From: Barry Stoller <[EMAIL PROTECTED]> Subject: [L-I] Capitalism itself ... pauses AP. 11 September 2001. S.E.C. Closes U.S. Financial Markets; Attacks Could Hurt Economy; Europe Markets Plunge After Attacks. Combined reports. NEW YORK, WASHINGTON and LONDON -- The nation's securities markets shut down and New York's financial district was left in chaos Tuesday by the terrorist attack that devastated the World Trade Center. The New York Stock Exchange, American Stock Exchange and Nasdaq Stock Market planned to remain closed at least through Wednesday. Analysts were divided on the effect the attacks would have when trading resumes. The shutdown on the NYSE, the nation's oldest exchange, was the longest since the market closed for two days at the end of World War II. The NYSE's longest closing was nearly four months during World War I. The trade center is a few blocks from the NYSE in the area known as the Financial District, home to dozens of investment houses and brokerages. Its twin 110-story towers, among the tallest skyscrapers in the world and a distinctive part of the city's skyline, collapsed after two hijacked jetliners crashed into them, scattering debris throughout the area. The New York Mercantile Exchange, where energy futures are traded, is in the nearby World Financial Center, which was not directly hit in the plane assault. In Europe, stocks closed sharply lower and panic buying caused oil and gold prices to soar as investors looked for the safest, least risky places possible to place their cash. Bond prices also moved higher. The U.S. dollar, meanwhile, fell against other foreign currencies. "This attack was an overt attempt to disrupt the financial system. But a lot of how the U.S. market reacts will probably depend on how long it stays shut," said Richard Dickson, technical analyst at Hilliard Lyons. If the shutdown is brief, there might be some initial selling when trading resumed, Dickson said, but "things would stabilize pretty quickly." However, Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray, cautioned against making too many assumptions, noting that "the market is very reactive right now, and it's never seen anything like what just happened." Longer term, other economists worried that billions of dollars in lost business because of the attacks could further jeopardize companies already struggling and tip the fragile U.S. economy into recession. "The attack will hurt (consumer) confidence and economic growth will suffer," said Sung Won Sohn, chief economist at Wells Fargo. "It's just incredible disbelief to look on TV and see both towers gone. It is surreal because it is an image we have seen in the movies, but haven't considered a possibility in real life," said investment banker Lee Mirman, who was on vacation in Florida away from his office on the 87th floor of the World Trade Center. The terror attacks in the nation's business and government capitals may well push the teetering economy into recession, analysts suggested. The Federal Reserve said it stood ready to pump extra money into the economy if needed to try to avert such a development. The Fed's promise to supply additional money to the banking system was similar to a pledge it issued on the morning after the October 1987 stock market crash. That action, only two months into Alan Greenspan's tenure as chairman, was credited with keeping the economy out of recession. However, private analysts said the Fed's magic of lower interest rates and ample supplies of cash to the banking system may not be enough to overcome Tuesday's series of attacks, which occurred at a time when the economy was already struggling and consumer confidence was faltering. "The economy has been on a high-wire act straddling between a recession and anemic growth. Now the terrorists have cut the wire underneath our feet," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. "The United States and the rest of the world are likely to experience a full-blown recession now." The concern is that consumers will cut back further on their spending. Consumer spending accounts for two-thirds of the nation's economic activity. Even before Tuesday's attacks, signs of trouble were evident as Americans grew more worried about their jobs with each new rash of layoff announcements. Economists said the terror attacks, in addition to hurting consumer confidence, could disrupt the economy in a variety of ways, including severely curtailing air travel, which especially would harm areas that depend on tourism. "There is no economic good that comes out of this. It is just a question of how bad will it be," said Mark Zandi, chief economist at Economy.com. "It is now likely we will get a negative GDP number for the third quarter, given all of the economic disruptions that this is creating with a shutdown of the transportation system and the financial markets." Alan Greenspan, who had been attending a banking conference in Basel, Switzerland, was on a plane returning to the United States when the terrorist attacks on the World Trade Center occurred. His flight, along with other international flights to the United States, was diverted. Fed spokesman Dave Skidmore said Greenspan was on the ground at a location he refused to disclose for security reasons. Skidmore said Greenspan was being kept fully apprised of developments through a monitoring team assembled at Fed headquarters in Washington operating under the direction of Fed Vice Chairman Roger Ferguson. William McDonough, president of the Fed's New York regional bank, who was with Greenspan at the Switzerland conference of the Bank for International Settlements, said Fed officials were striving to make sure essential banking operations were not disrupted. "The New York Fed will make every effort to conduct business as normal," McDonough said in a telephone interview with Dow Jones Newswires. "I am sure that central bankers everywhere will do everything possible to maintain calm and seek to ensure the world economy functions smoothly in the face of this horrendous deed." [Meanwhile, s]hocked investors sent European share prices sharply lower and panic buying caused oil and gold prices to soar in response to the apparent terrorist attacks Tuesday in New York and Washington. The London Stock Exchange evacuated its headquarters in the city's financial district as a precaution against a possible attack, although a spokesman said trading was continuing at an undisclosed alternative site. The International Petroleum Exchange suspended trading of crude oil and refined products for an hour to catch up on an unusually heavy volume of transactions, while gold trading on the city's bullion market fizzled earlier in the afternoon. Investors dumped shares on all major regional stock markets on news of the attacks, and stocks -- already battered from several days of heavy selling -- plunged further through the afternoon. Among the biggest losers were stocks in insurance companies and airlines, after hijacked passenger planes plowed into both towers of the World Trade Center. The FTSE 100 index of British blue chip shares closed down 5.7 percent from Monday's close to 4,746.0. British Airways, which canceled its remaining flights to the United States after the attacks, was the biggest loser on the London exchange, diving 21 percent. The Deutsche Boerse's Xetra DAX index of leading German shares plummeted as much as 11.4 percent lower before recovering somewhat to close the day 8.5 percent lower at 4,273.53. The Paris Stock Exchange's CAC 40 index tumbled 7.4 percent to 4,059.75. The Mib30 index in Milan, Italy, finished the day at its lowest closing level since Oct. 17, 1998 -- down 7.7 percent at 29,112. Trading of 10 Italian stocks, including Pirelli, Telecom Italia and Banca Fideuram, was suspended after they neared a loss limit of 10 percent for the day. European insurance companies, some of which would face damage claims from the attack, fell sharply in Europe. In Zurich, Swiss Re shares fell 13 percent, Baloise declined 11.1 percent and Swiss Life slipped 7.8 percent. The world's largest reinsurance company, Munich Re of Germany, said it too could face large claims. "It's a disaster. It throws the whole market background into chaos ... Banks, insurers will fall the most -- anything that's exposed," said Mike Lenhoff, a portfolio strategist at London brokerage Gerrard. "The tragedy postpones recovery and continues to put pressure on corporate profits," he said. . . . . . . . . . . . . . . . . . . . . . . . Barry Stoller http://groups.yahoo.com/group/ProletarianNews Updates throughout the day with photo attachments. _________________________________________________ KOMINFORM P.O. Box 66 00841 Helsinki Phone +358-40-7177941 Fax +358-9-7591081 http://www.kominf.pp.fi General class struggle news: [EMAIL PROTECTED] subscribe mails to: [EMAIL PROTECTED] Geopolitical news: [EMAIL PROTECTED] subscribe: [EMAIL PROTECTED] __________________________________________________
