LONDON (AP) — Stocks fell sharply worldwide Monday following declines on Wall Street last week amid investor pessimism over the U.S. government’s stimulus plan to prevent a recession.

U.S. markets were closed for Martin Luther King Jr. Day, but the downbeat mood from last week’s market declines there circled through Europe, Asia and the Americas.

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Somewhere in the Hamptons a high-roller is cursing his cleaning lady and shaking his fists at the lawn guys. The American poor, who are usually tactful enough to remain invisible to the multi-millionaire class, suddenly leaped onto the scene and started smashing the global financial system. Incredibly enough, this may be the first case in history in which the downtrodden manage to bring down an unfair economic system without going to the trouble of a revolution.

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Many writers of investment books approach the topic of saving and investing without any clear economic theory. Value investors often share the sentiments of fund manager Peter Lynch, who said, "If you spend 13 minutes a year on economics, you have wasted 10 minutes."

At the other end of the methodological spectrum, MBAs trained in efficient portfolio theory disdainfully characterize the suggestion that investors should at times not hold any stocks in their portfolios as "market timing" — the investment world’s equivalent of casino gambling.

It is not possible to approach macroeconomic questions without an economic theory. A sound economic theory may or may not yield any useful insights for investors, but a false one is almost certain to mislead.

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March 2 (Bloomberg) — New Century Financial Corp. disclosed a criminal probe and regulators told Fremont General Corp. to halt improper subprime loans, piling new scrutiny on two home lenders who’ve already lost about half their value this year.

Investigators are focused on New Century’s accounting and trading in its securities, the Irvine, California-based company said in a filing with the U.S. Securities and Exchange Commission today. Fremont said a regulatory order will require it to stop giving mortgages to people who can’t repay, and it plans to get out of the subprime home-loan business.

“It just shows there was a lack of principles and standards,'’ said David Hendler, an analyst at CreditSights Inc. in New York. “There was no real major guardian of conservative standards anymore, and that’s a danger to the safety of the market.'’

A surge in defaults on mortgages to the least-creditworthy borrowers has forced more than 20 lenders to close or seek buyers since the start of 2006. Earlier today, the Federal Reserve told banks to scrutinize their underwriting standards on subprime mortgages and make lending terms easier to understand.

New Century said in its filing that the U.S. attorney for the Central District of California is running a criminal inquiry “in connection with trading in the company’s securities, as well as accounting errors regarding the company’s allowance for repurchase losses.'’

SEC Seeks Meeting

SEC staff members also told New Century they want a meeting to discuss events that preceded the company’s Feb. 7 disclosure of a pending restatement to earnings, according to the filing. NYSE Regulation Inc. is reviewing trades that took place before Feb. 7 and has requested information, the company said.

New Century, the second-biggest subprime lender, said it will cooperate with the three inquiries. Laura Oberhelman, a spokeswoman for New Century, declined to comment on the filing. Earlier today, the company cut 300 jobs, or about 4 percent of its workforce, she said.

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