Wall Street’s Tailspin
EmailABC News’ Charles Herman reports: Fear gripped Wall Street in the last hours of trading as stock markets plummeted despite spending most of the day slightly above or below the opening. “When have stocks going down more then 2% a day for seven days in a row, that’s a panic and that’s a crash,” said Art Hogan, market analyst with Jeffries & Co. “You can call it anything you like but its still a historic sell off and one that we’ve never seen before.” The huge sell-off in the final moments was led in part by the 31% drop in General Motors — a Dow component — after the ratings agency Standard and Poor’s put the car company and its financing affiliate under review for a possible downgrade. That would make it harder and more expensive for the nation’s largest automaker to get needed loans. The news could not be worse for the struggling automaker as earlier in the day, an auto forecasting firm said it could foresee an “outright collapse” in 2009 in the global auto industry due to the crisis in financial markets and the possible downturn in the global economy. Led by General Motors, all 30 members of the Dow Jones saw their stocks drop as the index lost 678.91 to close at 8,579.19 (-7.33%). General Motors stock dropped to its lowest in 58 years according to Bloomberg and Ford hit a 26-year low. Today marks the one-year anniversary of the Dow reaching its all time high of 14,164.53. With today’s close, the Dow has now lost nearly 40% since that record. It has dropped 5585.34 points, or -39.43%. It was the first time the Dow closed below 9,000 since June 30, 2003. It is the worst bear market since the January 1973-December 1974 bear market, when the DJIA fell 45% from its peak to its trough. Additionally, it is the largest seven-day percentage decline since October 26, 1987 and the lowest closing value since May 21, 2003. Other indices also suffered today. The Nasdaq lost 95.21 to close at 1,645.12 (-5.47%) and the S&P 500 lost 75.08 to close at 909.9 2(-7.62%). So in addition to investors worrying about the survival of financial institutions and insurance companies, they can now add the auto industry to their list. And like troubled banks, the auto industry has also received help from the government. In the recently approved budget to fund the government, Congress provided the industry with $7.5 billion to fund a $25 billion loan program. But even more remarkable has beem the huge sell-off at the end of the day which has occurred the past three days as the closing bell draws closer. TUESDAY: Sell off started at around 2:25pm ET (-2.5%) WEDNESDAY: Sell off started at around 3:30pm ET (-3.3%) THURSDAY: Sell off started at 2:59pm ET (-5.5%) This could be in due in large part to when trades of hedge funds and mutual funds are executed. The $2.6 trillion overleveraged hedge fund industry can be forced to sell at the end of the day to cover losses. The average returns for hedge fund returns fell nearly 5% last month and this marks the biggest loss in 10 years. For the year, hedge fund average returns are down nearly 10%. There could also be a veritable “run on the mutual fund” as average Americans, perhaps panicked to see their investments dramatically drop in value, have hit the sell button. “It’s a reflection of how much mutual funds have to raise in terms of redemption,” said Hogan about the last minute selling of stocks. “That means people are selling mutual funds, the mutual funds are selling stocks, and unfortunately that becomes very self fulfilling.” In the two weeks ending September 22, approximately $185 billion has been pulled out of mutual funds and put into checking and savings accounts, including CDs, according to TrimTabs. In the prior four months, $40 billion was pulled out and put into the traditional bank accounts. On top of this, credit markets continue to remain constricted, even after aggressive steps taken by central banks around the world to cut interest rates. There were signs today that the Treasury Department is considering making direct cash payments to banks in return for some form of shares of the bank in order to give banks more money so they begin to lend once again. “If the banks and the markets aren’t performing