Nightly News   |  February 04, 2010

World markets fall

CNBC's David Faber talks about what set off a selloff in the stock market on Thursday.

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This content comes from a Full-Text Transcript of the program.

BRIAN WILLIAMS, anchor: Here in New York , this was a bad day for the stock market .

WILLIAMS: The Dow was down more than 268 points, closing just 2 points above the 10,000 mark. David Faber 's here from CNBC to tell us what set this off. And I understand it's a problem far from our shores apparently.

DAVID FABER reporting: It is. You know, the US, Brian , is not the only country in the world that has huge deficits, as it spends a lot more than it collects in tax revenues . In fact, there are many countries throughout Europe that have done the exact same thing we have, namely, trying to spend to revive their moribund economies, and in doing so, racking up huge deficits. In fact, a lot worse than we are in the sense of their interest costs , in some cases, may be as much as 30 or 40 percent of their tax revenues , in places like Spain and Italy , Portugal and Greece and Ireland , the so-called PIIGS . That is worrying investors. They have to continue to borrow in the markets to finance these deficits. Some say, `Well, if you're paying 40 percent of your tax revenues just to pay your interest, we may not want us to lend to you any longer.' That might sent rates up, or, in fact, might even lead to an unlikely outcome, default, which would clearly be bad for the economy worldwide and set off implications that many of us don't really know exactly what they would be.

WILLIAMS: This word you've left us with here tonight , a term of art in your business, we're going to be hearing more of it?

FABER: Yes, you probably will. And you'll hear more about sovereign risk, so to speak , as the year goes on, too.

WILLIAMS: Oh, terrific. David Faber from CNBC , thanks.

FABER: Yeah.

WILLIAMS: After a bad day on the markets.