October 9th, 2008
08:53 PM GMT
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NEW YORK - One year ago today the Dow hit an all time high above 14,000.  As I write this now, stocks are getting pummeled for the seventh straight day.  The Dow lost nearly 700 points.  The selling was like a tidal wave at the very end of trade.  Few saw it coming.

Earlier today I was down at the New York Stock Exchange and talked to a veteran trader who said there is just no confidence.  Every time someone tries to step in buy, they get their head handed to them. 

He thought part of the problem was the increase of electronic trade.  It used to be that human beings made markets at the New York Stock Exchange and other places.  You could see what was out there.  Who was buying and selling.  Specialists could bring parties together and in some cases stand behind a trade until a fair price was found.  It slowed things down, gave cooler heads a chance to prevail.

Now everything is down by a push of a button.  Things can unravel with lightning speed, which is what happened today.

These kind of furious sell-offs are terrible for confidence.  They spook retail investors, who are already lost trillions in retirement savings.  They scare professionals who can not make educated guesses on risk.  The market will eventually find a bottom, but in the meantime the victims are piling up.

How much have you been impacted?  Are you pulling out of stock markets for good?  



soundoff (28 Responses)
  1. shelly of illinois

    Maggie...I'm scared to death to look at my 401k! It is the ONLY savings that my husband and I have. We've worked on this for 17 years...I could cry. We are still paying on a student loan for our oldest son and our youngest just started college this summer. My husband is an over-the-road truck driver who hauls hazardous waste and I am a registered nurse. Despite our jobs, we feel that we are financially slipping. Yes, we have cut back and will continue to do so. I am angry at the Wall St. bankers whom have made millions and now my low-medium income will pay to bail them out! I want them to give up all the money they have made in the past 10 YEARS and pay off THEIR DEBT!

    October 9, 2008 at 9:37 pm |
  2. Brigitte Heinrich

    To be or to have – that was and is the question. "To have" was too important for too many people during recent years. Now we have to come back to be aware of the "to be".

    October 9, 2008 at 9:53 pm |
  3. Paul

    Aha – so now someone is finally understanding what the whole mess means.
    Liquidity crunch + deleveraging = fragile markets
    + electronic trading = meltdown.
    We're seeing it in the currency mkts as well – huge swings that have nothing to do with the idea of "market". Talk about price continuity for the joy of Black & Scholes :-/
    As we head towards year end, this kind of market condition could become even more stupid.

    IDEA: why don't they just shut down markets for 10 biz days, rent out the Madison Square Garden, and force all the credit default swap counterparties to net out all the outstanding positions? That would take one of the big worries away from those bankers who are hoarding the $$$ just in case they get hit with massive CDS / derivatives related payouts..
    IMHO, YMMV

    Paul

    October 9, 2008 at 9:56 pm |
  4. kStr3mac

    How is it possible that NO-ONE is mentioning the name BUSH during this market freefall? It's another presidential election season and all of us who foretold gloom and doom 4 and 8 years ago are saying "told you so" yet no one seems to believe that the republicans and their cronyism is responsible for this. Remember Clinton? Remember the words "Budget Surpluss?" It's been 8 years coincidentally since we've been able to use them. In that time, we've had a "conservative" in the White House and look at the shape of our economy, the deficit we've got to pay off, the bail-outs, our 401k's, etc, etc, not to mention our standing in this much more dangerous world. Bush and the republicans are responsible. Spread the word. Bush is responsible.

    October 9, 2008 at 10:05 pm |
  5. Rod

    I have no confidence in a market that demonstrates a willingness to hide losses and protect people that somehow have become defined as elite, genius, or priveleged. Does this somehow translate to above the law? Because of their connections? These modern day gold miners/ bank robbers need to be held accountable!!! Jail somehow seems to good for them. How many lives have they destroyed in their selfish quests. Market confidence is so low, banks won't lend to each other because they don't trust each other. They don't want to get robbed either. Call it what you want, but the money didn't disappear.

    Our leaders in Washington desperately need to prove to the people of this country and the world that we can once again be a country that up holds the rule of law and that common men and women rights and needs do matter. Essential and fundamental elements of a democracy, with a free market economy.

    I know most politicians are a little slow because they are too busy feathering their nests to listen, but I really hope they get it this time. "It's the Economy Stupid!!!" The market again cast its vote, today. The market voted; no confidence.

    We were lead to be worried about terrorism abroad, when we should have been worried about our fellow Americans on Wall Street were working hard to bring this country to its knees. Until our government starts jailing the architects of this disaster, confidence in our market and in our government will not return.

