Traders: Stock Market Crash Narrowly Avoided
This weekend, Michael Gray of the New York Post wrote:
The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.
Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level - a 22 percent decline! - while the clang of the opening bell was still echoing around the cavernous exchange floor.
According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.
The panicked selling was directly linked to the seizing up of the credit markets - including a $52 billion constriction in commercial paper - and the rumors of additional money market funds “breaking the buck,” or dropping below $1 net asset value.
The Fed’s dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.
Source:
“ALMOST ARMAGEDDON”
Michael Gray
New York Post, September 21, 2008
September 24th, 2008 at 9:14 am
The financial crash is in process and nothing will be able to stop it from happening now. The bailout will not work.
All of the government’s efforts to stop this collapse will only make things worse.
(Kinda like picking at a scab - it just makes it more painful and take longer to heal.)
I am about one inch away from emptying my 401K’s and using the money to buy Gold.
Good luck everyone!
-Mammoth
September 27th, 2008 at 12:32 pm
Thanks for the comment Mammoth.
“All of the government’s efforts to stop this collapse will only make things worse.”
I agree. While a “bailout” may provide some short-term relief from the recent chaos, it will only postpone the “Day of Reckoning.” Looking beyond all the spin, the jawboning, and creative bookkeeping in Washington, I cannot help but see a financial system that is heading for collapse.
September 29th, 2008 at 10:20 am
I believe that the whole stock market crash should not be stopped. George W. Bush feels that this should be stopped for one reason and that is to make money. Some how he can manage to raise taxes to help the mistake of mankind but he can not help or manage to put together health care for all the children here in the United States. Why? Because it costs too much money and we cant afford it. But now we can afford to help the rich make more money. This economy is messed up and very greedy. Obiously the man is only thinking about the well being of one and not all.
September 30th, 2008 at 7:49 am
Thanks for the comment beautiful. I have a feeling history won’ t look too kindly on Dubya. However, I feel his predecessor, whoever it is, will be seen as even worse, as I believe there is a really good chance the U.S. economy will most likely tank under their watch.