UPDATE: Market ‘rebounds’ in last hour Friday to about minus 100 – go here.
Markets Continues to Fall Despite George Bush’s ‘Reassurances’ & the Bailout
Do words matter? Ask George Bush. He addressed the nation this morning for nine minutes to reassure us that the U.S. government is doing all it can to resolve the financial crisis and restore credibility to the market. Afterall, the market had fallen nearly 680 points yesterday – 7.3% in just one day. He spoke of the FIDC changes and controls on short-selling, and how the G-7 meeting Saturday with the leaders of the twenty top industrialized countries will coordinate the globe’s largest markets and bring it all under control. But there was nothing new, no new news. It was just words. While Bush spoke, the New York stock market fell from being down 91 points to a negative 199 points. It fell another hundred points soon after he left the podium. Well, his words did not seem to matter.
Talk about restoring credibility – whew! When they trot out argubly the worst president in modern American history, for less than ten minutes, a guy who had to read every word of his script, all the while feigning concern and seriousness, who then turned and left abruptly as if on cue – without taking any questions – probably because he can’t – all this in order to restore our confidence in the country’s economic system … we are in deep trouble. What words describe that?
Clearly, the market swung wildly today with an one time drop of 800 points, then up 300, and then down a minus 500 by the early afternoon on the East Coast; it played with that psychological barrier of 8000 for a long time, dipping below it, jumping back up. And finally, the market did ‘rebound’ during its last hour on Friday, and at the closing bell remained somewhere around a minus 100 points.
But overall, this has been the worst week that Wall Street has ever experienced. The market has fallen 2,271 points – not counting today – in the last 7 days. This is huge. That is a loss of 20.8%. But no one has called it a ‘crash’ yet.
Days ago, the word ‘recession’ was not widely used. Now it’s everywhere, and in fact, more and more we hear it said that we’re headed for a ‘deep recession.’ Think of this: one year ago exactly, October 9, 2007, the market peaked at 14,164, and in just that one year since, it has dropped 5580 points – 39.4 % up to today. Other U.S. markets experienced the same, for example, the S&P lost 42% in this last year.
In Europe, today, Friday, October 10, 2008, is being called ‘Black Friday’. Today, not yesterday. The London index lost 9% – today. Germany and France saw their markets go down 6 – 7%. Over-all, in one week, European markets lost 20%. Asian markets also fell today.
Well, boys and girls, brothers and sisters, ladies and gentlemen. We have to call this fall of 44% loss in one year, with nearly half of it within the last 7 days, for what it is. The American stock market has crashed. This is a ‘market crash.’ Let’s at least call it for what it is. Words can have meaning.