That’s right; today, September 29th, 2008 will forever after be a black Monday. The DOW saw its biggest single day point loss in history today, falling a whopping 778 points (6.98 percent) by the time markets closed in the US today.
Greed Overcome by Fear
But that’s not why I’m calling today’s frightening decline in stock prices Black Monday. Rather, today was one of the worst days in market history for me because it was caused by greedy banking executives who took advantage of people with bad credit who just wanted their piece of the American dream, lending to them under terms that have become
And to make it a really bad day, it was also the penultimate example of political grand standing. With only 30-odd days until the 2008 Presidential Election, what we saw last week from the McCain campaign team was bad enough; McCain left the campaign trail for 3 days and said the debate should be cancelled, insinuating he had involvement in getting a 700 billion dollar mortgage bailout approved by congress.
Today that package was rejected in the house, with democrats and republicans alike getting hammered by millions of voters calling their state’s representatives personally to reject to the bailout package. Today, fear overcame greed as the bailout was voted down.
American Taxpayers Show Their Concern
Apparently house members were overwhelmed with calls from American citizens today, voicing their concern that the US Treasury buying $700 billion worth of home mortgages does not seem like the best plan.
As citizens and voters, we appear to have gotten at least a little smarter than we were going into the savings and loan crisis in the early 90s; it just seems eerily similar in more than a few ways to our current predicament, so we aren’t buying that line again!
Politics as Usual
Sure, all of us as taxpayers should be weary of the bailout plan. Yes, liquidity in the markets is critically lacking, but do election-crazed US politicians have our economic future in mind.
Today’s delay in agreeing on a plan to stop the bleeding seems to be more about winning an election than helping the American economy regain its footing. If this was not true then both parties would have figured out a way to agree on some plan by today! It seems our politicians did more finger pointing than anything else today.
Silver Lining in a Black Cloud?
Now just because this was Black Monday, it doesn’t mean all is bad. This could be a sign that we’ve finally hit bottom. And, in fact, a wealthy investor friend of mine called today to say he had bought when the DOW was down 800 points toward the end of the day.
After putting a large portion of his funds into cash a year ago, my friend says will keep buying as long as the stocks he believes in (those with solid balance sheets, strong earnings growth and little or no exposure to the financial markets that have been unfairly punished as a result of recent weeks’ Wall Street shenanigans). He will just dollar cost average his way along the bottom of this down market.
And with the elections so close now it will be historic how this situation is or is not handled quickly enough to prevent further market declines and a worsening economy here in America. Something needs to be done soon in order to bring this down cycle to its knees