19
Sep
Barack Obama’s milking the current financial “crisis” for everything it’s worth right now on tv. I finally had to give up even trying to listen. According to him, it’s basically time to admit defeat and gut the entire capitolist base of our economy and replace it with a pure socialist model. That would solve all the problems since there would be no stock market to worry about. Speaking of which, since a lot of people are telling us this is the next Great Depression, I figured I would put this all in perspective. So, without further ado, here is where our great crash stands percentage wise in the history of the Dow Jones:
| Greatest DJIA Percentage Losses Of All Time |
||||
| Rank | Date | Close | Net Chg | % Chg |
| 1 | 12/12/1914 | 54.00 | -17.42 | -24.39 |
| 2 | 10/19/1987 | 1,738.74 | -508.00 | -22.61 |
| 3 | 10/28/1929 | 260.64 | -38.33 | -12.82 |
| 4 | 10/29/1929 | 230.07 | -30.57 | -11.73 |
| 5 | 11/06/1929 | 232.13 | -25.55 | -9.92 |
| 6 | 12/18/1899 | 58.27 | -5.57 | -8.72 |
| 7 | 08/12/1932 | 63.11 | -5.79 | -8.40 |
| 8 | 03/14/1907 | 76.23 | -6.89 | -8.29 |
| 9 | 10/26/1987 | 1,793.93 | -156.83 | -8.04 |
| 10 | 07/21/1933 | 88.71 | -7.55 | -7.84 |
| 11 | 10/18/1937 | 125.73 | -10.57 | -7.75 |
| 12 | 02/01/1917 | 88.52 | -6.91 | -7.24 |
| 13 | 10/27/1997 | 7,161.15 | -554.26 | -7.18 |
| 14 | 10/05/1932 | 66.07 | -5.09 | -7.15 |
| 15 | 09/17/2001 | 8,920.70 | -684.81 | -7.13 |
| 16 | 09/24/1931 | 107.79 | -8.20 | -7.07 |
| 17 | 07/20/1933 | 96.26 | -7.32 | -7.07 |
| 18 | 07/30/1914 | 71.42 | -5.30 | -6.91 |
| 19 | 10/13/1989 | 2,569.26 | -190.58 | -6.91 |
| 20 | 01/08/1988 | 1,911.31 | -140.58 | -6.85 |
Pretty amazing huh?
What’s that you say? You don’t see this week?
That’s because it didn’t make it.
What people are failing to put in perspective is although the nearly 500 point loss would put this week in the tops along with 9/11, the fact is the market value wasn’t even remotely close to what it is now in very recent years. A 500 point loss just isn’t what it used to be. To put it in perspective, if the market had crashed like it did in 1929, it would have lost 1,798 points in one day.
Second clue about this “crisis”, the Dow Jones, which was hammered by AIG, will post a gain by the end of this week.
Now, what’s happening is an industry which built itself on a house of cards that was incredibly risky is collapsing in on itself. It is being absorbed by, get this, traditional lending institutions that do their very best to be risk averse.
In other words, the market is correcting with an assist from the federal government.
I think this is a win-win situation in most cases.
Now, a lot of conservatives are peeing in their pants right now because of the assist from the government part. I expect certain things to happen in order for this to have been handled as well as it could have. I expect over a period of time, just the Resolution Trust Company did, that once the situation has corrected itself, the RTC will divest itself of assets and cease to exist. People are whining about the bail-outs as hand-outs. I don’t see that as the case. I see it as coming with a heavy price for those who once owned products or stock in AIG and Bear Stearns and……. The dissolution of AIG will be ugly and done without mercy. Dow Jones has already forgotten about AIG and replaced them with a cheese maker. This is simply greasing the gears for the next financial boon that will be built on a much more solid house, over a much longer time, than what we had before. And it seems to be working. The Dow at this time is up over 400 points. Time for CBS to start touting the second Bush miracle! ( Cool out folks, 400+ points in one day won’t make the top 20 all time gains either. )
And, IMHO, it should lay to rest once and for all whether or not times were really all that great during the Clinton boon. That boon is what we have been paying for since then. Some of the growth was real, but a lot, as is evident right now, was not. It was never there in the first place. It was simply borrowed.
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--HedonistiX on 09.25.2008
With all the gloom and doom news, here are 2 articles with pretty optimistic tone about the bailout situation. We’ll be NOT in a bad shape if both of them are proven correct in the next couple years.
Authors are Andy Kessler (former Hedge Fund manager) and THE Bill Gross himself (just Google him if you must), both with more than legit credentials.
–H
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The Paulson Plan Will Make Money For Taxpayers, by Andy Kessler:
http://online.wsj.com/article/SB122230704116773989.html
Author’s website:
http://www.andykessler.com/
How Main Street Will Profit, by Bill Gross:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092302322.html
Moonage on 09.26.2008
Both are most excellent reads. I think the end-game is pretty well agreed upon. It’s how much pain is going to be endured until we get to that point is the only real question.
Watching now where Washington Mututal went under/got bought by JP Morgan. The end game is getting closer very rapidly apparently.