Insights Leading Up to the October 2008 Stock Market Crash

The following are excerpts from a series of private emails I wrote during the period  December 2007 through September 2008, foreshadowing major events of global proportion that would impact the financial markets. The “Crash of October 2008” officially began on October 6th of that year, but some accounts state that the crash actually began on October 1st and continued principally through October 10, 2008, when the market would drop a total of 2,399.47 points, or 22.11%. The extreme volatility continued for a time longer with another dramatic decline of 312.30 points on October 24, 2008. According to money-zine.com, the source of this market information, the 1929 and 1987 crashes also occurred in October, a fact of which I was completely unaware as I wrote these emails beginning in December 2007. There were already concerns about the markets being expressed in 2007, and it was  questions about those concerns that triggered the intuitive information. I didn’t come up with all of this information (much of which remains private and undisclosed) in a vacuum: the handwriting was already on the wall by the time I began this series. Often I knew nothing about current news events, however, and was “writing blind.”

What I wrote was intuitive, often metaphorical, and often a surprise to me. This is a perfect example of the power that hindsight gives to intuitive information. Much of what I wrote at the time made little sense to me at the time of writing, but poured out with a certain intensity that cannot be fully grasped when reading the text now, some three and a half years later. For money-zine.com’s account of the crash timeline, go to http://www.money-zine.com/Investing/Stocks/Stock-Market-Crash-of-2008/
For a timeline on about.com, go to http://useconomy.about.com/od/Financial-Crisis/a/Stock-Market-Crash-2008.htm

From a private email, 2 December 2007 written over 3 months before Bear Stearns went under in March 2008; 9 months before Lehman Brothers collapsed and Fannie Mae and Freddie Mac went into conservatorship in September 2008; and 10 months before the formal “crash” of October 2008.

“Guilt and blame no longer matter, whether directed at the poor whose backs are broken, or at the rich who loaded them up for bear. The only issue now is the discovery that backs big and small litter the streets with their charges, their burdens. Who is left to clean up the streets when all backs are broken and no one can wield a broom?

That is the moment of bottom, when all drop to their knees at the same time, forming one large net and holding hands across the globe to catch the remaining items before they are trampled on the street or dropped into the ocean.

When all hands are joined together to form a safety net, there are no fingers left or available to point. Turnaround can begin in earnest.”

From a private email, 10 December 2007:
“Something happens that, had it not happened before, would have been surprising. It is not that this is a repetitive cycle, exactly; rather it is that some event or series of events that, while rare, has happened before in recent history and is therefore less of a surprise than it ordinarily would or might have been.”

From a private email, 20 December 2007:
“This is the way of the world: the way of the world that we know ends for the time being. The phase is a rather protracted one and takes its toll on many who would otherwise or normally be untouched. The poor will remain so and will notice little change. This time the change affects the wealthier among us, who [come to] understand the nature of poverty and the close line, the fine line, between having much and having nothing.

The belly and heart of the world soften, and in softening through understanding or compassion, things turn around again. Not for the foreseeable future, however, no matter how hard some hold on to past glory.”

From a private email, 1 January 2008:
“This is the year the world turns on its axis on many levels at once. What is the pecking order of countries? What are the priorities of humanity? What is truly new or visionary? This is not a year for tired or repeated old formulations. Only new formulations rule; only new ideas can weather the requirements of a new time.

Written in January 2008 about the third quarter of that year:
“Q3 [2008]: ‘Fall into the fall.’ This requires suppleness….The question is not whether or if you fall, but how you fall and land on your feet. Some large financial institution may go under – through acquisition or foreign control. There may be attempts to minimize the implications and the damage to financial structures, but insiders will know and quiver in their shoes….” [The financial crash or fall of 2008 began in the fall; this intuitive insight about the third quarter was written some 10 months prior to the crash.]

Follow-up:
7 Sept 08: Freddie Mac and Fannie Mae, which owned or guaranteed nearly $6Trillion in mortgage loans for individuals as well as companies, was placed into conservatorship by the Federal Housing Finance Agency
14 Sept 08: Merrill Lynch is acquired by Bank of America in a last ditch effort to save the company
15 Sept 08: Lehman Brothers files for Chapter 11 bankruptcy and is not saved the way Merrill Lynch was through acquisition or bailout
16 Sept 08: AIG shares lose 95% of their value and report a $13.2B loss in the first six months of the year.
All of these companies were considered to be unsinkable and untouchable prior to this time.]
20 Sept 08: Dow Jones Industrial Average suffers its worst point drop ever: 777 points.

From a private email, 13 January 2008:
“Something goes for the broke. New infusions, new hope, new recession woes….’Goes for the broke’ means coming up with something that helps those who have nothing or nothing left; those who are broke.”

