The stock market is tanking. At midday Aug. 4, the Dow had fallen 300 points. The bond market is also beginning to growl like a bear. Investors are buying long-dated bonds while eschewing shorter-term securities to protect their assets, a clear indication that they feel the economy is likely to weaken further. High-profile economists are also turning gloomy. Former Treasury Secretary Lawrence Summers put the chances of another recession at 1-in-3; Harvard economist Martin Feldstein put it at 1-in-2. What's behind all the pessimism? Here are four big factors that are weighing on stocks and could determine the course of the global economy in the coming months:
The Minnesota governor and legislative Republicans say they have a deal to end a government shutdown that began on July 1. But budget experts say the deal is fiscally 'unustainable.'
American exposure to the Greece crisis is high in certain areas. Half the assets in the 10 biggest money market funds are invested in European banks, which hold a lot of Greece's debt.
Bond rates that are low require the US government to pay more interest to investors. Because the government has to borrow to pay off debt, bond rates could, in turn, affect taxpayers.
Credit rating agency Fitch lowers Libya's credit rating three nothces.
BP oil spill: The New York Federal Reserve is investigating Wall Street firms' exposure to the oil company, in the event BP goes bankrupt over the Gulf oil spill.
Virtually everyone agrees that BP should pay the costs of the Gulf oil spill – rather than US taxpayers.
The US Coast Guard announced Thursday that, as a part of the oil spill clean-up, BP will start to funnel oil and gas to the surface of the Gulf of Mexico after successfully cutting a leaking oil pipe on the sea floor.
The firm is spending about $6 million a day to contain the oil spill. Gulf of Mexico expenses associated with the oil rig explosion could eventually cost BP more than $3 billion.