Wall St. Down, Recession Fears Kick In

Yesterday's stock market gains didn't last through today. The Dow closed down today , due to fears of recession.

Two stocks that gained: Citigroup and Bank of America.

The AP has more on today's 200 point drop.

On a related note, GMAC told General Motors car dealers yesterday only people with credit scores above 700 will get new car loans. That's going to leave a lot of unsold cars on the GM dealers' lots. Cars the dealerships may own but be financing and paying interest on. How long can they hold out? [More...]

If the car dealerships go under, a lot of people will lose jobs -- not just in sales but in the service departments, including mechanics and the like.

While many car loans are now made through banks and credit unions, GMAC is still a pretty big player.

< McCain Offers Economic Plan: More Tax Cuts | House Report: Can't Assess Cheney Role in PlameGate; Stymied by Executive Privilege Claims >
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    Wall Street up. . . (5.00 / 2) (#1)
    by LarryInNYC on Tue Oct 14, 2008 at 02:25:51 PM EST
    900 points on Obama's economic platform speech.

    Down 200 points on McCain's.

    Just sayin'.

    It's kinda funny (5.00 / 0) (#10)
    by Steve M on Tue Oct 14, 2008 at 02:44:54 PM EST
    since Larry Kudlow and other GOP hacks have really been pushing this "the market is down because people are scared of an Obama presidency" over the last few months.

    I wonder if anyone asked Kudlow whether his theory was still operative after the Dow set a record on Friday.


    Ahh, (5.00 / 1) (#12)
    by andgarden on Tue Oct 14, 2008 at 02:46:59 PM EST

    Now, if only McCain can succeed in selling these measures. Especially the corporate tax cut, which should be sold as a middle-class consumer tax cut inasmuch as corporations pass along their tax costs to consumers in the form of higher prices. This is the key to selling the corporate tax cut. McCain's senior advisors tell me he has been briefed on this language, but so far it hasn't materialized in the debates. Perhaps it will Wednesday night.


    Yeah (5.00 / 1) (#14)
    by Steve M on Tue Oct 14, 2008 at 02:49:46 PM EST
    if you pay close attention, though, the McCain campaign has been successful in convincing some of the stenographers in the press corps to present their tax plan as something aimed squarely at the middle class.  Only when you look at it, you realize wait, how the heck does this help the middle class?  Only if you believe in discredited trickle-down crap.

    Kudlow's voodoo dolls are ready (5.00 / 0) (#17)
    by andgarden on Tue Oct 14, 2008 at 02:51:33 PM EST
    I don't know (none / 0) (#37)
    by Manuel on Tue Oct 14, 2008 at 05:11:58 PM EST
    A case can be made for lower corporate and investment taxes and higher individual taxes.  The problem is that the "free market" types only want the former.

    I love how Obama has been (5.00 / 1) (#16)
    by coigue on Tue Oct 14, 2008 at 02:50:52 PM EST
    smacking Reagan's trickle down economics lately, offering a direct to the middle class benefit instead.

    He even uses the term "trickle down" in a very sarcastic very effective way.


    That's a one of those Reaganomics' myths (5.00 / 2) (#19)
    by imhotep on Tue Oct 14, 2008 at 02:57:39 PM EST
    Do corporations ever cut prices?

    No (none / 0) (#29)
    by TomStewart on Tue Oct 14, 2008 at 04:10:53 PM EST
    but they down help shareholders and CEOs, so that's close enough.

    Do you think they won't raise them (none / 0) (#35)
    by coast on Tue Oct 14, 2008 at 04:36:45 PM EST
    if taxes are raised?

    Sure they would. That (5.00 / 1) (#42)
    by Radix on Tue Oct 14, 2008 at 05:52:45 PM EST
    doesn't mean they would cut them if taxes are lowered. Why would they? They can just pocket the money themselves after all.

    The Free Traitors (none / 0) (#43)
    by Pepe on Tue Oct 14, 2008 at 06:27:59 PM EST
    here will tell you they do.

    And for the few hundred you save a year most people lose thousands in income. That is supposed to be a good deal but you will have to have them explain to you why.


    That's a silly thing to say (none / 0) (#44)
    by Pepe on Tue Oct 14, 2008 at 06:30:58 PM EST
    The article and the diary cite recession fears for the drop today. Are you saying that the recession will not transpire because Obama will be elected?

