I don’t know a whole lot about the stock market other than it seems to be tanking. My guess is that tomorow some bargain hunters will swoop in and push the DOW back up around 10,000 where it will stay until the election.
One thing that is worth mentioning is that more regulation and more enforcement of existing regulations may bring stock prices down. At least part of the stock boom came about because businesses have not been following existing laws when it comes to enviroment or worker safety. This may have made business more profitable but at the cost of enviromental degradation and injured workers. These costs were carried by society and maybe these costs are going to start going to the businesses that caused some of the problems that society has been paying for over the last 30 years.
Update:
I wonder if part of the problem is that America is starting to look a little third world in some areas, and the rest of the world is starting to treat the US like a third world country for investment purposes. Amazing what eight years of neglecting a countries infrastructure can do to the financial side of things.
I think if we regulated Clinton, Cuomo, Schumer, Dodd, Frank, and Waters from twisting the arms of Fannnie & Freddie into pumping out stupid loans to high-risk borrowers and the government-chartered rating agencies who were willing to call junk debt AAA.
Too bad all those folks prevented Dubya Bush’s reforms to regulate the GSEs in his first term.
I think it goes a little further than that. The idea was that home values would always increase led to many people buying large houses with bad mortgages. Their are foreclosures in “good areas” as well as areas where lenders were told they needed to lend.
Once it became obvious that home values were not going to keep going up the mortgage backed securities did not seem like such a sure thing.
I think the idea was that the worst thing that can happen to a bank when they lend money on a house is that they will get a house which has probably appreciated. As we have seen far worse things can happen to a bank and the banks made bad loans not becuase they had to but because they thought they would be profitable.
Looks like I was wrong about the market leveling off at 10,000. I guess that is why I don’t work in the finance industry
I wonder how low it will go?