Stock Market ends worst week in history

[theotherguy]

NEW YORK - Wall Street ended one of its worst weeks ever trying to figure out whether to continue its freefall or take some tentative steps toward a possible recovery.

The stock market gyrated up and down, sending the Dow Jones industrials bouncing within a 1,000-point range before they finished with a relatively mild 128-point loss, while the Nasdaq composite index managed a small advance. Even in the last hour, stocks vaulted between gains and losses, and the Dow swung up and down by hundreds of points.

The market?s spasms fit in with the nearly 2,400 points, or 22.1 percent.

Investors suffered a paper loss for the day of about $100 billion, as measured by the Dow Jones Wilshire 5000 index. For the week, investors lost $2.4 trillion, and over the past year, the losses have piled up to $8.4 trillion.


The Dow had its worst week on record in both point and percentage terms as investors agonized over frozen credit markets. The Standard & Poor?s 500 index, the indicator most watched by market professionals, posted its worst weekly run since 1933.

?The deeper problem is not the stock market drop but the freezing up of the credit markets and that?s the root problem and they have to keep applying the antifreeze until it works,? Harris said. ?Fear has been running rampant all over the Street. Fear and greed, that?s what rules the Street."

Source: http://www.msnbc.msn.com/id/3683270/

 

[VictimOfScience]

I really have no idea what to say here. A certain fear is beginning to build in me as well but thankfully, unlike many Americans looking to retire soon, I have a long time left to save up again. This is potentially very scary and I don't think any of us really realize how scary it is yet.

 

[Krynn72]

THE DAY OF RECKONING IS NIGH, REPENT OR YE SHALL BE CAST TO RUIN!














But srsly.

 

[VirusType2]

I can't find work.

 

[kineaesth]

I can't find work.

Neither. It's your avatar, tbh.

 

[DEATHMASTER]

I never understood why "printing more money" doesn't work, I mean sure there isn't anything more to back it up, but isn't it all crap on the shitsandwich of what is already over looked on as far as back up goes?

 

[Kyorisu]

Printing more money devalues the currency. You end up with more money that's worth less.


So...America...going to regulate your banks now?

 

[DEATHMASTER]

I'm assuming this only matters because of other countries. In which case we just don't tell them and the gov't just gives people money as a tax refund! A disaster escalated but belated!

 

[theotherguy]

I'm assuming this only matters because of other countries. In which case we just don't tell them and the gov't just gives people money as a tax refund! A disaster escalated but belated!

No. It literally devalues the money. This is the definition of inflation.

More money circulating means higher prices means higher wages means more money printed means higher prices means....etc.

This is exactly what Germany did during the Great Depression, and it led to a total financial meltdown. For a modern example of why this is a very bad idea, look at Zimbabwe.

Besides, the current crisis has nothing to do with currency and everything to do with credit. Want to get a loan from the bank to buy a car or go to school or start a business? That money is generally borrowed from a larger bank, which borrows from a larger bank, and all of this borrowing eventually gets up to the financial giants who get their money from investors buying stock and occasionally from government lending. Recently, banks have been playing with "sub-prime" mortgages, or loans on homes to people with very poor credit histories. Somewhere along the line, computer models or get-rich-quick executives thought it would be a good idea to loosen requirements for getting mortgages.

This, along with a huge flood of new home-owners and first-time borrowers led to a massive housing bubble over the past decade. People were borrowing like crazy from banks and not paying them back. When the housing bubble burst, all of that money disappeared. Without money to lend to other banks or even pay their own expenses, huge wall-street financial giants like the Lehman Brothers and Fannie and Freddie Mac started tanking. These are some of the biggest names on wall-street. People were utterly shocked when these institutions started failing. This has set off an unprecedented panic as investors fear that credit will be dried up, and the economy will crash. Fear has led to massive selloffs over the entire world, and this is simply intensifying the financial crisis.

The government bailout and now the new plan to give the government control of key banks are measures taken by the government in an attempt to get credit flowing again. They are not meant to improve the stock market. The hope was that investors would be given confidence by the government bailouts around the world, but since the effects of these government actions will not be apparent for years or even decades, investors are now completely out of control, selling like crazy in fear of a global recession or depression before government action can take effect.

