Photograph of a trader at the New York Stock Exchange by Richard Drew/AP
$85 billion may be able to give AIG a second chance, but it's not enough to ease investors' worries. Stocks fell sharply, the Dow plummeting 200 points when the market open and then 338 points at one point.
The Wall Street Journal reports that there's uncertainty whether the bailout of AIG will help the troubled global market: "banks have again grown increasingly reluctant to lend to one another, as overnight borrowing costs have surged." Or, as a money manager told Bloomberg News, "It's ugly,. It's about the worst I've seen it in 25 years. You have to have free-flowing credit to lubricate the system. That's not happening right now."
Stocks fell in Asia and Europe, and the NY Times suggested that "government report on Wednesday morning that showed construction of new homes and apartments falling more than expected last month, reaching a 17-year low" may have also worried investors. John O'Brien, of MKM Partners LL in Cleveland, told CNBC, "The fear is who is next. It almost feels like people scour the books and say who is the next likely target that we can put a short on and that spreads continuous fear."
Dealbreaker says there's rumor the Fed may cut the key lending rate: "We are skeptical because any cut the day after the meeting would be admitting that they were, what's the word, totally fucking wrong yesterday. However, with the shit hitting the fan today, it has to have at least crossed the Beard's mind once."
