Monday, October 24, 2016

Happy Crash Day

In The Markets We Prepare For 'Festival'

Trader, The American Stock Exchange, September 29, 2008

The Roaring Twenties, the decade that followed World War I and led to the Crash, was a time of wealth and excess. Building on post-war optimism, rural Americans migrated to the cities in vast numbers throughout the decade with the hopes of finding a more prosperous life in the ever growing expansion of America's industrial sector. While the American cities prospered, the overproduction of agricultural produce created widespread financial despair among American farmers throughout the decade... Despite the dangers of speculation, many believed that the stock market would continue to rise forever.

On March 25, 1929, after the Federal Reserve warned of excessive speculation, a mini crash occurred as investors started to sell stocks at a rapid pace, exposing the market's shaky foundation...  However, the American economy showed ominous signs of trouble: steel production declined, construction was sluggish, automobile sales went down, and consumers were building up high debts because of easy credit. Despite all these economic trouble signs ... stocks resumed their advance in June and the gains continued almost unabated ... The market had been on a nine-year run that saw the Dow Jones Industrial Average increase in value tenfold, peaking at 381.17 on September 3, 1929.

...In the days leading up to the crash, the market was severely unstable. Periods of selling and high volumes were interspersed with brief periods of rising prices and recovery. Selling intensified ... [o]n October 24 ("Black Thursday"), the market lost 11 percent of its value at the opening bell on very heavy trading. The huge volume meant that the report of prices on the ticker tape in brokerage offices around the nation was hours late, so investors had no idea what most stocks were actually trading for at that moment, increasing panic...

Obligatory Cute Small Animal Photo In Middle Of Collapse Of Empire

On October 28, "Black Monday", more investors facing margin calls decided to get out of the market, and the slide continued with a record loss in the Dow for the day of 38.33 points, or 13%.

The next day, "Black Tuesday", October 29, 1929, about 16 million shares traded as the panic selling reached its peak. Some stocks actually had no buyers at any price that day ("air pockets"). The Dow lost an additional 30 points, or 12 percent. The volume of stocks traded on October 29, 1929 was a record that was not broken for nearly 40 years... The market would not return to the peak closing of September 3, 1929 until November 23, 1954.  [Wikipedia]

They Buddies. They Laugh At You, Fit To Bust. Ha Ha Ha.
And, Please Note How Coated Little Lloyd's Tongue Is. Ewww.

The stock market crash of 2008 occurred on September 29.  The stock market, as represented by the Dow Jones Industrial Average, fell 777.68 points in intra-day trading. That was the largest point drop in any single day in history. It was because Congress rejected the bank bailout bill. But the crash had been building for a long time.  

The Dow hit its pre-recession, all-time high on October 9, 2007, closing at 14,164.43.

Less than 18 months later, it had dropped more than 50% to 6,594.44 on March 5, 2009. That wasn't the largest decline in history. During the Great Depression, the stock market took a 90% hit. But this fall was more vicious. It took only 18 months, compared to three years during the Depression. [Kimberly Amadeo, "Stock Market Crash Of 2008", The Balance, September 9, 2016]

 The top subprime lenders whose loans are largely blamed for triggering the global economic meltdown were owned or bankrolled by banks now collecting billions of dollars in bailout money — including several that have paid huge fines to settle predatory lending charges.

These big institutions were not only unwitting victims of an unforeseen financial collapse, as they have sometimes portrayed themselves, but enablers that bankrolled the type of lending that has threatened the financial system.

These are among the findings of a Center for Public Integrity analysis of government data on nearly 7.2 million “high-interest” or subprime loans made from 2005 through 2007, a period that marks the peak and collapse of the subprime boom. The computer-assisted analysis also reveals the top 25 originators of high-interest loans, accounting for nearly $1 trillion, or about 72 percent of such loans made during that period.

The Center found that U.S. and European investment banks invested enormous sums in subprime lending due to unceasing demand for high-yield, high-risk bonds backed by home mortgages. The banks made huge profits while their executives collected handsome bonuses until the bottom fell out of the real estate market. [Center For Public Integrity,  "Roots Of The Financial Crisis: Who's To Blame?" May 6, 2009]

MEHR, MIT CURRENT DJIA:  18,232.72   +87.01

This means the broader market has increased by eleven thousand-plus points in the 91 months from its March 5, 2009 low to where it is today. 

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