black monday on the stock market

what a day for the stock market worldwide. First the statistics:

AEX Index	323,55	-8,75%	S&P 500 Index	1111,68	-8,35%
Dow Jones Indus. Avg.	10404,71	-6,63%	Nasdaq Composite	1983,73	-9,14%

so finally with all the talks of government bailout, we are on the right track. The market is really a different creature. It senses what is going to happen and responds accordingly. Rightly has it been said that the market lives in the future. Even before the bill for bailout of the US housing crisis was rejected by the US senate, the market took a downward plunge.

The AEX index has still to go way down. In order to complete the head and shoulder pattern with neckline around 389.98 (with high of 562) it has to go down to 217. That will complete the move and hopefully end the market downturn. Today's move is only the beginning. It may not be a linear slide but slide it shall be. I hope not, but be on the watchout.

EU is more leveraged that US. US economy's debt/GDP ratio is only 38 whereas of the EU region is more that 60. Moreover the EU is not so tightly knit as US. that might complicate the unwinding process. In the past EU has overcome their cultural barriers and acted alone, to make their single currency. How well they act now to save the economy will prove the future of the EU as a whole. It is these times of crisis that breaks or makes bonds. Bonds forged in troubled times make for a bright future. These are times of consolidation and is good for the economy as a whole as it flushes it clean. All the junk created by greed of people needs to come out to the open.

Given the US precedence it will be hard to restore confidence of people just by bribing the wall street or the european stock market. Liquidity is one thing and confidence another. Confidence is brought about by strong leadership which lives up to the promises it makes. This is what was missing in US. Europe is different but given the size of exposure to what has happened in US and the strong interrelationship of US/Europe it will have to suffer as well.

The huge wave which hit the US shore has now finally arrived here. Damage will be done but the strength and tenacity of EU nations will surely live up to the crisis that faces us.

Every such crisis has a huge positive side. That is it consolidates the industry and teaches us to avoid excesses. Mother nature does destroy but finally for our own good ......