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The DOW – Almost down 22% to 8,300 on Sept. 18, 2008

The Great Depression - 2008

The Great Depression - 2008

The market was 500 trades away from Armageddon on Thursday, September 18. 2008.

Had the Treasury and Fed not quickly stepped in with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level – a 22 percent decline!

According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.

The panicked selling was directly linked to the seizing up of the credit markets – including a $52 billion constriction in commercial paper – and the rumors of additional money market funds “breaking the buck,” or dropping below $1 net asset value. Continue reading The DOW – Almost down 22% to 8,300 on Sept. 18, 2008