Latest news with #TroubledAssetReliefProgram
Yahoo
12-04-2025
- Business
- Yahoo
History Says This Is What Comes Next After a Market Crash and When Stocks Might Recover
With the stock market crashing, investors may be wondering where the market is heading from here and when stocks may recover. There have been several market crashes over the past 100 years, so let's look what history has to say. The most recent market crash happened in March 2020, when the dropped 13.8% in two days on March 11 and 12. The cause of the crash was uncertainty over the COVID-19 pandemic and subsequent lockdowns. The market would bottom on March 23, with the S&P 500 declining by another 9.8%. The S&P's total decline from peak to trough would be about 34%. This was a quick yet steep decline, with the market putting in a bottom in just over a month. A fast recovery also followed it, as the Federal Reserve acted quickly slashing interest rates to near zero and launching a quantitative easing program where it bought government bonds and other assets. The S&P returned to its pre-crash highs by mid-August of 2020, as the Fed showed how it can help stocks during a market crash. Amid the subprime mortgage crisis and the collapse of investment bank Lehman Brothers, the S&P 500 declined by 8.8% on Sept. 29, 2008. It later declined by about 20% the week of Oct. 6. The market would bottom a little over five months later in early March 2009. After the initial Sept. 29 plunge, the S&P 500 would plummet another 44%. In total, the S&P would lose more than half its value during the bear market. It would take over five years for the market to return to new highs. Once again, the Fed played a huge role in the market's recovery, as it slashed interest rates to near zero percent and initiated a quantitative easing program that included purchases of mortgage-backed securities. The government also reacted with a fiscal stimulus package and injected capital into the banking system and other financial institutions through the Troubled Asset Relief Program (TARP). By the time the market bottomed, stock valuations had fallen quite a bit and were quite attractively priced. In the largest single-day decline in the U.S. stock market, the Dow Jones Industrial Average (DJIA), which was the benchmark index at the time, plunged 22.6% on Oct. 19, 1987. The large crash was attributed to stocks being overvalued as well as rampant speculation and the introduction of computer-based trading that would try to hedge portfolio losses by automatically selling futures when stock prices dropped. There was also a lot a leverage and margin debt at the time, and investors started to panic. The Dow would bounce around before finding a "second bottom" in early December. It would take nearly nearly two years for the Dow to reach new highs. The Fed once again acted quickly by injecting liquidity into the banking system to help stop further damage. However, while these actions helped the market from spiraling, valuations before the crash were high and investor confidence was shaken. As such, the crash essentially acted as a valuation reset for the market after a long bull market, and it took time for stock fundamentals to catch up to its past valuation. for the Dow to reach new highs. In late October, the Dow Jones nosedived about 23% over a two-day period. The crash was largely the result of speculation, high valuations, and investors buying stock on margin. In addition, the crash would kick-start the Great Depression, as banks collapsed and panic set in. Specifically, the Smoot-Hawley Tariff Act would only prolong this difficult period. The stock market crash, however, was just the beginning of a tough several years for investors. The Dow Jones Industrial Average would decline another 82% before hitting a bottom in July 1932. From peak to trough, the Dow's overall decline was 89%. It would take about 25 years for the market to fully recover. Throwing out the extreme of the Great Depression, history suggests that after a market crash, stocks should bottom out in just a few months. Following the three modern-day market crashes, the markets all hit their bottoms in under six months, and for two of them, it was less than two months. A recovery to new highs is a bit more difficult to pin down. Following the COVID-19 crash, the market rallied quickly. Given that it was the government's actions with tariffs and subsequent retaliatory tariffs that caused this most recent stock market crash, it seems like the bear market could be similarly short-lived if there is a change in course with the tariffs. President Donald Trump has proven to be unpredictable and whether the tariffs last a week or his whole term and beyond is a question mark. He has already paused the tariffs for 90 days for countries other than China. However, it