A Moody’s downgrade of several banks in Spain smashed markets in Asia and Europe.
The concerns that problems in Greece could spread to a much larger economy increased. Even with the new facility of nearly $1 trillion, and IMF aid, the cost to rescue Spain and its banks could be overwhelming. Spain’s economy is already in recession and unemployment is above 24%.
The Hang Seng dropped 1.9% to 18,845. The Nikkei was down 3% to 8,611. The Japan index has had its longest downward streak since the September 11 catastrophe.
In Europe, the FTSE, DAX and CAC 40 all moved lower by 1.1% at the open, and the trend was sharply down. European banks in particular were hurt on worry that some my have to take huge write-offs of sovereign debt holdings.
Douglas A. McIntyre
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