Fourth, Europe's recession pulls down the USA because of the tie-ins and because two or three U.S. banks had hidden exposure to Europe. The U.S. learns about the exposure too late because there still is not enough transparency and U.S. banks are still buying and insuring un-insurable risk over there. These banks are merged with healthy banks that have raised a lot of capital, but the stocks get hammered to their 2008 and 2009 lows.Go to your nearest European bank and thank them for not having secured a damned thing.
Fifth, massive layoffs strike the U.S. because of Europe. The U.S. economy wasn't growing anyway, though, and the country is sinking under the weight of higher commodity prices, Washington dithering and a president, who has failed to create jobs. As the U.S. continues to sink, commodity prices plummet and construction stops due to weak demand. The industrials take a beating every day.
Sixth, money flows from risky assets to high-yielding companies that weren't' high-yielders all that long ago. Safety stocks rally because commodities collapse and margins widen. This move happens on the way down, even as corporations were prepared for the downturn. The cyclicals don't get much love, though, and fall to their 2008 and 2009 levels, as well.
Booyah this already...