their financial intermediary function, corporations and other businesses can’t fund their day-to-day activities,” said Doug Pate, market strategist with J.W. Seligman. But perhaps in all this panic, there could be a measure of hoped-for-calm to come soon "When emotions totally rule the decisions,” said Sam Stovall, Chief Investment Strategist with S&P Equity Research, “that usually is the sign that we’re getting close the bottom.” Dow Jones Industrial Average Today is the 1-year anniversary for the DJIA of its peak and the six year anniversary from its last bear market low. As of October 9, 2008 The DJIA, down 678.91 points, or -7.33%, to close at 8579.19. First time closing below 9,000 since June 30, 2003. Closed at its lowest level of the day. The last time the DJIA had an intra-day low below 9,000 was on August 6, 2003. Worst bear market since the January 1973-December 1974 bear market, when the DJIA fell 45% from its peak to its trough. Down for the seventh consecutive trading day and eight of the last nine. Down 2271.47 points, or 20.9%, over the last seven trading days. Largest seven-day point decline in its history. Largest seven-day percentage decline since October 26, 1987. Longest losing streak since the seven day decline that ended on July 16, 2002. Lowest intra-day level since May 27, 2003. The last time the DJIA had an intra-day level below 9,000 was on August 6, 2003. Lowest closing value since May 21, 2003. Largest one-day point decline since September 29. Largest one-day percentage decline since October 26, 1987. It has dropped 5585.34 points, or -39.43%, from its record close of 14164.53, hit on October 9, 2007. It has dropped -34.30% from its 2008 close high of 13058.20, hit on May 2. Month-to-date, the DJIA is down -20.93%. In September, it closed down 6.00%. Year-to-date, it is down -35.32%. Off 38.8% from 52 weeks ago.
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Honestly as soon as I found out that Obama is ahead at polls few weeks ago, I called my broker to sell every single stock, mutual funds, IRA’s all!
HEY OBAMA GO GET MONEY FROM SOMEWHERE ELSE FOR YOUR WELFAE RATS!
I PROTEST OBAMA’s Capital gains Taxesd!
So do Americans too!
Posted by: I am afraid of Obama! | October 9, 2008, 4:32 pm 4:32 pm
Things will get worse. We still have poor earnings, the auto/airline mess, and an upcoming poor retail season.
Posted by: Brian | October 9, 2008, 4:32 pm 4:32 pm
What a mess… this is not Bush fault… but certainly… he left the country in shreds…
Posted by: Benjalamelami | October 9, 2008, 4:34 pm 4:34 pm
George Bush has solidified his status as the worst President ever. Can you imagine John McCain, then if something happens to him, Sarah Palin dealing with this mess?
Posted by: doug | October 9, 2008, 4:37 pm 4:37 pm
this is not only yhe meltdown but the fall of neo capitalism
the greenback must be change to worldwide dollar basd upon other tools like commodity, euro yen yuan gold etc
we see the new currency system as benchmark replace usdlr after gold standrad collapese
Posted by: Gunawan | October 9, 2008, 4:40 pm 4:40 pm
Obama wants to jack up taxes… he’s a jack off…..
Posted by: fred | October 9, 2008, 4:41 pm 4:41 pm
To all you Obama supporters, you think this is bad- just wait till he is in office! This is nothing! You will all see what real financial hell is when he is in office – that is of course unless you are a minority baby producing uneducated loser who sits home waiting for more handouts! Give me more,Give me more handouts! The motto of Obama supporters!
Posted by: Heidi | October 9, 2008, 4:42 pm 4:42 pm
glad half the demo_C_R_A_P party are R+E+D+N+E+C+K+S and won’t vote for Obama…
Posted by: fred | October 9, 2008, 4:43 pm 4:43 pm
And…I am afraid of ignorant posters!
Posted by: Ivy | October 9, 2008, 4:43 pm 4:43 pm
And just think, this is just the beginning after we get the Obama-Rama show started up in January.
Posted by: Mickey 13 | October 9, 2008, 4:43 pm 4:43 pm
get rid of capital gains taxes for 2008 and for the next couple of years and watch the investirs come back. Obama announcing that he is going to raise capital gains taxes I my adds to wanting to sell off. Obama will be a disaster for job creation.
