Alan, actually I currently think that 7000 by Monday is definitely possible. I think we could easily be down about 400 more tomorrow, and that could bring a real crash Monday. Watch the world markets tonight, because I believe it could get ugly around the globe. The world markets have typically been comforted by the stability of our market, and tonight they do not have that comfort.
As for Russia, Russia is a symptom, not the problem itself. The problem is that the world economy is crumbling, one country after another. Deflation is a very serious problem. Hard assets lose value, debtors can't pay loans, banks fail, the money supply contracts, GDP shrinks fast. The problem is that the world markets are no longer thinking correction, or even recession, they are thinking global depression. Would that affect every company listed in the US? Yes.
All the features are in place for deflation in the US. A strong dollar, high interest rates, falling commodity prices, and a flat CPI skewed by rising wages. Throw in a little unemployment and what happens? Wages fall (fast), and deflation is here in a big way. Now add an element of fear, and will people borrow money? Nope. Consumers won't. Businesses won't. And no matter how low the interest rate falls, people still hoard cash. And the old saw comes true, you can't push on a rope.
On the other hand I have a lot of faith in Alan Greenspan to guide us through these days. But the danger is there, and it is real. And people are starting to get scared, and fear is replacing greed. Voila, a bear market, or even a crash.
Carl
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