Econ-ocalypse: Dow Drops Below 7,600, No Deal Reached on Auto Bailout

Posted by Ian Welsh, Firedoglake at 2:52 PM on November 20, 2008.

There is no technical support below 8K, so where it ends now is not known.

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Well, the Dow has broken 8,000. As Jane noted there is no technical support below 8K, so where it ends now is not known. A historical low for a bear market, as I've written in the past is 6K, which is about 7 times earnings.

The issue isn't just technical trading, it's the spiral of margin calls, where the lower the market goes, the more investors who have borrowed funds to invest have to sell in order to keep enough value in their accounts to cover the loans they've taken out. The term for this is an Ohmstead break, and if one occurs, the drop will become uncontrollable.

In the meantime, I am amused that the same White House and Senate who supposedly passed the bailout bill to save the market wasn't willing to push cough 25 billion to stop this meltdown from occuring. When the White House and Congress failed to pass a restructuring bill, investors got scared, because even if politicians are stupid enough to be stampeded by Paulson, then too stupid to understand what 3 million job losses will do the US economy, investors know that it would devastate the economy.

But hey, the real job of the bailout was to save Congress's white collar friends. The real goal of not passing a bill that gives auto companies 25 billion, a fraction of the 700 billion given to Wall Street so they could give themselves 70 billion of bonuses, is to destroy a major union.

Priorities, ya know.

Tagged as: economic crisis, economic meltdown, econ-ocalypse, dow

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Article High on Emotion, Low on Critical Analysis [Report this comment] Posted by: curiousdwk on Nov 21, 2008 7:32 AM Current rating: Not yet rated [1 = poor; 5 = excellent] I would rate this article high on Emotion, but low on Critical Analysis. There are a lot of emotional phrases used but little analytical work to convince people. What is the connection between the loss of a 25 Billion Band Aid and the loss of 3 million jobs? This is not a recognized fact. It would have been better if the author tried to explain what the connection was rather than just throw it into the reader's face for an emotional reaction. [« Reply to this comment] [Post a new comment »] [Rate this comment: 1 - 2 - 3 - 4 - 5] » RE: Article High on Emotion, Low on Critical Analysis Posted by: JSquercia » RE: Article High on Emotion, Low on Critical Analysis Posted by: monkeywrench Maybe it's a sign of the times [Report this comment] Posted by: Landbaron on Nov 21, 2008 9:43 AM Current rating: 4 [1 = poor; 5 = excellent] for more socialistic ideas to put in action, like heavily taxing the rich. [« Reply to this comment] [Post a new comment »] [Rate this comment: 1 - 2 - 3 - 4 - 5] Bankruptcy downstream enormous [Report this comment] Posted by: warrior woman on Nov 21, 2008 4:16 PM Current rating: Not yet rated [1 = poor; 5 = excellent] The auto industry ties to other businesses must not be discounted. If they are allowed to go through bankruptcy, many, many more businesses will follow. Bankruptcy downstream would be enormous For those who supply the Big 3, their payments will be affected forcing them into bankruptcies, layoffs etc. It's a cycle that will not only break the unions but will break this country. To not do something is again, criminal. Why won't they impeach the Big Cheese and then we could get rid of some of this? Cowards. [« Reply to this comment] [Post a new comment »] [Rate this comment: 1 - 2 - 3 - 4 - 5] The Auto Industry Ignored US Consumers for Years... [Report this comment] Posted by: joeocho88 on Nov 22, 2008 6:22 PM Current rating: Not yet rated [1 = poor; 5 = excellent] If this WAS a REAL market-driven economy, the inefficiency and refusal of automakers to know what the public REALLY wanted should have driven these arrogant idiots back under the hoodlum rock the apparently came from and their little con games should have gone under or reorganized in a more profitable venture long before now. They kept building JUNK for vehicles that were often unsafe, that were inefficient for fuel, because the ONLY thing they considered was PROFIT! THE BOTTOM LINE. EVERY STROKE OF THE CAR DESIGNER'S PENCIL WAS MADE ONLY WITH THE BOTTOM LINE IN MIND! OUR GOOD FRIEND RALPH NADER MADE HIS CAREER POINTING OUT THE BAD THINGS THE AUTO INDUSTRY DID FOR THE USA! THERE WAS NO WAY THAT THE ORDINARY CONSUMERS WERE CONSULTED IN WHAT THEY WOULD ACTUALLY WANT AND BUY IN A VEHICLE! I DID NOT WANT THESE UNSAFE SARDINE CANS THEY HAVE NOW WITH ALMOST ZERO VISIBILITY AND A LOT OF COMPUTERIZED GADGETRY ON THE DASH THAT CAN GO WRONG AND REQUIRE HUNDREDS OF DOLLARS IN REPAIRS --IF THEY CAN EVEN BE REPAIRED. ASSUMING AN AVERAGE SIZED AMERICAN ADULT COULD FIT COMFORTABLY IN THESE SUICIDE MACHINES --MUCH LESS A DISABLED PERSON -- WHAT ABOUT A FAMILY WITH CHILDREN AND WHAT ABOUT A PERSON WHO HAS CHILDREN AND GROCERIES AND THE USUAL ERRANDS THAT NEED TO BE DONE --FACTS OF DAILY LIFE. I have been wanting more fuel efficiency and better and safer designed cars THAT NORMAL SIZED AMERICANS CAN FIT IN FOR YEARS! But the car markers would not listen.They wanted to force us into minivans and sport utilities, more appropriate for lumberjacks,farmers,roughnecks, and military instead of Suburban moms and city streets! The tight-turn rollover factor was not sufficiently publicized with these high center of gravity gas guzzlers. OUT OF TOUCH POWER ELITISM also extended into the auto industry. NOBODY CARED WHAT THE CONSUMER WANTED --IT WAS "HOW CAN WE PRODUCE THESE IN THE CHEAPEST WAY POSSIBLE AND GET AS MUCH MONEY AS WE CAN!" We don't NEED a new vehicle model every year! That's wasteful and conspicuous consumption which is impractical as well! NOW THESE AUTO INDUSTRY ELITES JET TO WASHINGTON DC SCREAMING HOW BROKE THEY ARE IN OVERPRICED, VERY FUEL INEFFICIENT CORPORATE JETS INSTEAD OF DRIVING THEIR OWN PRODUCTS. AND THEY WANT US TO CARE! Why didn't they listen to us when we told them what sort of vehicles we wanted and WOULD gladly buy --starting with an AFFORDABLE vehicle instead of having a choice between buying a vehicle AND/OR a HOUSE???? I am listening to them and wish they would all get a term or two in a state secure correctional facility! If it weren't for the worker drones who actually WORK the assembly lines who would be hurting, I would like to tell these overpaid and underperforming crooks who claim to be in charge of the automotive industry to GO TO HELL! [« Reply to this comment] [Post a new comment »] [Rate this comment: 1 - 2 - 3 - 4 - 5]

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