Quote:
Originally Posted by Tully Mars
In the last year the Dow's lost nearly 30%. It didn't do it in one day, but it didn't lose 22% in one day in 87' either. Unless the article I read is wrong. I certainly don't remember a day where the market dropped 22% in one day, then again I didn't have much of a 401k or many stocks then.
Plus I think this situation is a little different. This appears to be a credit crisis, don't think that was the cause of the 87' drop.
All that said I'm not sure this bail out was the right way to go. I feel like something needs to be done... what? I don't have a clue. But if nothing else comes out of this I'm hoping people wake up and start living within their means. IMO, many people "need" way more then they actually do.
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Well.. ok I think the 22% in '87 was just over a few months time..not a year.. however, it took 6 months for the market to restabalize in '87.. so I think if there is no bailout it will take approx. 12-16 months for this market to correct itself. I just can't help but think that this bailout is going to cause even more problems in the future.
This is a credit issue that is now turning into a panic issue and a capital issue. There's only two people to blame. The consumers and their insatiable appetite for instant gratification, and the banks who wrote all the bad paper and repackaged it and wrote even more bad paper. The market can handle this.. it will go way down and partly up for a while but it will correct itself in a few months time. We'll see the unemployment rate go up for a couple of months and then we'll see it shift back down as people get a better understanding of how to handle the new market.
Edit: I forgot to mention that another thing the banks have been doing is pretty simple, but it's starting to bite them in their collective asses. If you are in foreclosure, many times a bank will agree to a partial buyout and a renegotiation. They stopped this practice in order to push a heavy loss into the quarter and make it back up in stock dividends. More loss=share price drop, next quarter the stock raises and they get heavy bonuses. It was all fine and dandy.. until the whole thing collapsed under their feet.