Posted by: brad | October 9, 2008, 4:53 pm 4:53 pm
“HEY OBAMA GO GET MONEY FROM SOMEWHERE ELSE FOR YOUR WELFAE RATS!”
I would rather see my tax dollars go to poor folks than to see it go where Bush/McCain want to put my taxes: Corporate welfare (Halliburton, Exxon, AIG, etc, etc).
Posted by: Mark from atlanta | October 9, 2008, 4:55 pm 4:55 pm
doing away with not only people like Fuld but also doing away with people and the system that hired and promoted people like Fuld must be part of the clean up. Also flush Congress down the tubes. I’m voting against all my incombents….
Posted by: fred | October 9, 2008, 4:58 pm 4:58 pm
Crime does pay, as congress, politicians and wall street. We have just see the biggest rip off in our history and there are no indications that anyone is going to jail. Why is that? It’s because the same people who were sworn in to represent the people and uphold the law, are the same people who ripped us off.
I played by the rules:
Worked hard.
Saved my money.
Bought a home with my hard earned dollars.
Raised a family.
I now have a home that is less than what I bought it for.
Over 1/2 of my savings are gone.
My kids have moved back home as a result of the economy.
Still, no one in jail.
Now the democrats wantt to help me by socializing our government, as if the same goivernment that got us into this mess, will now get us out of it. Tell me one thing the government does right?
I will no longer be playing by the rules. It’s everyman for himself now. What ever it takes to secure my families future is open game from here on out.
The government is now enemy # 1
Posted by: Bob | October 9, 2008, 4:58 pm 4:58 pm
And I’m specially pleased that all my incumbents are demo_C_R_A_P party… FLUSH!
Posted by: fred | October 9, 2008, 5:01 pm 5:01 pm
“Obama will be a disaster for job creation.”………And McCain will bust the economy altogether. You saw that he already changed his brilliant plan to buy up mortgages. He doesn’t have a clue about anything. At least Obama thinks and will have sharp people on the problem.
Posted by: Mark | October 9, 2008, 5:08 pm 5:08 pm
Sheesh, now Republicans are even blaming Democrat presidents *not yet in office*. Traitors, the whole lot of them.
Posted by: Markor | October 9, 2008, 5:08 pm 5:08 pm
A tradeable bottom will be in place soon. Although not “The Bottom”. This is panic selling. After the uncertainty of the election is over, I expect a nice 3-5 month rally into the 2nd quarter. Then the grand finale drop starts. But what do I know ?
Posted by: Uncle Moe | October 9, 2008, 5:09 pm 5:09 pm
John McCain and Sarah Palin are both “honorable” candidates, like the conspirators who killed Caesar and said they did it for the good of Rome. I guess they think slinging mud, no make that blood, makes them honorable and they can justify it by saying their blood letting campaign is for the good of this country because they are such patriots. A true United States Patriot stands up to unjust wars. A true United States Patriot does not support lies about the war in Iraq. A true United States Patriot does NOT send this nation’s young people into an unjust war to destroy a country so it can be controlled by the Republican oil men. McCain and Palin are NOT patriots. Both are only interested in their own self-serving benefits of office. Their recent lies, cheap tricks, and downright stupid antics should make EVERY PATRIOT IN THIS COUNTRY VOTE OBAMA-BIDEN. God, grant us the wisdom to select cool-headed, wise leaders, who seek more level-headed solutions than merely BOMB,BOMB, BOMB!
