What does the Dow drop say about Friday’s rescue package?
The Dow closed below 10,000 for the first time in four years today. But, of course, you know that already, because everyone has been watching the market today after Friday’s passage of the bailout bill and since the international markets tanked much earlier today.
According to the AP story on our site right now:
Investors have come to the realization that the Bush administration’s $700 billion rescue plan and steps taken by other governments won’t work quickly to unfreeze the credit markets.
That sent stocks spiraling downward in the U.S., Europe and Asia, and drove investors to sink money into the relative safety of U.S. government debt. Fears about a global recession also caused oil to drop below $90 a barrel.
So, how have the events of the day affected you? Have you looked at your 401(k) today (I haven’t — I don’t want to know right now!)? Do you think this is a short-term concern? If the market didn’t like the economic rescue plan, or bailout, or whatever you’d like to call it, why didn’t the bottom fall out of the market on Friday?
::UPDATE:: Today, “the Federal Reserve announced a radical plan to buy massive amounts of short-term debts in a dramatic effort to break through a credit clog that is imperiling the economy.”
The Federal Reserve, invoking Depression-era power under “unusual and exigent circumstances,” will buy “commercial paper,” a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls.
By the way, here’s a great piece that was on NPR on Sept. 28 that explains the commercial paper market — something the average person doesn’t really pay much attention to.
Does this change the outlook?
Kurt is the director of social media for the Post-Dispatch, where he has worked since August 2002. He's been a journalist since 1982, covering municipal government, courts, education and two hurricanes as a reporter before becoming an editor. 
I happened to get my retirement account statement today. It’s down, of course, from last year. I’m still young enough that it will have a chance to recover. I’m not too worried. To me today’s drop just means that outside intervention doesn’t always work, especially in the short term. I have confidence that the market will fix itsself. The problem with those knuckleheads in Washington is, their egos are so huge, they think only they have the answers. I’m sorry they got involved.
The market is NOT the economy. The one reflects the other (both ways). I did not expect an immediate upsurge in the market. In truth, I’m expecting the Dow to keep dropping to around the 9000 level between now and election day. At which point, I’m going to roll most of my 401K into the S&P 500 and start buying.
Just because the market didn’t immediately recover with a 500 pt gain doesn’t mean a thing.
What?! The federal government can’t solve our problem overnight?!
I think that these losses are only a concern to conservatives. Liberals love giving their money away to trillion dollar tax schemes….why would they care if their 401K drops a bit???
A combination of amatures buying and selling via internet, and low cost trading by amatures…all panicing, plus the herd mentality of stock traders is what is driving this. The real pros want to stay the course and just move your money to more secure areas of the market. Now the smart people should start buying all these bargains, and all the panic sellers will have made a poor financial move.
Personally, I don’t care if the Dow goes to 400, or 4000. I saw this coming, and divested myself of all stock, There are lots better investments than playing games with politicians who govern over the must unstable government in the Western Hemisphere.
On a whim they can break any company and any individual. Look at the bailout. The AP story, that Kurt referenced, still refers to a 700 Billion Bailout. Either the AP writers can’t read or don’t read.
First, the 700 billion was a figure pulled out of thin air. I tried to find who used that figure first. I couldn’t. Now it is not important.
The bailout bill in no way limits the Feds from taxing us. They have an open end, there is no limit to what they can spend for the bailout. None. Read the damn thing for yourselves.
Have a nice day all, I’m building a new addition to my house,including a huge bathroom with all the bells and whistles. Plus, I bought two one acre lots adjacent to my home and will put up guest house for my many visitors. I’ll take the plans down to my building supplier, they will do a material take off, package it, and keep it for me until Next Feb, and deliver it. I will go down and pay them when they give me the cost.
Have a nice day.
To me it means that we’re “recovering”–that we haven’t yet recovered. It will take time.
Is anyone suprised the bailout didn’t fix the problem? The plan was hatched by a bunch of clueless idiots who still don’t understand how we got into this mess, or how the bailout was supposed to help. Just 3 weeks ago Bush was telling us “the economy is strong” and Todd Aiken was blaming it on “careless borrowers”. Thankfully, in a few months we’ll be rid of Bush and I hope we can say the same for Aiken.
Remember, Enron and Worldcomm. I hate the fact that a lot of rich people are at fault for this mess. I do hope that the Federal Government and the FBI will investigate some of this mess to see if possibly indictments for those crooks for fraud, criminal theft can be prosecuted and them being sent to prison. These crooks have done a lot of damage to many people and this all happened on George Bush’s watch.
If you expected the bail out to change thing overnight, I have some swamp land in Florida to sell you. Most Americans seem to be very upset with the so call bail out. I don’t expect them to go out and try to trade the market up to show the government how happy they are. Once again we have been fooled. They attached bills that would have not otherwise passed on their own the the bail out to get it through. I really don’t care what happens. I’m going to be O.K. no matter what. I got out of that arena of financial hype some time ago and I now sleep easy.