Investors remained fearful that the financial crisis would lead to a world recession despite concerted action by governments to stem the crisis.

A year ago exactly, the Dow closed at a record high above 14,000 points. Now it is 8500 and many think that professional investors will come in at 7000.

Early gains in European shares faded, with the FTSE 100 ending down 1.2% and France's Cac 40 falling 1.55%. On Wall Street, the Dow Jones ended down 7.33%, or 678.91 points, to 8579.19 points.

US car maker General Motors was the biggest decliner on the Dow, falling 31% on fears that a recession could hit demand 

for cars worldwide. Energy firms were also hit as oil prices fell to below $85 a barrel, underscoring that it is not just financial stocks affected by the panic selling.

Although A lot of people believe the bottom has been reached but that doesn't mean volatility hasn't gone away," But the professional investors are unlikely to come back in until the psychological 7000 level is broken. That is the level that will compensate for the inflated prices of banks and finance related stocks.

As Newsweek predicted back in January 08, "it's considerably 

more likely that the storm is still gathering force," Also they said "Home prices could sink an additional 25% over the next two or three years, returning values to their 2000 levels in inflation-adjusted terms. That's even with the Federal Reserve's half-percentage-point rate cut on Jan. 30" If one extrapolates what they said then you can see that the current levels are nowhere near bottom.

The White House announced on Thursday afternoon that President Bush will speak on Friday at 10 a.m. in an attempt to reassure people on the economy. "Americans should be 

confident that every effort is being taken to stabilize our markets," said Dana Perino, the president’s chief spokes woman. Thursday’s decline came after the Treasury Department signalled that it would move quickly to inject money directly into big financial firms in addition to buying up to $700 billion in troubled loans and securities from the companies.

Meanwhile in Iceland, the government seized Kaupthing Bank, the country’s largest lender, effectively completing the nationalization of its banking system.

Now that the US has signed the rescue bill, investors are analyzing ways they can use the bill to help them beat the market. The collapse of housing prices in the United States led directly to the problems with the mortgage securities that are freezing credit markets. Some investors might think that the bottom in the current recession is near and the markets will recover soon. Others are not so sure. In this case, it pays to look at the past to see if you can learn from prior experiences and the trends in the housing market.

There is a bigger problem with the reluctance of the big players with cash is the lack of confidence in both stock brokers and the banks.

The combination is lethal. If you don’t trust the man that holds your money. And you don’t trust the dealer then you might as well just hold on to what you have.