 

[DEATHMASTER]

I remember learning about the Germany thing and "its worth more to burn it." But I never understood it. I mean why not keep the prices at their original size? People make more money, people spend more money (or current rate to survive)

 

[Raziaar]

No. It literally devalues the money. This is the definition of inflation.

More money circulating means higher prices means higher wages means more money printed means higher prices means....etc.

But generally the poor people will still be poor, the middle class will still barely have enough money, teetering on becoming poor, and the rich will have all the rest.

We'll still keep those ratios intact as long as we forget how much actual money is in circulation!

 

[kineaesth]

Because it's an economy. It's not up to America to say 'an ice cream is worth one dollar'. The price of that ice cream depends on how much it costs to produce, and how much it's sold for for profit.

 

[theotherguy]

I remember learning about the Germany thing and "its worth more to burn it." But I never understood it. I mean why not keep the prices at their original size? People make more money, people spend more money (or current rate to survive)

Supply and demand. All of this new free money pops up in the hands of consumers, and suddenly everyone has the ability to pay more, so they do. What initially happens is a consumer rush to the stores, followed by a brief surge in the economy, and then massive inflation. Facing higher demand and consumers willing to pay more than usual, producers raise prices. As prices rise, the real value of money decreases. In the case of Germany, the real value of money decreased to almost nothing. Loaves of bread could cost a barrel-full of paper money.

Also, when inflation is so high, debtors get a free ride. They have the money to pay off their debts, but their money is now worthless.

Since we are in a credit crisis, printing more money is exactly the opposite of what we want to do. People would be able to pay off their mortgages and bank loans, but this money would be worth less than before, and banks wouldn't be able to make back what they leant. This leads to failed banks, a crashed economy, and a depression.

 

[DEATHMASTER]

so what if the sellers kept prices the same?

 

[Krynn72]

They wouldn't.

 

[DEATHMASTER]

gov't force them to, aside from being pissed to shit, what economic effect would it have?

 

[kineaesth]

They'd lose lots of money, is what effect it would have.

 

[Laivasse]

The credit freeze is having a clear effect all over the world, with governments in every country now trying to offer reassurances that savings won't be lost should high street banks start to croak.

I'm a bit worried myself. Gordon Brown the other day increased the amounts that savings were insured up to, from ?30k to ?50k, but I still have one account where I hold significantly more than that. I don't really know what to do, since to withdraw a load of it at this time is to behave in exactly the way that were everyone else to behave in the same way, it would cause mayhem (a run on the banks)...

 

[MJ12]

I can't find work.

Neither. It's your avatar, tbh.

Neither Neither

 

[Escaep]

In just September my parents lost $37,000 in investments. Just September.

I am sincerely worried.

 

[The Monkey]

Bush ****s up again. When will people realize that deregulation isn't the solution to all life's problems. The market was extremely deregulated in the 1920s, that's why the crash happened in 1929. After that regulations of the market was put in place to prevent something similar from happening again. Those were removed by Bush in 2001, and now the same ****ing thing is happening again. ****ing idiots, didn't history teach them anything?

 

[AJ Rimmer]

Here's my question; If America is having a financial crisis, how come the dollar is worth more than I've seen it in the last two years? It sucks, means stuff I wanna buy over the internet is expensive again!

 

[nurizeko]

The dollar is worth more because there is less of them but demand is still the same or more.

 

[Kamikazie]

It's worse than the 1929 stock market crash? What do you know, they both happened in October.

Kamikazie makes a motion to remove October from calenders to be replaced with Kamitober

 

[Krynn72]

The credit freeze is having a clear effect all over the world, with governments in every country now trying to offer reassurances that savings won't be lost should high street banks start to croak.

I'm a bit worried myself. Gordon Brown the other day increased the amounts that savings were insured up to, from ?30k to ?50k, but I still have one account where I hold significantly more than that. I don't really know what to do, since to withdraw a load of it at this time is to behave in exactly the way that were everyone else to behave in the same way, it would cause mayhem (a run on the banks)...

One of the guests that came on to the Colbert Report said you can just transfer your money into different banks, and each account is covered up to that much. He was obviously talking about American banks, but maybe its the same for you?

