Having had a weekend to process the President’s economic stimulus plan, the global markets have spoken.

And they have replied with “You’ve got to be kidding me.”

European and Asian stock markets plunged Monday following declines on Wall Street last week amid investor pessimism over the U.S. government’s stimulus plan to prevent a recession.

The U.K. benchmark FTSE-100 dropped 3.9 percent to 5,673.1; France’s CAC-40 Index plunged 4.5 percent to 4,861.2, while Germany’s slumped 5.35 percent to 6,922.7.

In Asia, India’s benchmark stock index tumbled 7.4 percent, while Hong Kong’s blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Investors dumped shares because they were skeptical that an economic stimulus plan President George W. Bush announced Friday would shore up the economy that has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

“We’ve taken our lead from the Asian markets who have not been impressed by the U.S. There’s debate if there’s going to be a recession in the U.S. I don’t think there’s much chance of that though,” said Richard Hunter, an analyst at Hargreaves Lansdown Stockbrokers Ltd. in London.

Concerns about the outlook for the U.S. economy, a major export market for Asian companies, has sent the region’s markets sliding in 2008. Just last Wednesday, the Hang Seng index sank 5.4 percent.

“It’s another horrible day,” said Francis Lun, a general manager at Fulbright Securities in Hong Kong. “Today it’s because of disappointment that the U.S. stimulus (package) is too little, too late and investors feel it won’t help the economy recover.”

Keep in mind this happened on an idle holiday weekend Monday.  There was no major announcement over the weekend, no major market numbers announced, no figures coming out.  The world on Friday was pretty much the same on the world today.  Today, the markets are closed in the US.  Tomorrow, they will not be.

The term  “bloodbath of Biblical proportions” will not begin to describe the markets tomorrow and most likely from this point on.

So what changed?  What caused the cliff?  Over the weekend, something changed to the point where the Nikkei lost 2% within the first few minutes of trading and it only got worse from there.  As I’m writing this, it’s 4 PM in London.  The European markets have dropped almost 6% in some cases.

What changed was psychological.  Asia, and now Europe, have both realized that the question is no longer “Will the US downturn qualify as a recession possibly causing a global downturn?” and not even “Will the US recession qualify as a depression, possibly causing a global recession?” but “How long will the US Depression last and how much damage will it cause globally?”

That seems harsh, if not alarmist.  But let’s keep in mind we’re depending on George W. Bush to be economically prudent and not political.  One one hand, Bush’s legacy will motivate him to do something, hence the economic stimulus package.  He does not want to be remembered as another Herbert Hoover.

On the other hand, the people doing the something are largely comprised of Helicopter Ben Bernanke, Henry Paulson, and Bush’s closest advisors.

In other words, the Eurasians have seen our response to Big Shitpile (tm, Atrios, still) and their response to OUR response has been something along the lines of abject horror, panic, and resignation to a particularly unpleasant fate.  They have no confidence in us, because they are looking at us making more tax cuts and handing out some refunds and have realized that we simply refuse to grasp the depth of the problem.

They think we’re fucking crazy.  And they’re right.

We’re throwing a $145 billion dollar or so bandaid on a $14.5 trillion dollar or so problem.  It’s that bad.  Our response to the issue is literally, a One Percent Solution.  It’s two orders of magnitude below the order of the problem, and I’m being kind.  We ran up another 3 trillion in national debt just screwing around with Iraq, and that when our economy was supposedly good.

Eurasia is upset because they were counting on the people who should know better to actually do something substantive about it.  What they have realized is that the stimulus package instead is designed to soften the blow for the top 1% of the economy and let the other 99%, the ones buying all that crap from China and Malaysia and Singapore and Japan and Germany and wherever (i.e. all the countries whose markets just tanked today), go eat cake.

Which makes all the countries whose markets just tanked today very unhappy, because without Americans buying all their PS3s and Jettas and handbags and toys and saucepans and flat screen monitors and doodads and widgets and whatchamacallits, they have a real problem.

Even bigger than that problem is the problem with the global credit market.  The wave of defaults are coming, and the people holding the increasingly worthless debt that won’t ever get repaid in a timely fashion are going to find themselves without a damn thing.

When America stops making payments on out IOUs, it’s all over.  Today’s market plummet was the realization that America is going to renege on all this stuff.

Now there’s a chance I’m wrong.  There’s a chance that America will come out of this by the end of the year and that we’ll turn this around.

But let’s keep in mind the massive flaw in that plan:  the people who got us into this mess are the same people who have shown seven years of repeated incompetence, partisan bloodletting, unabashed greed and powermongering on an almost dictatorial scale.  We’re betting on Bush and his crew to do the right thing.  Even if there WAS something we could do about it at this point…the person who has to do is still George W. Bush.  So far, betting on Bush to do the right thing has been a loser bet 100% of the time.  We would need something bordering on an actual miracle here, and we have George W. Bush at the helm.  Miracles don’t come with instruction manuals, and even if they did, he wouldn’t fucking read it, ya dig?  We’re goners.

Today?  Today was the rest of the world realizing that we are screwed, and that we’re taking them with us.  The escape pods are being checked for supplies.  The economy is officially able to have its consistency checked at this point not by the professional economist, but by the layman with nothing more than that tined eating utensil we ofter refer to in times such as these.  When said layman does stick the fork in, the economy will really be done.

So yes, today was a Global economic no confidence vote.  No confidence in Bush’s plan.  No confidence in Bush.  No confidence in Bush’s country.  No confidence in a global confidence game, where fractional reserves of cash leveraged multiple orders of magnitude of credit.  People now want their cash back.  And multiple orders of magnitude of people aren’t going to get it.  People are running for it.  It’s not the fire that kills you in a crowded building.  It’s the smoke and the stampede.

From here things just get worse in 2008, other than the 15-20% stock market “corrections” around the world.  And it’s just freaking January. STILL.

If the 70’s were the “I’m getting mine” decade, the 80’s were the “I’m getting mine and going for yours” decade, the 90’s were the “I’ve got yours and I’m going for everyone else’s” decade, they’ll look back on this one and say it was the decade where we had ours and lost it all.

That sound you heard today is the Eurasian markets heading for the exits at the 8th inning while we still think there’s a chance we can pull this off being down 12 runs and the bottom of the lineup coming up.

Game over, folks.  Thanks for coming.  

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