Shaw Capital Management Factoring: Fraudulent Google certificate points to Internet attack

http://shaw-capitalmanagementfactoring.com/2011/09/shaw-capital-management-factoring-fraudulent-google-certificate-points-to-internet-attack/

This screenshot shows the warning the user reportedly got when attempting to log in to Gmail.

A Dutch company appears to have issued a digital certificate for Google.com to someone other than Google, who may be using it to try to re-direct traffic of users based in Iran.

Yesterday, someone reported on a Google support site that when attempting to log in to Gmail the browser issued a warning for the digital certificate used as proof that the site is legitimate, according to this thread on a Google support forum site.

“Today, when I tried to login to my Gmail account I saw a certificate warning in Chrome,” someone using the screen name “alibo” wrote. “I think my ISP or my government did this attack (because I live in Iran and you may hear something about the story of Comodo hacker!)” Alibo then posted a screenshot and the text of the certificate. The screenshot page was not accessible.

In this case the browser of the person reporting the problem warned that there was a problem with the digital certificate. However, it’s unclear what triggered the warning and other browsers may not. In that event, a user could end up on a site that purports to be google.com but isn’t.

CNET verified that the digital certificate is fraudulent. This Pastebin post details how to verify that a certificate is real and notes that it was issued in July. More information on how to mitigate the risk from the DigiNotar certificate is provided on this Facebook page from Ryan Hurst, manager of advertising security engineering at Microsoft.

A Google spokesman provided CNET with this statement: “A Chrome security feature warned the user of the invalid certificate and blocked them from visiting the attacker’s site. We’re pleased that the security measures in Chrome protected the user and brought this attack to the public’s attention. While we investigate, we plan to block any sites whose certificates were signed by DigiNotar.”

Mozilla said in a blog post that it was “Because the extent of the mis-issuance is not clear, we are releasing new versions of Firefox… shortly that will revoke trust in the DigiNotar root and protect users from this attack. We encourage all users to keep their software up-to-date by regularly applying security updates. Users can also manually disable the DigiNotar root through the Firefox preferences.”

The certificate was issued by DigiNotar, based in the Netherlands. Representatives from the company did not immediately respond to an e-mail seeking comment today and an automated message said the offices were closed for the night and offered no voice-mail option. A phone call and e-mail to Vasco Data Security, parent company of DigiNotar, were not immediately returned.

The situation is similar to one that happened in March in which spoofed certificates were found involving Google, Yahoo, Microsoft, and other major sites and they used Internet Protocol addresses in Iran. In that case, the fraudulent digital certificates were acquired through reseller partners of certificate authority Comodo and a 21-year-old Iranian patriot took credit for the attack, saying he was protesting U.S. foreign policy.

Moxie Marlinspike, chief technology officer of mobile security firm Whisper Systems and an expert on Internet authentication infrastructure, warned against jumping to conclusions about who is behind the attack.

“Clearly something is amiss. There’s a rogue cert for all of Google services in the wild,” he told CNET. “Of course many people are quick to claim that the state of Iran is responsible for all this but I think it’s probably too soon to draw that conclusion. There doesn’t seem to be any specific evidence.”

These situations happen all the time, and rather than point fingers, the industry should fix the underlying problem, he said. In the meantime, individual Web surfers can protect themselves by using a Firefox plug-in Marlinspike developed called Convergence. “My hope is that this will be integrated into Web browsers themselves” in the future, he said.

These attacks illustrate a fundamental weakness with the current Web site authentication system in which third parties issue certificates that prove that a Web site is legitimate when making an “https://” connection. The list of certificate issuers has ballooned over the years to approximately 650 organizations, which may not always follow the strictest security procedures. And each one has a copy of the Web’s master keys. There is no automated process to revoke fraudulent certificates, nor is there a public list of certificates that companies like Comodo have issued, or even which of its resellers or partners have been given a duplicate set of the master keys. And there are no mechanisms to prevent fraudulent certificates for Yahoo Mail or Gmail from being issued by compromised companies, or repressive regimes bent on surveillance.

