I am spending my vacation in Mexico reviewing my notes. One cites The Economist as saying that on 16 August, 2007 the US Markets were on the edge of panic. I seem to recall some of the whys. GM releasd dismal number, Ford was worse, subprime portfolios were found to worth much less than thought.
How was the market near panic?
What was done to prevent the panic from taking hold?
Who acted to prevent the panic from spreading?
According to this .pdf, a 0.5% cut in US official rates helped to boost investors’ confidence in September, and quelled many of the tremors. Don’t ask me what all that means, I know squat about sharemarket stuff, sorry.
Thank you both.
Can anyone else explain this in tiny words? The total drop does not seem to be a panic. Of course the drop over that week was worse, and the CountryWide story seems to have spooked people.
People above gave some of the detailed effects. However, the root cause is that August 16th is the day that Elvis died and people tend to be especially edgy around that time.
Then the thread left the tracks. It rolled over twice and began to burn.
A number of credit and finance investment companies have completely self-destructed here over the last two years or so, taking millions of dollars of invested money with them, including the dosh of ordinary folks. Probably because the modern world is funded by all those digital, non-tangible dollars and cents in the financial credit markets – anything putting that system into jeopardy can cause panic. The Fed had to back up a lot of those credit promises to calm things down again – but a lot of that back-up wouldn’t have been in hard currency either.
All a bit of a worry. 