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29 September 2008

this can't be good 778 POINTS?
I don't even know HOW to react. I've just been dumbly staring at my computer wondering if I'll have a job in a month.
It's like my grandfather used to say, "Don't sit in that chair, the leg's broken. Sit in that one."

Actually, that's not very comofting in this instance. Damn, I wish my Grandfather left some wisdom for times like these. He was so spot on that chair advice.
posted by Slack-a-gogo 29 September | 16:22
Panic not.
posted by ThePinkSuperhero 29 September | 16:23
I have to make a major college pmt later this month, so I moved 4k out of the college account (stocks) into my checking TODAY, so whatever hit would not be reflected in the selling price.

I don't know what to think. I would like to think that there will be SOME kind of bailout in that it's not the bankers and stock brokers who will suffer, but down at my level.

The coalition of liberal dems and conservative republicans is mind-numbing. . .if I saw the "progressive" member of congress that represents me in a store (like I do at times) I would probably physically assault him today, so I am glad for my sake that he is in DC right now.
posted by danf 29 September | 16:36
I'm sorry to sound naive but what is "778 Points?"
posted by MonkeyButter 29 September | 16:36
I'm freaked about this too. Will have to talk to pops this evening about it (although knowing him, it won't be a discussion about this, it'll be about how the damn libruls fuck up everything. Yes, because that is so helpful and productive.)
posted by sperose 29 September | 16:38
I'm afraid to check our portfolio. If I had extra money I'd buy.

I think they will reach a deal tomorrow. If they don't, today will look like a walk in the park. There will be some massive selling.

It could be a good thing that the Republicans decided not too come along today. After phone calls from their panicked constituents, they may be in a more reconciliatory mood. Every congressperson and 1 out of 3 senators are up for reelection. I doubt they'll commit political suicide.
posted by LoriFLA 29 September | 16:49
On Friday, I managed to sell my house that I was trying to sell for the last fifteen months and I am so fracking happy. I still can't believe that it happened, I thought that it would never sell. We didn't get the price that we wanted but we managed to pay off our mortgage and come away with enough cash to pay a couple of credit card so we're happy. We now know that we can survive if one or the other of us gets shitcanned by our respective employers.
posted by octothorpe 29 September | 16:53
I'm sorry to sound naive but what is "778 Points?"
The biggest drop in the history of the stock market. Including 1929.

posted by kellydamnit 29 September | 17:00
Is it the biggest drop percentage-wise, though? I mean, didn't the Dow pass 12,000 in the past year or so, and so wouldn't this drop not be quite as precipitous? And didn't the FDIC come about after 1929? (And wasn't the average Joe's fear of losing personal funds the crisis that caused the crash back then, which is assuaged today somewhat by FDIC guarantees?)

These aren't smartass questions. I really want to know. I don't understand all this very well, so I'm operating on the above assumptions, which could well be false.
posted by mudpuppie 29 September | 17:12
According to the nytimes:

The broadest measure of the American stock market, the Standard & Poor’s 500-stock index, fell 8.77 percent, its biggest drop since October 1987
posted by DarkForest 29 September | 17:17
Thanks Kelly.
posted by MonkeyButter 29 September | 17:17
Biggest drop by POINTS. The 1987 crash was 22.6% in one day. The October '29 crash saw a 12.8% drop on one day followed by a 11.7% drop the next day. Today it was ~7% (though the S&P 500 and NASDAQ dropped about 9% each).
posted by mullacc 29 September | 17:17
Yeah, I'm buying. But I feel kind of freaked about it. It's not a huge amount of money, and it's money I can more-or-less afford to lose, and anyway that particular fund is my nest egg (which has suddenly gone all quail-egg sized) and I don't tap it except for emergencies or, like, cars and houses, but...still.

posted by Fuzzbean 29 September | 17:25
I'm just waiting for investment banker types to show up at my store with armloads of leather bound books from tehir offices.
posted by jonmc 29 September | 17:31
I would not panic just yet. Give this a couple days. Last week was a rollercoaster too, but it pretty much balanced out on Friday.
posted by Ardiril 29 September | 17:49
And then we'll turn around and do it all over again next week....
posted by chewatadistance 29 September | 18:41
I wouldn't be surprised.
posted by Ardiril 29 September | 18:44
It also means that the market is now slightly below where it was when Bush took office:

On Monday, the Dow finished lower than when George W. Bush assumed the presidency: 10,587.59 on January 19, 2001 compared to 10,365.45 at its close on September 29, 2008.

