Friday, September 3, 2010

It All Happened Two Years Ago in September

and I still remember it as if it were just last month.

I don't like September. The US stock market sentiment seems to have turned on a proverbial dime for no rhyme or reason on Wednesday, September 1st, and it managed to hold the gain Thursday. And I'm highly suspicious. September is a bad, bad month.

Why? Because I am still traumatized by what transpired in September, October and November of 2008. It started with "nationalization" of Fannie and Freddie on September 8, 2008. Then all hell broke loose: Lehman Brothers went bankrupt, money market fund "broke the buck", AIG was "nationalized", Washington Mutual was seized and sold off to J.P.Morgan Chase, and global credit markets froze.

One year ago on September 8, 2009, I wrote this post:

It All Happened One Year Ago - September 8 (9/8/2009 EX-SKF)

"One year ago on September 8, Fannie Mae and Freddie Mac were effectively taken over by the U.S. government.

"These were the headlines on Investors Business Daily on the next day, describing the events on September 8, 2008:

• U.S. Takeover of Fannie, Freddie Still Doesn't End Troubled Saga
• Builders And Banks Rally Over Seizure of Freddie, Fannie
• Fannie's stock tumbled 90%, Freddie 83%
• Picture of anxious specialists on NYSE floor
• Lehman Brothers Down On Uncertainty: the stock lost 13%
• Delivery Firms Reduce Speed To Save Fuel: UPS eliminates left turn
• S&P cuts Wamu to junk
• Russian troops were still in Georgia

"Lehman Brothers and Washington Mutual were still with us. Not just homebuilders and banks but the general market rallied on the Fannie/Freddie news.

"For more on what happened one year ago, read my posts (Part I, Part II, Part III, Part IV)."

Now it's two years ago. It is almost miraculous that we somehow survived. Yes, yes, now more mainstream people are saying "end is near", not just Roubini (remember him?) and Celente, Schiff. But I feel the world we knew and the financial markets we knew died in September 2008; that was the end.

Whatever happens in this afterlife of a market, I hope I will not see the gut-wrenching 800 points plunge in Dow Jones Industrial Average every other trading day, I hope I will not see a stock sell off 70% in a week or the ghastly faces of floor traders and specialists almost reduced to tears on the NYSE. But such things would happen in a free market, which died.

Now only algo bots are capable of wrecking havoc, like they did on May 6. But if they do that again, the SEC will simply nullify the trades as if nothing happened.


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