IN THE paparazzi swirl of New York, it is actors, models and socialites who are the usual targets. It is a sign of the times that Jack Grubman, a mere analyst at Citigroup's Salomon Smith Barney, this week found himself tailed by a television correspondent barking out questions; he had played a crucial role in promoting WorldCom and other upstart telecoms companies. “Why are you harassing me like this?” he said as he fled down Fifth Avenue. “I'm as shocked about this as anyone else.”

WorldCom's sorry state had become clear in recent months, and its shares had fallen from a peak of over $60 to below $2 a share, a level that Mr Grubman had already said was still too high. So why did financial markets around the world react so badly to the news on June 25th of a $3.8 billion fraud at the company?

Stockmarkets around the world fell, presumably in anticipation that American markets would later plunge. Before New York opened, Japan's Nikkei, Germany's Dax and France's CAC 40 each fell by over 4%. The dollar also fell, almost touching one-for-one parity with the euro for the first time since 1999 (see article). In the event, American stockmarkets did open lower, though not by as much as overseas markets had feared.

In this section
Another scandal, another scare
Spreading risk
Holey cow!
Novelty knocks
Big and bumbling
Bidding adieu?
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WorldCom: Another cowboy bites the dust
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Related topics
Financial-market indices
Wall Street
Financial markets
United States
It is still possible that WorldCom's fraud will prove the straw that broke the stockmarket's back. For a start, plenty of other reasons suggest that shares (and the dollar, indeed) remain overvalued. The markets have been edging lower anyway in recent weeks, and perhaps needed a catalyst to move decisively to levels that make more sense in terms of...