CHESSNOID

This has been a crazy month to say the least and were not even at the half way mark.  There seems to be a lot of financial chaos both here in the states and abroad.  October is not just a scary month because of Halloween but because that is when we had our biggest stock drop in history.

According to the NY TImes:

The market has been down every day this month, but it has not been a straight road down. The intra-day volatility has been extraordinary, a signal of the total uncertainty that has gripped investors as they ponder whether the latest government move will stem the credit crisis.

Another way this is different is that the 1987 crash brought prices down from levels that were not very far from their record highs, set in the previous August. Investors were stunned, but they had not felt badly before prices plunged. At the close Oct. 19, the S.&P., was down just 7.2 percent since the end of the previous year. By the end of December, the index was up 2 percent for the year. There was no recession.

This time, we were in a bear market before the October plunge began. Since the peak last Oct. 9 — a year ago today — the index is down 42 percent.

This year, there was a recession under way for the entire year — I believe — and by the time the crash began there was no doubt that the economy was in decline both in the United States and overseas.

Even more frightful than our stock plunges is news overseas that I haven’t figured out how it will affect us. I know the US Treasury is looking into nationalizing our banks in hopes of instilling confidence her. But abroad in Iceland the government is in dire straights and has already taken over their banks because the country may be bankrupt. Courtesy of the global recession we sparked from our housing crisis.

Oct. 9 (Bloomberg) —

Iceland may ask for a loan from the International Monetary Fund in addition to opening formal talks on Oct. 14 to borrow as much as 4 billion euros ($5.49 billion) from Russia, Prime Minister Geir Haarde suggested.

Loans from the IMF and Russia “are not mutually exclusive,” Haarde said at a press conference in Reykjavik late yesterday. Iceland has “discussed several things” with the IMF, he said, “but we have not, at this point at least, asked the IMF for a standby facility or an economic program.”

Iceland’s banking system is buckling under the weight of debts equal to 12 times the size of the economy, with financial regulators now in charge of the second and third largest lenders, Glitnir Bank hf and Landsbanki Islands hf. As the crisis mounts, the central bank yesterday gave up an attempt to fix the exchange rate, indicating it is powerless to halt the slump in the krona.

Iceland may ask for money from the IMF after failing to get “the response that we felt that we should be able to get” from European governments and central banks, Haarde said.