Thursday, November 06, 2008

Why Is This Happening?

Stocks have had the worst two day plunge since the Market melt down of 1987. There has been a ten percent decline in two days and it doesn't show any sign of turning around anytime soon.

Why is this?

Did something happen two days ago that sent an icy chill through the business community?

Stock markets generally look forward. They are a reasonabe indicator of what the business community expects over the foreseeable future.

I remember the 1980 election. Reagan won on Tuesday. The following Wednesday and Thursday stocks shot way up only to decline a little bit on Friday. Johnny Carson got it exactly right when he said "After Ronald Reagan won the election Tuesday we saw the stock market go up the next day and the day after. Today the investors realized that Jimmy Carter was still in the White House for two more months."

The business community is not expecting things to improve or stocks would have started to rise. They were rising until the election. I don't see that as a good sign. If the rich aren't making money you can be sure that the middle class, working class, and poor won't either.


Blogger Bloviating Zeppelin said...

Perhaps the market doesn't respond well to potential massive regulations, to greater taxation, to more spending -- ??


9:50 PM  
Blogger Patrick Joubert Conlon said...

I sold whatever I could because the current capital gains tax is 15%. Obama has promised to raise it to 28%. People are selling their stocks as quickly as they can.

1:41 AM  
Blogger christian soldier said...

Something did happen Tuesday that sent a chill up the spine of all freedom lovers ....and business lovers too!
Speaking of business:
Did you read that gun sales a UP...?!

I know-I'm just a little ray of sunshine :-)


1:43 AM  
Blogger Average American said...

Yup, something happened all right, America made a hugh mistake and elected a Bleeding Heart Liberal to the White House. Every time that happens stock crash. Investors know that Uncle Sam can only borrow just so much money to throw at the problem, and it wont be enough. They are starting to get to the point where they will be jeopardizing the countries ability to pay its loans. If that happens, the shit will REALLY hit the fan.

3:35 AM  
Blogger Tim said...

This crisis isn't just about the election. Stocks did very well under Clinton, aa. Don't forget, the last time we had a crash like this was in 1987 when Reagan was at the helm.
This crisis is driven by earnings estimates going down across the board because credit is tough to get. Nobody is going to buy a car or a house and pay cash. The scary part is that housing starts going up has always been the driver that gets us out of recessions, and with all these forclosures that could mean a long, long wait before we get there from here.

We are in for some tough times in the stock market. For the most part I am on the sidelines for now. I still have 1000 shares of Ford and 100 of Apple. I am "keeping my powder dry" as it were. I wouldn't be suprized to see interest rates going up. Let's face it: we are in the most seriuos financial crisis since the Great Depression.

There will be oppurtunities to make money in the market, but I'm thinking that it will probably be March 09 before I buy anything else. After we difest horrible Christmas sales data in January, nothing usually goes on in the markets until first quarter earnings come out.

8:29 AM  
Blogger Joe said...

The stock market is but one indicator of trouble ahead. We can look to actual sales, expecially in big ticket items. This may be the worse Christmas, in terms of sales, in recent memory.

But we will perservere and dump this guy first chance we get.

10:40 AM  
Blogger Ducky's here said...

Retail sales are horrible. The unemployment figures are bad and the U.S. auto industry is on the Hill saying they may disappear unless they can shake us down for 50 billion or so.

This economy is crap. I will predict that the right will be fighting efforts to resolve a bad situation from day one rather than trying to be constructive.

11:30 AM  
Blogger Bob said...

You and Johnny Carson are right.

11:44 AM  
Blogger christian soldier said...

I like the cartoon-looks like Todd Palin..and the message"-citizens do"

11:55 AM  
Blogger Ducky's here said...

shoprat, GM was once the largest corporation in the world and it now has a lower capitalization than Burger King.

That should start to tell you that we are in deep yogurt.

I don't think you know how close to a deflationary depression we are.

