Black Monday, How Does it Compare to Today's Economic Crisis? From an Insider Who Lived Through It

My wife, Susie, and I were walking on the beach this weekend and the subject of "Black Monday" came up. All of a sudden I was thinking back to what had happened to cause such a precipitous drop in the stock market. Whatever it was I remember feeling good about the fact that we all went through, learned from it, recovered, and actually things were much better for an extended period of time because of it.
Looking back to Friday, October 16, 1987, the Dow Jones Industrial Average dropped just over 100 points. That is considered just a sneeze today, however, consider that the Average stood at about 2,200 at that time. A 100 plus point drop was significant enough so that everywhere we went that weekend, people were talking about it.

I remember thinking at the time, although it was a big drop - about 4.5%, when Monday morning came, things would get back on an even keel, and "the market" would begin its climb back. Well needless to say I was wrong, really wrong. It seems that not only everywhere my wife and I had been over the weekend everyone was talking about the market, everywhere everyone went, they and everyone else was also talking about "the market".

Monday morning arrived none too soon for me and all of the optimistic stock brokers. After all, the first 100 point gain on Wall Street had been in August of 1982. The first return and close back over 1,000 had come near the same time (the market had closed above 1,000 in the mid 1970's and had not closed above it again because of a prolonged recession). We, as stock brokers all knew that everything would be O.K. and "the market" would rebound.

Well of course, that didn't happen. As a matter of fact the New York Stock Exchange was open for less than an hour and WHAM! Down over 100 more points. And that was only the beginning, by the end of the day the Dow Jones Industrial Average had dropped another 500 plus points. Monday October 19, 1987, became known as "Black Monday". Think of it, people who were fully invested in the stock market lost as much as 25% of their net worth practically overnight.

Reform came on the heels of "Black Monday". The type of reforms that almost "guaranteed" that this kind of catastrophe wouldn't, or better yet, couldn't happen ever again. So what happened? What went wrong?

Back then, the stock market gradually regained its lofty closes above the 2,000 mark, although it took over six months for the economy to stabilize. The new regulations seemed to bring about more confidence in the "system" from the public's perspective, and more order in all of the financial markets. What has happened since that time until now is different.

There appears to be more greed on Wall Street for starters. Add to that the loosening of regulations, the dramatically falling value of the dollar, real estate values which plummeted over a year ago and have yet to recover, foreclosures at all time highs, a $700,000,000,000.00 bailout which was basically forced on the American public as part of a plan to clean up for the errors of corporate America's and regulator's failures and well, what do we have?

We are already in a recession regardless of what the Federal Government says. I foresee the economy falling deeper and wider into the recession. Deeper meaning more bank failures, more lost jobs, more foreclosures, more time before real estate prices begin to rise, and your purchasing power steadily declining with the reduced value of the dollar. Wider meaning that eventually this recession will be very broad in scope as far as the number of people's lives it touches.

The same two questions keep coming back to me. The first is somewhat rhetorical, and that is; haven't you seen this coming for a long time? The second is simple, given all of these conditions, what are you doing to secure your and your family's financial future?

George L. Kenney has a BA in Economics and career of twenty five years in financial services, including the past six in the mortgage industry. He is now a successful online marketing professional, with a passion for serving others and helping them realize their dreams. He will help you learn how to leverage your time, money, and technology to put you on the fast track to success. To find out more about his team and the Marketing Mentors Program Click Herehttp://EzineArticles.com