From a private email, 2 March 2008:
“Challenges ahead. Be on the lookout.
Then  it stops. The whole world stops to watch some major event on the horizon with global implications. After three weeks none of it makes any sense. New forms, new criteria…. Ship of Fools [from the old movie title with Oskar Werner and Simone Signoret re: the beginning signs of WWII]. Prelude to war? Perhaps a war of a different kind?

Something new kicks in of global proportion, political and other. Feels like another 9/11 type event, or political moment that captures world attention. elements of both tearing apart and bringing together for good….

[Follow-up: The three weeks from October 6-24 changed the world and the way we think about things. The fallout continues throughout the world, into and including the Arab Spring and the potential demise of the Eurozone as European country after country teeters on the verge of bankruptcy, or falls over its edge in the summer of 2012.]

Some major feeling of impropriety at high levels.”

[Follow-up: The heads of the eight largest banks are called to Washington to testify before Congress about potential malfeasance in the fall of the U.S. housing industry and their use of credit default swaps and other derivatives instruments. Goldman Sachs is called to task for betting against its own loans, knowing full well that the loans would be defaulted.]

From a private email, 17 March 2008:

Europe is under some pressure now, and this leads to political fallout and consequences of an enormous nature. The ill will towards the U.S. grows dramatically as the walls begin to press in on the European economy. This kicks the continent into retrograde thinking, failing to take a true and deeper look at contemporary complexities and issues….”

From a private email, 17 April 2008:
“Some new twist on insider trading or price-fixing phenomena. Charge of collusion to pass risk and loss on to consumer will follow on the heels of subprime issues and trigger more than a slap on the wrist of financial institutions. There are some who are looking for punishment.”

Follow-up: In 2012 two individuals were found guilty of insider trading and sentenced to prison.

From a private email, 9 May 2008:
“This is the way the world ends; not with a bang but a cigarette. The vices continue uninterrupted, and increase….Recession driven social constraint and social rebellion[both at once].”

From a private email, 22 May 2008:
“All of the resources of government and certain sectors of business will be devoted to mercenary and rogue treasure hunts….The impact as other news unfolds over the next 2 years will be nothing short of amazing….[revealing a] Machiavellian approach of certain individuals in leadership circles.”

From a private email, 23 June 2008:
“Another awakening before all settles down and settles in….it’s not over for the short term.

Taking on too much water makes the boat sink. When water is coming in, unloading is better than taking on. If you think the ocean will not know the boat has sprung a leak [because you have placed furniture over the hole], think again. Nothing…nothing is outside the all-encompassing ocean.”

From a private email, 29 June 2008:
“Gets a thrashing like never before.
Yes, this is the way down to the flood plain. Washout…and more. Going to go this way before the rest is finished.
Disaster. Then she flies out of the ashes like before: beautiful, strong, clear on her role in the world….Lots of losses before the rainbow this time.”

From a private email, 15 July 2008:
“Not the way it is going to be for a long time. This isn’t over: the toll goes on and on into the future. This great depression will be remembered for along time to come, and the impacts are just beginning to trickle up to an intensity that makes all take severe and sincere notice.

It is no longer a question of being acquired or sold or merged; it is a question of ceasing to exist, and this strikes many. Zero value. Zero degrees of separation. Zero potentiality for rescue.”

From a private email, 21 July 2008:
“‘This is the way the world ends, not with a bang but a whimper.’”
Godot doesn’t live here anymore. It is pointless to wait for a savior who no longer saves.”

From a private email, 1 September 2008:
“This isn’t the one that goes away. And then you must wonder what the rest is about. There are other stories not told that surface just as the water subsides. Watch and wait. Listen for the undertow, the rip tide that is still to come….

Going to go away….The end of all that we know now and later. Some critical shift in the air….”

From a private email, 9 September 2008:
“They still cant’ believe the numbers. Wait until they really, really know what they have to do.”

From a private email, 14 September 2008:
“There are those tho have begun to see the handwriting on the wall, the true meaning of ‘What goes around comes around.’ This has to do with economic policy and practice; with shortsightedness regarding actions taken long ago; with a realization that the empire could fold without [the presence of] heart….

This dates from the end of WWII. Some consequences or implications on the horizon now date from these economic, political, military decisions.”

From a private email, 21 September 2008:
“Pay attention to Europe. There is pain and suffering there that is not addressed in these measures. Confidence may be restored in the U.S., but anger comes along with the restoration. The carnage is unmistakable and unintentional, surpassing any and all expectations and calculations. The toll cannot be computed unless you bring in the physicists, who are used to infinite numbers and factors of trillions. The societies will be leveled. And while there will be those alive to tell the stories, many get dragged into this undertow.

The rip tide from the hurricanes is matched by and reflects the rip tides in the world’s economies.

This is only the beginning. Actually a short-term middle that stems from a past older than 9/11 or [the stock market crash of] 1987.

This is the beginning of the end of time for others….

Another institution bites the dust. Or it could be a rescue plan that does not rescue.”

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