Earlier this morning new began to surface of a massive number of countries moving in to nationalize their banks. In response to the mass nationalizations, the Central Banks announced they'd be pumping more than $620 billion into the global banking system. With that, the free fall began.
"As nine central banks used currency swaps to oil the wheels of dollar liquidity in the money markets, sterling plunged and was on course for its steepest one-day drop against the dollar for at least a decade and a half.
The steep sell off of sterling and London shares came as agreement reached on Capitol Hill on a proposed $700 billion rescue plan for the US banking system was overshadowed by the latest woes for British and continental European banks. As well as B&B, the Belgian, Dutch and Luxembourg Governments nationalised parts of Fortis, the European banking and insurance giant, and agreed to inject €11.2 billion into the group.
Iceland's government also took control of Glitnir, that country's third biggest bank.
The euro also fell heavily against the dollar amid concern over the eurozone's banking strife and the adequacy of arrangements for bank rescues in the 15-nation bloc."
The dollar also gained on Tokyo's Nikkei, oil fail $5 per share closing below $100 a barrel and as previously stated sterling silver fell a record amount against the dollar. Normally the climb the US dollar saw today would be seen as great news, but these aren't normal times. We are nearing the close of a presidential election cycle.
The DOW's decline is being incorrectly tied to the failure of the economic bailout bill. Democrat political leaders desire to tie the market to the failure of the bill so they can blame Republicans for the failure, despite the fact that the Democrats have a majority in both the House and the Senate that, had they showed leadership, they could have passed. Business leaders hope to tie the decline to the bailout bill in hopes that the people will believe the government must pass the bill to save the economy when in reality they only want the fed to save their failing companies and poor investments from their own bad business decisions.
In the end, the truth is the market's decline had little to do with the failure of the bill, it simply compounded investor reaction to the rash of bank nationalization occurring in Europe and the Central Bank's decision to flood the market with cash.