Archive for Friday, August 5, 2011

Questions and answers about the stock market fall

August 5, 2011


Fears of another global recession on Thursday sent the stock market into its steepest dive since the 2008 financial crisis.

The Dow Jones industrial average plunged more than 500 points, erasing its gains for the entire year. Stock indexes have sunk in nine of the past 10 trading days.

Here are some questions and answers about what’s happened and what it means:

Q: What triggered so much anxiety across the financial markets Thursday?

A: In Europe, worries mounted that Italy and Spain won’t be able to pay their bills, the latest shudder in a debt crisis that has gripped the region.

The European Central Bank restarted a bond-buying program to calm credit markets. But it had the opposite effect on stocks and other investments, highlighting concerns about a worsening global economy.

Investors were also jittery about July jobs data the U.S. government will release today.

Q: Could falling stock prices weaken the economy?

A: Yes, by making people less likely to spend — and companies less likely to hire. Lower stock prices tend to slow spending as people see their wealth shrink.

And consumer spending drives about 70 percent of the economy. When spending slows, job growth typically does, too.

Q: Other than the massive selloff, have there been any unusual signs of distress?

A: Bank of New York Mellon said it will charge a fee to pension funds and other large customers that want to hold cash deposits over $50 million.

Similarly, the yield on the one-month Treasury bill fell to almost nothing — 0.008 percent. Normally, banks and the U.S. government pay people interest for their money.

But many large investors have grown so anxious that, above all, they want to invest their money in ultra-safe ways.

Q: How bad is this selloff compared with the one after the 2008 crisis?

A: The Standard and Poor’s 500 stock index fell 57 percent from its October 2007 peak to March 2009. So far, the S&P; has fallen 12 percent from its highs last spring. Analysts say corporations are healthier and better able to endure an economic slump than they were three years ago. Earnings for the second quarter are still on pace to post a record high.

Q: What’s an average investor to do?

A: Stick with your long-term plan. Responding emotionally to short-term movements in the market is usually a bad idea and results mostly in locking in losses. But be practical about protecting yourself from the worst-case scenario if you face big cash needs in the next few years for college, retirement or other pressing demands. Stock allocations should be tailored for your goals and risk tolerance.


uncleandyt 6 years, 9 months ago

Q. When there is a massive selloff, isn't there also a massive buyoff ? A. Please stick to the script. Q. Who writes these anonymous AP stories ? A. Brett Favre may return to football.

Steve Jacob 6 years, 9 months ago

After a big selloff Tuesday morning, a lot of people entered the market and it was up for the day. Those people lost 3-5% yesterday. Point is, you can go broke calling the bottom. Think the term used was "Catch a falling knife".

Richard Heckler 6 years, 9 months ago

We said we didn't want it. Most people didn't even vote for it. In survey after survey, public opinion polls rank a large tax cut as one the least desirable uses of the federal budget surplus. And Republican and Democratic leaders alike have warned the President-select that his tax cut package will never emerge whole from Congress.

But all to no avail. George W. Bush has yet to back off from the monstrous, surplus-draining tax cut proposal that was the cornerstone of his campaign. Now he's even telling us that it's for our own good: His tax cut will cure our softening economy and stave off the threat of recession by "encouraging capital formation, economic growth, and job creation." Even Alan Greenspan, chair of the Federal Reserve Board and a debt-reduction hawk, is prepared to accommodate the Bush plan.

At least one group is happy to swallow the Bush tax cut medicine—"the haves and the haves-more," as Bush referred to his supporters during a fundraiser last year. After all, it is their taxes he will cut. Together, lower income tax rates (with the biggest drop at the top) and the repeal of the estate tax account for nearly three-quarters of the Bush tax cut. Nearly three-fifths of the total benefits of the tax cut package will go to the richest 10% of all taxpayers, and some 43% will go just to the top 1%, those who make more than $319,000 a year and showed average income of $915,000 in 1999.

But no matter what Bush says, his tax giveaway to the wealthy will not inoculate us against recession. Nor are well-to-do taxpayers suffering from over-taxation, as the Bush team insists. One thing is sure. If the Bush tax cut goes through, social programs that have already been neglected for more than two decades will continue to suffer. Defending the Indefensible

The editors of the Wall Street Journal never met a pro-rich tax cut they didn't like. And the Bush tax cut is much to their liking. Last December, they argued the case for a massive tax cut on three grounds:

Flap Doodle 6 years, 9 months ago

How many times have you posted that decade old article, merrill?

gl0ck0wn3r 6 years, 9 months ago

Iron Maiden is not for tax cuts. Iron Maiden are an English heavy metal band from Leyton in east London, formed in 1975 by bassist and primary songwriter Steve Harris. Since their inception, the band's discography has grown to include a total of thirty-six albums: fifteen studio albums; eleven live albums; four EPs; and six compilations.

Pioneers of the New Wave of British Heavy Metal, Iron Maiden achieved success during the early 1980s. After several line-up changes, the band went on to release a series of platinum and gold albums. These include the U.S. platinum-selling The Number of the Beast in 1982, Piece of Mind in 1983, Powerslave in 1984, the live release Live After Death in 1985, Somewhere in Time in 1986, and Seventh Son of a Seventh Son in 1988. The band are currently undergoing a resurgence in popularity, with their 2006 album A Matter of Life and Death peaking at number nine on the Billboard 200 and at number four in the UK. Their latest studio offering, The Final Frontier, was released worldwide on 16 and 17 August 2010, peaking at number one in 40 different countries and receiving universal acclaim from reviewers.] The album's second track, "El Dorado", won in the Best Metal Performance category at the 53rd Grammy Awards.

Considered one of the most successful heavy metal bands in history, Iron Maiden have reportedly sold over 85 million records worldwide with little radio or television support. The band won the Ivor Novello Award for international achievement in 2002, and were also inducted into the Hollywood RockWalk in Sunset Boulevard, Los Angeles, California during their United States tour in 2005. As of October 2009, the band has played over 2000 live shows during their career.

For the past 30 years, the band has been supported by their famous mascot, "Eddie", who has appeared on almost all of their album and single covers, as well as in their live shows.

Richard Heckler 6 years, 9 months ago

Retaining Bush tax cuts,not saving $4 trillion and putting forth zero job bills obviously was not the answer.

Neither Tea Party neoconservative republicans nor democrats stepped up to the plate

What was missing from the deal? A budget that would have saved $4 trillion.

Plus Millions of new jobs that would create new economic growth and the “Peoples Budget” that which does everything this country needs:

* Creates good-paying jobs
* Fully maintains our social safety net
* Invests in education
* Ends our costly wars
* Closes the tax loopholes that have made offshoring jobs profitable
* Ends oil and gas subsidies that pollute our country at taxpayer expense
* Creates a national infrastructure investment bank to help us make intelligent investments for the future

The “People's Budget” represents not just common sense; it represents the will of the American people.

What the “Peoples Budget” does very specifically:,70

Flap Doodle 6 years, 9 months ago

FORGET the people's BUDGET !!!! Read THE people's CUBE !!! it = waaaay more reality based than anything merrill links to.

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