Today’s system gives browser makers tremendous responsibility. Any list of so-called certificate authorities they include will be trusted by billions of Web browsers around the world, unless users take the time to change the settings.

“I expect this type of attack to become somewhat commonplace in time,” said Roel Schouwenberg, senior researcher at Kaspersky Lab. “And in this case we may be looking at a double whammy – not only does SSL suffer yet another blow, we may also be looking at a serious compromise within Vasco. The latter could have a very significant impact.”

Shaw Capital Management News: Former Lenovo’s Rory Read is AMD’s New CEO

http://news.shaw-capitalmanagementfactoring.com/2011/09/shaw-capital-management-news-former-lenovo%E2%80%99s-rory-read-is-amd%E2%80%99s-new-ceo/

AMD announced its new CEO Rory Read. His new position follows after five years of being company president and chief operating officer at the PC maker Lenovo. Read served IBM for 23 years, including managing director for IBM’s Consulting Services division and general manager for business consulting services in the South Pacific. Shaw Capital Management reports that he is also a part of the company’s board of directors.

AMD Chairperson Bruce Claflin states that Read has proven to be a proficient leader who can draw more profits for the business. He believed that Rory can improve AMD’s evolution as a worldwide company leading in the semiconductor designs.

Dirk Meyer, AMD’s previous CEO, resigned from his position eight months earlier from a mutual decision over a reported disagreement concerning the company’s mobile strategy. AMD instantly searched for a new CEO, where Read is now appointed. Although the company never mentioned about other possible candidates, but it was believed that it included the current Apple CEO Tim Cook, HP CEO Mark Hurd, and former NCR and Intel executives. Thomas Seifert acted as interim CEO for AMD while the search was ongoing. He will return to his position as senior vice president and CFO with Read’s appointment.

AMD is currently aiming for a high performance graphics processing. Shaw Capital Management Warning News has identified its primary competitor is Nvidia. It has also launched a new line of APU processors that come with integrated graphics. This is product intends to compete with myriad Atom offerings and Intel’s second-generation core processors.

Read’s is equipped with extensive experience from Lenovo and IBM, making his skills competent for the company to venture into a new product area where profitability is possible. He is faced with a new challenge, but his expertise has prepared him for this role. AMD and Lenovo may have participated in the budding industry for tablet devices in the latter years. But AMD can aggressively match Intel’s high-end server market.

Shaw Capital Management Factoring: Oil Scarcity and its impact on the Global Economy

In the latest edition of the International Monetary Fund’s World Economic Outlook publication, the IMF dedicates a chapter entitled “Oil Scarcity, Growth and Global Imbalances” to an examination of the world’s oil markets and the impact of growing oil scarcity on the world’s economy.  In this document, the IMF seeks to answer the current status of oil scarcity, how oil scarcity will impact the global economy and how oil scarcity will impact economic policies around the world.

Now that the price of both Brent and West Texas Intermediate seem solidly positioned above $100 per barrel for the first time since 2008, this is a timely study.  Demand for oil has risen and, for some major consumers such as China, consumption levels have reached new records.  Since oil is central to the world’s economy, the impact of oil price volatility is key to economic growth and security.  While oil prices have risen and fallen over the past 4 decades, it is only now that the issue of looming oil scarcity is becoming increasingly discussed.

The authors of the report believe that the world is, in fact, reaching a point of increasing oil scarcity.  Demand from emerging economies is acting in concert with decreasing levels of growth in supply resulting in increasing tension in the world’s oil markets.  The IMF distinguishes between an absolute drop in supply (decreasing absolute daily oil production level) and a drop in the level of oil supply growth.  If oil supply growth were to drop by one percentage point, annual global economic growth would slow by an annual rate of one-quarter of a point over the medium to long term.  On the other hand, a steady decline in absolute oil supply levels would have a much greater negative impact on the global economy even if there is an increase in substitution of other energy sources in the place of oil.  As well, the pace of the rise in oil scarcity will also affect the level of impact on the world’s economy; should there be sudden downward trends in supply, the economic impact will be far greater than if supply constraints were gradual.

