Stocks already are down, both in global markets and in the U.S., Bloomberg says today, blaming the failure of auto bailout talks. The dollar and crude oil also both are falling.
“This is a very stressful, tense time for the market and for everyone else,” said Alan Gayle, senior investment strategist at Ridgeworth Capital Management, which oversees $70 billion in Richmond, Virginia. “The tentacles of the auto industry throughout the economy are fairly extensive.”
There’s also Bernard Madoff’s $50 billion Ponzi scheme to make Wall Street nervous. It all adds up to a nasty double-whammy:
“His market making operations are big, his investor base was widespread and the fraud will destroy confidence in some areas of money management,” Peter Boockvar, a New York-based equity strategist at Miller Tabak & Co., wrote in an e-mail to clients today.
As Laura noted, the White House possibly may step in to extend a lifeline to automakers. Word of that scenario apparently eased some of the cliff diving. But no one’s expecting a rally.
There are still broad economic consequences to ponder if the automakers go under. That’s the focus today. As all this sinks in, I think the next phase will be to consider the political consequences to Republicans for starting a class war with union workers.
Funny, I don’t recall Republican lawmakers declaring loyalty to their core beliefs and coming down hard on Wall Street bank executives who came to the government, hat in hand. It reminds me of schoolyard bullies picking on the most vulnerable children. Republicans looked at this as an opportunity to break a union, rather than considering the impact it will have on workers who have nothing to to do with the UAW. As everyone pays for the auto industry’s collapse, that stance will come back to haunt them.
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