    Wasn't it some MIT math and physics majors that got this whole thing started? Paulson has now appointed an engineer (Kash n Carry) to allocate the bailout money? Sounds like we haven't learned a thing. Warren Buffet when asked what he learned out of this mess said, "Beware of geeks bearing formulas." I betting he's right.

    I won't provide another sad story, but I will say that my story is not good, either. Like everyone else in this country our financial future and standard of living are tied to the market. Right now Wall Street needs a whole new set of standards. Draft Warren Buffet, he's got the credibility people can find confidence in.

    October 9, 2008 at 10:25 pm |
  6. Kelly

    This is disconcerting but I don't plan to retire for 10 years so I have not changed or sold any equity investments.

    October 10, 2008 at 12:02 am |
  7. Luis Acevedo

    My thoughts lean towards how much influence does the media have on this panic effect, the first news headline that I see when I logged on to the web(cnn) is a BRIGHT YELLOW headline that displays how much of a drop the nekkei index has had. Does the speed of this unraveling have a connection with the continued media overload and does this contribute to the already fragile national psyche.The problems are very real , but the complexity and diversity of industries in today's markets should be enough to quell many fears.Then again Ignorance is bliss and evidently misery loves company.

    October 10, 2008 at 12:49 am |
  8. Doug Geller

    Personally, I am a conservative investor, always have been and so I am not feeling too much pain. I am also more than 10 years to retirement, so I am not even looking at the balances in my retirement savings, it really doesn't matter, the money keeps going in and over the next few months, the money will buy more. Living in Canada, I feel the economy here and the balance sheets of major banks and government are in much better shape than the U.S. and parts of Europe. Despite all this, what confidence I had in markets is shaken pretty much for good. It's still the same old adage: don't invest what you cannot afford to lose. Unfortunately, for many people saddled with debt and spiraling real estate values, hard times are in the offing. Lessons will be learned from all of this, but since the end of the panic is not here, it is too soon to tell what those lessons will be.

    October 10, 2008 at 1:41 am |
  9. c. covington

    The Dow Jones average was forcasted on Feburary 5th to drop to 8,ooo. According to an article in World Net Daily. I seems that prediction has come to pass. Here is the web address for the article.

    http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=55601

    October 10, 2008 at 1:48 am |
  10. cecillia

    I have a FANTASTIC IDEA! Give every American 18 years or older $430,000.00 (There are about 200 million Americans) that comes to about 87.4 billion dollars.The amount of initial money that bailed out AIG. Stimulate the economy by giving us this money. Let us invest in America pay off our homes and send our kids to college invest in stocks etc. That would work and make things more even. Since the government is not going to do this, give us 100,000.00 a piece in stocks dividends and cash over 5 years. The economy would take an immediate upswing.Pass this on let's get Senator Obama to give us this incentive. It is our money and we all need it.

    Cecillia

    October 10, 2008 at 3:05 am |
  11. too bad

    when the market hits 7842 that will be the bottom.it not going to be pretty alot of people are going to get hurt .the truth is no one wants to say it the big D

    October 10, 2008 at 3:06 am |
  12. George Panares

    Did God sent Jonah again in the guise of economic crises? During his time people of Nineveh repented and GOD did not destroy the City. Perhaps we should examine ourselves now.

    October 10, 2008 at 3:11 am |
  13. Kasey

    Why would we give billions to the very people who made this mess? The US is in need of new bridges, roads and dams. Haven't we been through this before? Let's spend the money on us and upgrade our infastructure. That way the money will get into curculation by giving people jobs. Didn't we call it WAE in the 30's.

    October 10, 2008 at 4:40 am |
  14. Ron M

    Almost three decades ago, I started asking officers in my Army units about investing. I never did get a straight answer let alone any sound investment tips, until nearly the end of a 24 year career. So, I never invested. I know that I will have to work until the day I drop dead. If I had the money to invest, I wouldn't. The same shady people who manipulate the stock market are the ones pulling the strings of government puppets. Perhaps if I had worked for Goldman-Sachs, was about to lose a fortune the size of an aircraft carrier, and the government asked me to run things I would see things differently. We were set up for this FUBAR situation the minute corporations were given the status of a person. I'll suffer this life knowing that afterwards we will all stand on "equal ground" owning only our souls. The two trillion in retirements that evaporated last week never existed anywhere other than our minds and in some computers. Call me stupid, but I haven't noticed the Earth getting any bigger. How can we expect continuous "growth"?

