Jan 21, 2008

U.S. Stock Market: Calm Before the Storm?

Global stock markets tanked Monday following declines on Wall Street last week, and global investors seem unpersuaded by the U.S. government's stimulus plan to prevent a recession by issuing $800 tax rebates.

India's principal index tumbled 7.4% Monday, falling 1408 points to 17,605, while China's Shanghai Composite Index dropped 266 points, or 5.1%, to 4914.

Germany's DAX index fell 381 points to 6933, while the CAC 40 in France was down 238 points at 4854; these represent declines of six and four percent, respectively. Some £77 billion in value was erased from UK blue chip shares today, as investors brace themselves for what appears to be a U.S. economy running headlong into recession.

The Dow is currently 14.6 percent below its October 9 record close of 14,164.53, and the index is less than 100 points away from slipping beneath the benchmark of 12,000. A number of analysts are discussing the possibility of a drop of 500 or more points when trading opens in New York Tuesday morning.

Personally, I am going to ride out what seems to be a financial tsunami looming ahead. We have enough equity in our home to avoid almost any conceivable real estate disaster, and we will not be cashing out our 401-K and IRA funds for a couple of more decades, anyhow. Still, it is difficult to keep from drawing comparisons between 2008 and 1929.

Thus, I will keep one eye on FNN tomorrow as I prep for my lectures, much as I would slow down to see a horrific accident. Kind of hard to ignore, right?


Hooda Thunkit said...

And here I am faced with withdrawing ~ $ 9,000 to purchase some time for Mrs. T so that she can retire sooner.

What to do, what to do; delay or just bite the bullet and get it over with...


Historychic said...

Hey Mike, I think drawing comparisons between 1929 and 2008 might be a little extreme. Yes, we are most likely in a recession, which happens every 6 years so that the market corrects itself. There are safeguards in place to prevent another depression such as the FDIC, unemployment, etc. Yes, the housing market is in a meltdown but housing prices became over inflated and lenders gave mortgages to people who should never have been given a mortgage. The housing market is correcting itself. That is how we are able to get a house appraised at 80k for 50k.

microdot said...

I have been watching financial news on CNN International, CNBC and BBC and Al Jazeera English for months now as the analylists tried constantly to spin the reality and the administration kept chanting, "No, ignore reality, reality lies! Who you gonna believe, me or your lying eyes!

Everything's fine..."
Then George Bush finally admitted that "Houston, we have a problem!" with his stunned deer caught in the head lights patented blank stare and the bottom proceeded to drop out..
Hey, I earn most of my money in the States in US Dollars that aren't worth half in exchange here against the Euro. No wonder the ATM machines I use here all have a "laugh track"....

I don't spend money anyways, I use my car a few times a week, have lots of insulation and a big fireplace. I have a huge garden and grow most of my vegetables.
We have our grocery bills, for 2 adults and a cat and dog pared to around 50 Euros a week...
Luckily, my house is totally paid for...cash!
But for the first time in my life, I am looking forward to getting older, because then I can start to collect social security...between my wife and I, being such miserable but artful cheapskates, we will be living like little pashas!

My biggest fear is that the Republican fat cats are going to go after Social Security next and start a smear campaign against all of us aging free loading old coots who are ripping off the system by living too long!

craig said...

People just don't understand what downgrading MBIA and Ambac means to the financial world. Drawing comparisons to the Great Depression is not as far-fetched as it seems.
The tax rebates are a joke. That's just a way for the Repugs to make Bush's tax cuts permanant and give the Dems a reason to capitulate. We are all well and truly screwed.