Posted by: Terresa | October 9, 2008, 5:12 pm 5:12 pm
Government intervention may lengthen the cycle but it can not stop the boom to bust. I originally posted this before ( about three weeks ago )the Scam Bailout, since then things have accelerated, but that only lengthens the recovery time. We are in the Great Bear which has been artificially been held at bey. In about a year and a half, when the real estate market is at 50 percent, and DOW has stabilized at between 7800-8000, NASDAQ 900-950, S&P 700-750, it will be the bottom. Then it will be safe to go back. Until then it is a Day trader’s market. Gambler’s paradise. The bailout is just a waste of resources. In fact it will compound the problem. Much like the physicians of old who would bleed the patient, to give the appearance of action. The Scam Bailout is an action to give the appearance of care and concern, but will in truth deplete needed resources for healing and extend the time required for recovery. We are looking at a very rough 3 to 6 years, according to who is president and how much more Socialistic debt is added.
Some people just refuse to learn and therefore make the same mistakes over and over. This no time for amateurs nor on the job training. For you still playing the blame game or fighting the party wars, you are the same type of idiots as Nero, fiddling while Rome burned. The crash has been artificially held off for over forty years. The Great Bear is now loose.
Posted by: Sean Michael | October 9, 2008, 5:24 pm 5:24 pm
Obama will probably win. But if not, each candidate has pros and cons to which the market will react. I’m hoping after the election, there will be less hot-headedness and bit more sanity. This bear market has a long way to go. In the end, those who adjust to the conditions will be ok. Get out of debt, save and wait for better days.
Posted by: Uncle Moe | October 9, 2008, 5:24 pm 5:24 pm
Soros has Crashed the financial System of many Countries.
He knows how to play the system to do as he wants.
He wants a new Government and a New Finacial system in America.
He is the basically the main man in the banking of Country Georgia.
He has tried to break other banks in the world.
He is the money wads behind the Democratic Party
Would the Democrats be living up to what they said, A win at all cost?
Posted by: ah_heck | October 9, 2008, 5:26 pm 5:26 pm
Do you wonder why the DOW went down after the vote for the SCAM BAILOUT? Because it marked the end of free representative America! Communism is bad for business !
My fellow Americans, you have just witnessed the end of the USA and the constitution if this is allowed to go unchallenged. Our so called Representatives have, against expressed desires of those they swore to represent, blatantly sold us and our children into slavery. The SCAM BAILOUT bill will not cure the problem. It will compound it. There are three things to do. Mount a Constitutional challenge, vote each who is up for reelection and voted yes out of office, and start recalls on those who are not up for reelection this election. Save THE USA while we still have the time. To say I am throughly disappointed and discussed, is an under statement. The true feeling is much like the feelings I have had putting fallen comrades in body bags. Those who voted for this, PORK BARREL SCAM BAILOUT, have put The USA and The Constitution in a body bag.
This is supposed to be an election for president not PR rock star. You are hiring the CEO of Firm USA. Who do you want to run the firm, a manager with over 25 years experience or the newly hired stockboy? If you complain about Palin’s experience to be VP candidate where does that leave Obama? She has more real experience than he has. Or is Obama really running as Biden’s VP? We have no time for an amateur nor for on the job training. Working Citizen will lose . Banks and Wall Street are not Citizens they are Business entities. The government will borrow (at interest) the money needed from the Fed. The Fed will create the dollars out of thin air (refer to Germany 1923), devaluing the U.S. currency. Taxpayers will repay the loan. Like the economy of the Carter years, The scale and damage will be about 300 fold more severe. Those business entities which cannot survive will be bought up, as is already happening ( refer to Banks acquired.) Politicians couldn’t run a business if their lives depended on it. This is a political solution that will compound the problem. I say Fasten your seat belts everyone. It’s going to be a long, bumpy ride. As one of those who survived the Carter years, “you ain’t seen nothing yet!” But wasting resources will not cure the problem. America and the Constitution just got sold out.
Posted by: Sean Michael | October 9, 2008, 5:29 pm 5:29 pm
Polls are like statistics and accounting statements, not to be believed unless you falsified them your self. Polls were even for Reagan vs Carter, the election was a landslide for Reagan. 487 to 49 electoral votes. Hope we see the same for Mc Cain.
