Socialist Worker

US shares plummet over fears of European instability

Issue No. 2200

While we are watching the election results, there’s a stark reminder of the fragility of the economic “recovery”. US shares have plummeted amid fears that the turmoil in Greece could spread to other parts of Europe.

The Dow Jones Industrials index fell almost 1,000 points at one stage before recovering to a loss of 328.

Although the Greek parliament passed the country's cuts bill, bankers are worried that similar trouble will reach Portugal, and possibly Spain.

The credit agency Moody's added that the “fragile balance” in the British economy was particularly vulnerable.

It was the third day of losses on Wall Street and triggered concern of more instability in the markets on Friday.

The market is now realising that Greece is going to go through a depression over the next couple of years,’ said Peter Boockvar, equity strategist at Miller Tabak. “Europe is a major trading partner of ours, and this threatens the entire global growth story.”

Analysis from the European Commission this week showed that Britain’s budget deficit will be the biggest in the EU this year, at 12 percent of national income.

For now financiers believe that the British government will pay its debts. But they will be nervous about any elements of instability – such as a hung parliament.

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