A Blacker Monday

The Dow is down over 800 points, and the day isn’t even over. This beats last week’s all-time record of 777 points. A global credit crisis is in full swing, with versions of what just decimated Wall Street repeating itself across Europe as governments swoop in with bailouts of high-profile banks. Verily, blood is in the streets. Hm, what’s that old saw? Oh. Right. Buy when there’s blood in the streets.

Credit Crisis Drives Stocks Down Sharply [NYT]

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  1. chauncy that billups says:

    I don’t understand the markets at all. I figured that the bailout would at least create optimism that some of these bad securities would be removed from the system – we can be certain of that at least. After the plunge last week I thought today would be a buying opportunity, but I guess the problems in europe are creating panic here.

    • RStewie says:

      @bilups: It’s probably due to the fact that, unlike Americans, Europeans know the $700B will be “confederate cash” as opposed to solid money.

      Evidently, you CAN’T just print money and fix the economy.

    • ThickSkinned says:

      @bilups: Wall Street was smart enough to know the ‘bailout’ is a sham and only prolonging the inevitable. Wait until the Default Credit Swap crisis hits. That’s when the real fun begins.

      [econlog.econlib.org]

  2. holocron says:

    Yowzer!

  3. pezhore says:

    Wee! Good to see the bailout saved our economy.

  4. thatblackgirl says:

    Should I panic right now, or wait ten more minutes?

  5. Sunflower1970 says:

    Ouch. I don’t really understand how the market works, but watching it go down has been quite interesting. I sense some people are in panic mode now.

    But, won’t this thing self-correct later in the week and go up quite a bit in the next few days…?

    • chauncy that billups says:

      @Sunflower1970: I would assume so – at least that was the point of the bailout. With no bailout, they figured there’d be no way to calm the rout. with the bailout, investors are supposed to realize that the troubled assets are going to be flushed from the system (hopefully). Unless we’ve past the point of no return, and now other assets are being devalued. At some point, investors are going to realize there are extremely good buys out there. The market is too volatile right now though.

    • kaptainkk says:

      @Sunflower1970: It’s gonna take years. I suspect the market will be going a lot lower before it goes higher to where you can actually see some type of upward trend.

    • BrianDaBrain says:

      @Sunflower1970: This will most likely take years. You can’t just make $700B magically appear (much to the chagrin of our government-types right now), and yet it’s something that we essentially just did. That’s not a mistake that corrects itself in a couple of months.

      @bilups: In the end, it matters little whether the bad assets get flushed out of the market. It’s the value of the dollar that suffers here, and it will suffer greatly. That will impact the market, and the economy as a whole, for many, many years.

  6. youbastid says:

    Well, the solution to this is simple. We must bail out Europe!

  7. fool me once-shame on you
    fool me twice-shame on me
    fool me….ah forget it.

  8. 2copper says:

    I just started my 401K this month. I’ll just lose a sock instead of my shirt.

    • selectman says:

      @2copper: You are one of the few people who are in a relatively good position. Even though I’ve only had a 401k for 4 years, I lost $13,000 in the last three months. At least you are starting much closer to the bottom than I did.

      • yaced says:

        @selectman:

        I was thinking that this may be a good time to go in or up my contribution being that stocks are so low…. cant really go anywhere but up.. Am i Wrong on that?

        • zlionsfan says:

          @yaced: If you aren’t close to retirement, then no matter what the market is doing, it’s a good time to open a 401(k) or increase your contributions. If your employer has a matching program, you should contribute no less than the maximum they will match: it’s free money, and particularly if you’re 40 years or more from retirement, it’ll grow like the national debt.

          I guess one caveat is that if you’re in a difficult financial position right now, you might want to work on that before you put away 401(k) money … if Capital One is calling to find out how much you have in your wallet, you might not want to put 10% of your salary into investments just yet.

        • BrianDaBrain says:

          @yaced: Provided you have several years to wait without your money (as in, you’re under 40 or so), absolutely.

      • floraposte says:

        @selectman: Unless you’ve cashed out, though, you haven’t actually lost any money. The value is only theoretical unless you’re trying to convert it to something liquid. Mind you, it might be a good idea to leave your statements unopened for awhile.

  9. Geekybiker says:

    Why don’t I just set up the government a direct debit link to my checking account? We’re going there anyways.

  10. wgrune says:

    Is the DOW down alot? Yes. Does it really matter? Experts seem to disagree. A lot of financial gurus believe that the DOW is NOT a good indicator of the overall health of the financial system. Just sayin…

    • ARP says:

      @wgrune: The problem is that our American political system is governed by the DOW. If the DOW is doing bad, politicians will scamble to do something about it, even if the rest of our economy is doing fine.

