Wall Street Calamity: Stocks Crushed in Financial Freefall

Stocks are Crushed in Financial Freefall

“Stocks crushed,” is how CNN Money, employing all the descriptive restraint that it could, sees this morning’s disastrous economic landscape. The Dow Jones Industrial Index’ record 777.68 points (7%) drop yesterday was “the biggest one-day point drop in [its] 102-year history,” writes the Wall Street Journal. Washington “lawmakers groping for a resolution…..as they attempt to avoid economic calamity,” writes the New York Times, with all the urgency that two-thirds of the House Republicans and some 40% of the Democrats failed to muster yesterday.

At the same time, the banking industry continues what the Wall Street Journal is calling “a decade’s worth of consolidation in a matter of weeks.” Yesterday it was Citigroup’s turn to swoop in on some distressed financial institution, with its government-brokered takeover of Wachovia’s banking operations for $2.2 billion in an all-stock deal. Wachovia, the nation’s fourth-largest bank, wasn’t on the point of collapse but the government intervention based on its deteriorating condition – and the threat that posed to the teetering U.S. financial system – hammers home how “quickly once-mighty U.S. banks are succumbing to a growing mountain of bad mortgages and other loans,” says the Wall Street Journal.

Clearly, then, the headline from the world of politics and economics for today seems fairly self-evident: in the wake of the House of Representative’s failure to pass a bailout package for Wall Street, the Dow dropped by the largest point margin in any single day in history.

But as Sam Stein points out in The Huffington Post, that number told only half the story. Indeed, much of what transpired on Wall Street and in the halls of politics put a bookend on what now seems to the final – poor – chapter of the Bush administration’s economic record. On Monday, the Dow finished lower than when George W. Bush assumed the presidency: 10,587.59 on January 19, 2001 compared to 10,365.45 at its close on September 29, 2008.

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