Stock Market Drops a Record 778 Points
Subprime crisis continues to ravage economy.
by James Buchanan
A Reuters article reports “The Dow industrials plunged on Monday in their biggest decline ever after U.S. lawmakers unexpectedly rejected a $700 billion financial bailout, spooking investors who fear for the future of global markets and the U.S. economy. The Dow lost 778 points, its largest point decline in history, and posted its biggest daily percentage slide since the 1987 stock market crash. The benchmark S&P 500 also had its worst day in 21 years after the House voted down the bailout plan by a count of 228 to 205.The failure of the bill, which would have let the Treasury buy up bad mortgage debt from struggling banks in an effort to kick-start much needed lending, was seen as crucial to shielding the economy from an even deeper slowdown. That further unnerved investors who on Monday saw the credit crisis claim several new victims, including Wachovia Corp and a bevy of European banks. Fear ran deep and widespread, as investors dumped stocks for the relative safety of U.S. government bonds. The Chicago Board Options Exchange Volatility Index, Wall Street’s main barometer of investor fear, jumped 39 percent to 48.40, a nearly six-year high, and ended at 46.72 — a record high.”
There has been a tidal wave of popular opposition to the bail out. Calls to politicians were running as much as 300-to-1 against the bail out. Americans don’t want to prop up banks that were making high risk subprime loans. The government would not bail any of us out if we defaulted on our mortgage payments so why should any banks or mortgage lenders get special treatment. Added to all this is the hidden liberal agenda which helped cause the subprime crisis. Federal regulators pressured mortgage lenders to greatly increase the number of subprime loans to minorities and to throw out the lending criteria, which was blocking many Blacks and Latinos from qualifying for loans.
This was a golden opportunity for John McCain to prove to conservatives that he understood the free enterprise system and to come out strongly against the bail out on behalf of ordinary Americans. Unfortunately McCain decided to take the side of the special interests against the American taxpayer. (more…)