One of the most jaw-dropping news items I saw this week was the announcement by Volvo, the world's second largest truckmaker, that it had "won just 115 European orders in the third quarter, down from 41,970 a year earlier," according to a Bloomberg report, "Volvo, Scania Miss Profit Estimates, Cut Truck Output."
There are no safe havens from the forces battering the global economy any longer.
In rich countries and poor countries alike, markets are plunging, companies are scrambling for credit and cutting their growth plans and consumers are keeping cash in their pockets. The U.S. and some governments in Europe and Asia are spending heavily to stanch the problems in markets and Main Streets globally, but the attempts have not halted the damage.
Stock declines started in Asia and quickly spread as markets opened for trading around the world.
Fears of a prolonged recession pushed shares down across the world on Friday. The slide started in Asia, where the benchmark Nikkei Stock Average fell 9.6% to a five-year low of 7649.08, and markets in Hong Kong, Mumbai and Seoul registered similar declines. Europe followed next, where the pan-European Dow Jones Stoxx 600 Index fell 4.7% to 198.80, dropping below 200 for the first time since mid 2003. In the U.S., the Dow Jones Industrial Average fell 312 points, or 3.6%, to finish at 8378.95, a 5 1/2-year low.
Disappointing economic statistics released Friday fed the sense of malaise. In Europe, a closely-watched survey of economic activity, the Markit Purchasing Managers' Index, fell to its lowest level in a decade in October. In the U.S., sales of previously occupied homes rose 1.4% from a year earlier in September, as bargain hunters started nibbling. But that news was eclipsed by the fact that there's still a huge glut of homes and credit remains tight. In Asia, currencies sank across the continent, deepening fears that companies would have a tougher time paying off debt that is in dollars and euros.
One big exception was Japan, where the yen jumped to a 13-year high, and was at 94.6 yen to the dollar late Friday in New York. But the gain stoked fear that the Japanese export machine will sputter further because its exports will be more expensive when measured in dollars.
Japan's deepening pessimism came just a few weeks after big firms started uncharacteristically bold overseas acquisitions. Last month, Nomura Holdings Inc. snapped up parts of bankrupt Lehman Brothers Holdings Inc. in Asia and Europe. Nomura's ebullient chief executive Kenichi Watanabe said in an interview he was looking at other possible acquisitions. But even though the strong yen makes overseas assets cheaper, there is a chance that Japanese companies may hunker down, removing another potential rescue force for ailing companies elsewhere.
While markets have been tumbling for some time, Friday seemed to be a day when many people around the world became convinced the economy is in for a long recession. That sense was exacerbated by poor earnings results and news of deep layoffs. Central banks in Europe and the U.S. are hinting broadly at further interest-rate cuts, while government officials in the U.S., Europe and Asia also are plotting further action. But that wasn't enough to calm fears around the globe.
"No one expected this," said Jimmy Panthaki, a 63-year-old Indonesian manufacturing executive, fretting about his personal investment losses. "Where do we go from here? We can't buy. We can't sell. It is a Catch-22 situation."
J.P. Morgan Chase & Co. economists estimate U.S.
