Markets plunge on worries about a world economy slowdown

Investment bank Morgan Stanley cut its global growth forecast for the year to 3.9 percent, down from a previous forecast of 4.2 percent. The bank cited an “insufficient” policy response to Europe’s sovereign debt woes and the possibility of fiscal tightening that could make it harder for businesses to borrow. Morgan Stanley, which also cut its China growth forecast for next year, wrote that the U.S. and Europe are “dangerously close to recession.” The report stated: “Recent policy errors, especially Europe’s slow and insufficient response to the sovereign crisis and the drama around lifting the U.S. debt ceiling, have weighed down on financial markets and eroded business and consumer confidence.”