Bailout up, market down
After the first attempt at a bailout failed on September 29, the Dow Industrial Average dropped about 780 points.
Newspapers, politicians and pundits across the country took it as a sign that we needed the bailout. Voting "no" had caused the "largest" single-day fall in U.S. history, we were told.
The recovery on September 30 was, we are told, the result of negotiations that Harry Reid was leading to push the bailout legislation through the Senate. On the day the Senate voted yes on the bill, Wall Street was rather quiet. But on October 3, the day the House passed the bailout, the stock market tumbled 158 points.
The fall continued.
October 6 – down 371 points
October 7 – down 508 points
October 8 – down 179 points, despite international banking efforts to increase liquidity.
October 9 – down 682 points, which, by the way, as a percentage of the Dow Industrial Average (7.36 percent) was a larger fall than September 29 (6.98 percent, and neither is anywhere close to the largest single-day fall in U.S. stock market history).
October 10 – At the time of this posting the market was down another 380 points. Today, almost half of the stock market's losses in the last year can be attributed to this past week.
If the 778-point stock market decline immediately after the bailout failure was evidence of the need for a bailout, what does the more than 2,000-point decline in the week after the bailout passed suggest?