Tremors
Stocks Have Worst Day Since 9/11 Attacks
Ever since the November elections, that marvelous roller-coaster ride of the DOW has been threatening to collapse at various moments. While 2006 saw incredible gains in the stock market nearly across the board, the election results ushered in a great deal of uncertainty in investors' minds -- will the US military stay in Iraq? Will large corporations face punishing taxes from the new congress? Will the new "championing of the green" force enormous restructuring and rebuilding costs? How ugly and bloody will the run-up to the '08 elections be? Combine these jitters with emerging economies that were overheating like your grandma's ancient oven and we've got a recipe.
For disaster.
The minimum wage was just hiked up even as the Federal Reserve was issuing cautious statements about the vigor of the US economy -- was this smart? Placing additional strain on small to medium businesses that employ the majority of unskilled, minimum wage labor while analysts have been whispering "recession" for months? Guess who gets laid off first?
Look to see the potential for a looming recession kick-start the illegal immigration debate into high gear. After all, when jobs looks like they might start to evaporate, it's tough enough to respect the legal competition for your slice of the pie.
And adding insult to injury, the housing market hasn't even begun to hit bottom.
Not that I'm a gloom monger, but what happened today in the stock market was a worldwide slump, not some localized tremor. The Chinese market dropped harder than it has in 10 years. The United States market hasn't seen this kind of reaction since 9/11. Europe, Latin America, Australasia -- down like a dirty little club fag scrambling for his last snort of meth.
"It's not just a one-day drop,'' said Andy Mantel, managing director of Pacific Sun Investment Management in Hong Kong. "There's more room in the downside. My strategy is to increase in cash and shorts.''
And that, my friends, is the other shoe dropping.
In comparison to what happened in the markets in 1987, this wasn't as bad, but what makes the outlook rather bleak is that where most investors were hoping for China's economy to push the globe into productivity and wealth, today's bust takes a bit of the shine off that apple -- and the US certainly isn't poised to ride to the economic rescue anytime soon -- so while there will undoubtedly be a brief upsurge after a week or so due to reckless investors rushing in where angels fear to tread, the foundation for that house of dreams is a bit too rickety for my taste.
I got out of the market almost completely today. It looked ugly, and I think I'm going to wake up with it looking worse tomorrow. I'll stick my cash in something safe, that gives me a decent interest rate and where I don't have to worry about nuclear bombs, Barack Obama or overheated economies.
I could be wrong about the staying-power of all this economic carnage, but somehow I doubt it (especially when stock hucksters like Jim Cramer are beseeching their acolytes to buy buy buy!). That sound I hear when I put my ear to the ground is like distant hooves approaching.
NYSE? I hardly knew ye.
Now, where's my martini . . . ?