wylie
17th September 2001, 21:58
Ive had to explain this a bit to some people over here today....thought I'd share my synapsis with you in case anyone cares... ;)
In case you hadn’t heard, the US stock market fell about 7% at the close of trading. This is reportedly the single biggest fall in history. Here is a VERY simplistic summary (the “gist” of it).
1. Why? The single biggest influence on the market is confidence. No-one is going to put their money into something without a reasonable expectation of it doing well & getting a return (would you??). Take this to a larger scale. Confidence is down in the US at the moment. People simply aren’t spending. They are in a state of shock…..they are scared to travel, future looks bleak and potentially violent…….investors see this and go “eek – cant see me making any money out of this” and bail….(the market is a heartless b***tard)….it doesn’t even have to be true, just appear likely to be the case. This happens on a mass scale, people see the share prices dropping & get out to try & cut losses, everyone else follows suit, the market crashes. You can bet whoever orchestrated the attacks knew this. Amongst other things bin-laden is a very astute businessman. You can bet this was part of his idea.
2. What now? - Looks like a recession. The attacks happened at the worst time for the US economy. It was teetering above recession last week. This will topple it. (again – a planned effect). The Reserve cutting interest rates pre-emptively was a master stroke that avoided even worse damage (why is another story)
3. So what? Well…..recession means many things. First & foremost employment. Job losses start when businesses start to struggle & cant afford to employ people. Consumer spending further decreases (as overall there is less disposable income in the economy)…. investment in the US drops, it gets harder to raise funds for new ventures……all of this means less money in YOUR pocket. World markets actually fell before the opening of the US stock exchange (it usually occurs after), so the effect is global.
Will it improve? – of course...(markets here have picked up some ground already today)...….when?? hell…if I knew that I’d be filthy rich and number one genomer with a 30 gazillihertz farm of palominos!
Simplistic overview only guys – don’t use it for your economics assignment!
In case you hadn’t heard, the US stock market fell about 7% at the close of trading. This is reportedly the single biggest fall in history. Here is a VERY simplistic summary (the “gist” of it).
1. Why? The single biggest influence on the market is confidence. No-one is going to put their money into something without a reasonable expectation of it doing well & getting a return (would you??). Take this to a larger scale. Confidence is down in the US at the moment. People simply aren’t spending. They are in a state of shock…..they are scared to travel, future looks bleak and potentially violent…….investors see this and go “eek – cant see me making any money out of this” and bail….(the market is a heartless b***tard)….it doesn’t even have to be true, just appear likely to be the case. This happens on a mass scale, people see the share prices dropping & get out to try & cut losses, everyone else follows suit, the market crashes. You can bet whoever orchestrated the attacks knew this. Amongst other things bin-laden is a very astute businessman. You can bet this was part of his idea.
2. What now? - Looks like a recession. The attacks happened at the worst time for the US economy. It was teetering above recession last week. This will topple it. (again – a planned effect). The Reserve cutting interest rates pre-emptively was a master stroke that avoided even worse damage (why is another story)
3. So what? Well…..recession means many things. First & foremost employment. Job losses start when businesses start to struggle & cant afford to employ people. Consumer spending further decreases (as overall there is less disposable income in the economy)…. investment in the US drops, it gets harder to raise funds for new ventures……all of this means less money in YOUR pocket. World markets actually fell before the opening of the US stock exchange (it usually occurs after), so the effect is global.
Will it improve? – of course...(markets here have picked up some ground already today)...….when?? hell…if I knew that I’d be filthy rich and number one genomer with a 30 gazillihertz farm of palominos!
Simplistic overview only guys – don’t use it for your economics assignment!