Let’s start by looking at the concept of oil scarcity and the extent of the issue.  To put the importance of oil to the world’s economy into perspective, oil is a key factor in production and transportation and is the world’s most widely traded commodity with world exports averaging $1.8 trillion annually over the years 2007 to 2009, about 10 percent of global exports.  Oil prices generally follow the economic law of supply and demand.  When demand rises, if the supply is steady, prices will generally rise which will ultimately result in both an increase in supply and a drop in demand.  The price of oil generally reflects the opportunity cost of bringing an additional barrel of oil to the market place.  In general and over time, a high price generally implies that oil (or any other commodity) either is (or is anticipated to be) scarce while a low price generally implies abundance.  Short term market fluctuations can occur that will lead to price spikes such as those seen in the 1970s OPEC embargo or the Gulf War in 1991 when the price spiked to just over $40 per barrel from just under $10 per barrel just five years earlier.  Over the longer term, oil price changes generally appear to be relatively smooth with a gentle rise prior to the rapid rise and fall in 2008 – 2009 which reflected issues in the world’s economy rather than oil market macroeconomic factors.

The concept of oil scarcity is a contentious one.  Many authorities in the oil industry now acknowledge that the world may well be entering a point of supply constraints.  The decline in oil availability reflects the constraints placed by nature on the ability of the industry to profitably explore for and produce reserves.  When prices are low, the oil industry generally reduces capital expenditures which places downward pressures on supply.  On the other hand, mounting oil prices have resulted in technological advancements that have impacted industry’s ability to bring certain reserves to market, for example, the advent of both deep water drilling and multi-stage hydraulic have allowed the industry to invest in higher risk/lower productivity play types.  It is the widespread use of enhanced technology that is now depressing natural gas prices in North America where both horizontal drilling and multi-state fracking have resulted in an oversupplied natural gas market.

The scarcity of oil is also related to the properties of the commodity.  Oil has unique physical properties that make substitution difficult, particularly in the chemical industry where it forms the feedstock for many of the items that we use in our daily lives.  If substitutes for oil for these products were found, oil supply constraints would have less of an impact on prices since rising demand for the substitute would dampen oil price volatility.

One of the fundamental factors that impacts the world’s economy is the fact that oil is the world’s most important source of primary energy with over 33 percent of the world’s total with coal accounting for 28 percent and natural gas accounting for 23 percent.  In recent years, the world has experienced increased rates of growth in energy consumption, particularly from China who is now the world’s number one overall energy consumer.  For the foreseeable future, growth in China’s economy will be the primary driver of increases in global energy use.  In general, the world’s developed economies (OECD nations) expand with little increase in energy usage, however, those non-OECD nations in lower income countries have a one-to-one relationship between economic growth and energy usage.  This means that a one percent increase in real per capita GDP is accompanied by a one percent increase in per capita energy consumption as shown in this graph:

Note that the share of the world’s primary energy consumption for the United States, Europe and Japan is dropping while it is rising for India and the Middle East and rising markedly for China (blue line) as shown in this graph:

Given the one-to-one relationship noted above, the IMF forecasts that China’s energy consumption is predicted to double by 2017 and triple by 2035 in comparison to its 2008 level.  In 2000, China consumed 6 percent of the world’s overall oil consumption, this rose to nearly 11 percent in 2010 with coal accounting for 71 percent of total energy consumption and oil for 19 percent.

