I swear I didn't read the following before I posted. The link comes from here:

Dow plunges 800 points amid global sell-off

Monday October 6, 2:49 pm ET By
Joe Bel Bruno, AP Business Writer
Dow Jones industrial average plunges 800
points amid global sell-off
NEW YORK (AP) --

The Dow Jones industrials skidded more than 800 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain. Financial markets took a despairing view of the future Monday, seeing contagion in a credit crisis that threatens to cascade through economies globally despite government efforts to provide relief.

Investors around the world have come to the sobering realization that the Bush administration's $700 billion rescue plan won't work quickly to unfreeze the credit markets. Global banks, hobbled by wrong-way bets on mortgage securities, remain starved for cash as credit has dried up. That has sent stocks spiraling downward in the U.S., Europe and Asia, and driven investors to sink money into the relative safety of U.S. government debt. Fears about a global recession also caused oil to drop below $90 a barrel; and the benchmark index that gauges fear in the market jumped to the highest level in its 18-year history.

"The fact is people are scared and the only thing they're doing is
selling," said Ryan Detrick, senior technical strategist at Schaeffer's
Investment Research. "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working." The selling was so extreme that only 67 stocks rose on the NYSE -- and 3,155 dropped. That's a telling sign considering the stock market is considered a leading economic indicator, with investors tending to buy and sell based on where they believe the economy will be in six to nine months.

Monday's steep decline on Wall Street indicates that investors are becoming more convinced that the country is leading a prolonged economic crisis that is spreading to other nations. Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits. As the U.S. tries to repair its battered banking system, the German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG. And France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed. The Fed also took fresh steps to help ease credit markets.
The central bank said Monday it will begin paying interest on commercial banks' reserves and will expand its loan program to squeezed banks.

Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., said government intervention certainly might help. However, he believes investors are sensing that what's happening in the economy is a shift in the extent to which consumers and businesses take on debt, a change that will take years to play out. "This is a global deleveraging of many economies," he said. "It might appear that you're going into the abyss where the economy grinds to a halt and the financial system goes into complete disarray. But, what the market is really reading here is that this is a global phenomenon, and when you delever like this, it is a process that takes a very long period of time measured in years, not quarters."

That, he said, is being reflected in major stock indexes being repriced significantly lower. In mid-afternoon trading, the Dow Jones industrial average fell 703.68, or 6.82 percent, to 9,621.70, dropping below 10,000 for the first time since Oct. 29, 2004. The Dow came within striking distance of its biggest one-day point decline -- 778, which the blue chips suffered a week ago when investors feared the bailout package might not pass Congress.

Broader indexes also tumbled. The Standard & Poor's 500 index shed 81.91, or 7.45 percent, to 1,017.32; and the Nasdaq composite index fell 156.33, or 8.03 percent, to 1,791.06. The Russell 2000 index of smaller companies dropped 48.68, or 7.86 percent, to 570.72.

Bolded for the really interesting parts. We're falling now because people are scared. When they calm down, I think things will start righting themselves. But, I think it's interesting to note what Battapaglia said: people are changing the way they think about debt, and investors are taking note. God, I hope so. The current pace of consumption simply can't continue.

-- DV