Dow Dips Below 8,000; Anxiety, Anger at all Time Highs

Posted by Joshua Holland, AlterNet at 11:36 AM on October 10, 2008.

Is there anger out there? You betcha.

Think about how many people would have traded their left ... whatever to be the guy who punched out the head of Lehman Bros, Richard Fuld ...

Mr. Fuld, who has been testifying on the financial crisis before the US House Oversight Committee, was attacked on a Sunday shortly after it was announced that the banking giant was bankrupt.

Following rumors that the incident had occurred, Vicki Ward, a US journalist, said "two very senior sources - one incredibly senior source" had confirmed it to her. "He went to the gym after ... Lehman was announced as going under," she told CNBC. "He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold.

"And frankly after having watched [Mr Fuld's testimony to the committee], I'd have done the same too."

"I thought he was shameless ... I thought it was appalling. He blamed everyone ... He blamed everybody but himself."

There's a sea-change occurring in our political-economy.

What has basically been a decades-long slump for most working people -- with wages stagnating and the costs of education, health care and everything else rising -- has spread to those at the top, to the movers and shakers of the "new economy," and now we're all suddenly in the same boat.

It shouldn't come as a surprise, really. You can't continue to feed a consumer culture like ours with a declining middle class. But all that pain working America's experienced was obscured by the use of averages -- average incomes that included the immense share taken in by those at the top (In 1972, the top 1 percent of Americans took in 8.7 percent of all earned income, but that figure skyrocketed to more than 20% in 2006, while wages stagnated for nine out of ten U.S. tax-payers. Recently, The Wall Street Journal reported that "the richest 1 percent of Americans in 2006 garnered the highest share of the nation's adjusted gross income for two decades, and possibly the highest since 1929").

What's noteworthy is that the decline in economic security was a distant issue probed mostly by lefty bomb-throwers like me for years, and now questions about our economic paradigm are front and center.

Consider this mind-jangling fact: today, the Washington Post -- long a mouthpiece for the neoliberal economic establishment -- is running a prominently-placed story titled, "The End of American Capitalism?"

This is surely a sign of the apocalypse -- some highlights ...

The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism....

The Bush administration is considering a partial nationalization of some banks, buying up a portion of their shares to shore them up and restore confidence as part of the $700 billion government bailout. The notion of government ownership in the financial sector, even as a minority stakeholder, goes against what market purists say they see as the foundation of the American system...

"People around the world once admired us for our economy, and we told them if you wanted to be like us, here's what you have to do -- hand over power to the market," said Joseph Stiglitz, the Nobel Prize-winning economist at Columbia University. "The point now is that no one has respect for that kind of model anymore given this crisis. And of course it raises questions about our credibility. Everyone feels they are suffering now because of us."

This new found skepticism is a result of the crisis hitting the kinds of metrics that economic reporters most frequently cite hard -- the stock indexes, GDP and unemployment. Numbers like the Dow:

U.S. stocks continued a relentless sell off today, taking wild swings before falling back into the red, as fears of global recession continue to overtake government efforts to address the financial crisis.

After falling nearly 700 points within the first 30 minutes of trading, the Dow Jones industrial average regained some ground, but continued to bounce between positive and negative territory. It is down about 5.8 percent, or 498 points around the noon hour. It fell below 8,000 briefly today for the first time since March 2003 after falling below 9,000 for the first time since June 2003 yesterday.

I've taken an oath to stop writing about "Wall Street" and "Main Street" -- it's become so clichéd. So let me say that these kinds of numbers -- which have a far more distant impact on most people than, say, median income (the income in the middle of the distribution) -- are causing an unprecedented level of anxiety on Maple Street, especially given that the government's massive bailout package hasn't done much to calm the markets.

Gallup:

Despite passage of the Treasury bailout and a global reduction in interest rates, consumer pessimism hit a new record high early this week, with the percentage of Americans rating the economy as "poor" increasing by 21 percentage points from a month ago and the percentage saying the economy is "getting worse" increasing by 12 points.

A month ago, around the time of the Fannie Mae/Freddie Mac bailout, 38% of consumers rated current economic conditions "poor." By the time of the Treasury's bailout proposal in mid-September, the percentage rating the economy poor had increased 15 points to 53%. Even with the congressional passage and president's signing of the Treasury proposal, consumer pessimism has continued to increase. Early this week, the percentage of Americans rating the economy "poor" hit a record new high of 59% -- up 21 points from the same time a month ago.

Here's consumer confidence:



Those are the views of Americans, but this is a global crisis, and it's causing a worldwide re-evaluation of the status quo. From that same Washington Post article ...

At the same time, anger is mounting over the global spillover effect of the U.S. crisis. The Korean currency, the won, has fallen sharply in recent days as corporations there struggle to find dollars in the heat of a global credit crunch.

"Derivatives and hedge funds are like casino gambling," said South Korean Finance Minister Kang Man-soo. "A lot of Koreans are asking, how can the United States be so weak?"

In South Korea, rising criticism that the government is sticking too close to the U.S. model has roused opposition to privatizing the massive, state-owned Korea Development Bank.

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Tagged as: economic crisis, bailout

Joshua Holland is an editor and senior writer at AlterNet.