Am I wrong to think that the Dow will implode?

[CoffeeCat]

Yeah, I'm no expert, but I feel that we're nowhere near the bottom.

I wouldn't be surprised to see the Dow slip down to 3,000 or so--before this is all over.

I'm thinking that many companies--companies that have been around for a long time---will
go bankrupt and cease to exist. They won't survive this.

Many factors are causing the markets to fluctuate now. However, my limited understanding is
telling me that the biggest factor of corporate success--Americans willing to spend their dollars--
hasn't even hit rock bottom yet.

Americans are just beginning to tighten their belts. They aren't spending as they used to.
They aren't using their credit cards as much--because those cards are maxed out and because
they're scared--and paying them off instead. Furthermore, many credit-card companies are
freezing people out of credit. They're lowering consumer lines of credit--which prevents
new spending on the card.

Consumer spending is decreasing. However, it's going to decrease even more due to high unemployment,
small-business failures, uncertainty, and stock-market fluctuations that make people more nervous. Consumer
spending has just BEGUN to impact the markets.

I just don't see how we avoid a major catastrophe---with many iconic companies failing to survive this.

We've lost several major banks and the auto industry is crumbling. Do we really believe that Applebee's,
Hallmark Stores, Home Depot, Disney, Sony, Pier One and other mainstay retailers won't be affected? As
people switch from pricier brand names to generic at the grocery store--you have to wonder about the future
of companies like Kraft, Kellogg's, General Mills, Proctor & Gamble, Con Agra, etc.

[CrispyQ]

1. There was a brief story in our local paper about how many

high priced cars can be seen in the new super Walmart parking lot. At the high end mall, one of the anchor stores has been vacant for over a year & other stores are closing too. The rich are still shopping, but they are shopping at Walmart now.

I think you are right - this is just the beginning.

[SurfinBetty]

6. It's been that way for a while

There are always high priced cars parked outside wal mart. I haven't noticed anything different.

The anchor stores are empty because they have sucked for a long time. I've watched crappy Macy's swallow up all the other anchor stores. It was only a matter of time, anyway, since they were all starting to sell the same crappy stuff. Unfortunately Macy's sold the crappiest. When I Magnin went under I knew the days of department stores were over. People shop at small clothing stores now because they just have better stuff.

[cliffordu]

20. Please don't respond to the OP whatever you do.

[K Gardner]

10. My local Big Lots had a Jag and a couple Mercedes parked in front yesterday. we're nowhere

near the bottom.

[APPLE_PIE]

2. There is not enough money on Earth to buy the stock market.

The total money supply M1 and M2 is about 1.5 Trillion dollars. That's all the dollars printed.

The USA stock market is valued at about 28 Trillion dollars at today's prices.

There are not enough dollars anywhere to pay for all the stocks.

Doesn't sound good, does it?

[SurfinBetty]

3. It will recover

It may go down pretty low, but I think the standby companies will still be around. There will just be a few companies that have a LOT more market share and power than they do now. They will have no competition.

A lot of the big companies also manufacture the generics, too.

[caledesi]

8. Keep dreamin! NT

[NNN0LHI]

4. Even the experts are talking like a depression is possible

[ThomWV]

5. Yes, you are wrong. You need to keep in mind that there are actually resources backing stock prices

Buildings, land, machnes, all the apparatus of transportation, communications, packaging, and even the cash resources of the companies that are traded are still in existance. The point is that the companies who's stocks are tanking still have value no matter what the market thins of their share price.

[RaleighNCDUer]

14. Right. Remember how US Steel weathered the storm last time around? nt

[Subdivisions]

7. I watch two traders' forums fairly closely and the general concensus

is that we are going to experience a complete reset of our financial system - which I take to mean that everyone will eventually liquidate and we'll start over. So, your concern is not without merit.

[CoffeeCat]

16. Is your assessment that people who are...

...in the stock market now--riding it out--will eventually lose everything?

That's what I'm wondering. I see a massive plunge coming--but I don't see the stock market
emerging from the crash--as it went in.

Our economy was propped up on people spending rented dollars (credit cards, home-equity loans,
retail cards) for too long. That shifted aggregate demand upward and to the right---and it
held there for years. Our economy was puffed up on hot air for too long.

Now, that air is slowly leaking out--and forcing that aggregate demand curve back down and
to the left.

That's why I'm thinking that the stock market is not only going to plunge, but that entire
companies will disappear---and that original stock market value will never be reclaimed.

Yes, we will recover. Yes, America will go on. However, the landscape will have changed
significantly and people will lose invested dollars because so many iconic companies will
not survive this.

Is this not totally off the mark?

[Subdivisions]

17. Not off the mark at all, according to what I'm reading around the web...

In fact, over at tickerforum they're Bears and they've mostly decided to cash out and watch from the sidelines. They are predicting total structural failure of the global financial system - a complete reset. I suppose that those who stay in the markets stand the risk of losing everything. Major companies have already fallen and others like major airlines and General Electric and General Motors are on the ropes. We are in a deflationary spiral and if China, for instance, decides to end Dollar hegemony, it's all over. All in all, things don't look good at all for the foreseeable future.

[LeftHander]

9. Comparativly the bottom could be 2500....

If you look at 1934 and 2008 financial crisis.

Trading was slower then and it took more time for the market to bottom out...we will probably see the bottom...be much deeper. I think people are in denial....

[PDJane]

11. There aren't enough assets in the world

To cover the bloated stock market.

Moreover, the worth of those assets isn't fixed; if there is no market for them, the factories in China aren't going to help the balance of us HERE, pointing out the truly obvious.

[adigal]

12. A few weeks ago I went to TJ Maxx, a discount designer label

store and it was still jammed,

I went two days ago, around the same time as before, and there were 1/2 the people. I know I have been tightening my belt, only bought what was absolutely necessary.

[VWolf]

13. I'd be surprised to see it go below 7000

Then again, we're already in unchartered territory.

[Javaman]

15. jeez stop posting about things that matter! don't you know we are all obsessed with

some twit in pa that beat herself up?

don't make me come back there!

[TheWatcher]

18. You are wrong to think that TPTB won't use every criminal trick in the book

To manipulate it from happening, thus causing a bigger calamity than would have happened.

Otherwise, what's to argue with?

[TahitiNut]

19. As the price of gold (and oil) drops, the value of the dollar rises and the DJIA drops.

We're actually seeing some deflation (imho) ... which, I suppose, is an effect of tightening credit. As the 'money supply' (credit instruments) shrinks the value of the dollar (cash, M1) goes up. Watch for the Treasury to authorize more printing.

The value of non-liquid capital assets, however, go down as the ability to use those capital assets for production shrinks. That's what the 'fundmantals' of stock are all about -- earnings (as in P/E and such). IOW, company stock values goe down as the ability of the company to sell products and services (into a market with decreasing ability and willingness to pay) goes down. Food (agribusiness) would be a trailing stock - i.e. its value would decline later. (People need to eat.) Durable goods decline more rapidly ... since purchases of durable goods are most easily postponed.

It's gonna take a long time for the economy to recover from the failure of the financial system. The Enron Bandits (derivatives) are doing their damage and then some. And that's AFTER some 'bottom' is found. That won't happen for months.