The IMF study also examined the elasticity of oil.  Elasticity is defined as “…the ratio of the percent change in one variable to the percent change in another variable. It is a tool for measuring the responsiveness of a function to changes in parameters in a unitless way…”  The IMF found that an oil price increase of 10 percent leads to only a 0.2 percent reduction in demand (low elasticity).  Over a longer term of 20 years, that 10 percent price increase reduces demand by only 0.7 percent, a very insignificant amount.  When looking at oil demand based on income, over the short-term, a 1 percent increase in income results in a 0.68 percent increase in oil demand; this drops to 0.29 percent over the longer term.  This is far lower than the increase in demand for total energy consumption meaning that as incomes rise, over the short-term, people increase their demand for oil but over the longer term, while their demand for all energy sources increases, they substitute other fuels for oil.  It is interesting to note that the demand for oil among the developed nations of the OECD changes very little when the price of oil rises when compared to the demand of non-OECD nations.  This is likely because during the oil price shocks of the 1970s and 1980s, nations such as the United States and France switched from oil to other means of power generation such as coal and nuclear.  The economies of the more developed nations are somewhat more immune from increases in the price of oil since their power generation does not require the use of oil.  The same cannot yet be said for those nations with less mature economies who still rely more heavily on oil.

What impact will increasing oil scarcity have on the global economy?  Strong and increasing oil demand is expected from emerging market economies where rapid income growth is being experienced.  Since oil production appears to have reached a plateau over the past decade, supply and demand could well fall out of balance.  As I noted above, even a drop in the average growth rate of oil production (not a drop in the absolute level of oil production) will have an impact on the world economy.  To put the following scenarios into perspective, oil production has grown at a historical rate of 1.8 percent annually.

Now let’s look at two of the IMF oil scarcity scenarios:

1.) Oil production growth drops by a persistent 1 percent annual growth rate: In this case, an immediate oil price spike of 60 percent is predicted by the IMF models.  Over a 20 year period, a 200 percent increase in the price of oil is predicted.  This will result in a massive wealth transfer from consuming nations to exporting nations and will result in a much lower GDP for oil importers that is at least partially offset by a higher GDP for oil exporting nations.  On the upside, increased demand for goods from oil importers results in increased exports of these goods by the wealthier oil exporting nations.  Overall, the IMF feels that global economic growth is slowed by less than one-quarter of a percent annually over the medium and long term if oil production growth slows gradually.

2.) Oil production growth drops by a persistent 3.8 percent annual growth rate: This scenario is more closely related to scenario anticipated by the proponents of “peak oil”. In this case, an immediate oil price spike of 200 percent is predicted by the IMF models.  Over a 20 year period, an 800 percent increase in the price of oil is predicted.  Price changes of this magnitude have never been experienced by the world’s economy and the impact would make it very difficult to carry out monetary policy.  The economies of emerging Asia would be highly impacted since their economic growth is at a one-to-one ratio with energy usage.  As well, the economies of those nations that have weak links to oil exporting nations, such as the United States, would be highly impacted.  It is likely that if oil output decreased substantially, oil exporting nations might well reserve an increasing share of their production for domestic use, shrinking the amount of oil available for the world’s oil markets.  This could have the ultimate result of shrinking the world’s supply of oil far faster than would normally be anticipated.  A persistent decline in oil production growth of this size would result in larger current account imbalances (exports minus imports) among nations with oil importing nations experiencing a 6 to 8 percentage point drop in GDP over the long term.

The state of oil scarcity can be mitigated by changes in government policy toward the development of sustainable sources of energy, particularly among nations that are net importers of oil.  Changes in policy will also be required for nations that use subsidies to keep energy costs reasonable for their citizens.  As oil scarcity results in higher prices, the fiscal cost of fuel subsidies could overwhelm the fiscal situation of these governments.  Removing such subsidies has often resulted in civil unrest, however, on the other hand, the reduction in subsidies would also allow market forces to work their way through the system to reduce demand as prices rise.  In place of subsidies, these governments will need to implement an enhanced social safety network to ensure that their citizens do not face increased poverty.

