CHESSNOID

Wow, today was a crazy day.  All the indexes closed down 3-4 per cent but the reason why they fell down is the scary part.  I always talk about the recession and global recession and how it gets worse everyday.  Today was one of those days that makes a lasting impression because the companies that collapsed and are in a collapse are giants.  When Lehman files bankruptcy and puts out 30,000 employees overnight, that does impact everyone.  To become laid off in this economy in this sector is the worse time.

If you were in real estate or construction one or two years ago, it was hard to get a similar paying job.  If you were in banking a year ago, I doubt most of those laid off found similar paying jobs. Now, investment bankers are closing doors or being swallowed up by other companies just for appearance’s sake.  The result is the same, more massive layoffs.  The majority of these people will not be getting similar jobs at this time.

This Lehman fiasco reminds me of Bear Stearns with the way their stock plummeted in a matter of weeks.  In turn, other giant companies became exposed today and their stocks took a beating:

Amid worries that the bankruptcy of Lehman Brothers and the sale of Merrill Lynch over the weekend might not be enough to stop the downward spiral, stocks fell sharply in the last half hour of trading. By the end of the day, the Dow Jones industrial average had dropped 504.48 points, or 4.4 percent, as a record volume of more than 8 billion shares traded hands on the New York Stock Exchange.

A concern hanging over the market is the fate of other financial companies, most notably the American International Group, one of the world’s largest insurers. After the Fed rebuffed a request by the company for a $40 billion temporary loan, federal and state officials worked on Monday to stabilize A.I.G.

The State of New York relaxed rules to allow the company to borrow as much as $20 billion in much-needed cash, while the New York Federal Reserve Bank was engaged in talks with JPMorgan Chase and Goldman Sachs on a $75 billion loan for the insurer.

Market participants fear that without a cash infusion for A.I.G., losses on its financial insurance contracts could cause a ripple effect that would damage other companies. Shares of A.I.G., already battered in recent weeks, plunged another 60 percent on Monday, closing at $4.76. Last year, the company had traded as high as $72.

As I post this, the stock market futures are gearing up for another down day.

	Dow	-149.00	-1.36%	10,800.00
	NASDAQ	-16.75	-0.97%	1,704.50
	S&P	-19.60	-1.64%	1,176.50

Usually after a down day like this, we have a bounce with all the bargain hunters. This slide may have spooked them. It is still possible to get a bounce, but more than likely the momentum will get us back down a couple more percentage points down.

As nice as it is to see Bush get ready to leave office, the other two candidates Obama and McCain do not instill any confidence that they can do a better job.  With the economy where it is at, they  both look like fast talking politicians who only know how to talk and spin lies.