is this unpredictability and quick decision reversals that make it difficult for companies to take actions. Many companies had previously started shifting their sourcing and manufacturing to other Asian countries such as Vietnam, only to see Trump initially look to hit those countries with huge tariffs as well. Meanwhile, reshoring would take years to accomplish and the U.S. likely doesn't have the workforce to take on these jobs. This likely leaves most companies paralyzed in their actions just waiting to see what may happen next. The Fed, meanwhile, has played a big role in past market recoveries, but with this crash self inflected by government tariffs, and given the on-and-off nature of them, the central bank has also stayed on the sidelines. The whole lack of clarity and flip-flopping makes this one of the toughest market crashes for anyone to react to and make decisions. With history suggesting the market could drift lower over the next couple of months, one of the best strategies investors can deploy is waiting for further small dips and then buying into them. While pinpointing the market's exact low is challenging, gradually allocating funds during market downturns over the next few months should optimize your returns when the market recovers. Another option is to dollar-cost average into an exchange-traded fund (ETF) such as the Vanguard S&P 500 ETF (NYSEMKT: VOO), which tracks the S&P 500. This could just entail investing a set amount every two weeks into the ETF. Bull markets typically see their best performance when they rally from the bottom. As such, you'd want to avoid picking a bottom, or you could miss out on the biggest part of the rally. Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $679,900!* Now, it's worth noting Stock Advisor's total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Geoffrey Seiler has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. History Says This Is What Comes Next After a Market Crash and When Stocks Might Recover was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
11-04-2025
- Business
- Yahoo
‘MAGA leftist' blames Obama for 2008 bank bailout that was signed by George W. Bush
Self-described 'MAGA leftist' Batya Ungar-Sargon confidently declared on Thursday night that President Barack Obama's 'first act in office' was passing the $700 billion Troubled Asset Relief Program that bailed out financial institutions during the height of the 2008 financial crisis. Ungar-Sargon would double down on that claim the following morning, tweeting that 'in 2008, President Obama bailed out Wall Street and screwed over Main Street' while defending Donald Trump's tariffs, insisting that 'in 2024' the current president 'screwed over Wall Street to bail out Main Street.' There is just one small problem with The Free Press columnist's analysis: TARP was signed into law by then-President George W. Bush on October 3, 2008 — a full month before Obama was elected president and four months before he entered the White House. During an appearance on CNN Newsnight with Abby Philip, Ungar-Sargon — who has been making the media rounds to passionately defend Trump's chaotic tariffs that have sparked a global market meltdown — attempted to contrast the factors that led to the Great Recession to the current economic environment. 'I've been thinking a lot about the 10 million Americans who lost their homes in the 2008 financial crisis, and how President Obama's first act in office was to give $700 billion to the banks that caused it, including $30 billion in bonuses to the crooks who organized it,' she exclaimed. 'And I'm thinking about how those very Americans saw a president pick Wall Street over Main Street,' Ungar-Sargon added. 'And what they saw this whole week was a president willing to go out there and fight for the forgotten men and women of this heartland and take on the entire international global order for them.' A one-time Marxist academic who has since morphed into a Steve Bannon-style MAGA populist-nationalist, Ungar-Sargon has pounded the drum in recent days that Trump is 'waging war' for 'the forgotten people in the heartland of America' with his trade war, going so far as to argue that it could fix the 'crisis in masculinity.' Still, regardless of the merits of her arguments on behalf of Trump's tariffs, one thing is indisputable — TARP was not Obama's 'first act' after he was sworn in as president in 2009. In reality, the massive bailout came about during the fall of 2008 when the global economy was in freefall due to financial institutions and banks — many of which were deemed 'too big to fail' — going bankrupt due to the subprime mortgage crisis. With the housing bubble bursting and defaults skyrocketing, the mortgage-backed securities that lenders and investment firms bought up