unconvinced that
inflation would not pick up in the months ahead. At the same time, they
worried that risks to the economy had become more serious, particularly
since the financial markets were fluctuating.

“A further deterioration in financial conditions could not be ruled out
and, to the extent such a development could have an adverse effect on
growth prospects, might require a policy response,” the minutes said.

The Fed has since responded in one meaningful way, cutting the rate on
the short-term, emergency loans it provides to banks on Aug. 17. But it
is unknown whether the Fed will use the most far-reaching power it has
and cut its benchmark interest rate when it meets next month.

Copyright 2007 The New York Times