    October 10, 2008 at 4:44 am |
  15. CY

    I am one of the million people who has been hurt badly by this financial turmoil. However, I have no plan to pull out from the market. My suggestion is , beside cutting the interest , may be governments should consider doing some tax cut as well to stimulate the economic.

    October 10, 2008 at 6:14 am |
  16. rajesh thomas

    This financial crisis was due the pseudoeconomic tatics of the US.
    This is also due to very high premiums that some manufacturers and service providers charge for their products and services. Commodities should be traded with atlesat the main regional currencies and not only the US $.
    We should give more importance on return on labour and agriculture rather than return on capital.This will create a well balanced economic world.

    October 10, 2008 at 8:13 am |
  17. Harriet

    Anyone who has studied economics knows that everything runs in cycles and there are long term and short term effects. What we are experiencing now is an accumulation of effects, thanks to poor policies. When the current band aides hit their long term effects, we will have newer, possibly worse, problems.

    October 10, 2008 at 3:14 pm |
  18. Pingala

    Why the US government is not able to close stock market before the stock marget gets empty? it did in the past. I understand that investors are emotional as they lost faith in stock market and this pattern of CEO screwing up is happening every 10 years and US government has no control and oversight on people savings.

    October 10, 2008 at 4:39 pm |
  19. shaukat

    I loss all my saving and under 3000 debt.

    October 10, 2008 at 6:41 pm |
  20. Tanyi Ernest Ayamba

    Personally, I think the markets are over inflated thus the present crisis. The fall of the markets is required to get them to their real level for we are all living in a real world not an electronic and unreal one as some in the stock market might want.
    While I think now is not the time to be pointing accusing fingers or playing the blame game, it is also important to know the root cause of all this so as to get our way out of it and never to return there. Which is the very large appetite of mostly Amercan and some western consumer who alway want to spend more than their income would permit and the banks for selfish and profit making reasons give out cedits even though the knew were risky.The world has to make sure that such habits cease to avoid another crisis in the future.
    Ayamba from Cameroon

    October 10, 2008 at 7:14 pm |
  21. Johann Schmidt

    Now that fiscal conservativeness is returning to the US, and consumers are forced to handle their debts instead of inflating super-sized consumption... everyone keep talking about the "world economy problem," and how fiscal conservativeness, oversight and transparency must return... how is the US going to handle it's debt? Or is that not an issue – since it is a "world problem?" Can the US work their way out of the debt – like European countries and emerging markets did? How long will that turn around take?

    China is reducing growth from 11% to 9% and Brazil down from 8% to 7% - how much growth does the US need in the coming decades to handle their debt? Or is debt only an issue for consumers – not nations?

    Regards,
    Johann, Brazil

    October 10, 2008 at 7:17 pm |
  22. Uma in Liverpool, UK

    If I had money, which I don't, I wouldn't touch the Stock Markets with a barge pole.

    I don't gamble. I am VERY upset by the notion that banks DO GAMBLE with the funds we entrust to them, without so much as a by-your-leave.

    Other people can gamble, if they CHOOSE. Leave my money (assuming I had some, which I don't) OUT of it!

    Stock Markets. [[shudder]]

    October 11, 2008 at 7:08 am |
  23. Tom Wilson

    Blue collar opinion,

    Like many of my fellow Americans I drank the cool aid. It nearly killed my retirement plans and will take years for me to recover. I labored hard put my faith in my 401K and that the value of my home would slowly increase. I sat by and watched as stock brokers and Wall Street executives accumulated wealth beyond my comprehension. What is happening now on Wall Street is just a simple lost in confidence in its leadership. The average Joe American worker believes Wall Street leadership is corrupt, greedy and motivated only by self interest. I for one would like to see new and dynamic leadership, of high morale statue (i.e. Warren Buffet) who will work hard to re-earn the trust of its investors. Right now all I see is the Fed and Wall Street Exec’s telling me everything will be OK meanwhile relax don’t panic just take another sip of the cool aid.

    October 11, 2008 at 12:03 pm |
  24. Andreas, Sweden

    In a few weeks from now I suspect there will be rallies on stock markets to levels not seen in a long time. With soon to come tighter regulations put in place for the money markets, stocks will regain some of their lost ground during the last years. This is what new lending legislation needs to spark and it makes sense since very few will trust MBS's.

