Maybe I wasn't clear enough. I meant, why was there a small drop in USA markets when the drop was bigger abroad?

Perhaps the picture will be different in a few days... Sometimes the markets take time to react.

4) What about my investments with these firms/what about my bank going under?

FDIC insured banks are insured for up to $100,000 dollars on checking, money market accounts. Joint accounts are i believe $150,000. Investments are protected for up to $500,000. When you have assests in an institution that is bankrupt that excedes these values its a stand in line scenario to see if you get everything back or just what is insured.

So, for most of us, we should be ok. I do not forsee a true depresssion, but this is obviously not good. Most of us will not loose anything, but it will be harder to get loans. And if you have investments in some of these companies going under, you will loese money on thier stock.

luckily for sony, ps3 sells most of its consoles somewhere other than the us.

Well, many european companies also have investments in american markets. Since the stocks they are invested in go down, thier value as a company goes down too and that, in turn, makes the investors in the europen company nervous. So, i'll use a hypothetical scenario here.

Big British company has investments in many different companies. They may have had stock in Bankruptfirm001. Thus, they loose basically all thier money in that stock (ex it was 63 a share, now its 14). Thus, the value of Big British company goes down and the investors in Big British Company feel a bit skittish and sell.

It is more complex than this and I can't talk about everything that might cause this (I just don't know it), but this is the gist of it.

Greenspan has said it is the worst he has seen in at least 50 years.

Thats pretty bad.

edit: I missed on the european market number, was more like 2-4%

I understand why European companies would drop (as Asian companies did, and also will tomorrow when their main markets open after today's holiday). What I don't understand is why American companies didn't drop more.

Apparently it's not just me who's baffled:

http://biz.yahoo.com/cnbc/080915/26718956.html

I'm not really sure either.

Maybe the market is just out of touch with reality. Conspiracy theorists would say things may get different after the election, I wouldn't discount that possibility...

Well, I usually don't agree with the conspiracy theorists. Those theories hinge on the fact that alot of people work together on these complicated plans with no trouble from eachother. I've never seen people work together well enough for these types of plans to make it reasonable imo.

Edit: Market can do better after election, uncertainty about who will be next pres is resolved.