Governments around the world face a conundrum; by ignoring the issue now, the world’s addiction to oil continues to rise unabated.  By acting too soon to curtail oil consumption through the use of policy interventions, the world’s economy could be thrown into a premature economic malaise.  Since the scarcity of oil is a global problem, it is critical that governments throughout the world act in a cooperative manner to ensure that the ultimate outcome is one that is advantageous to all of us.  The sooner that action is taken, the better for everyone.

Shaw Capital Management Factoring: New Venture Highlights Important Role of Non-traditional Business Lending

Tuesday, March 29, 2011

Phoenix, AZ (PRWEB) March 29, 2011

California-based Lawrence Financial Group, a leading financial funding intermediary, and FSW Funding, a division of the Arizona-based asset based lending firm Factors Southwest, LLC, announced the formation of Lawrence/FSW, a full-service financing resource for businesses of virtually every size and scope.

With offices in Los Angeles and Phoenix, Lawrence/FSW will assist companies in securing financing for working capital, lines of credit, refinancing and restructuring. Additionally, the firm will generate business loans needed for growth, acquisitions and purchase order funding.

Robyn Barrett, founder and managing member of FSW Funding, and Lawrence Hurwitz, CEO of Lawrence Financial Group, together appointed Ms. Haze Walker as Director of Sales to manage the joint venture.

Walker, who currently serves as a member of the board of directors for the Turnaround Management Association, has more than 22 years of experience in banking, asset-based financing, factoring and consumer receivable lending. She specializes in providing commercial financing solutions and solving the cash flow needs of small- and medium-sized businesses.

“The current economic climate and stringent rules for lending make alternative financing an attractive option for businesses that may not otherwise qualify,” said Hurwitz. The partnership with FSW Funding brings both expertise and a strong reputation in this arena.”

In addition to being involved in and overseeing operations of Lawrence/FSW, Barrett and Hurwitz will maintain their current positions with their respective companies. To learn more about Lawrence/FSW or to inquire about financing options, visit www.fswfunding.com or call (310) 315-1090.

About FSW Funding
FSW Funding, a division of Factors Southwest, LLC a Phoenix, Ariz.-based factoring firm established in 2001, is focused on providing financial solutions for small to mid-size companies nationwide. FSW was founded by Robyn Barrett, who serves as a managing member of the firm. Barrett brings more than 15 years of finance business experience, including six years with the publicly traded commercial lender FINOVA Capital Corporation. To learn more about FSW Funding visit www.fswfunding.com.

About Lawrence Financial Group
Established in 1990, Lawrence Financial Group is a comprehensive financial funding intermediary that has provided more than $7 billion in loans to thousands of companies. The vast experience of company founder and CEO Lawrence Hurwitz includes serving as a former CEO of a NYSE broker dealer based on Wall Street and as a faculty member of the Harvard University Graduate School of Business, from which he earned an MBA with distinction. For more information on Lawrence Financial Group, visit www.lawrencefinancial.com.

Shaw Capital Management Factoring: FINANCIAL ADVICE: What investors and gardeners have in common

http://shaw-capitalmanagementfactoring.com/2011/08/shaw-capital-management-factoring-financial-advice-what-investors-and-gardeners-have-in-common/

Summer is here. If you’re a gardener, you’re probably outside daily tending to your flowers, fruits or vegetables. But even if you don’t have a green thumb, you can still take advantage of the season by “planting the seeds” for the growth of another valuable piece of property — your investment portfolio.

Actually, you can find a few similarities between successful gardening and effective investing.

For starters, both gardeners and investors need to consider the landscape. If, for example, your garden is in a shady part of your yard, you could grow some nice geraniums, but you’ll have a tougher time with roses, which crave the sun.

As an investor, you’ll also find that some investments are more appropriate for your situation than others.

So, before you purchase a stock, bond or mutual fund, you’ll need to determine if it’s suitable for your risk tolerance, time horizon and long-term goals.

In addition, just as gardeners don’t usually grow only one variety of a flower or one fruit or vegetable, an investor shouldn’t stick with one type of investment vehicle.

