We are "once again" on-board for a stock crash. 500 point is significant, but it isn't an out-of-control all out crash. Notice in the graph below we are about the same location of the recent low, but still a far cry from valuations back to 2003.
If there is a stick save, stocks may go up a day, week, but not a month. The cat is out of the bag finally, and there is systematic risk in the system including Lehman, AIG, WaMu, and weakness in other institutions.
This week is still anyone's guess. One thing I have had people ask is, are we about to see Inflation with the free credit by the government? I believe no in the near term. We will see massive deflation. See blogger Mish's explanation by clicking here.
Today's Events Highlights
- DJIA (the Dow Jones Index) lost 4.4% in one day
- Lehman stock tumbled down to 0.21 cents.
- BAC lost 21% of their stock value, after announcing Merrill purchase
- PIMCO & Vanguard biggest losers of Lehman Collapse
- AIG credit rating lowered, further putting pressure on AIG
- AIG allowed to "borrow from itself". NOTE: I must refrain from commenting on insurance companies moves.....
- WaMu Credit rating cut
- Hewlett Packard to cut workforce by 24,000 over next 3 years
- Industrial output down 1.1%, autos down 11.9% for August
- DEBUNK myth: Warren Buffett is not pursuing AIG