With banks loaning money willy-nilly for over a decade, it's no wonder we (U.S. market) is in a crisis right now. You haven't heard me say much about the stock market ever since I bought put options on Garmin and it went to the moon. I lost over $2000 which represents about two months of my allowance for living expenses. It was a huge blow to me and I tucked tail and went off to the corner to watch the market. I learned never short a stock you love. Garmin did eventually start going down and when I thought there was an adequate correction and it was trading at a fair value, I bought stocks in Garmin. The stock price has been slashed in half since I purchased those stocks. That's how it's been going... not good to worse.
My little petty stock losses are nothing compared to the millions of people losing their homes, businesses, and their retirement funds. It was announced today that JP Morgan Chase has swooped in and bought out Washington Mutual ("the largest banking failure in U.S. banking history") at a bargain basement price. I used to have a home loan with WaMu. Now, I'm debt free and have no bills except for the monthly stuff like electric, telephone, water and cable. (That spells 'FREEDOM' to me).
When the PRESIDENT OF THE UNITED STATES keeps making televised statements about the financial crisis, you know the problem has reached the red alert level. It's serious but no one listened to Jim Cramer 15 months ago when he was ranting and raving on CNBC (the clip is on YouTube) about the impending fall-out ("THEY KNOW NOTHING" - JC). Cramer saw it coming.
The domino effect could happen if something is not done fast. I'm too young to remember the 1929 rush on the banks and the banks closing their doors. Now, we have laws and FDIC insurance to help people sleep better at night but could it happen again?
Is this just a new form of terrorism? Bailout or bottom out? or both.