The Crash & Burning Of The Economy

It was a massacre. Traders and stockbrokers were strewn in the pit of defeat holding the bloodied wallets of their investors. It was a blood bath. A rocket-propelled grenade blast in an economical war and when it was over, it would hang like the painting of the St. Bartholomew's Day Massacre by François Dubois. (pictured above)

The Dow Jones Industrial Average was wounded deeply and Wall Street was barely breathing on life support with it’s blood pressure quickly approaching sudden death.

A bird's eye view of the massacre would show stockholders and shareholders among the financially deceased and Warren Buffet with not so much as a hair out of place.

I am trying to understand why the government has bailed out Wall Street to the tune of $700,000,000,000.00. It’s not like we had that stuffed in a White House mattress. It’s not like we needed to do a massive cash clear out.

How many bailouts can we really afford with a deficit of over $10.2 Trillion? How can a country whose been writing off debts to other countries for years afford to give anything to anybody?

Isn’t that why we are in this trouble? Aren’t we just rewarding bad decisions? We have spent what we don't have and we don't have anything to spend.

From what I understand, the $700 b's (billion) is going towards scooping up junk bonds, failed companies and cleaning up a debt that I would like to say nobody saw coming, however, unless Wall Street is in serious need of trifocals, even Stevie Wonder could have seen this coming.






Hindsight supposedly is 20/20, except in Wall Street’s case, hindsight is a golden opportunity to zero their books and start all over again. As soon as people, companies and banks are able to borrow money again, the rollercoster will start to climb.

This isn't the first time it has happened. I am reminded by financial historiographies of the past. The stock market has crashed and burned several times in the past since 1901.

This is the oldest crash on record (records are not available before 1900) lasted 875 days from June 17, 1901 to November 9, 1903. During that time, over 95% of all births took place at home, 14% of homes had a bathtub, average wage was 22 cents and hour, life expectancy in the U.S. was 47 and the #1 cause of death was Pneumonia and Influenza.

The fourth worse crash was the shortest at 71 days, but a deadly one. It started September 3, 1929 and ended November 13, 1929. Investors lost half their money in two short months. This crash kicked off what we now know as the "Great Depression."

The worse thus far in U.S. history was the 1932 Stock Market Crash.
Starting April 17, 1930 and ending on July 8, 1932, in this behemoth investors lost 86% of their money over 813 days. This market crash combined with the 1929 crash, makes up the great depression. The full recovery didn't take place until 1954, 22 years later.

So you see, it is not the first time the stock market has had shallow breathing. This time around, inveterate companies such as Bears Stearns, Merrill Lynch, Lehman Brothers, Washington Mutual, Wachovia, AIG, IndyMac, Countrywide, Freddy Mac and Fanny Mae have fallen under the bell.

I get that all of the financial markets are tied to the economy, but I don’t understand why we have put all of our eggs in Wall Streets basket? The taxpayers have been thrown to the lions and the government is forcing us to buy indulgences to absolve bad choices and lusting for the almighty dollar.

So was it greed or an urgency for corporeal desires; yachts, Kobe beef, intoxicating wine, exotic vacation homes, $1,000 Luxury Pizza topped with six sorts of caviar and fresh lobster or the $1,000 “Grand Opulence” Sundae, with 5 scoops of Tahitian vanilla bean ice cream topped with Grand Passion Caviar. Perhaps it’s a box of Behike cigars for $18,846.

For a company such as Merrill Lynch to go under was shocking. In 1914 when Merrill first opened it’s doors, Ford Motor Company announced an eight-hour workday and a minimum wage of $5 for a day's labor.

Merrill Lynch stood for strength and courage to take an investor to new heights. Merrill gave us confidence to take a chance. Merrill told us that we could ride the bull, we just had to hold on.






A stock is considered to be a share of ownership in a company that can be bought, sold or traded. A bond is a loan to a company that can be bought, sold or traded.

Trading of shares of ownership may have begun as early as 9000 BC to 8000 BC. Tokens were made out of clay and were used for accounting and financial purposes.

Stock exchanges originally came about from trading in agricultural and other commodities during the Middle Ages at what were called Euro-Fairs. Credit was commonly given, and therefore supporting documents were created such as drafts, notes, and bills of exchange. These were the precursors to modern stock and bonds certificates.

There’s an old joke that I remember as a child. “If money doesn’t grow on trees, then why do banks have so many branches?” Years later that joke would come back to bite me in the lip in a way that is not laughable but discomfiting to say the least.

Even though we don’t all invest in the stock market, we invest in our lives. This current financial crisis affects the way we earn money, spend money, save money and invest money. It affects what and how we buy, when and if we can afford to retire, how much taxes will increase despite how much the presidential candidates swear they won’t increase them, when and if we will be able to buy on credit.

It affects whether we will be able to buy homes, cars, health care, insurance, education, have secured bank accounts and many other aspects.

I can summarize it as saying that life is fluctuation. It is a balance to stay on top of it. It’s no surprise that the stock market reflects that fluctuation accentuated with dollar signs, ticker tape, bells and whistles.

Life is unpredictable, but if we can come to expect an upheaval, we will be better prepared for a good landing.

For some people, 2008 will be remembered as the day the earth stood still. It will be remembered as the year Wall Street went belly up, 401k’s disappeared, banks closed, businesses failed, millions suffered severe financial loss, people lost their homes because of subprime mortgages and bad choices, and the American dream turned out to be a screaming nightmare. It will be remembered as the year of the $700 billion bail out.

And with that, we can only hope to build a better way of life without letting our desires become more than our faith in people. Though our foundations may shake, we can still hold on to who we are. As Meister Eckhart said, “The more we have the less we own.”

This is just another test of faith. We can get through this.

Do you think the tests of faith get tougher with each day or does our perspective change according to level of fear?

Does fear play an big role in our faith?

Share your thoughts?