    Nope. Just sayin'. (none / 0) (#48)
    by LarryInNYC on Tue Oct 14, 2008 at 08:59:29 PM EST
    After going up more then 10%, I would (5.00 / 5) (#2)
    by tigercourse on Tue Oct 14, 2008 at 02:27:19 PM EST
    have been shocked if it didn't drop the next day. Some people made an absolute killing yesterday, and they took their profits.

    This is the usual pattern (5.00 / 7) (#4)
    by Steve M on Tue Oct 14, 2008 at 02:31:00 PM EST
    just as historic crashes are usually followed by an up day, as people shop for bargains.

    Exactly (5.00 / 1) (#46)
    by Socraticsilence on Tue Oct 14, 2008 at 06:47:48 PM EST
    I think a lot of people over-reacted to the rise yesterday, the was a similarily massive rise following the 1929 Crash-- here's a hint: it didn't stop a depression.

    Actually (5.00 / 1) (#3)
    by Steve M on Tue Oct 14, 2008 at 02:30:20 PM EST
    the market closes at 4pm, so there is still about a half hour left.

    I know in the half-hour.... (none / 0) (#5)
    by kdog on Tue Oct 14, 2008 at 02:33:44 PM EST
    before they close the casino on a cruise ship as you approach US waters, everybody starts pressing and taking on more risk like a bunch of lunatics....is it the same at the Wall St. casino?

    Kinda sorta (5.00 / 1) (#8)
    by Steve M on Tue Oct 14, 2008 at 02:41:19 PM EST
    The last half-hour or hour of trading often sees some wild swings.  Also, this Friday is "options expiration Friday," which means that options trading gets more active and speculative as the deadline approaches.  So it will be an interesting week.

    The reality, though (which is instinctively understood by the sort of people who don't read the Wall Street Journal far better than those who do) is that the economy is slowing down and it's gonna be rough for a while here, regardless of what the market may do or not do on a given day.  Just because the Dow goes up 900 points doesn't mean millions of new jobs got created and bluebirds started singing.  The nightly news anchors always report breathlessly on the day's stock market performance as though that's the real story, when the market is really nothing more than an imperfect signifier of what's going on in the lives of real people.


    Trying to conjure up an image of (5.00 / 1) (#13)
    by oculus on Tue Oct 14, 2008 at 02:47:52 PM EST
    the kdog we see here on a cruise ship.  Very funny.  Kind of like Paul Theroux's description of the people he was on a cruise ship with in the Mediteranean.

    Pretty soon we'll all be in the Albania scene (none / 0) (#15)
    by andgarden on Tue Oct 14, 2008 at 02:50:50 PM EST
    with little kids pulling pens from our pockets.

    Pretty soon. . . (none / 0) (#23)
    by LarryInNYC on Tue Oct 14, 2008 at 03:44:42 PM EST
    we'll be in Albania with the kids trying to put pens in our pockets.

    I don't get it (none / 0) (#24)
    by andgarden on Tue Oct 14, 2008 at 03:48:02 PM EST

    And sending us candy. . . (none / 0) (#27)
    by LarryInNYC on Tue Oct 14, 2008 at 04:00:46 PM EST
    and care packets.

    Some days. Not today though. It's only (none / 0) (#7)
    by tigercourse on Tue Oct 14, 2008 at 02:39:25 PM EST
    down about 1%, which isn't panic selling.

    SELLLLLLLLLLLL!!!!!!!!!!!!!! (none / 0) (#6)
    by coigue on Tue Oct 14, 2008 at 02:33:53 PM EST

    It's usually a mistake (5.00 / 2) (#9)
    by Democratic Cat on Tue Oct 14, 2008 at 02:41:28 PM EST
    to attribute single-day movements to any one factor, especially one as nebulous as fears of recession.  The market goes up and down as a result of thousands or millions of individual buying and selling decision, and lately, who the heck knows how to explain any single day's change?

    One of the problems for GM (5.00 / 1) (#11)
    by andgarden on Tue Oct 14, 2008 at 02:45:04 PM EST
    is that a few years ago they started to build their cars to last longer than they used to. It was a response to the Japanese makers (who doesn't still see late '80s Camrys on the road?)

