European Debt Detonated Confidence Crisis &Nbsp; Global Market Is Sad.

The global capital market collapsed in August 4th.

European and American stock market suffered the same day

Analysts believe that the main reason for the collapse of the market is the increasing risk of the spread of the European debt crisis, while the United States has avoided debt default, but the economic recovery is weak, and the market's confidence in the US economy is obviously insufficient.

The collapse of the market is undoubtedly a vote of no confidence in the crisis response of the European and American governments.

Global stock market

On the 4 day of closing, the three major stock indexes of the US stock market hit a new low this year.

Among them, the Dow Jones index fell more than 500 points, the biggest one-day drop since December 2008.

The standard & Poor's index fell about 4.8%, down from 10% in April 29th.

In terms of European stock market, the MIB index of Italy Milan dropped by 4 on the 5.16% day, and the main index of other countries also dropped by more than 3%.

The largest stock market in Latin America, the Brazil Bo Vespa index dropped by 5.72%, while the St Paul stock index in the Argentina stock market plunged 6.01%, while the main indexes in Mexico and Chile fell by more than 3%.

5, the Asia Pacific stock market also showed a sharp decline after opening.

Morgan Stanley Capital International Inc Asia Pacific Index (MSCI) fell 5 in early trading on 2.3%, the biggest decline since March.

At the close of the morning market, Japan, Australia and South Korea also had more than 3% of Seoul's stock market declines.

In addition to the stock market crash, oil prices plunged more than 5% on the 4 day, and crude oil futures prices in the New York market closed at $86.63 a barrel, the lowest in six months.

Large scale liquidation of investors in the bulk commodity market also led to a 4 day decline in the price of corn, soybeans and wheat on the Chicago futures exchange.

"Investors have already disarmed," said Peter Kenny, managing director of Knight capital of investment company. From stock market to oil market, from spot to futures, no matter which market, which company or which trader, they sell or sell.

European debt detonate confidence again

"The reason for today's collapse is more than 90%," said Joseph, a trader at Wall Street, told Xinhua.

Recently, debt problems in Italy and Spain continue to ferment in the third and fourth largest economies in the euro area.

On the 4 day, the yield of 10 - year treasury bonds in Italy and Spain rose to 6.19% and 6.27% respectively.

From the experience of three countries that have received assistance from Greece, Ireland and Portugal, once the yield of treasury bonds reaches 7%, external assistance will be required.

Berlusconi, Prime Minister of Italy, delivered a televised speech on the 4 th, saying that Italy had a solid economic foundation and could overcome the turmoil in the bond market.

However, the market understands this statement from a negative angle.

Investors believe that the Italy government has the same attitude as Greece, Ireland and Portugal before. Once a country repeatedly claims that its reputation is good, it has no credibility.

The European Central Bank held a monetary meeting 4 days ago, and President Tyse announced that it would restart the euro zone national debt purchase plan which was suspended in March.

But Tyse refused to answer the question of whether the ECB would buy Italy and Spain bonds at the press conference that day.

Some traders disclosed that the European Central Bank had bought Portugal and Irish bonds in the two tier market, but did not buy Italy and Spain bonds.

This led to investor panic.

Joseph said: "the yields on Italy and Spain have risen by more than 6% recently. We can not believe that the ECB will continue to buy the two countries' bonds unless they are mad."

According to Bloomberg statistics, the balance of Italy and Spain's debt is as high as 2 trillion and 200 billion euros ($3 trillion and 100 billion), and the ECB has reason to worry that it will be difficult to get away if it gets involved.

Market's vote of no confidence in the government

The recent US debt ceiling problem and the European debt crisis continue to cause a lot of trouble, because the government's policymakers are not coping with it.

Ronnie Ryan, an analyst at KWB, a research firm, said: "political leaders need to be prevented ahead of time, not the crisis."

Bloomberg's comments on the 5 day show that the global market

Analysts believe that the reason why the European debt crisis once again ignite the confidence crisis is largely due to Trichet's latest statement highlighting the internal fragmentation of the European leadership.

The European Central Bank has been opposed to debt restructuring in countries like Greece and other countries in crisis, and hopes that euro zone governments will shoulder more responsibility for rescue.

The European central bank stopped buying Treasury bonds in March this year, and is also trying to kick the ball back to the government.

For the European Central Bank, its primary responsibility is to develop an independent monetary policy to maintain price stability and not to be too involved in crisis relief.

Governments in the euro area hope that the ECB will more share the cost of salvage.

According to sources, on the 4 day's meeting, Wiedemann, the governor of the Bundesbank, voted against restarting the debt purchase plan, showing that the contradiction between the European Central Bank and the government is increasingly fierce.

Bloomberg commented that euro zone leaders must act immediately to overcome the limitations of national politics and solve the overall problems of the eurozone.

In addition, the US debt ceiling has passed, but the solution has failed to resolve the market's worries about economic growth, and the recent poor economic data released by the United States has exacerbated the pessimism of investors.

For the United States, how to combine long-term deficit reduction plans with short-term stimulus plans is a test of the wisdom of political decision-makers.