NASDAQ, the American stock exchange, too, was lower now than it was when Bush took office: 2770.38 on January 19, 2001 compared to 1983.73 on September 29, 2008. The dollar exchange with the Euro was lower than when Bush was elected: 1.068 on January 19, 2001 compared to .695 on September 29, 2008.

Some things have risen, but not the good economic indicators. The Consumer Price Index was at 175 on January 19, 2001 and 219 by September 29, 2008. Unemployment, meanwhile, stood at 4.2 percent when Bush came into power. Today, it is at 6.1 percent.

We've also lowered the number of amendments in that pesky Bill of Rights by a few, too, I think.
posted by scody 29 September | 19:26
The world isn't ending just yet, I don't think.

Wall Street is going to threaten our 401k's if Washington doesn't show them the money, but I have no idea who's going to have the stronger will here. (Washington not being known for having much of a will at all, anymore...)

This bailout didn't happen for one reason: constituent response was 99% against it, and people actually WERE calling/emailing their congressperson. So, apparently people still CAN be motivated to respond and influence how Congress votes. I was beginning to wonder.
posted by BoringPostcards 29 September | 19:53
This bailout didn't happen for one reason: constituent response was 99% against it, and people actually WERE calling/emailing their congressperson.

Exactly. Though, I think a lot of people will be changing their tune after today. Nobody wants to bail out the fat cats, but after today they'll say, DO SOMETHING.
posted by LoriFLA 29 September | 20:13
NPR was reporting that without a bailout you'd see a lot of companies unable to make payroll. Something about liquid assets, I didn't quite understand but it sounded very bad.
posted by kellydamnit 29 September | 20:20
What the feds will do is use measures already in place regarding failing banks, since now that the investment banks are through, only commercial banks remain. Today's bill basically would have removed some responsibilities over handling failures from the executive and put them into legislative hands.

A lot of the media coverage I have seen is pure scare-'em journalism.
posted by Ardiril 29 September | 20:27
A lot of the media coverage I have seen is pure scare-'em journalism.

It looks like there's an effort out to make people feel like they either have to support a bailout, or Wall Street will destroy their 401k's. I think that's what the market nosedive was supposed to tell us... "We own your retirement funds, don't fuck with us."

Doesn't appear to be working so far, maybe because so few middle class folks expect to be able to retire, ever.
posted by BoringPostcards 29 September | 22:12
The central bank can expand its reserves at will, because it controls the money supply and can create more to buy things like Treasury securities and mortgage-backed securities.

“We have a lot of money to play with,” said Kenneth Rogoff, an international economist at Harvard University. “As long as foreigners have a lot of confidence in our ability to solve our problems, we can borrow the $1 trillion to $2 trillion we need to solve it.”

But Mr. Rogoff cautioned that the real limitation for American policy makers is whether they can maintain the government’s long-term credibility. “The real constraint is not a bookkeeping one,” he said. “It is a sense of faith on the part of foreigners that the U.S. government will repay its debt. Our most precious asset is that credibility.”
posted by Ardiril 29 September | 22:16
... and so many other middle class folk have already raided their 401k's to depletion.
posted by Ardiril 29 September | 22:18
So what would be the best way to profit off of the market tanking? I have €1000 to spare and I do not have any investments whatsoever other than the liter and a half of beer in the fridge.
posted by cmonkey 29 September | 22:41
I'm shocked at how "well positioned" I am for the "Economic Apocalypse". Of course, I'm broke and on a fixed income that's 1/3 of what I used to earn as a Productive Citizen, but nobody's talking about cutting Social Security Disability payments and aren't likely to until after everything else has collapsed. I'm getting by and Medicare is the best medical insurance available. Living 3 miles outside a 40,000-population 'city' and 180 miles from L.A., when "they" are rioting in the streets, I won't even notice. What little money I have is in a free checking account at one of the few stable banks (not just ad hype, it's stock went UP 5 cents today).

