Panic Subsides, But for How Long?
By: Rick Ackerman
Friday, 7 May 2010
The panic we’ve all been waiting for hit like a tsunami yesterday, sending the Dow Industrials into a thousand-point dive, 700 of it occurring in under ten minutes. We’d warned of this just a few days ago when we wrote that the market was “vulnerable to a sudden, even spectacular, selloff.” Yesterday’s selling was indeed so ferocious that it might have gone on for another thousand points if not for Mr. Market’s addiction to round numbers. With the Dow down almost exactly a thousand points, the broad averages turned from their lows like a cattle stampede encountering a wall of fire. We should consider it a warm-up for the real panic that surely lies ahead. Thursday’s hysteria will be just a sound bite by the time it is replayed on the evening news, but when a truly destructive panic finally hits, it will run its course on Main Street as well as Wall Street. Safeway shelves will be stripped bare as quickly as stocks were stripped of value yesterday afternoon, and branch banks will run out of dollars before even a half-dozen customers have had a chance to deplete their accounts.