If you own nothing but aggressive growth stocks, you’ll likely take on too much risk. Conversely, if you are too conservative and invest only in bonds, you’ll probably never achieve the growth you need, and your earnings may not even keep pace with inflation.

Instead, think about building a portfolio containing a variety of investments that, when put together, can help you make progress toward your objectives. We call this diversification, and while it can’t guarantee you’ll make a profit or prevent losses, it can be a good strategy to help reduce overall risk.

Another trait exhibited by gardeners and worthy of emulation by investors is patience.

If you were dissatisfied with the growth of a plant after just a few days, would you uproot it and put another plant in its place? Probably not.

Instead, you’d nurture the original plant, hoping that, in the long term, it is possible for it to grow.

The same thinking can apply to investments.

Over the short term, your investment choices will fluctuate in price, and sometimes you may be frustrated by what you perceive as the lack of progress. But instead of constantly selling off investments and buying new ones, you’ll likely be better off choosing quality securities and holding them for a period of many years. Eventually, your efforts may be rewarded.

What else do gardeners do that might be relevant to investors?

For one thing, they get rid of weeds that can choke off the growth of flowers or vegetables. As an investor, you too may benefit from occasionally “pruning” your portfolio of those investments that no longer meet your needs, and, in fact, take up space that could otherwise be more profitably used. That’s why it’s a good idea to review your holdings at least once a year.

Finally, just as backyard “diggers” may turn to master gardeners for advice and guidance, you, as an investor, could quite likely benefit from the services of a financial advisor — an experienced professional who knows the markets and who will take the time to understand your situation, needs and goals.

So the next time you see some industrious gardeners making something beautiful and productive in their yards, watch them closely. Their skills and habits might be productively transferred to you as you invest for the future.

John Beyer, CFP, is a financial advisor with the Niagara Falls brokerage firm of Edward Jones. Visit the website at http://www.edwardjones.com/.

Shaw Capital Management Factoring: HearUSA issues ‘going concern’ warning

http://shaw-capitalmanagementfactoring.com/2011/04/shaw-capital-management-factoring-hearusa-issues-going-concern-warning/

Read more: HearUSA issues ‘going concern’ warning | South Florida Business Journal

HearUSA said its accountants have a “going concern” about its ability to continue operating after it lost $7.7 million last year and got into a legal spat with Siemens.

The West Palm Beach-based company (AMEX: EAR), which sells hearing aids, has been trying to prevent Siemens from declaring it in default on a $2.3 million portion of a $32.7 million loan, which would be due in full if the German company prevails. HearUSA won a temporary injection against Siemens seeking to collect on the loan and that will be addressed at a May 2 hearing in New York.

With or without the dispute with Siemens, HearUSA has some problems. The company lost $7.7 on revenue of $83.5 million at its 175 hearing care centers in the fiscal year ended Dec. 25. In the previous year, it earned $1.5 million on revenue of $88.9 million. HearUSA finished fiscal 2010 with $3.9 million in just cash and equivalents.

According to HearUSA’s annual report:

If we are unable to generate cash from operations and/or raise capital through the issuance of securities we might have to cease operations…Because the Company may not be able to reduce its costs to offset cash shortfalls or to raise debt financing to meet its cash needs and pay any amounts due on the Siemens credit agreement, management believes that the company’s current cash will not be sufficient to cover the expenses the company will incur during the next twelve months, which may include the monthly payments due to Siemens under the supply agreement.

The company had 427 full-time and 58 part-time employees.

In addition, HearUSA said it hasn’t completed an impairment analysis on $51.6 million in goodwill and $12.1 million of other intangible assets.

Shares of HearUSA closed down 1 cent to 45 cents on Monday, before it released its annual report. The 52-week high was $1.58 on April 9, 2010. The 52-week low was 37 cents on March 17.

Read more: HearUSA issues ‘going concern’ warning | South Florida Business Journal

Dow plunges more than 634 points after downgrade

Stan Choe, AP Business Writer, On Monday August 8, 2011, 7:49 pm EDT

NEW YORK (AP) -- Fear has taken over on Wall Street. 

