Stock Market is Falling, Falling, Falling...
The end is coming closer, and it's not going to be pretty. Even with yesterday's joint interest rate cuts from international entities including the US Federal Reserve, the Bank of England, the European Central Bank, and the central banks of Canada, China, Sweden and Switzerland, stock markets around the world are not looking happy.
Chines stock exchange is not having an enjoyable day The government of Indonesia didn't allow their stock market to open today for fear of investor panic.
The world may soon begin watching the demise of a nation. Iceland is on schedule to become the first industrialized nation of this millenium to declare bankruptcy. Imagine that, an entire nation.
You've probably learned by now that the Dow fell 678.91 points (well, you probably didn't hear that exact number) today leaving it below 9000 points, the lowest it's ever been since August 2003. It started out this morning with 9258.1 and ended with 8579.19, at one point losing 400 points in 45 minutes. We do some math and we come up with... 7.333, but... so what?
If we're like the majority of Americans, then that probably doesn't mean that much to us. But if we can read a blog then we can comprehend numbers and understand when someone took a risk and it doesn't pan out.
Dice, money, and stock indexes If you were a business owner and you saw that your company was only worth 60.6% of what it was a year ago, wouldn't you be a little... anxious? For example, if I was making an $100 dollars a day and then suddenly was only make $60 a day, I would be pretty upset. This is the equivalent of if you had an A+ average at school, and then came home with a D- on your report card. Someone wouldn't be happy.
Not that I'm saying people aren't frustrated enough right now. Plenty of people on Wall Street are pulling out their hair, but perhaps now you can empathize with them a little better.
Stock agent pulling out hair in frustration Because you have to. You see, this doesn't just affect them, it affects you too.
Short economics lesson: When people lose money, people don't buy as much. When people don't buy as much, trade slows down. When trade slows, whatever trade occurs is generally at a higher cost. When trade is at a higher cost, you pay more for individual items. When you pay more for individual items, you buy less. When you buy less, you get less.
Summary: When people lose money, you get less.
When markets go down, so does the economy Yes, you can point out some flaws above. I'm sorry, I don't have time to right a book on the stock market, or what happens when it falls. But that's generally a good, seat-of-your-pants idea how money works.
AP News has numbers on 3 of the largest indexes in the American stock exchange, and they aren't pretty. reported that the stock market paper losses today in the United States totaled $872 billion, and the monetary value of shares nationwide has lost $8.33 trillion since last year's high point.
Cash is ripped and loses value as stock values depreciate America's population is roughly 305 million people. If we pretend that those losses were spread to all Americans and run those numbers through a calculator we come up with approximately...
$2,859 lost since this morning $27,311 lost since last year
Basically it's like every American man, woman, teenager, grandparent, and baby bought a brand new Chevy Malibu added a customized stereo system and then totaled it in one year.
Thankfully, Americans aren't all equally sharing the debt. Or at least... not yet. Things aren't looking up, things aren't looking level, they're all looking down.
As markets continue falling, a man ponders what will become of him
Paul Hastings is a student, armchair, layman, citizen, what-have-you analyst of the United States stock market. He is 18 years old and resides in Texas.
