Black Friday – well, almost, when the Dow opened with breathtaking plunge of nearly 700 points during the first 5-minutes into trading hour. The much monitored index was whacked to as low as 7,884 before recovered to above 8,000. Somehow I believe the authorities had their hands in this sudden recovery, not that it’s anything puzzling considering Friday’s closing was the seventh day of straight triple-digit loss. The Dow was bashed again at from 1:50 pm to 2:50 pm when the index tried to dive below 8,000-level after Moody’s warning that Morgan Stanley’s (NYSE: MS, stock) and Goldman Sachs Group Inc.’s (NYSE: GS, stock) long-term debt ratings might be cut. At the closing the Dow was down 128-point only with a huge swung of about 1,000 points from its low to its high *applause*.

Some stock market players immediately raised the buzz that the bottom is forming simply because it appears there was a strong support at 8,000-level. On the other hand there’re analysts who believe it’s not easy to call the bottom as it takes time for the U.S. stock market to recover. I think it makes perfect sense to believe the market has yet to find its’ bottom. It’s like how the Malaysian were being bullied by the Barisan Nasional ruling government for the last 50-year and yet the voters still voted in the bully to become their master and guardian. Year after year mismanagement and corruptions were getting rampant but the stupid Malaysian chose to close one-eye and voted the same corrupted parties as the government. Only after the nation’s coffer is out of money and the arrogant government raised fuel hikes until the people couldn’t take the heat did they retaliate.

It’s the same with the current U.S. stock market crisis. Banks took the risks to become sub-prime lenders lending to unqualified borrowers in the name of profit and business growth. As long as the financial institutions reported good quarterly growth their stock skyrocketed. The top management was treated as God and huge bonuses were paid for job well done. When it burst this is what we’re getting. And the more the government tries to rescue or bail out such lenders (banks), the more people wouldn’t listen – just like how Malaysian has the perception that the current ruling government is too corrupt to be trust. It takes time for the sell-off (stock market) to cool down, the same way the Malaysian government needs time to reform (if they ever do). Another analyst even predicted that the U.S. stock markets might test S&P-500 low of 800-point and the Dow at 7,300-point before we can see clearly if the bottom has been hit *whoa*. There’re even calls that it’s not too late to sell now.

Another reason why I believe the bottom is still quite far below is the fact that such crisis will not infect financial sector alone. We’ll soon see the chain-reaction and it seems the next immediate sector is auto industry with 100-year-old General Motors Corp and 83-year-old Chrysler LLC talking about merger possibility. All this while we were being fed with the mortgages problem but nobody talks about the hidden time-bomb – credit-card debt, which amounted to a whopping US$950 billion outstanding. Prepare for another round of financial crisis when this credit-card melts and should this happens, banks such as Citigroup Inc, Bank of America and JPMorgan Chase will not be spared.

The other day I had a conversation with the boss of an electrical shop as I was thinking of getting a plasma TV after my sister got hers. It would be fun to play my PlayStation on that big flat screen. I asked the boss how was the business during the recent Hari Raya festival and since his business was mainly targeted at the Malay-Muslim, his feedback would be a good yardstick. He cried that this year his business dropped by 30% compared to previous year. But he grinned when he related the story of his good friend whose business is in car accessories that dropped by 50 percent. Assuming what the Second Finance Minister told us about Malaysia will not go into recession is true, the above story about domestic business should suffice for politicians to stop lying about the true picture of the country economy. Domestic economy is insufficient to move the nation’s engine, stupid!

With Jakarta Stock Exchange frozen in the fridge, Japan’s insurer Yamato Life Co Insurance and Co in bankruptcy and Iceland financial system collapsed to the extent that the country may go bankrupt herself prompting the Iceland’s premier to tells the nation to go fishing instead, there could be more fireworks from countries such as:

• Indonesia – stock fell by 21 percent in three days,
• Vietnam – inflation of 21% and currency depreciation),
• South Korea – currency (Korea won) lost 30% value against dollar since early of the year)
• Pakistan – central bank’s foreign currency reserves fell to US$5 billion only),
• Argentina – inflation of 28%),
• Turkey – huge foreign debt),
• New Zealand – currency (Kiwi dollar) lost 28% value against dollar and is in recession
• Hungary – huge foreign debt exceeding 80% of GDP)

And to think that the dreadful “Mahathirism” will be back haunting us again with his shadow dictating Najib in the daily administration and policies, the old dictator might just play with his favorite toy again – repeg the ringgit against dollar again, not to mention more bloggers would be dump into the toxic site. So far we’ve witness the stock market tsunami. Will we be able to see the political tsunami this year? Life during weekend is definitely boring without Anwar’s stories, never mind he flip-flop imitating Badawi’s dance.

Other Articles That May Interest You …

• Panic Selling Continues, first Stock Exchange to be Frozen
• Cash is King but do you have the bullets?
• Tsunami Politic Tsunami Stocks, waiting for Perfect Storm

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October 11th, 2008 by financetwitter

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