Related Quotes

Symbol	Price	Change
BAC	6.51	-1.66
MCO	29.80	-3.08

Follow these stocks

The Dow Jones industrial average fell 634.76 points Monday, the first trading day since Standard & Poor's downgraded American debt. It was the sixth-worst point decline for the Dow in the last 112 years and the worst drop since December 2008. Every stock in the S&P 500 index declined.

But the S&P downgrade wasn't the only catalyst Monday. Investors worried about the slowing U.S. economy, escalating debt problems threatening Europe and the prospect that fear in the markets would reinforce itself, as it did during the financial crisis in the fall of 2008.

"`What's rocking the market is a growth scare," said Kathleen Gaffney, co-manager of the $20 billion Loomis Sayles bond fund. "The market is under a lot of stress that really has little to do with the downgrade." Instead, Gaffney said, investors are focused on worries about another recession and "how Europe and the U.S. are going to work their way out of a high debt burden" if economic growth remains slow.

The Vix, a measure of market volatility and fear among investors, shot up 50 percent. That was its steepest rise since February 2007.

Investors desperately looked for safe places to put their money and settled on U.S. government debt -- even though it was the target of the downgrade Friday, when S&P removed the United States from its list of the lowest-risk countries.

The price of Treasurys rose sharply, and yields, which move in the opposite direction from price, plunged. The yield on the 10-year Treasury note fell to 2.34 percent from 2.57 percent Friday. That matches its low for the year, reached last week. Before last Friday, there was widespread concern that a downgrade would push yields up and increase borrowing costs for the government, businesses and consumers.

"This is largely a flight to safety," said Thomas Simons, money market economist with Jefferies & Co. "The bond market is really trading off of what's going on in the stock market." Money flowed out of stocks and into Treasurys.

Gold set a record. It rose $61.40 an ounce to settle at $1,713.20.

Crude oil, natural gas and other commodities fell sharply on worries that a weaker global economy will mean less demand. Oil fell 6.4 percent to $81.31 per barrel, its lowest price of the year.

Fear is spreading quickly through the market, said Dimitre Genov, senior portfolio manager with Artio Global Investors. "It's becoming a vicious cycle and could feed into consumers reducing their demand as well."

The Dow was down 5.5 percent at 10,809.85. The sharp drop extended Wall Street's almost uninterrupted decline since late July, when the Dow was flirting with 13,000. It fell below 11,000 for the first time since November.

The S&P 500 fell 79.92, or 6.7 percent, to 1,119.46. The Nasdaq composite index fell 174.72, or 6.9 percent, to 2,357.69.

Trading volume was the highest since September 2008 and the fourth-highest on record. A total of 9.9 billion shares traded, and about 70 stocks fell for every one that rose on the New York Stock Exchange.

Stock markets in Asia began Monday's global rout. The main stock index fell almost 4 percent in South Korea and more than 2 percent in Japan. European markets opened later and fell, too, with Germany down 5 percent and France 4.7 percent.

In the U.S., stocks fell even as Moody's, another major credit rating agency, stood by its top rating of Aaa for the United States. It said it could downgrade the U.S. if it doesn't cut its deficit, "but it is early to conclude that such measures will not be forthcoming."

Financial markets also did not appear comforted by an afternoon statement by President Barack Obama, who said Washington needs more "common sense and compromise" to tame its debt.

"Markets will rise and fall," he said. "But this is the United States of America. No matter what some agency may say, we've always been and always will be a triple-A country."

S&P, in its downgrade, criticized dysfunction in the American political system. The downgrade wasn't a total surprise but came when investors were already feeling nervous about the U.S. economy and European debt, among other problems.

Last week, the Dow Jones industrial average fell almost 700 points. That was its biggest weekly point loss since 2008, during the financial crisis. Counting Monday, the Dow has dropped in 10 of the last 12 trading days. It is down more than 1,900 points, or 15 percent, since July 21.