The bailout reminds me of a young lady who was told her bank account was overdrawn and remarked” I can’t be out of money! I’m not out of checks!” Is that the Senate’s excuse? No Bailout! They are trying to write a check they can’t cash. But come election day I bet the American People can cash a check.
No time for an amateur or OJT
Posted by: Sean Michael | October 9, 2008, 5:32 pm 5:32 pm
Every senator and congressman that voted in favor of the bailout needs to be fired! Vote them out of office, including Obama and McCain. Vote 3rd party. It’s time they know that this is OUR country and WE THE PEOPLE will not tolerate business as usual in Washington.
Posted by: Lorretta | October 9, 2008, 5:36 pm 5:36 pm
As evidenced by most of the above postings, this country is populated by a great number of hateful, unintelligent, bigots, who, despite the destruction of our economy, despite the violation of our civil rights, despite sending our sons to their deaths in an illegitimate war, and despite all the horrors the republicans and George W. brought upon our nation in the last eight years, are so racist that they would rather see more of the same for the next eight years than allow a black man to be their president. God help our country no matter who wins this election.
Posted by: Larry | October 9, 2008, 5:38 pm 5:38 pm
Wall Street needs to get its panties out of a wad and calm down.
Posted by: MyFellowAmericans | October 9, 2008, 5:38 pm 5:38 pm
The thing is people is that are economy
is in the craper and we just need to stop fighting over things and just get stuff done……also i am not going for either canidate because i think that there are problems with Mccain and obama they all talk about change but do they really mean it? or well we just get further and further in the hole intile we can not get out at all? what the canidates need to do is stop telling us what they are going to do and start showing us.
Posted by: ashton nowicki | October 9, 2008, 5:41 pm 5:41 pm
Capital GAINS Brad? Oy! No worries about any tax issue there. Nobody is gaining in this market, no matter who wins.
Posted by: michael | October 9, 2008, 5:46 pm 5:46 pm
I think the bold investment in dependable energy infrastructure is needed to overcome oil shock and job loss.Over the few years, gas price has shown steep increase, in my wiew, more than 60$ / barrel can blocks normal economic activity.I suppose uncertainty means no substantial action for energy plan, so Like NEW DEAL PLAN, another bold action is needed.Gas price is still high, volatile. Anytime it can dampen normal stock price.Dependable energy is the future and love for KIDS I believe.
Posted by: 상율 한 | October 9, 2008, 5:58 pm 5:58 pm
you all beaaach that Palin doesn’t have international experience and i actually find that refreshing since i would rather see next president focus on domestic policies. who needs wars anyway. if and when there were trouble she would be the person i would want to kick some butt with, plus terrorists would be bored with her and what man would want to hurt her? she would defenitly be a coward and looking for attention wouldn’t he?
Posted by: zorra | October 9, 2008, 6:04 pm 6:04 pm
oops, i meant any terrorist who would mess with Palin would be a coward.
Posted by: zorra | October 9, 2008, 6:07 pm 6:07 pm
No money for the market from my 401K if McCain wins, I will have to pay the government taxes on heath care my employer provides as income! The insurance companies are salivating at the idea. Paycheck can only shrink so much so I guess I won’t contribute anything for my retirement…McCain will finish killing off what remains of the middle class. While I am being taxed on health care the ultra rich banks will benefit from McCain using tax money to “fix” mortgages.
Posted by: Hege! | October 9, 2008, 6:07 pm 6:07 pm
These comments remind me of the forecasts about another Democratic candidate: Bill Clinton. Conservatives griped and whined about “high taxes” and a “ruined economy” but look what happened: 8 years of growth, uninterrupted until the GOP took over again and tried to run the country into the ground.
Posted by: DaveJ2007 | October 9, 2008, 6:19 pm 6:19 pm
All you republican retards are blaming Obama for this stock market sell-off!!! God, you are all delusional demented sick dangerous zealots. What a pathetic bunch.
