And investors were worried about a German vote on the European rescue plan and the US Senate was to vote on its financial regulation bill.
To make matters worse, there were options expirations which always heightens activity in either direction.
The S&P 500 and the Nasdaq lost around four per cent and a serious, positive circuit breaker is needed and fast.
That academic pariah Nouriel Roubini, has tipped a 20 per cent fall in stocks but as always he’s talking up his questionable credentials for big calls.
I hope he’s wrong again but as I say, we need a circuit breaker.
This is the correction that I often referred to as a possibility, given our big bounce back since March 2009 but I underestimated the stupidity of the EU Government, which is at the epicentre of this earthquake on global stock markets.
Credibility of governments to support the global economy is raising question marks over bank’s balance sheets and this is raising doubts about a global recovery, which hurts share prices big time.
Ironically the economic story in places such as the US and even Japan are actually on the improve but the trouble spot is Europe and until they take actions to build confidence then shares will be under pressure.
If some decisive actions comes next week, this share sell off might be arrested, as great value has emerged with quality stocks but we’re again in challenging waters. I wouldn’t want to go to an election in this sort of environment.
By the way, if this continues the next interest rate movement from the Reserve Bank will be down.
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