The Russell 2000 index of small stocks has now lost nearly 25 percent from its most recent high on April 29. A decline of 10 percent or more is considered to be a correction. And a drop of 20 percent or more is said to be the start of a bear market.

The Nasdaq and S&P 500 are both down about 18 percent since the end of April. The Dow is down 16 percent.

The last bear market for the S&P 500 ran from October 2007 until March 2009. The index lost 57 percent of its value.

Despite the slide the last two and a half weeks, the S&P 500 index, at 1,119, is 7 percent higher than its close of 1,047 late last August, just before the Federal Reserve announced a program to support the economy. And the Dow's percentage drop of 5.5 didn't make the list of its 20 worst days.

S&P on Monday downgraded mortgage lenders Fannie Mae, Freddie Mac and other agencies linked to long-term U.S. debt. Fannie and Freddie own or guarantee about half of all U.S. mortgages. Their downgrade could eventually mean higher mortgage rates.

Worries about weaker profits that could result from a slowing economy have slammed the financial industry since late July. As a group, financial stocks in the S&P 500 index fell 10 percent on Monday to their lowest level since July 2009.

Bank of America plunged 20.3 percent, to $6.51, after AIG filed suit against the bank. The insurer alleged Bank of America sold it overvalued mortgage-backed securities. The bank denied the allegations. Its stock is down 51 percent this year, from $13.34.

Stocks in other industries whose profits are closely tied to the strength of the economy also fell sharply. Energy stocks in the S&P 500 fell 8.3 percent, for example.

The smallest losses came in safer industries such as consumer staples whose profits tend to be steady, regardless of the economy. Even in a bad economy people will still buy things like toothpaste and bread.

The Vix, a measure of fear among investors, is up more than 90 percent this month. The index shows how worried investors are that the S&P 500 will drop over the next 30 days. It does that by measuring prices for stock options that investors can buy to help protect their portfolios.

Investors are also worried that Italy and Spain could become the next European countries to have trouble repaying their debts. Greece, Ireland and Portugal have already received bailout loans because of Europe's 21-month-old debt crisis.

The fears have pushed investors to shun Spanish and Italian bonds, which have led to higher yields and in even higher borrowing costs for the two countries.

The European Central Bank stepped in Monday and bought billions of euros worth of their bonds. The move helped to lower yields on Spanish and Italian bonds, at least temporarily.

Seeking to avert panic spreading across financial markets, the finance ministers and central bankers of the Group of 20 industrial and developing nations issued a joint statement Monday saying they were committed to taking all necessary measures to support financial stability and growth.

"We will remain in close contact throughout the coming weeks and cooperate as appropriate, ready to take action to ensure financial stability and liquidity in financial markets," they said.

Worries about the U.S. economic recovery have been building since the government said that economic growth was far weaker in the first half of 2011 than economists expected.

The economy grew at a 1.3 percent annual rate from April through June, below economists' expectations. It expanded at just a 0.4 percent rate in the first quarter. The first half of 2011 was the slowest since the end of the recession.

Then reports showed that the manufacturing and services industries barely grew in July. Job growth was better than economists expected last month. But the 117,000 jobs created in July were still well below the 215,000 that employers added in February, March and April, on average.

The Federal Reserve will meet on Tuesday, but economists don't expect much to come out of the meeting. The central bank's key interest rate is already at a record of nearly zero, where it has been since 2008.

The Fed has also already said that it plans to keep rates low for "an extended period." Chairman Ben Bernanke said last month that the Fed could step in to help the economy if it further weakened.

Fears about a weaker U.S. economy have overshadowed the profit growth that companies have reported for the second quarter. For the 441 companies in the S&P 500 that have already reported, earnings rose 12 percent in the second quarter from a year earlier. Revenue growth has also topped 10 percent for the first time in a year.

AP Business Writers Matthew Craft, David K. Randall and Daniel Wagner contributed to this report.