      • ARP says:

        @ARP: To be clear, the rest of our economy isn’t doing great either- I was speaking to the knee-jerk reaction to the dips of the DOW.

  11. ribex says:

    Right now the DOW is down “only” 492. A far cry from 800.

  12. Ah… see, I knew all those years of living paycheck to paycheck, unable to save or plan for my future, desperately poor and suffering would pay off!

    NAH NAH NAH SUCKERS!

  13. Ladies and Gentleman. What you are currently experiencing is the feeling of the a stock broker as they manage high risk investment funds. Feel the swoops, surges, and that empty weightless feeling in the pit of your stomach without the hassle of a roller coaster!

    Watch as the money you are responsible for looses value.

    [This simulation brought to you by the United States Government. Please enjoy the ride]

  14. tedyc03 says:

    Hey, don’t worry, you can trust the stock market!

    And don’t worry about that other browser window…I’m not selling off my stocks…promise!

  15. Woofer00 says:

    It’s great to see that news is getting posted before it even happens. The market hasn’t closed yet for the day, and yet the post suggests that the market set a record point loss. Go Consumerist! for not understanding that the DJIA moves throughout the day! I’d be scared if it was at -800 at 4:30PM, but during the day anything can happen.

    Note to Ben: PLEASE wait until the market closes before freaking out your readers.

    • noi56u says:

      @Woofer00: So does just a 4.35% drop (450 points) make you feel all warm and fuzzy inside?

      • Corporate_guy says:

        @dinger_82: As someone who only started a 401k in June and as a person who loves cheap gas, It makes me all warm and fuzzy inside.

      • Woofer00 says:

        @dinger_82: No, but it’s neither unprecedented nor surprising. Reporting “The Dow is down over 800 points, and the day isn’t even over..” suggests the belief that the market is going to continue to bottom out for the rest of the day, whereas the market’s reaction to the current situation can’t be predicted. Dropping the index below the 10,000 mark would normally send a mental shock that sparks investment, but the lack of faith in the government is making everyone hold onto their capital.

        • BrianDaBrain says:

          @Woofer00: I fail to see a problem with the story. At the point in time it was posted, the market was down 800 points. News outlets the world over were reporting it, because, guess what, it’s news. The beautiful thing about the Internet is you don’t have to wait until the end of the day to get your current news. As for the title, you are free to interpret any way you want it. Don’t read if it bothers you that much.

          Sorry, Roz. Outside comment code, I know. Couldn’t help myself.

          • Woofer00 says:

            @BrianDaBrain: I agree that it’s news-worthy and that it’s absolutely astonishing that the DJIA dropped so many points and closed below 10,000. I just don’t agree that the best way to inform consumers about the impact changes in the market is to have a static post stating that the Dow had a momentary record loss (that ended up being largely recovered to the price at 9:05 AM) and that banks are in crisis around the world without explaining just what it means for the Dow (a selection of only 30 market indicators) to move 800 points (almost 8%), or report on how it impacts consumers, as is the mission of this blog. The way it’s written, the post feels like as much of an unexplained knee-jerk reaction as the $700B bailout. This isn’t a financial blog, so some explanation may be worthwhile.

            The DJIA alone affects nobody – it’s just a number. However, it does have value as an indicator of the health of the economy and thereby consumers’ money valuation and credit availability, and this relationship should be explained if posted at all. Included in that explanation (in my head at least) would be that momentary rises and drops during the day do not necessarily reflect an absolute irreversible change.

  16. Like many others, I don’t understand the stocks and all the numbers, but you’d think the people controlling these things would go to work on a Monday morning and say “You know that thing we did last week that made the market crash 777 points? Lets NOT do that today!” I mean, there are acutal people controlling these things right? Its not a naturally occurring thing like the weather?

    • Diet-Orange-Soda says:

      @LastVigilante: I think it’s more organic than the “man behind the curtain” you’re describing.

      • Woofer00 says:

        @Diet-Orange-Soda: Today’s response is more of a response to international problems than domestic. Everyone is just in a selloff mood to hold onto their cash, and noone wants to buy until the market has hit a clear low. We’re in a slow and unpleasant 12-month crash that hasn’t showed but a moments strength a few months ago. Just about everything worth anything is marked underperform, so it’s just incredibly dangerous to jump back into this market.
        That’s how I’ve been understanding it all day, anyway.

