The stock market crash of 2001
Let's start calling the "sell off" what it is. Let's call it a panic. Let's call it a crash.
Indeed, after rallying following Sept. And the continuation of selling on Monday , following the seventh worst point-loss in Dow history, is doing little to reassure investors that the worst is over. Or like the United States strained under in the s. The fear breeds selling, the selling breeds more fear. Some economists have even begun to talk about how the Fed could step in and cut rates to try and stanch the bleeding -- while at the same time they worry that for the Fed to do that would only stoke the market's fears.
The crash of - Jul. 19,
It's starting to feel like , when fears ran high that financial crisis would seize up the economy. In the latter half of a debt crisis in Russia and hedge funds, which were almost as profoundly overleveraged as they were mispositioned, sparked a global flight to safety in the markets.
Stock market downturn of - Wikipedia
It was a slow growing panic -- you would think it was going to get better and it just kept getting worse. As the market deteriorated investors began fearing not only that the United States would slip into recession, but that it would enter its first deflationary episode since the Great Depression. The Fed cut rates three times in an attempt to shore things up.
The fears never came true, of course.
The hurt that got put on markets never turned up in the economy -- heck, economic growth actually accelerated through the entire episode. And now, even though all the indicators are pointing toward economic growth, people are starting to worry stocks could snuff the recovery. If the market keeps tanking, he thinks the Fed is going to have to cut rates. Padinha, however, thinks the notion that the market could sink the economy is just wrong, an idea bred by Wall Street economists who are a little too close to stocks.
Take a look at the economy, and it's clear that things are getting better.
Sales and industrial production are gaining ground. Inventories, slashed to the bone, have begun to grow again.
Padinha probably has it right, thinks Aeltus Investment Management strategist Jim Griffin. But he worries about the off chance that this really is going to be much worse than experience. It's our stock market bubble that popped.
The United States was attacked, and our CEOs cooked the books. Now the world's investors are staring at the United States and wondering the same thing. Griffin can imagine, he said, a Japanese-style pullback from risk in the United States, in which investors give up, banks refuse to lend and the economy languishes.
He can imagine other countries, accustomed to the United States' role as the world's economic locomotive, not taking up the standard. He can imagine a crisis of capitalism of a s order.
Griffin thinks the people talking about deflation are probably wrong, but he doesn't think they're crazy. We can be smug now, and say the crash, when the Dow dropped 30 percent in two days, was all about the way investors were using portfolio insurance.
But at the time it seemed much bigger than that. At the time, people were seriously entertaining the idea of a depression.
List of stock market crashes and bear markets - Wikipedia
We're not there quite yet, thinks Padinha, but we're on our way. He can see the panic growing, see the s references getting progressively more ink. He can imagine the Fed cutting and people arguing that lower rates won't do a thing. That moment -- and who knows how far down from here it is -- will be the sign. Most stock quote data provided by BATS.
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