in high volumes became worthless, resulting in these institutions losing all their money — and customers' deposits. TARP was eventually implemented to buy up these 'toxic' assets and keep the banks afloat amid concerns of a full-blown economic collapse. The bill was initially met with bipartisan resistance and even failed on its initial vote in the House, but Congress eventually passed it after some tweaks, and it was quickly signed into law by Bush. After Obama came into office, other changes were made to the program, including prohibiting firms receiving TARP funds from giving bonuses to their 25 highest-paid employees. The Treasury Department reported in 2023 that the total amount disbursed from TARP was $443.5 billion, with the government collecting $425.5 billion through repayments, sales and dividends. 'After considering the interest expense of $13.1 billion, the net cost of TARP programs was $31.1 billion,' the report stated. Sharing a clip of her CNN comments, Ungar-Sargon reiterated that Obama was responsible for TARP while simultaneously claiming Trump was president last year. 'In 2008, President Obama bailed out Wall Street and screwed over Main Street,' she posted on X (formerly Twitter). 'In 2024, President Trump screwed over Wall Street to bail out Main Street. That's what a lot of Americans are going to remember about last week.' It didn't take long for a number of political commentators and journalists to take Ungar-Sargon to task for her revisionist history. 'Bush was President in 2008. Trump's tariffs are cratering the economy in 2025. I would recommend that @CNN and @abbydphillip stop inviting on pundits who don't seem to have a handle on the most basic facts about politics or economics,' Pod Save America host Tommy Vietor reacted. 'How many mistakes can you make in one tweet?' Charles W. Cooke, a senior writer for the conservative outlet National Review, wondered while Inside Elections deputy editor Jacob Rubashkin was even more succinct with his observation of Ungar-Sargon's remarks. ''Who was president in 2008?' and 'Who was president in 2020?' are two questions you should be required to answer before you opine about politics on TV,' he noted. 'It's one thing to go on TV and claim that Obama was president in 2008. TV is hectic and ppl make mistakes,' The Atlantic's Derek Thompson added. 'But it's another thing to log on in the morning and go: To be clear, Obama, who became POTUS in 2009, hates the common man so much he traveled back thru time to sign TARP.'
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The Independent
11-04-2025
- Business
- The Independent
‘MAGA leftist' blames Obama for 2008 bank bailout that was signed by George W. Bush
Self-described 'MAGA leftist' Batya Ungar-Sargon confidently declared on Thursday night that President Barack Obama's 'first act in office' was passing the $700 billion Troubled Asset Relief Program that bailed out financial institutions during the height of the 2008 financial crisis. Ungar-Sargon would double down on that claim the following morning, tweeting that 'in 2008, President Obama bailed out Wall Street and screwed over Main Street' while defending Donald Trump's tariffs, insisting that 'in 2024' the current president 'screwed over Wall Street to bail out Main Street.' There is just one small problem with The Free Press columnist's analysis: TARP was signed into law by then-President George W. Bush on October 3, 2008 — a full month before Obama was elected president and four months before he entered the White House. During an appearance on CNN Newsnight with Abby Philip, Ungar-Sargon — who has been making the media rounds to passionately defend Trump's chaotic tariffs that have sparked a global market meltdown — attempted to contrast the factors that led to the Great Recession to the current economic environment. 'I've been thinking a lot about the 10 million Americans who lost their homes in the 2008 financial crisis, and how President Obama's first act in office was to give $700 billion to the banks that caused it, including $30 billion in bonuses to the crooks who organized it,' she exclaimed. 'And I'm thinking about how those very Americans saw a president pick Wall Street over Main Street,' Ungar-Sargon added. 