Big train in the tunnel and we were trying to tell people exactly that but they all they are going to do is yell "socialist" rather than dealing with facts and effective policy. Their loss of wealth has been stunning but they still start whining about some rumor that the government is going to take over their 401K's.

12:19 PM  
Anonymous miradena said...

In response to the above comment - there is indeed a "big train in the tunnel" but I am uncertain as to your reference - "we were trying to tell people."

Surely, you are not implying that our Democratic Congress did more than sit on their collective hands while this train barreled out of control. And now we have chosen to place a remarkably inexperienced engineer at the helm - with the expectation that he can guide us safely to a better destination. No. I'm afraid that the light you see at the end of the tunnel - is just another oncoming deflationary train. And under an Obama regime, we are surely heading for a crash. Impact is inevitable.

3:37 PM  
Blogger shoprat said...

We agree that there is a problem but your "solution" will only make things worse. You seem unwilling to understand that.

10:16 PM  
Blogger Chuck said...

Obama is ahead in the polls andd the market is down. McCain gains some ground in the last couple of weeks and the market picks up a bit. Obama wins the election and the market is back down. I think we can say the market has spoken.

11:13 PM  
Anonymous Anonymous said...

If we run my car until its gas tank is almost empty and you take it to the gas station but run out on the way..... whose fault is it??? It is easier to say you did it, than it is to accept any of the resposibilty. Kind of like saying Michigan is in the position it is in because of "Jenny".
Instead of all this blaming and finger pointing why don't we accept the fact, like it or not, he is (as McCain said} our President.

9:15 AM  
Blogger Ducky's here said...

shoprat, you are going to have problems making it much worse.

Now miradena, there have been voices from the left to Barron's magazine (hardly a socialist tool) telling us that the bubble economy was going to blow sky high. However, you decided to deregulate and go of into the laissez-faire, Libertarian sandbox.

Now if either you or shoprat can convince me that an incoming administration that is going to put regulation back in place after the damage deregulation has done, try to stop the upward wealth transfer and stabilize housing prices is a problem then I really, really want to hear about it.

I think the only way the right will participate is by harping from their little laissez-faire sandbox and trying to sabotage the Obama presidency.

2:12 PM  
Blogger Z said...

I think people REALLY thought McCain would pull it off a couple of days before the election and the market reacted.
Since obama won, it's a nightmare.
All he'd had to have done Friday is mention not taxing cap gains and the market would have improved. But, apparently that's not his goal.

The media's been doing a number on our economy for about a year now..(i am NOT blaming the media for the housing problems, etc., really not) Every time there were good economic numbers, we'd hear "but......" I'd think"BUT WHAT? WHY THE Constant NEGATIVE?"
I believe obama needed a nasty economy in which to win because he couldn't fight that the surge worked, that was not in his favor. far WILL the media let this go? Into Socialism? Where the economy's so bad we ALL personally need bail outs? Is that the plan, little comrades?

Ya, it sounds conspiratorial and nutty but it occurred to me that the best way to make Amerika a Socialist state is to drive us SO into the ground, with SUCH huge debt and nobody wanting to spend and this not-spending driving us so down that we'll ALL need help, not just GM and Ford, etc. Crazy, maybe it sounds like it...for me!! But,'s a consideration.

WHY does SOROS SO hate our country..I would love the answer to that. Apparently, he's working in overdrive trying to make sure Tom McClintock doesn't win his seat in Norther California but it looks like he IS winning......TONS of money going to the liberal opponent. Soros is supposedly behind the opponent.

6:51 PM  
Blogger Nightcrawler said...

The market doesn't like uncertainty. The things that are certain are that taxes are going up, including taxes on capital gains. The market's reaction is one of fear and common sense, they're cashing out while they can and probably converting their assets into something more sound like gold or other investments. They're hunkering down, preparing for at least four years of "eat the rich" politics. Obama is an unknown quantity to many, but what is known isn't very comforting to anyone with any kind of wealth.

Buckle up, it's going to be a bumpy ride.

8:57 PM  

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