Posted by: Matt Tannenbaum | October 9, 2008, 6:26 pm 6:26 pm
Funny the economy is in total meltdown and Obama spend $3.3 million on Tuesday alone in his quest to be the president of CHANGE. I guess he does really care about main street!
Posted by: Mauro | October 9, 2008, 6:33 pm 6:33 pm
All you moronic conservatives posting here are the reason for this economic meltdown!!! Conservative capitalism is an abject failure that once again must be bailed out by liberal socialism. When are you morons going to get a clue??? Hopefully, a bunch of you idiots will be jumping out of windows soon.
Posted by: Monk | October 9, 2008, 6:42 pm 6:42 pm
Here is a reminder: we are Americans – we are supposed to be in this together instead of blaming each other. If Obama wins give him a chance to lead instead of immediatly railing against him. I’ve lost a ton of money and I’m worried like the rest of you, but it’s not productive to hate. Take a deep breath, say a prayer for our country and for our children. We all want better for our kids – be productive and not haters.
Posted by: jbuck | October 9, 2008, 6:43 pm 6:43 pm
Funny, john McCain speaks about his love for the middle class while wearing $500 shoes and speaking from the porch of one of his 11 houses.
But, hey, if McCain pulls down all of his ads and stops spending money on direct mailings and then sends all of his campaign money to the poor, Mauro, you might have a point.
Posted by: AppeaseThis | October 9, 2008, 6:43 pm 6:43 pm
Plbbbbbbbbbbbt
Posted by: mjme | October 9, 2008, 6:56 pm 6:56 pm
YOU shareholders are all out of your minds! If you sell your stocks below what you payed for it you are really stupid. You really think people stop eating and foodindustry goes bankrupt? you really think oilcompanies go bankrupt because people stop driving. THE SHARES ARE UNDERVALUED!!
When people behave so irrationaly people deserve COMMUNISM!
Posted by: Mike | October 9, 2008, 6:58 pm 6:58 pm
Wow, these comments are amazing. Conservatives yahoos elect Bush, get everything they want, the economy (predictably) falls apart, their darling Bush socializes the financial sector, and then they want to blame Obama and the Democrats??
Sorry, this is America. We believe in responsibility and accountability. This is the result of the policies your boys put in place, and their bad decisions. You guys had your shot, and look what you did with it. Let these new guys show you a thing or two.
The bad news is, if Obama was the man you think he is, I wouldn’t vote for him either. The good news is, he’s not, and he’s going to be bringing in the smartest, most honorable crew we will have had in Washington a couple generations. Give him a chance.
Posted by: Bible-believing Patriot | October 9, 2008, 7:07 pm 7:07 pm
The financial status of our country, and – therefore – the world, is in the tank because of the greed and malfeasance of the senior management teams of leading investment houses, insurance firms, et al. This is undeniable.
As complicit in the mess is the prevailing Administration and select members of Congress. The Administration, due to morbid incompetence and selfishness. The Congress, due to special interests (say ‘lobbyists’) who should be banned from Capitol Hill.
The investigation process should be aggressive – ruthless. Those senior managers now with their hands out should be prosecuted and their personal assets confiscated & redistributed to offset the losses being experienced.
As if there were not enough reasons to keep the McCain-Palin ticket out of the White House, our country’s financial collapse should be the exclamation point that serves as the nail in the coffin of the campaign. There is irrefutable evidence John McCain would perpetuate the Bush Financial Doctrine of lining the pockets of corporate America, at the cost of the rank and file.
BTW: just received my investment statements. Overall, down 30% – and, the house I’ve been trying to sell for 19 months is still empty. In part, this is due to Realtor incompetence; in a greater part, to the criminal conduct of the Bush-Cheney Regime.
And to think over 40% of U.S. voters want another 4 (or more) years of the same!?