'And what they saw this whole week was a president willing to go out there and fight for the forgotten men and women of this heartland and take on the entire international global order for them.' A one-time Marxist academic who has since morphed into a Steve Bannon-style MAGA populist-nationalist, Ungar-Sargon has pounded the drum in recent days that Trump is 'waging war' for 'the forgotten people in the heartland of America' with his trade war, going so far as to argue that it could fix the 'crisis in masculinity.' Still, regardless of the merits of her arguments on behalf of Trump's tariffs, one thing is indisputable — TARP was not Obama's 'first act' after he was sworn in as president in 2009. In reality, the massive bailout came about during the fall of 2008 when the global economy was in freefall due to financial institutions and banks — many of which were deemed 'too big to fail' — going bankrupt due to the subprime mortgage crisis. With the housing bubble bursting and defaults skyrocketing, the mortgage-backed securities that lenders and investment firms bought up in high volumes became worthless, resulting in these institutions losing all their money — and customers' deposits. TARP was eventually implemented to buy up these 'toxic' assets and keep the banks afloat amid concerns of a full-blown economic collapse. The bill was initially met with bipartisan resistance and even failed on its initial vote in the House, but Congress eventually passed it after some tweaks, and it was quickly signed into law by Bush. After Obama came into office, other changes were made to the program, including prohibiting firms receiving TARP funds from giving bonuses to their 25 highest-paid employees. The Treasury Department reported in 2023 that the total amount disbursed from TARP was $443.5 billion, with the government collecting $425.5 billion through repayments, sales and dividends. 'After considering the interest expense of $13.1 billion, the net cost of TARP programs was $31.1 billion,' the report stated. Sharing a clip of her CNN comments, Ungar-Sargon reiterated that Obama was responsible for TARP while simultaneously claiming Trump was president last year. 'In 2008, President Obama bailed out Wall Street and screwed over Main Street,' she posted on X (formerly Twitter). 'In 2024, President Trump screwed over Wall Street to bail out Main Street. That's what a lot of Americans are going to remember about last week.' It didn't take long for a number of political commentators and journalists to take Ungar-Sargon to task for her revisionist history. 'Bush was President in 2008. Trump's tariffs are cratering the economy in 2025. I would recommend that @CNN and @abbydphillip stop inviting on pundits who don't seem to have a handle on the most basic facts about politics or economics,' Pod Save America host Tommy Vietor reacted. 'How many mistakes can you make in one tweet?' Charles W. Cooke, a senior writer for the conservative outlet National Review, wondered while Inside Elections deputy editor Jacob Rubashkin was even more succinct with his observation of Ungar-Sargon's remarks. ''Who was president in 2008?' and 'Who was president in 2020?' are two questions you should be required to answer before you opine about politics on TV,' he noted. 'It's one thing to go on TV and claim that Obama was president in 2008. TV is hectic and ppl make mistakes,' The Atlantic's Derek Thompson added. 'But it's another thing to log on in the morning and go: To be clear, Obama, who became POTUS in 2009, hates the common man so much he traveled back thru time to sign TARP.'
Yahoo
11-04-2025
- Business
- Yahoo
Kashkari: Fed should intervene only reluctantly, still need to finish job on inflation
By Howard Schneider WASHINGTON (Reuters) -The Federal Reserve should intervene in markets only reluctantly and in a true emergency, Minneapolis Fed President Neel Kashkari said on Friday in the most explicit comments yet from a Fed official about the possibility of the central bank stepping in to tame volatility that has torn across asset classes in response to President Donald Trump's tariff policies. "The Fed or Treasury stepping in should be done reluctantly, should be done when it is only truly needed," said Kashkari, who as a Treasury official during the 2007 to 2009 crisis led the Troubled Asset Relief Program. "I think we should be very cautious about taking moves that could demonstrate a weakening, which I don't think is there, to the Fed's commitment to getting inflation down." So far, he said, markets seemed to be functioning smoothly, which is the Fed's overriding concern. Since Trump tariff announcements last week U.S. stock prices have cratered and Treasury yields have risen at the same time, a potentially worrisome sign of investors turning from the U.S. more broadly. More typically in times of stress U.S. yields fall as investors seek a safe place to park cash. In a wideranging interview on CNBC, Kashkari said recent market developments may show investors changing their view of the U.S. "There's a lot of complexity," he said. Along with yields rising "the dollar has been weakening. Normally when you see big tariff increases I would have expected the dollar to go up. The fact that the dollar is going down at the same time, I think, lends some more credibility to the story of investor preferences shifting."
