Dow Lowest in 11 Years / Worst February Since 1933

So, here's a day for U.S. History

March 2, 2009:

Not since 1997 has the Dow fallen below 7000 - down 300 points just today, March 2, 2009! February 2009 was the worst February since 1933.

Friday, February 27, 2009, was also a market disaster, closing at 7063. There has been a 43% decline in the stock market over the past six months.

Several factors are believed to be responsible for the condition of the stock market, and they are as follows:

The credit crisis and subsequent recession that have cut over half of the average's value since hitting a record high which was above 14,000 in October 2007. It is now reported that investors fear that regaining the lost 7000 may take a painfully long amount of time.

No doubt that some of the freefall today can also be contributed to more government money being thrown at AIG. This in the wake of today's report from AIG of an overall $61.7 billion fourth-quarter loss, driven largely by continuing losses in its investments and in its Financial Products business. The Treasury Department revealed its plan today to support the ever-struggling AIG (AIG, Fortune 500) which posted a 2008 loss of $99 billion. Treasury said the latest restructuring in AIG's bailout -- the third since the company first received an $85 billion loan last September -- "will help stabilize the company, and in doing so help to stabilize the financial system."

The Dow Jones industrial average is down by 17% since Feb. 10, 2009, when Treasury Secretary, Tim Geithner, disappointed Wall Street with a vaguely worded financial stability package. Bill Strazzulo who is the Chief Market Strategist for Bell Curve Trading is reported as saying "As bad as things are, they can still get worse, and get a lot worse." Strazzullo is also of the opinion that the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively. The "game-changer," he said, will be the housing market and whether it can stabilize.

Warren Buffett stated that the market "will be in a shambles" for the rest of 2009 and probably well beyond 2009. Buffett is reportedly one of the wealthiest men in the world. He surely didn't get that way through uneducated guessing so why would someone so well-respected in this arena say something so negative? While Buffett may be speaking the truth, his statement will surely not cause investors to become more confident in their decisions to remain in the market.

And what is President Obama's role in all of this? For starters, there are items of concern for those of us who are worried about deficits and debts that can imperil the future of the U.S. The Obama Administration's assumptions with regard to economics include rapid recovery, with true GDP growth of 3.2% in 2010 and a hopeful 4% in 2011. We can all continue to hope the same. However, if the economy does not recover as quickly as the Obama Administration hopes (there's that word again), U.S. deficits and debt will turn out to be significantly higher than projected in the budget. To make matters worse, President Obama is not proposing to adopt additional measures that would help keep the deficit under some control by introducing discretionary spending caps or automatic reconsideration triggers for mandatory spending items and tax preferences. However, President Obama is also wanting to move some items from the category of discretionary spending to the mandatory column.

And what about oil today? Well, the cost per barrel dropped to near $40.00 as economic woes and concerns overwhelm a report that OPEC has nearly hit production cut goals. The cost of oil per barrel has been dropping for sometime, and yes, the cost of gas at the pump is down; however, am I the only one wondering when the consumer is going to get to benefit from such drops? The price per gallon is down and has been down from its near $4.00 a gallon range; however, just how far does the cost of oil have to fall before we can all pump gas for around $1.00 once more? It really wasn't that long ago when we did that, and I am just curious as to how much the price per barrel was at that time. The cost of gas is still near $2.00 per gallon. Only time will tell. Let's see what tomorrow brings for us all at the gas pumps, and everything else - for that matter.

Tomorrow is a new day, folks.