    But now people will keep their cars longer. And if you don't get approved for a new loan? Oh well, the 98 Caravan can keep chugging along.

    I drove my last two cars over 200k (5.00 / 1) (#18)
    by Jlvngstn on Tue Oct 14, 2008 at 02:53:32 PM EST
    and would not have bought the minivan in 07 were it not for the new babies.  I hope to drive the minivan until 2020.  I only put on 10-12k a year so i should be ok.

    Yes... (5.00 / 2) (#22)
    by MileHi Hawkeye on Tue Oct 14, 2008 at 03:37:30 PM EST
    ...GM should not be building cars that are of good quality.  They should stop that right away.  I mean, Toyota does that and look how far down the crapper they are.  Oh wait...

    Building longer lasting cars is the least of GM's problems.  Lack of innovation, being behind the curve in new/green technologies and a 1980's mindset are what's killing them.  

    People should keep their old cars longer--until they can actually afford to replace them.  Old fashioned values like living within one's means, deferred gratification and the like.  


    Um, who said that? (none / 0) (#25)
    by andgarden on Tue Oct 14, 2008 at 03:49:41 PM EST
    Personally, I wouldn't buy an American car. None fit my taste, and they're chintzy. But this is nevertheless a problem for them.

    I don't see the logic (5.00 / 1) (#28)
    by Steve M on Tue Oct 14, 2008 at 04:04:55 PM EST
    If a company makes crappy cars that tend to break down after a few years, the result will not be a buying public that keeps buying a new car from them every few years.  They'll just buy their next car from someone else.

    The Japanese forced them (5.00 / 1) (#30)
    by andgarden on Tue Oct 14, 2008 at 04:14:39 PM EST
    into making better cars. So their choice was to lose business because their cars were crap, or to lose business because their cars lasted too long.

    In some respects I think they got the worst of both worlds because they waited too long to make their cars not crap.


    Making a quality product... (5.00 / 1) (#33)
    by MileHi Hawkeye on Tue Oct 14, 2008 at 04:31:44 PM EST
    ...does not always equate to losing business.  It builds brand loyality, which translates into repeat customers.  People who buy something that lasts and gives them a good value for their hard earned money may not be replacing vehicles as often as the manufactures would like, but they do tend to stick with a good thing.  

    I agree (none / 0) (#34)
    by andgarden on Tue Oct 14, 2008 at 04:33:45 PM EST
    but without the cushion of planned obsolescence, GM will have to find more new customers.

    Don't forget about price/value ratio. (none / 0) (#39)
    by sarcastic unnamed one on Tue Oct 14, 2008 at 05:19:06 PM EST
    iirc, GM, Ford & Chrysler are all saddled with a sizeable (like $1000/car or something) expense for retired workers that US-made Toyota, Honda and Nissan autos, for example, are not.

    went from ford/gm in my teens (none / 0) (#31)
    by Jlvngstn on Tue Oct 14, 2008 at 04:20:14 PM EST
    to toyota and have never bought another brand (although I did lease a lexus for a spell).  

    Mostly true now (none / 0) (#41)
    by gyrfalcon on Tue Oct 14, 2008 at 05:52:16 PM EST
    but wasn't up until very recently.  Americans like new stuff.  Buy a new car, drive it two or three years, trade it in and get another new car. So for a very, very long time there was nothing to be gained by making long-lasting durable cars.

    If I was GMAC... (5.00 / 2) (#26)
    by kdog on Tue Oct 14, 2008 at 03:55:23 PM EST
    I'd forget about credit scores...they're basically worthless, chock full of errors the credit reporting agencies have no desire to correct, unless you're famous and could cause them bad pr that is.

    I'd look at the buyer...do they have steady income, do they have roots in the community, do they have a down payment...f&ck the crooked credit scores from the crooked reporting agencies.


    They also downrate... (5.00 / 3) (#32)
    by MileHi Hawkeye on Tue Oct 14, 2008 at 04:25:57 PM EST
    people who use cash as their primary means of purchase--people that do actually tend to live within their means.  

    Just because you don't believe in being in debt doesn't make you a bad credit risk.  Quite the opposite, really.  


