WASHINGTON - Wall Street skidded further into despair as the Dow closed another 500 points down after Federal Reserve chairman Ben Bernanke warned the current financial crisis would not go away soon.
The drop is the second day of losses after the Dow lost as much as 800-points before its big rally the day before. To ease panic and unclog credit markets here in the U.S. and abroad, the Bush administration is considering some bold, historic moves.
What could this all mean for your paycheck? Click play to hear CBN News Financial Editor Drew Parkhill's analysis.
Pain on Wall Street
This morning, the Dow opened below the 10,000 mark for the first time in four years - a painful blow to Wall Street and Main Street, for both the billfold and the brain.
"Psychologically it hurts the floor a lot. We don't like seeing money flying out the window as fast as it's been flying out the window," independent trader Dave Henderson.
The pain is not only felt here at home but in overseas markets as well.
"It's kind of a vicious cycle. We sell off, they worry. They sell off, that extends into our selloff again," explained Art Cashin, the head of floor at UBS Securities.
Australia's central bank surprised markets today with a major rate cut- something many analysts believe the Federal Reserve may eventually have to do.
Desperate Times Call for Bold Measures
The Fed is already considering a bold plan to buy massive amounts of short-term business debt known as 'commercial paper.'
Businesses use these notes to keep their day-to-day operations going. And the market for these critical loans has virtually dried up in the current credit crunch, leaving many companies vulnerable.
The Fed is also loaning as much as $900 billion to squeezed banks.
The Fed's moves come as some worry that the rescue package passed by Congress last week wasn't enough.
Some economists now see it as essentially a stopgap for the U.S. alone. Others say the plan will take a while to begin to work.
President Reassures Americans
"I believe in the long run this economy is going to be just fine," President Bush said.
The President tried to reassure Americans and nervous investors that the multi-billion dollar plan will eventually work.
"I signed the bill on Friday. It's going to take time for the Treasury Department to put a plan in place that won't waste your money and that will achieve the objective," Bush said.
But with the financial outlook so unstable, many worry about what may come next.
One man said, "I think the long-term trend is, people losing their houses, people, losing their jobs, small businesses going out of business. I hope I get to keep my job."