Stock Market Crashes – What's Going On?

The stock market crashed!  The market went from bullish to bearish in a flash!  The Dow was down about 1000 points at one point during the trading day, closing at about 347 off for the day.  All 30 Dow component stocks were down, Bank of America was down around 7%.  What happened?  Why so fast?  What’s going on?

Those who run the market will likely check for technical or programming glitches.  These might be a contributing factor.  But, it appears that the larger issue is simply FEAR.  Fear of what?  Fear that the problems of Greece will spread to Europe and to the rest of the world, including America.  Ultimately, it’s really a fear that welfare state socialism will lead to economic bankruptcy.  In my book, America’s Economic War, I say several times that socialism always leads to economic bankruptcy.

Greece has been spending way beyond its capacity to create new wealth.  Greece’s debt is a staggering 113% of its GDP!  According to a recent article in The Wall Street Journal, “Greece’s predicament – like New York’s and California’s – is signaling loud and clear that the spend-and-tax economic model has hit the wall.”

Plus, Greece’s entitlement mentality has led to riots in the streets and even deaths.  People expect their government to provide for their needs.  They don’t seem to realize someone has to pay the bill.  Greeks don’t want to face austerity and citizens in other countries are reluctant to bail them out.

Most likely, the market has crashed because investors realize the Greek economic crisis might spread to Europe and to the entire world.  They also probably realize that America might face the same type of crisis soon, if our government doesn’t stop spending beyond our means.  America needs to cut spending, cut borrowing, and cut taxes to create economic growth and to get our own economic house in order.

The stock market crash is sending up a big red flag.  Socialism doesn’t work.  America needs to stop its descent into socialism.