Posted by: saftgek | October 9, 2008, 7:09 pm 7:09 pm
in god we trust us dollar note says.only god can be trusted now.i urge all american citizens to pray for economic recovery of united states of america.pick a date hour and time and all america should stand still and pray together wherever you are. god bless america
Posted by: anna naidu | October 9, 2008, 7:14 pm 7:14 pm
“I am afraid of Obama!” wrote: “as soon as I found out that Obama is ahead at polls few weeks ago, I called my broker to sell every single stock, mutual funds, IRA’s all!”
“…afraid of Obama” is the proverbial fool who is parted with his money.
Posted by: Truth | October 9, 2008, 7:23 pm 7:23 pm
Americans should start buying american cars. Stop buying cars from Japan and Europe. Stimulate our economy—not theirs. We need to take care of ourselves–we can’t rely on our government!
Posted by: trish | October 9, 2008, 7:24 pm 7:24 pm
Replace Bush with Ron Paul.
Posted by: John | October 10, 2008, 5:40 am 5:40 am
Please note this is a copy of an article from the 1980 awake…
The End of Today’s Economic Systems
IF YOU designed a machine and it did not work well, what would you do? You would likely try one modification after another to see if it would work better. But what if you found that after each repair it got worse? Would it not be time to consider that the machine itself was unsatisfactory, and that a different kind was needed?
Today’s economic systems are not working for the good of all mankind. There are enormous injustices in them. Hardworking people see their money eaten away by inflation. Hundreds of millions live in poverty. Other hundreds of millions do not even have the necessities of life. The New York Times reported of some lands: ‘For many poor people the price of a single meal now exceeds a day’s income,’ which is a striking fulfillment of the Bible prophecy, ‘A whole day’s wage for a loaf of bread.’—Rev. 6:6, Weymouth, Fifth edition.
Really, today’s economic and money systems cannot bring the peace, security and prosperity mankind so desires. Selfishness, greed, pride and a heartless lack of concern for others are built into them.
What does all of this mean? Why the worldwide inflation, as well as food shortages, wars and other unprecedented troubles since 1914?
All these things are a sign of the times. They are conditions that were foretold to be a part of the ‘last days’ of the present system of things. And included in the foretold conditions is that people would be ‘lovers of themselves, lovers of money, . . . without self-control, . . . lovers of pleasures rather than lovers of God.’ All these things are part of today’s political, economic, social and religious systems.—2 Tim. 3:1-5.
Hence, today’s money instability and hard economic times for so many are part of the evidence that this system of things is rushing toward its finish, as Jesus himself foretold. (Matt. 24:3-14) Any patchwork improvements to try to keep today’s economic systems going will be very short-lived. No repair can undo the selfishness, greed and injustice that are built into them.
So what all these things really mean is that this present unsatisfactory system is moving toward its greatest crash ever, but by divine action, not human failure. As Jesus put it: ‘For then there will be great tribulation such as has not occurred since the world’s beginning until now, no, nor will occur again.’—Matt. 24:21.
Comfortingly, though, God’s prophetic Word promises that this time of coming trouble will be followed by ‘a new earth’ in which ‘righteousness is to dwell.’ (2 Pet. 3:13) That ‘new earth’ means a new human society, which will include a new economic system, one that will work for the good of every person. The promise is: ‘The LORD Almighty will prepare a banquet for all the nations of the world—a banquet of the richest food and the finest wine. Here he will suddenly remove the cloud of sorrow that has been hanging over all the nations.’—Isa. 25:6-8, Good News Bible.
‘In order to clear up the present economic problems everything must be set back to zero’
What will soon happen, then, is similar to what a Japanese businessman answered when asked about a solution to today’s economic turmoil. He remarked: ‘In order to clear up the present economic problems everything must be set back to zero.’ He rightly saw the hopelessness of ever repairing the system. And God’s Word agrees: it is too far gone. Hence, it will not be repaired, but will be demolished.
