DOW Drops Over 800 Points WHILE You Are Bailing Wall Street Out.. Again
As of Wednesday evening, 10/2/19, the DOW had tumbled by over 800 points in 2 days. On Tues, the DOW declined by -344 points, followed by a decline of -494 points on Wednesday.
Of course, we have seen even greater declines in less than the past single year. However, circumstances are highly important in this case and the implications are grim.
The decline this week is concurrent with the Federal Reserve pumping $75 billion PER DAY into the market to prop it up. I already covered that in this previous article, https://medium.com/@russellmeyers_35963/you-just-spent-300-billion-to-bail-out-wall-street-and-that-cost-just-started-8216d726a4dd
Yet even that is not all the Fed is doing to save banks and corporations. In the same time frame, they have been offering short term loans to unnamed banks to the tune of as much as an additional $100 billion PER DAY. The reason they are offering these loans is because the banks borrowing the money are literally at risk of default and closing their doors.
All of this is happening after the Fed reduced the core interest rate a SECOND time on 9/18/19. The first reduction brought the core interest rate to 2.0–2.25%. The most recent reduction brought the core interest rate down to 1.75–2.0%. This was done, we were told, to improve the economy. Less than a week after the most recent core rate decrease, they determined it was not working.
As I detailed previously, this bailout is in the early stages and with only the $75 billion per day amount, the total pumped into the repo market stands to exceed $1 trillion in only three weeks. This does not include the $100 billion per day being loaned to unstable banks. That program does not have a set time frame of continuance. Nor does it appear to include a contingency for what happens if that step fails and we see banks default. We have no idea which banks or how large those banks are.
The other thing these Federal Reserve actions do not do is help the actual economy. They do not create jobs. They do nor preserve existing jobs in real terms. Chances are the corporations and banks receiving assistance are currently in the process of laying people off or will be in the very immediate future. That’s what companies do when they run out of liquidity.
Hewlett Packard has announced 7000 to 9000 layoffs over 3 years.
Lazard Asset Management is laying off 7% of their global workforce.
Freightliner laying off 900.
Kroger laying off hundreds in middle management (living wage jobs).
Con Security Systems laying off 699 workers.
Ironically, WeWork has announced likely layoffs, Bloomberg estimates as many as 2000.
UAW workers remain on strike from GM.
Ford has laid off 25,000 workers in the past year.
Bank, asset management and financial management instability is not new or localized to the US. Deutsche Bank earlier this year laid off over 20,000 workers globally. Again, these were living wage jobs. DB still remains highly leveraged and in debt.
Can you even conceive how things would look if workers were being bailed out instead of corporations and banks?
While the first impulse of many is going to be to blame Trump exclusively, that does not capture the picture accurately. These events have been building for over a decade. The only entities that have been bailed out have been the same entities being bailed out right now. Economic instability is global, which cannot be ascribed to Trump.
The indications of the stock market continuing to decline in spite of the money being “printed” to bail out unstable and failing entities has one indication- That if this bailout were not occurring, the stock market decline that we are seeing would be an epic crash right this minute. Which means that the crash IS actually happening right now, it is just being hidden from view.
While the stock market has made a partial recovery since the 800 point drop is not a good sign. Very much the opposite. With the amount of money being dumped into the market, the stock market should be soaring to new heights. What we are witnessing is a market treading water before going under. That can only happen for a limited period of time and that time has become very short.