 

[delusional]

Bush ****s up again. When will people realize that deregulation isn't the solution to all life's problems. The market was extremely deregulated in the 1920s, that's why the crash happened in 1929. After that regulations of the market was put in place to prevent something similar from happening again. Those were removed by Bush in 2001, and now the same ****ing thing is happening again. ****ing idiots, didn't history teach them anything?

This crash has little to with the crash in 1929. This crash has more similarities to the depression in the 1870's.

http://chronicle.com/temp/reprint.php?id=477k3d8mh2wmtpc4b6h07p4hy9z83x18

 

[Laivasse]

One of the guests that came on to the Colbert Report said you can just transfer your money into different banks, and each account is covered up to that much. He was obviously talking about American banks, but maybe its the same for you?

I'm pretty certain that option's open to me. It's just the principle of the thing though: is that headless-chicken panic behaviour, or is it legitimately covering my back...? If everyone with 50k+ holdings were to switch a ton of funds to different banks, would it cause meltdown or would the effect be balanced out due to the new accounts created...?

Essentially I don't know if I should be worried about a simple current account at this point, since the account in question is with quite a small bank, as British banks go...

Here's my question; If America is having a financial crisis, how come the dollar is worth more than I've seen it in the last two years? It sucks, means stuff I wanna buy over the internet is expensive again!

I think it's because the crisis has really started to bite elsewhere. Faith has been diminishing in the dollar for a long time due to the spiralling credit crisis, but this is the first we're seeing of countries around the globe having to take emergency measures to protect their banks, etc. As such, world currencies are dropping like a stone while the dollar, already afflicted with lack of confidence, is staying relatively still for the moment. That's my simplistic layman's interpretation of what's going on, anyhow.

 

[MiccyNarc]

gov't force them to, aside from being pissed to shit, what economic effect would it have?

Diamonds are valuable. Why? Because they're rare. Same reason money is valuable. Sounds good if everyone has millions and can buy everything they want, but in the end you're trading actual goods for pieces of paper. Would you accept cut up paper as payment for an automobile? Hell no.

 

[Jintor]

One of the guests that came on to the Colbert Report said you can just transfer your money into different banks, and each account is covered up to that much. He was obviously talking about American banks, but maybe its the same for you?

Jim Cramer? THEY KNOW NOTHING! THEY KNOW NOTHING! PEOPLE ARE GONNA LOSE THEIR HOMES!

 

[DEATHMASTER]

Diamonds are valuable. Why? Because they're rare. Same reason money is valuable. Sounds good if everyone has millions and can buy everything they want, but in the end you're trading actual goods for pieces of paper. Would you accept cut up paper as payment for an automobile? Hell no.

Well I mean giving every family a couple more thousands doesn't sound that overkill ($3000ish). Doesn't obama already have a plan of that sort?

 

[delusional]

Diamonds are valuable. Why? Because they're rare. Same reason money is valuable. Sounds good if everyone has millions and can buy everything they want, but in the end you're trading actual goods for pieces of paper. Would you accept cut up paper as payment for an automobile? Hell no.

Diamonds aren't rare, it's artificially rare.

And just because something is rare, doesn't make it valuable. Some poisonous fruits may be rare, but no ones going to pay and arm and a leg just to have one.

 

[DEATHMASTER]

Cuz they're not pretty or useful.

 

[Pesmerga]

There is actually a small market for exotic foods and animals.

 

[Krynn72]

Diamonds aren't rare, it's artificially rare.

And just because something is rare, doesn't make it valuable. Some poisonous fruits may be rare, but no ones going to pay and arm and a leg just to have one.

Some bleeding edge graphics cards that arn't much better than current ones may be rare, but no ones going to pay an arm and a leg just to have one right?

Spoiler

WRONG

 

[Kyorisu]

Diamonds aren't rare, it's artificially rare.

Indeed when you can manufacture 100% flawless diamonds one has to wonder.

 

[MiccyNarc]

Well I mean giving every family a couple more thousands doesn't sound that overkill ($3000ish). Doesn't obama already have a plan of that sort?

So basically your line of thinking is that money grows on trees and the problem is that the government just isn't printing enough of it?

Diamonds aren't rare, it's artificially rare.

And just because something is rare, doesn't make it valuable. Some poisonous fruits may be rare, but no ones going to pay and arm and a leg just to have one.

Ah, excuse me for having an imperfect analogy. You get the picture, stop arguing semantics and don't be a prick.