Wall Street Fallout

I guess the fat lady is singing - loudly!

Today the stock market dropped 500 points! That hasn't happened since 9/11 which was over 7 years ago (almost to the date, hmm...). I remember the stocks dropping sharply because when the stock market came back online, I decided to buy stocks for the first time. Can we say, "1/2 off sale"?

But today, there was no collision, no explosions, no planes crashing into buildings, and no buildings crashing down. Therefore, the stock drop of today is not caused by the same knee-jerk reaction as happened with 9/11.

This is worst.

When I invested in the stock market after 9/11, I knew that investors were reacting to catastrophic event that was, for the most part, unrelated to the economic heartbeat of Wall Street. The Dow Jones was around 10,000 points and went up to 14,000 points as of July 2007. I guess the powers that be decided that was as high as it should go because the stock market tumbled down,
down,
down...to hover between 11,000 to 11,600 points over the past year.

But dropping 500 points in one day is over the top.

As I write this, my mother has told me of a young man who was just hired by Lehman Brothers and was immediately downsized due to the bankruptcy. They were moving to California to buy a house when he received the news. Luckily they didn't buy the house yet!

I watched CNBC as they discussed all the reasons why the federal government should bail out Lehman Brothers. Doesn't bail out simply translate into continued high wages to the CEOs who caused this mess in the first place?

I guess I am thinking that if the government had regulated the mortgage industry and helped out homeowners by underwriting their loans to a fixed and affordable interest, there would have been fewer foreclosures and therefore less behemoth financial institutions going belly up.

Why should the large financial institutions get help while the homeowners buying overpriced houses be left out to dry? Obviously, the federal government had the money if they could assist Bear Stearns and take over Freddie Mac and Fannie Mae. A little regulation could have gone a long way.

Instead, the government under Bush's "Ownership Society", let banks have at it. They were giving away loans. And now look at was has happened. Our economy is in the toilet!

But why do the banks get federal assistance and the thousands of people in foreclosure are on their own? Why is it that regular individuals, including some first-time homeowners, were expected to know what they were doing when they bought that $500,000 house with no money down and therefore get no help from the government, while the CEO who is paid hundreds of thousands of dollars to f*** up get bailed out?

You want to know why?

I do too.