The DOW went over the cliff today. Closed below 8000. Down 5%

[Liberal_in_LA]

http://money.cnn.com/2008/11/19/markets/markets_newyork/index.htm?postversion=2008111916

Dow plunges below 8,000 - 1st time since '03

Major indexes close sharply lower. Fears grow about economy and auto industry.
NEW YORK (CNNMoney.com) -- Stocks fell hard on Wednesday, with the Dow closing below 8,000 for the first time since March 2003, as ongoing anxiety about the economy and uncertainty about the future of the auto industry weighed on the market.

The Dow Jones industrial average (INDU) shed more than 400 points to close 5% lower. All 30 Dow components lost ground.

[opihimoimoi]

1. Its all on Bushies watch...the asshole....trickle down my ass....

[Johonny]

2. But I heard on the radio it's the Obama recession.

[opihimoimoi]

10. That would be Rush and his Brainwashing shit...Bullies never take responsibility

They always blame others

They never solve

Mostly Whine

Want to Lead but never quite does it well...

Its a BUSH ECON FAILURE....and he is supposed to be an MBA no less....what the hell did he learn...How to fuck it up???

[gratuitous]

11. It's like the Bush presidency never happened!

See, everything bad that happened up until November 2008 was Clinton's fault. Everything bad after that is Obama's fault. There was a window of about 2.3 seconds where George W. Bush was actually responsible for running the country. And nothing bad happened, so there! Boy his legacy is sterling!

[RagAss]

15. And we end this by keeping them out of power for the next 16 years !

[TheFarseer]

16. don't you know

the Stock Market is still reacting to Obama threatening to raise taxes and tax capital gains!!!! Some people actually make that argument.

[magellan]

3. It's just catching up to the financial condition of most AMERICANS

I really don't give a flying rat's ass about the players on WS. They're the ones who got us into this situation. Again.

[TexasObserver]

4. And I still think we have another 500 points to go to find the bottom.

I've been saying we have to close below 7500 before we see the bottom of this.

[tama]

5. More

one zero more. Bottom at 3000 is what I'm guessing. But we'll see.

[TexasObserver]

6. That's not gonna happen.

[tama]

7. Why not?

If it dropped back to beginning of Reagan era and neoliberalism, 1980, it would drop below 1000. In 1930's Depression Dow dropped 80% in few years. And this is greater depression.

Oil per capita peaked in 1979, since then economic growth has been based on ballooning debt bubble. Remember the dictum "deficit don't matter". This depression is not just about latest inflation of the bubble bursting, but the whole debt bubble. A systemic crisis of capitalism - that capitalism is unlikely to survive.

[TexasObserver]

8. Because we are not in a Depression.

This is much like the decline of 1987, a bad recession. It will take 2-3 years before we're through the worst of it, and another 2-3 years before we are entirely recovered from it.

The DOW has already lost 43% of its value off its record high of a year ago. It's not going to drop below 50%, which would be right at 7000 on DOW.

If I'm wrong, you can say you told me so. If I'm right, I'll remind you.

[KoKo]

13. '87 Recession was nothing like this...though... n/t

[TexasObserver]

18. Of course it was. Sorry you missed it.

[tama]

17. I saw a chart

showing that 1st year plunge has been more severe than in Great Depression. And this is hardly over, just beginning.

[TexasObserver]

19. That's absurd.

I don't what you think you saw, but that's simply not accurate.

[tama]

21. This:

http://www.nytimes.com/interactive/2008/10/11/business/20081011_BEAR_MARKETS.html

"In the first year of this current bear market, the market has fallen more steeply than it did during the first years of the Great Depression's bear markets."

[TexasObserver]

23. You're misreading the chart, and the statement is factually incorrect.

Neither you nor the author quoted are recognizing that the pre collapse market in 1929 was ten percentage points higher than was the 2007 market, and that is reflected in the chart if you key on it.

The decline the first ten months is similar to the decline experienced the first ten months of the Depression. That much is accurate. However, from its peak to a point a year later, the Depression experienced a greater slide, by 5-10 percentage points.

[tama]

24. OK

You may have a point. But on the other hand, the chart gives no credence to your claim that this is more like 87 than 29.

[TexasObserver]

26. It's true that the % loss the first year is closer to the Depression's than was the 1987 collapse.

However, that collapse, which was on the order of 30%, instead of the 45% or so we're seeing now, occurred in a much shorter time frame. It was a sharp drop in under five months. It took two years, roughly, for the markets to return to their previous highs.

While the decline by percentage does more closely parallel the first year decline of the markets in the Depression, my comparison of 2008 to 1987 relates more directly to the way in which government addresses the decline, the impact on the economy in general, and the likelihood of returning to where we were in 3-4 years.

To put it bluntly, there was nothing in place in 1929 to deal with a collapsing economy. We went into free fall because there was no agreement on how to address problems, because the calamity was a new type of crisis, and we had to grope with ways to address it. The farm economy was collapsed before the stock markets collapsed.

I see 1987 as more similar to 2008 than 1929 because our approach to dealing with the problems is fairly similiar: we will deficit spend and throw a lot of government money into bailouts and projects. I believe we will bottom out in the next 6 months, somewhere above 7000 on the DOW, and we will see a recovery to 14000 on the DOW before the next presidential election.

We'll know in the next 6 months whether your 3000 point floor or my 7000 point floor is correct, won't we?

[tama]

27. Not in six months

it might take couple more years to reach the 3000. Or less. Or more.

As for deficit spending, IMO that is nothing but Federal state giving pledge to go down with Wall Street. And down it will go, FIAT currency system etc. This is not even 2nd Great Depression, this is the beginning of turning point in history of civilization - meeting the limits of growth.

[LeftHander]

28. that is what I figured....too actually 2600 ish....nt

[leftofthedial]

9. it's still about about 20% overvalued

maybe more

[spanone]

12. the asian markets aren't pretty right now either

At 10:47 PM ET
MARKETS »
JAPAN
Nikkei
7,886.28
–386.94
–4.68%

HangSeng
12,156.83
–658.97
–5.14%
CHINA
Shanghai
1,993.20
–24.27
–1.20%

[aint_no_life_nowhere]

14. I remember reading DU posts that anticipated a drop below 8000

about a year ago. I just didn't believe it was possible. But here it is.

[TexasObserver]

20. I've been anticipating a fall to 7500 all year.

And saying so here, religiously.

[annabanana]

22. sigh.. I have a hard time getting panicky about the Dow..

The money that is earned there is money that should be thought of as "extra". It is speculation money. Investment money is speculation money. It shouldn't be in there unless your room & board are already secure. The market was never meant for the "working classes".

[earth mom]

25. That's exactly how I feel about the stock market.

A bunch of freewheeling gamblers who care nothing about people who actually work for a living. :puke:

[LeftHander]

29. Capitalization....

When stock prices fall companies go broke.

They cannot capitalize for new tools, and raw materials, they can't pay payroll. Particularly in a tight credit market.

Add onto all the other factors in this economy and if you are not really scared then, honestly, you are a fool.

THis is a consumer based economy and no one is buying anything. there is little or no consumer credit, there is growing unemployment...and companies are worth almost 50% less than they were a years ago....

Business is whipping through their liquid cash and it is only a matter of time as we have seen with the big three until the cash runs out...then more lay offs and plant closings...and that further puts the economy into the read...


or should I say...DEPRESSES the economy...AND we ARE seeing deflation across many sectors.

Very hard times are coming and BushCo is robbing the coffers before they leave in an unprecedented manner.