Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles

Massive Declines on Stock Markets Largest Since... Last Week

Published 10/24/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

The Dow Jones Industrial Average fell 514.45 points in Wednesday's trading session, marking the fifth-largest decline in the index's history, according to The Los Angeles Times.

The precipitous decline is alarming enough on its own. Yet when it is considered with the fact that the index plunged over 700 points just two weeks ago, we see the dangerous instability inherent in our current market. The Dow was not the only index to decline dramatically, the NASDAQ, S&P 500, NYSE and other markets in Europe and Japan also fell. The Dow figures are highlighted because it, as the largest stock index, is largely representative of the overall marketplace. That marketplace is clearly just as tumultuous now as it has ever been.

Only ten days ago, the market was believed to be recovering from its most recent crash. The argument that the gains would be fleeting was often ignored as investors “bought low” betting that the economy would rebound. The government continued to mismanage the situation, putting money where it isn't needed (Wall Street) and keeping it away from the core issue (the housing crisis). Now, after brokering bank mergers and encouraging consolidation, not to mention agreeing to pump over $1 trillion into financial and banking interests, the government's action seems to be nullified.

Americans seem rattled by the current handling of the bailout. Many are pointing the finger at Henry Paulson, but he is merely representative of a system that ignores its foundations. Our policymakers continue in the belief that the bailout is necessary, completely ignoring the fact that our economy has more pressing issues.

Investment in alternative energy projects has dried up in our cash-strapped economy, retail sales have continued to plummet (showcasing the lack of money among middle-class Americans), and the Detroit automakers seem poised to implode completely. Meanwhile, the government seems to think that investment and finance are the only issues to address.

The Dow has completely erased the gains made in the last week and a half, and another session like Wednesday's would put it below the 6-year bottom it reached on October 10. But share prices are going to continue to fall regardless of what the government does because the prices were artificially high to begin with. Our economy was not nearly healthy enough to support last year’s stock market records. It is now reverting back to its positions of the early 2000s, which by the way were still higher than any point in the market's history. Instead of addressing a market correction which will “trim the fat” of corruption and inefficiency from the marketplace, we should be focusing on the real economy (housing, employment, manufacturing, education, etc.). Unfortunately Wall Street pays well, and the government – Democrats and Republicans – are happy to receive their cut.

Source Los Angeles Times:

On Wednesday, the Dow Jones industrial average plummeted more than 500 points after a rash of negative earnings reports spooked stock investors. The loss erased what remained of Monday's 413-point rally and made the Dow's gain last week -- its biggest in more than five years -- seem a distant memory.

...

The Dow closed down 514.45 points, or 5.7%, at 8,519.21 after a furious sell-off late in the session put the index down almost 700 points. The broader Standard & Poor's 500 index fell 58.27 points, or 6.1%, to 896.78, and the tech-heavy Nasdaq composite index slid 80.93 points, or 4.8%, to 1,615.75.

At its worst levels of the day, the Dow was below its five-year closing low of 8,451.19 reached Oct. 10. The benchmark S&P 500 actually finished below its recent low ebb, closing at its lowest level since April 2003.

Click Here For Solutions To America's Economic Problems:

Click here to contact your Representative in Congress.

Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.