Financial Market Update-Fri., Oct. 24

Can we call it Black Friday yet? Not yet. As soon as trading opened this morning, stocks fell sharply, but then started bouncing around like a rubber ball. So predictions of a 1,000-point DJIA meltdown haven’t come to pass–yet. As of mid-day, the index had lost a mere 380 points, or about 4.3 percent. The Nasdaq and S&P 500 were similarly off (3.8 percent and 4.5 percent, respectively). Stay tuned. Today, by the way, is the 79th anniversary of Black Thursday, the first day of panic selling on the stock market back in 1929, which turned out to be an ill wind that grew to tsunami strength in the early 1930s. Alan Greenspan was only three years old at the time, but if he’d been aware of the Crash, he probably would have expressed “shock.” Curiously, home resales in the U.S. actually rose in September, up 5.5 percent from the month before, and 1.4 percent compared with the same quarter in 2007, according to the National Association of Realtors. What’s going on here? Could it be that during a bubble, houses cost a lot, pricing a lot of people out of the market? Could be. According to Bloomberg, the median price of a house dropped 9 percent year over year. The downside of that, of course, is that such a fall will also cause a surge in defaults. There’s little enough good news these days, so here’s some schadenfreude to enjoy: OPEC is having a tough time of it, with the oil bubble continuing to deflate–fully $5 a barrel down so far just this morning, $40 all together in the last month. So far the cartel’s efforts to stop the collapse have been in vain. Too bad. Back to the bad news, at least in one economist’s opinion. Former Labor Secretary Robert Reich on the bailout, writing in his blog:” In other words, taxpayers are financing a massive effort to save Wall Street’s balance sheets from Wall Street’s previous off-balance-sheet excesses. It won’t work. It can’t work.”