Markets plunge as fear of worldwide recession grows

Canadian Marshall McLuhan's global village philosophy has never been so accurately expressed in the financial markets. It is not clear if Wall Street opened lower today because of poor performance in Europe after the president of the BCE, Jean Claude Trichet's, intervention or if it was Europe who decided to throw in the towel after the rocky opening.

Truly the cause is hardly important when the results look this bad. Markets plunged and the price of gold hit a new high of $1,681 per troy ounce.

In Europe, investors are not finding any much-awaited calm in the president of the BCE's ambiguous statements about purchasing public debt, and that ended hopes that the markets would await more direct statements. Stock market reactions were not put on hold and sales rose again.

In Spain, the Treasury earned passing marks for issuing 3 and 5-year bonds, but this move did not create much relief. During the sale, payments were made at 12% more per share than expected, because previous agreements indicated that the price would be lower. The incentive was not enough to placate the Ibex 35, which for another day decided to flirt with its support levels. The Ibex 35 tried to regain the psychological barrier of 9,200 basis points during the morning, but it lost them again later in the day.

The open fronts revived the fear that a global recession could be very close, or that it is already a reality. The fear was reflected in all the European markets; every single one finished in the red, with drops between 3% and 4%. Investors took the biggest hit from Italy, whose stock market index marked 5.6% declines. But shareholder enthusiasm also took a beating. The Cac 40, the main stock market index for France, fell 3.9% to 3,320 points. And it goes on and on. Germany's bastion, the Dax index, recorded its seventh consecutive loss with a 3.4% drop.