The Dow Jones industrial average has plunged below 7,000 as investors grow increasingly pessimistic about the health of banks, and in turn the economy, around the world.
The Dow hadn’t traded below 7,000 since Oct. 28, 1997, and last closed below that mark on May 2 of that year. The credit crisis and recession have now slashed half the average’s value since it hit a record high over 14,000 in October 2007.
Investors are again fleeing stocks in response to bad news about financial companies. The government said it would give American International Group Inc. another $30 billion in loans, in addition to the $150 billion it has already given the insurer. AIG also said it lost $61.7 billion in the fourth quarter.
Meanwhile, HSBC PLC reported a 70 percent drop in 2008 profit and said it needs to raise $17.7 billion and cut 6,100 jobs.
As of 10:05AM EST: The Dow is down 117 at 6,945. The Standard & Poor’s 500 index is down 12 at 722, and the Nasdaq composite index is off 11 at 1,366.
(Source: Wall Street Journal / AP / Yahoo Business News)
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8 Responses
One wonders if the hundreds of billions in “corporate welfare” might be better spent in handing everyone a check to re-ignite the economy (while closing the “bad banks” and stripping their shareholders, investors and managers of their assets – which have value only because the government is transferring money to them).
The policy started by the Bush administration, and continued by the Obama administration, of “rescueing” corporate debtors is at odds with the usual rule in bankruptcy for normal people who make financial misstakes, and are required to rely on hard work and savings to rebuild their fortunes.
At least these “rescues” should convince the nutcases who claim Obama is a socialist that he is just another foolish capitalist who sees nothing wrong with bailing out his rich friends (the more things change, the more they stay the same).
Apekurma:
You’re right. Obama is not a pure Socialist–He’s a national Socialist.
You will, perhaps, recall, that in Nazi Germany, Hitler created Nazism–National Socialism. It was a marriage of Socialism with Big Business–Krupp, Siemans, IBM-Germany, etc.
The big businessmen worked closely with the government, while the small shopkeepers and workers became, essentially, slaves of the state.
With the nationalization of banks and major industries, the expansion of government control over healthcare and jobs, the expansion of government bureacracies, and the expansion of welfare programs that forster dependency, we are well on our way towards National Socialism.
All hail the messiah Obama, and say thanks
Deepthinker – the worse legitimate criticsm of the president is that he hangs out with too many liberal Jews and reflects their thinking.
Nationalization of banks andindustries happens all the time. What do you think occurs in BANKRUPTCY? A government bureaucrat takes over and tries to liquidate. It’s no hiddush. The only hiddush is that big companies used to be btter run.
I don’t expecially agree with Mr. Obama’s policies, but I can’t see what you dislike about him. I supported McCain from the beginning, but its no point being a sore loser.
#1 Bush wanted temporary government intervention to help the economy while Obama is trying to use this crisis to turn America towards old fashioned European-style socialism and I think that’s the underlying cause of why the market is crashing. Obama tried to hide his goal of redistributing wealth during the campaign but it did slip out once when speaking with Joe the Plumber. The country was duped by a very clever and deceitful campaign. Let’s just hope that 2010 leads to fiscal conservative’s gaining control of Congress.
Akuperma:
You’re overlooking the SCALE of what is involved here.
this is not an isolated bankruptcy. This is a takover of EVERYTHING. The doctors will become employees of the State, ditto the bankers, ditto the automakers, diito the insurers.
Eventually, you and me will be swept in, too.
The only people who will retain their independence will be the plumbers, electricians, and carpenters, who retained their freedom even under the Soviets, because they were indispensable.
Then what do you suggest doing with major corporations (GM, Chrysler, Citibank, Countrywide, Lehman Brothers, etc.) that can’t pay their bills.
Are you suggesting that the government should bail them out permanently and keep the executives (who messed up) on the payroll? That’s something like what Mussolini tried.
Do you favor having the banks fail leading to ATMs not working, credit cards bouncing, etc. The uncontrolled crash was tried by President Hoover, and it didn’t work.
The method followed by the Federal Reserve is a controlled crash to allow for restructing and spinning off viable companies. Obama and Bush are being a bit too nice to the executives, but that’s the only problem.
If a plumber, a doctor or an electrician manages to run up hundreds of billions in debts (even Mr. Madoff only made it to $50 billion), they deserve a gulag.
akuperma said: “Then what do you suggest doing…?”
If I knew THAT answer, I would be President!
However, I can say, with full confidence, that 9,000 pork-barrel earmarked appropriations, and massive payoffs to Democrat constituencies can only result in the destruction of the dollar and the financial system.
The irresponsible political class cares only about their careers, and they are quite ready to let the county go to hell!