Tuesday, September 16, 2008

What's that giant sucking sound...?

Editorial note- As many of you have responded with your own memories, and most of you did not have stocks then -neither did I. My own response to this crisis, aside from the sheer drama of the event, was involved in the fact that as antiquarian booksloggers we have, as customers, many folks involved in the financial markets. They lose money, we lose sales. That was my main concern as the story went forward. Obviously we made it to today, and NOW we have canned tomatoes and firewood... I also want to thank the several new MMB Commenters who shared their thoughts with us -Many Thanks!

Suddenly the stock market seems to have everyone's attention. Yesterday's 500 point loss was certainly dramatic, but represented less than 5% of the NYSE value, and it's what comes next that has really analysts worried. Suddenly everyone knows what AIG stands for.

The current brouhaha brought back my memories of a really impressive melt-down, that of October 19, 1987. On that Monday, the NYSE plunged 22% -to equal that, todays market would have to lose 2,400 points in a single day. Ouch.

I can remember exactly where I was on Monday, October 19th, 1987- I was on a train to Chicago, where I was going to attend a big book auction on Tuesday. I've never been crazy about flying, so Sunday evening I got on an Amtrak train and headed from Boston to the Windy City, planning to arrive sometime after lunch on Monday and go over to the day-before-auction preview.

Back in Ye Olden Dayes, of course, we didn't have cellphones or WiFi or anything, so when you were on a cross-country train you were essentially cut off from all news of the outside world. When I rolled into Chicago around 1 pm I hadn't heard a word of news all day.

I grabbed a taxi for a ride to the auction house, and got a chatty driver. This was one of the big-city fancy-schmancy auction houses, so I'd put on a tie, and was carrying a briefcase which had my jammies & toothbrush in it, so I probably looked like a disheveled bond trader or something. The driver immediately started making cryptic remarks about "what a crisis, huh?" and "ever seen anything like this before?".

In situations like that I have this odd reflex reaction of trying not to look stupid and playing for time until I can figure out what the Hell is going on, so I made a few non-committal remarks, and we were suddenly at the auction gallery.

I got out of the cab with the odd sensation that the world was ending, and everyone knew it but me.

Big city fancy-schmancy auction houses are not the sorts of places you go up to someone and ask "pardon me, but have you heard a newscast lately?", so I got my catalog and started previewing. All round me the gallery front-office staff, which at places like this is mainly composed of attractive, well-bred young women trolling for well-off art-collecting husbands, had a hushed feeling of dread. They were whispering things to each other like, "my fiance sold all his positions this morning but we got wiped out anyway," and "well, my boyfriend works at the Board of Trade, and he says this could be the end of it ALL".

hehehehehe... I thought- I got to get me to a radio...

...and I eventually found one, playing softly in one corner of the gallery. The newscasters were using comforting phrases like "the worst disaster since the 'Crash of '29".

At times like that I am thankful that my business of buying and selling century-old books lends me a certain long-term perspective on such things. Well, the books and a few stiff scotch-and-waters did, anyway. And the good news was that on Tuesday everyone was completely spooked and I got some good buys at the auction.

And, of course, the markets went back up eventually. So a 500 point drop, or even a 1,000 point drop isn't something to worry about. It's that AIG thing that has me hoarding canned goods and being thankful we have 4 acres of cuttable firewood out back.

And I'm staying off trains.


Malicious Intent said...

See, this is why it is so nice not to have any money, I cannot loose any. We are just slowly digging in our basement for our new bomb shelter and are gradually stocking up supplies. It's the new rage these days.

Knight said...

October 19, 1987 I was four. I have no input on that moment in time. All I know is that learning what AIG stands for has made a significant impact on my life.

Malicious Intent said...

I was a junior in high school and our POD teacher was prolly the only guy I saw that was EXCITED over this misfortune for millions.
He thought we would learn from this very important moment in "History" and so we all had to start roll playing as if we were on wall street trading stocks.

He obviously didn't loose any money or I think his excitement would have been slightly dampened.

Phoebe Fay said...

I don't even pretend to understand all the implications of this, but I know it's going to be ugly. Very, very ugly.

Hungry Mother said...

During that 1987 thing, I was getting ready to take a 8 month sabbatical to Cape May. I had no stock and the company where I was consulting didn't have any problem, so I wasn't directly affected.

Doug P. Baker said...

I too remember exactly where I was when I learned about the enormous drop in '87. I wasn't quite homeless, because I was alowed to sleep in the back room of a used clothing store. But I had nothing else. I was outside of the store in the late evening admiring the fish swimming across the computer screens (stone-age screen savers) in the window of a tech store, and a friend came by. He told me about the stock market, which was as foreign to me as soap is to a deadhead. Once I understood that rich people were becoming suicidal, we both had a good laugh.

But it recovered, as all the rich people should have known it would. So, now that I have a little money in the market, via my retirement account, I don't worry about little ups and downs. Over the long haul it is a better place to have your savings than any bank! I'm still a bit poor, but I'm not a bit worried.

Beach Bum said...

What I'm puzzled by is the sheer stupidity that lead highly educated men and women in the financial industry to act like third-graders with money stolen from dad's wallet. AIG carries the contract to manage the 401k accounts at my work. Today a massive email was sent out at work assuring everyone that AIG's problems were not connected to the 401k's. Needless to say many voiced doubt over this assurance and began transferring their money, sort of a minor localized bank run. I wonder how much more of this banking trouble might it take to start a old fashioned nationwide run on the banks?

Oh, yeah in 1987 during that stock crash I was in West Germany on that REFORGER. Got so worried that I found a pay phone, called collect home to Georgetown to check on my grandfather who I was worried about for various reasons much too long to describe, who promptly cussed me out for calling him collect from "F**king Germany." Once I got back to the states he apologized since he said the call only cost ten bucks, which I paid him back.

Malach the Merciless said...

The market is like playing the slots nowadays

pissed off patricia said...

I remember that day too. We had very little in the market at the time so it didn't scare us the way this present thing does. Now the govt has given a loan to AIG so we'll see who shows up with the empty tin cup next.

Colonel Colonel said...

MI: I had no stocks then either. Have next to none now. Gotta visit your blog- am trying to make money now, but times are hard...

Knight: Oh, you child, you. sorry- I still find it hard to believe you and my cousin are old enough to have kids. Fuck- I'm not old enough to have kids. But welcome to MMB. Please keep checking in!

MI: At the time, my excitement for high school, juniors (me being 25) oh, never mind..

Phoebe Fay: It's all ugly. Gold coins are apparently where John MCcain kept his money...

HungryMo: Good to hear from you -my apologies for not visiting.If GW Bush's economy was in better shape, I'd be everywhwere...

Blogger Doug P. Baker: Great story! welcome to MMB! And please, keep coming back.

Beach: I was 25, and called my mom and dad to make sure they were ok.

Malach: Bet on "TILT!!!!"

PoP: You are another blogger I have not been visiting as i try to buy oil for the winter- but thanks for stopping by, and I'll be back!