Wall Street: a helping firedamp, even before the first spark
According to the plan unveiled by U.S. Secretary of Treasury--Tim Geithner, it appears that the U.S. government seems to abandon the project of creating a 'bad bank' (defeasance structure along the lines' Credit Lyonnais - CDR ') fully secured by public funds.
The Dow Jones plunged to -4.6%, the S & P Protected content 4.9%, the Nasdaq falling more than 4.2% ... is a movement of temper unmatched since 1 rejection of Henry Paulson TARP by Congress on September Protected content to adoption that person not convinced on 3 October Protected content .
Wall Street has unscrewed from -2% in a few seconds to 17H (even before Tim Geithner has had time to read the 3rd line of his speech) was the victim of a real wave of panic at half-time of with the closure trigger cascading automated sales programs.
The Dow Jones plunged to -5% in 7.850Pts around 21:45 (closing in Protected content , or -4.61%) and 'S & P' erased all the gains accumulated since February 2.
Tim Geithner has commented then presented before a parliamentary committee in a four-what is readily apparent-complicated for the first implementation of 'stress tests' (a kind of scale survey of the degree of confidence enjoyed by banks). The thing that annoyed was evidently the creation of a fund public / private body to absorb toxic assets from the market to the tune of $ 500Mds: there is no assurance that private investors have wanted to be exposed to a unknown risk of MBS and CDOs, even if their value 'market' is very close to zero.
What seems to worry very much the members of Congress, is the development of a system of evaluation of assets in distress ... and according to Tim Geithner, no entirely satisfactory answer exists. Wall Street did not feel reassured by not providing support to indebted households and small businesses by granting loans totaling up to one trillion dollars ($ 1.000Mds) with support from the EDF.
The launch of a program aimed at stabilizing real estate market has also received at least a paradox: the developer Lennar unscrewing of -15%, Richard Ellis of -13.7%, Kimco Realty of -13%, Pulte Homes -10%, DR Horton of -9.5% (sector crashing -12%).
Banks have also plunged in the image of Bank of America Protected content , Citigroup Protected content , Wells Fargo Protected content , XL Capital Protected content , JP Morgan Protected content %.
As for statistics, the day was not charged and it was limited to the publication of wholesale inventories, which fell by 1.4% in the U.S. in December ... it is frankly not the kind of figure that could justify a relapse of the Dow below 8.000Pts.
The assertion that 'TARP-2' would be expensive, difficult to implement and the results slow to materialize pouvaint not surprise anyone ... however, the violence and suddenness of the rupture in the fall just as if a gun had sounded on the 'floor', raises many questions.