The possibility of today’s economic systems crashing has been a more frequent topic of discussion among economists lately. For instance, American financial commentator Sylvia Porter spoke of the real possibility of an ‘inflationary blowoff in this nation and the world, destroying the confidence in any investment in ‘paper’ [money], and so undermining the functioning of our international monetary system that trade among nations would grind to a near standstill.’ The columnist added:
‘The blowout would then ripple out to cause a rash of bankruptcies among businesses, a collapse of the dangerously swollen credit bubble, an upsurge in unemployment, foreclosures of vastly overextended mortgage credit, and repossessions of goods bought on installment loans the debtors could not repay.
‘The scenario becomes more scary even as I write it.’
‘Nations cannot go on borrowing to improve living standards’
Political commentator Jack Anderson similarly commented on the shaky money situation, stating:
‘Nations cannot go on borrowing to improve living standards. The money can never be paid back unless it is invested in production instead of consumption. For many countries, the debt is already greater than they can absorb without a financial breakdown. . . .
‘Skyrocketing prices keep adding to the bad debts until the whole banking system is threatened with collapse.’
The American Institute for Economic Research makes the following observations:
‘During the next several years, the following economic developments seem highly probable:
‘A severe and prolonged worldwide depression. . . .
‘During a prolonged depression, social disorder might well become extreme. . . .
‘Any person or family who appears to be substantially better off than those who are most adversely affected may become the target for mob violence.’
When people rob, rape, mug and murder in such increasing numbers now, in a time of relative peace and prosperity, they would do much worse if a breakdown occurred. An evidence of this is what happened during the blackout in New York city in 1977. In certain areas anarchy prevailed. Looting, vandalism and robberies were epidemic. The police admitted that they were helpless.
Similarly, in an African country, a one third increase in the price of rice sparked rioting and looting in the capital city. The streets looked as if a war had just been fought. Martial law was declared and a strict curfew imposed.
‘Into the streets they will throw their very silver, and an abhorrent thing their own gold will become’
Concerning what lies ahead for the entire world, the Bible speaks of a ‘great tribulation such as has not occurred since the world’s beginning until now, no, nor will occur again.’ During that time, paper money will be worthless. Why, Bible prophecy even says: ‘Into the streets they will throw their very silver, and an abhorrent thing their own gold will become. Neither their silver nor their gold will be able to deliver them in the day of Jehovah’s fury.’—Ezek. 7:19.
No human leader, nor any form of human government, will be able to forestall the coming ‘great tribulation,’ since it is God’s judgment against this present wicked system. That is why his Word warns: ‘Do not put your trust in nobles, nor in the son of earthling man, to whom no salvation belongs.’ (Ps. 146:3) What, then, is the right course to take? The Bible answers: ‘Trust in Jehovah with all your heart and do not lean upon your own understanding.’—Prov. 3:5.
Those who trust in Jehovah now he promises to help even in an economic way. No, God will not provide his servants with luxuries, but he has promised them the necessities of life. (Matt. 6:24-34; Ps. 37:25) Nor does this mean that those who trust God will have an easy time in life, since they too are affected by bad conditions in the world. But they will certainly have more success than others do in coping with today’s troublesome times.
In addition, such ones will have the assurance of God’s protection during the coming crash, and of surviving into a righteous new system. (1 John 2:15-17; Ps. 37:27, 34, 37) That is why a family in Brazil who learned to trust Jehovah states: ‘Although beset by economic problems, we are a happy family because we know Jehovah, the happy God, and we know his purposes.’
‘Raise yourselves erect and lift your heads up, because your deliverance is getting near’
So, regardless of how severe the money squeeze becomes, there is the sure hope of the best of times directly ahead in God’s new order. Hence, persons who have the right hope based on accurate knowledge, and who trust in God and not in material wealth, can ‘raise themselves erect, and lift their heads up, because their deliverance is getting near.’—Luke 21:28.
Posted by: The Truth | October 10, 2008, 6:31 am 6:31 am