After Initial Bump, Stock Market Drops
This morning, on the news that the U.S. had joined several other countries in cutting interest rates by 50 basis points, the stock market got a nice little bump. However, those early gains are all but gone now as the stock market plunges in despair.
Now matter the commitment being show by the United States government and governments around the world, investors are giving in to wholesale panic right now. They don’t want to wait it out, they are demanding swift action. But no matter how much money Washington has proved it is willing to throw at Wall Street, investors remain skittish and unsatisfied. Bloomberg reports on the despair spiral that is gripping the stock market right now:
“The uncomfortable reality is that this mess is going to take more time than anyone wants to come to grips with,” said Matthew Kaufler, a fund manager at Rochester, New York-based Clover Capital Management Inc., which oversees $2.6 billion. “For the first time in couple of decades, we have the prospect of a consumer recession.”
The news that consumer credit and spending is dropping (hat tip: Miki at Leadership Turn) has Wall Street worried about recession. Forget that recession is natural part of the economic cycle. For some reason there is this idea that immediate and spectacular growth has to be seen now. No one wants to hear about economic cycles, long-term stability and other tired economic talk. Unfortunately for them, that’s not reality.
The governments in the U.S. and other countries are proving that they are willing to do what it takes to return some stability to the markets. They are putting up taxpayer money, buying stock in banks and taking over commercial paper. It’s probably time for investors to realize that this problem isn’t going to go away next week, and that just because it might take five years to recover, the world won’t actually end.
Tags: stock market, stock market news, investing blog, Fed rate cut,
economy, investments, recession