    October 11, 2008 at 4:57 pm |
  25. Alex Carmel

    I'm an American computer programmer living in France, and I also spent 3 years in the UK and to me it is very clear. When you get out of the states for a while you can finally see what the difference is.
    Here in France there are NO banks that need saving, not one! They are heavily regulated the way US banks were a long time ago. But in the states we took out all the stops and removed all the rules. We said that they will learn from their mistakes because they either sink or swim. But in the end, if they start to sink, oh, woops, we can't afford to let them sink, so we have to pay for it anyway. The stability of the banking system is part of national security! In France they are very serious about this institution and there will be no fooling around. In the UK they were jelous of the big money happening in America running around and and were convinced (fooled) into following the US down the same path. Well, just like Iraq, the French were NOT fooled. They did not let the banks make a house of cards of the financial institution. French banks are buying up banks in the neighboring countries, and no one feels that there bank is falling. People are not stretched economically. Home equity loans don't exist here, and when I explain about them to people here they all can't believe a bank would every do such a stupid thing.
    Travel a bit folks. It opens your eyes. We (the USA) chose this path, and stability in the banking world will only happen when the rules are put back in place.
    The banks are like children. Without rules they go crazy. They want and need barriers so that they all can all play safely without hurting each other, and us.

    October 12, 2008 at 12:04 am |
  26. Hans

    What have been the losses for Mr. Paulson, because he has been there some years?? The advisor coming in to assist Mr. Paulson is originating from Goldman Sachs?? Mr. Bush is repeating same phrase time after time "We will find a way to solve this"

    People loosing their ability to pay, to plan their future and the futures of their children or simply to maintain their independence. Pensions at risk and with that health care when people get older.

    Next excuse of these happenings will come from the big companies, advising that due to the crisis they will have to lay off people, basically not for the sake of this crisis, but as a excellent excuses to get those weighing heavily on the company's balance sheet out for which they could otherwise would seriously have to battle with unions.

    October 12, 2008 at 4:08 pm |
  27. Johan,Netherlands

    Hello Maggie

    In the past stock-markets were never designed in the way they are being used at present (commodities,derivatives,futures)
    Nowadays it looks like a giant casino where company-values do not seem to matter anymore
    I kept my portofolio after the 2000-techcrash and even now !
    I refuse to surrender NOW but i do not intend to buy more...

    I worked hard for my money and did not gamble all of it at the stock casinos although I lost a lot of money.
    Furthermore I think that a whole lot of the elder current generation
    has had enough of it and will not return when they get out

    SO GAME OVER , RIEN NE VA PLUS
    Yours Sincere

    October 12, 2008 at 4:21 pm |
  28. Mysterion

    I agree with Alex Carmel, that the bail-outs of the U.S and Europe are very different.

    First of all: It was the Idea of the U.S.govt. to buy the banks, that refused to loan more money,to overcome that issue.

    Only to buy the banks the, U.S.Govt. needed to loan money from for instance China.

    Can you imagine you go to a bank and you say "please lend me more money"and the bank replys"We're sorry sir ,but you already borrowed to much!" and then you say "You just wait and see, I'll go to another bank to get a loan based on taxpayers money,to by your Bank.

    China however already lent 1/2 trillion to the U.S.

    On top of a probably ,as expected,a national depth of 11,3 Trillion,but they haven't started to recalculate,so possibly it could also end up doubled that number.

    This of course caused a lack of trust,and confidence. the European Govts.have done the opposite, the last 8 years:

    They have privatized all the too expensive national companies

    They have raised taxes on top of already to high taxes.

    They have declined the national depth until the lowest level of intrest..

    At the same time, the European Countries ,without anybody knowing saved up to about 1 1/2 Trillions taxpayers money together .

    And as also Mr Alex Carmel suggests the banks have a policy that made the U.S. a strong player in the economic field.

    Namely ,you can only borrow money,when ou have money!

    To buy these bank is nothing else then nationalizing or deprivatizing , and you can imagine that the European people was gobbesmacked to see how much money suddenly, as if out of nothing, appeared.

    But it's a very good investment of the Taxpayers money for the future,because the tax money is from now on doing banking business and making profits on the intrests on the loans of the U.S.

    And to resist the impact of the Recession of the U.S. Economy,for now.

    I told you this already before, that in Europe there was no sign of crisis.

    On the contrary I'd say.

    And although the stockmarket had been decreasing,after the bailouts it was rising again.

    So, for the occasionalist ,there were big profits to make,but because of economic/strategic reasons you don't hear that,of course.I must say that I don't understand the Story of Mr Johan,netherlands, but maybe he's to much a "safeplayer "on the U.S. economy and to less a Gambler.

    October 14, 2008 at 1:39 pm |

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