Yahoo
27-03-2025
- Politics
- Yahoo
Contributor: The 'Signalgate' theories may be entertaining, but they're probably not correct
The venerable logical principle known as Occam's razor, attributed to the 14th century English philosopher and theologian William of Ockham, asserts that when confronted with multiple possible explanations for a causal phenomenon, the simplest explanation is — absent persuasive evidence to the contrary — usually correct. Although hardly foolproof or comprehensive, Occam's razor has the benefit of simply making a lot of sense. The problem is that Occam's razor, as a general signpost to help make sense of the many things happening all around us, falls out of favor in an era when institutional trust is in free-fall. And so it is today: From organized religion to the military to the media to Wall Street to public health authorities to Congress and the Supreme Court, public polling across recent decades typically shows a very negative trendline when it comes to Americans' trust in virtually all of our major institutions. To be sure, much of this collapse in public trust has been self-inflicted. The Catholic Church sexual abuse scandal, which first came to light more than two decades ago, undermined public trust in institutional religion in general. Many legacy media brands have largely abandoned objectivity or political neutrality, acting instead as culture-warring crusaders. Wall Street did itself no favors with the 2008 global financial crisis — as well as the subsequent Troubled Asset Relief Program bailout. Public health officials utterly botched aspects of their handling of the COVID-19 pandemic, from lockdown rules to the virus' origins. Congress often seems incapable of doing anything other than hurl petty invectives across the aisle. And the Supreme Court is led by a chief justice who ironically exalts his tribunal's 'institutional integrity' so much that he ends up delegitimizing it. We live in a decidedly populist age, and much of our underlying angst is justified — indeed, it is sometimes righteous. Public authorities have routinely dropped the ball and made egregiously bad decisions. Media bias is very real — and so is congressional incompetence. Oftentimes, the American ruling class — as the late, great intellectual Angelo Codevilla famously described it in a 2010 essay — really does prioritize its own parochial interests over the supreme imperative of the common good. But there is a profound danger, always bubbling just below the surface, of anti-institutional sentiment going too far. Institutional dysfunction trains us to find or dream up arcane and irrational explanations for what we see in the world. At some point, Occam's razor gets turned on its head: The simplest or most logical explanation cannot possibly be true because that's what the powers that be want you to believe! Alternative explanations, often wildly elaborate and bearing little to no basis in factual reality, are proposed — sometimes in a circuitous manner, done in the ostensible name of 'just asking questions.' We saw this familiar script play out in the major domestic story of the past week: the 'Signalgate' group chat texting scandal that has taken the nation by storm. On Monday, the editor of the Atlantic, Jeffrey Goldberg, reported that he had inexplicably been added to a high-level group chat earlier this month on the encrypted commercial messaging app Signal. The chat, comprising top-ranking Trump administration officials such as Vice President JD Vance, Secretary of Defense Pete Hegseth and national security advisor Michael Waltz, debated and discussed plans for U.S. strikes on the Iran-backed Houthi rebels in Yemen (which have since come to fruition). They all seemed oblivious to Goldberg's presence. There are numerous glaring questions that must be asked from this most embarrassing error, perhaps chief among them: How in the world did Jeffrey Goldberg, who did more than any other journalist in America to sell Barack Obama's Iran nuclear deal one decade ago, get added to this chat? Waltz organized the Signal chat, and many have been calling for his head all week. Waltz, a four-time Bronze Star recipient who became the first Army Special Forces soldier ever elected to Congress, tends — like President Trump himself — to be more aggressive when it comes to confronting the terrorist Iranian regime and its sprawling web of regional proxies. Accordingly, there are actors on the left and the Tucker Carlson-aligned right who want to sideline Waltz. Some of these propagandists have thus speculated that perhaps Waltz intentionally leaked to Goldberg — or perhaps that Waltz served as a Goldberg source inside the Trump administration. But these ideologically driven explanations for "Signalgate" are implausible. The simplest explanation, per Occam's razor, is that someone in Waltz's office messed up — badly — by adding the wrong person styled 'JG' into a group chat. To borrow another logical principle, Hanlon's razor: Don't ascribe to malice that which can be otherwise explained by rank incompetence. And so it is here as well. In this instance, the offender should be fired posthaste, the administration should vow to do better — like not letting life-or-death military intel fall into unknown hands. And that ought to be the end of the matter. Many of the leading institutions in American public life do deserve our skepticism. Quite a few even deserve our outright scorn. But we cannot let that sad state of affairs melt our minds, either. Go outside, touch some grass, and remember that oftentimes the exciting 'alternative' explanation should be rejected for the simpler and more straightforward one. Josh Hammer's latest book is 'Israel and Civilization: The Fate of the Jewish Nation and the Destiny of the West.' This article was produced in collaboration with Creators Syndicate. @josh_hammer If it's in the news right now, the L.A. Times' Opinion section covers it. Sign up for our weekly opinion newsletter. This story originally appeared in Los Angeles Times.