To get here, of course, I had to endure a personal financial (also health, emotional and relationship) meltdown 5 years ago when nobody else was, so I know what many of you are or will be going through. I know it's going to be damned rough, but if I can come out the other side, (and I did go through a genuinely suicidal period in '03) you certainly can.

But bad investments were never a cause of my financial woes, especially after I worked for a company that went belly up in the JunkBond Crash and I had the "dumb luck" to sell off my own stock in the company to handle a health/finance emergency while it was still worth something. A little investment paranoia after that has served me well. I've told the story before of the aggressive investor I compared 401Ks with at the bottom of the DotCom Crash and found I'd done better with an interest bearing bond fund over a 9 year period.

I certainly would not have had a single penny in the Stock Market since then (if I had a single penny), not even of a company I was working for. The Market is still overvalued IMO and will not stabilize and recover until it is genuinely undervalued. That's how it works. It's just never had to work that way on such a grand scale until now. I never considered buying real estate unless I could make a larger-than-average down payment and get a fixed mortgage rate, which would have required more than my highest income I ever had in L.A. Those things never worked out for me, but I can still gloat over knowing the right thing to do.

And let me mention again that a few weeks before WaMu collapsed, they issued me a credit card with a credit line equal to 2 months of my current income (I had responded to the offer out of pure curiosity and was aghast at what they gave me). And since I got the card, WaMu has sent me three more "pre-approved offer" mailings, one arriving after the JPMorgan/Chase buyout. (The credit card site is still WaMu branded) They are NUTS but I will take advantage of their stupidity if I have to and only if I have to.

Remember "It's the Economy Stupid"? Right now, "It's a Stupid Economy" and I'm happy to be living an austere lifestyle and contributing as little to 'keeping the economy growing/going' as I can. And let me reassure everyone facing financial hardship that it's not so bad if you can work out things like living in a beautiful place and getting away from people and institutions that are toxic to you. (And I am "lucky" in not having any good relationships I had to hold onto)

I'm keeping my head when all around me are losing theirs, dealing with my disabilities and inabilities instead of denying them and in the next few hours enjoying my 53rd Birthday alone but not lonely. And even if my number of future birthdays is in single digits (I'm awaiting test results that may give more clues and trying to avoid thinking about it), living well IS the best revenge.

I just hope that last paragraph didn't sound like me trying to keep my spirits up - I am just surprising myself that my spirits are, indeed, so far up.
posted by wendell 29 September | 23:07
I'm ignoring it. I remember the 87 drop and that kind of freaked me out. The first time you hear about valid comparisons to 1929 it's disconcerting, but really, this will all smooth out eventually. If your living is directly based on the values of stocks, then this would be a good time to get nervous. If not, this will all blow over before you know it. Look at it this way- if stocks are dropping right now, the next several shares of whatever mutual fund, 401k, or whatever, you buy will be bought very low and should do quite well indeed.

What's happening is that a bunch of banks made loans based on collateral that wasn't real (property values) and when some markets went down, many lenders were hurt and hurt badly. I don't know if a $700 billion bailout is a good thing or not. On the one hand, it should stabilize things; on the other it will reward some very bad financial behavior, and I'm the one who has to pay the bill in my taxes.

And, pretty much most of what Wendell said. If you're not sure you should be freaked out, then don't freak out; this probably won't affect you directly.

My biggest concern is that we'd like to sell this house next year after my son graduates, and buy a different one. If the markets are still screwed up and credit is tight, we may have to wait a bit for that.
posted by Doohickie 30 September | 00:49
≡ Click to see image ≡ "will bank for food"
posted by dabitch 30 September | 04:31
Sky adds her two cents...

≡ Click to see image ≡
posted by taz 30 September | 05:02
This week's Photo Friday theme: "Broken Thing", suggested by ethylene || Fun Fact: Iggy Pop wears Crocs.