        • @Woofer00: So, right now its dangerous to jump back into the market, but, if everybody in combined effort jumped back into the market all at the same time, would that make it swing back for the positive?! Though, I guess that is a lot like saying: There wouldn’t be any traffic jams if everyone just hit the gas pedal at the same time.

  17. draketrumpet says:

    So….I like how the dumb bail out plan has been received. I wonder, will they be man enough to recant?

  18. mrmysterious says:

    So the market goes down when the bailout doesn’t pass and it goes down when it passes. I guess that proves that no one knows what the hell is going on.

  19. They should call it purple Mondays, because purple is the new black… that and considering how many people are getting beat up, purple seems more apropo.

  20. MrDo says:

    you were just off by 450 points, not bad for internet work.

  21. Suttin says:

    And the record 777 point drop happened within the last few minutes of the market closing.

  22. ClankBoomSteam says:

    Ben, considering this is an article about money and, thus, numbers, I would recommend that you choose your words more carefully here, with respect to the following quote:

    “…with versions of what just decimated Wall Street…”

    The word “decimated” does not mean “devastated”, as is commonly believed — it means “reduced by ten percent”. I trust you see the problem, here.

    • Ben Popken says:

      @ClankBoomSteam: [dictionary.reference.com]

      1. to destroy a great number or proportion of: The population was decimated by a plague.
      2. to select by lot and kill every tenth person of.
      3. Obsolete. to take a tenth of or from.

      • howie_in_az says:

        @Ben Popken: They’re killing every 10th Wall St. banker now? Awesome!

      • ClankBoomSteam says:

        @Ben Popken:

        Sorry Ben, but while the word is commonly used to mean something like “annihilate” (as evidenced by the dictionary.reference.com quote you supply), such usages are only slang derivations that muddy the actual meaning of the word:

        It comes initially from the Roman practice of killing one out of every ten members of a rebellion. The Romans spoke Latin, and the word for “ten” in Latin is “decem” ~ ergo, “decimate”.

        The word has historically been used for other similar concepts having to do with percentages of ten, divisions of ten, etc., and it is only recently that the word has been used for concepts like the one in your article, most likely due to the word’s similarity to other words like “devastate”.

        Again, I only point this out because quite a few people (myself included, obviously) still read the word by its actual, root-word meaning, and therefore your use of the word becomes a distraction from your point. I would assume that as a journalist, you would prefer to keep such distractions to a minimum. Just trying to help.

  23. iamlost26 says:

    When this post was published was the time you should have bought.

  24. Pipes says:

    Alright, I have to ask: with this and the credit crunch, how does this affect me?

    By “me”, I mean someone 24 years old in a brand new job. I’ve just started contributing to a 401k (which as I’ve read is good – less money to lose!) I do have job security, as I work for a company with only one mass layoff in its history, after the dot com bubble burst – and our CEO reduced his salary to 1 penny to save 6 jobs. (Take that, Wall Street!) I make obscene amounts of money for a 24 year old, in the 6 figures. So…what does that mean? Will my 6 figures buy me less stuff then before…instead of, you know, wallowing in a bathtub full of cash I now can only maybe have a sink full? Or will it be a good thing(relatively…for me), since people less off are having problems affording things that a lot of prices seem to be going down?

    I read a lot of this stuff but am having a problem comprehending the ramifications for myself, since a lot of the literature focuses on people who are starting to have problems due to the economy. However, a very very short while ago I was the poor college student with $100 in my account, so I haven’t even begun to understand the economy of the well-off.

    • Aladdyn says:

      @Pipes: Im sure youll get lots of responses so ill throw one idea out there… I would assume the company you work for either makes a product or sells a service. If the people who buy said service or product get laid off/ make less money/ cant get loans for extra money, then they might not buy what your company is selling. This in theory would make your company cease to exist. Unless of coarse they have some super, recession proof product.

    • howie_in_az says:

      @Pipes: Less chances of getting a loan for a new car/house/engagement ring/medical procedure; less customers to buy your product/service == less income for the company == “expensive guys get fired first”, or “last hired first fired”, pick one; lower interest rate for so-called ‘high yield’ savings accounts means your money isnt growing as fast as inflation; stocks tanking == the money you DO put into the 401k is immediately ‘lost'; rising inflation == “why is this loaf of bread $20? yesterday it was $5″; more people getting laid off == your friends cant go out drinking with you like they used to because they’re too busy looking for jobs or simply dont have the money.

      I could go on…