    Damn.... (none / 0) (#47)
    by kdog on Tue Oct 14, 2008 at 07:56:17 PM EST
    Ya got me wondering what my score is...2?  Sh*t, or all I know somebody has run up a 100k marker using my SS...lol.

    Not that I care enough to find out...that's the money changers game, not mine.  I plan on paying as I go till I'm in the dirt...so freecreditreport.com can kiss my arse:)


    You can't buck the system (none / 0) (#45)
    by Pepe on Tue Oct 14, 2008 at 06:46:39 PM EST
    so you have to know how to navigate it. You can still have credit cards and build your credit up with them without going into debt. I helped my sister go from almost bankrupt from a divorce that screwed up her credit to a score of 702 in 14 months and she didn't go into debt doing it.

    As for GMAC as mentioned in the diary, they are not the only place to get financing. There are plenty of places that will finance people with less than a 700+ score. If people want to buy cars they won't be sitting on the lot as there are lots of options.


    You sound like Suze Orman (none / 0) (#49)
    by Militarytracy on Wed Oct 15, 2008 at 10:53:13 AM EST
    I stopped watching her a few years back when she started talking positively about and pushing A.R.M.s.  I turned the television off right there and I've never turned her on since.  I couldn't help having to deal with her the other day though when CNN ran her all over the place and she went on and on about how the medicines weren't working so the economy was going to be in ICU for awhile....she sounds utterly ignorant to me in the middle of this meltdown and her preaching about credit use is so inconsistent she is now pathetic.  The saving and spending practices of the masses is what cocreates the system we all navigate and to think otherwise is a fallacy.

    Suze Orman (none / 0) (#50)
    by Pepe on Wed Oct 15, 2008 at 12:07:36 PM EST
    knows what she is talking about when it come to credit repair. If she was previously pushing ARMS then she was obviously wrong on that one.

    According to the documentary Maxed Out (none / 0) (#51)
    by Militarytracy on Wed Oct 15, 2008 at 03:40:09 PM EST
    she has been on the payroll of credit card companies while preaching her preach.  When are credit card companies responsible for making the judgements about credit worthiness that they made?  We are about to find out.  Credit is a two way street though.

    Well if she has been (none / 0) (#52)
    by Pepe on Wed Oct 15, 2008 at 09:39:14 PM EST
    on the credit card companies payroll they must have been paying her to give good advice because that is what she has been doing.

    Which makes sense because the CC companies best customers are those who pay their bills and don't max out by spending over their head. Just as the beer companies advocate for people to drink responsible I wouldn't be surprised for the CC companies to help fund someone like Orman to spread the handle your credit responsibly mantra.


    Any guesses on the GM Volt? (none / 0) (#38)
    by Manuel on Tue Oct 14, 2008 at 05:17:40 PM EST
    It looks like GM must absolutely deliver on the Volt.  However, it isn't clear that even if they meet all expectations that it will be enough to save them.

    huh? (none / 0) (#20)
    by mindfulmission on Tue Oct 14, 2008 at 03:07:00 PM EST
    The Dow ended just 76.62 points down, which was only 0.82%.  That is nothing to worry about, and surely not a panic and doesn't really show fear.

    car dealerships and trickle down (none / 0) (#21)
    by Jlvngstn on Tue Oct 14, 2008 at 03:31:01 PM EST
    I said this 2 months ago.  We can keep talking bailout and stimulation and buying into the banks til we are blue in the face and it is not going to change one of the largest contributing factors to the awful spiral we are in.  

    Unless our leaders look at JOB creation as an emergency situation to fuel and stimulate the economy next year is going to be ugly.  The clock is ticking and unfortunately it is attached to a financial IED.

    Current Account Deficit (none / 0) (#36)
    by coast on Tue Oct 14, 2008 at 04:38:51 PM EST
    Learn it...live it...and be very afraid of it.  This will be the next bomb to hit our economy.

    The credit markets are the ones to watch (none / 0) (#40)
    by Manuel on Tue Oct 14, 2008 at 05:23:09 PM EST
    They are coming down very very slowly.  It looks like we have avoided the depression scenario for the moment.  The stock market has already priced in a steep recession so barring any disasters we should see less volatility in the weeks ahead.  However, if after a few weeks it starts to look like the interventions aren't working, watch out!