Six-Day War

Well, not quite indiscriminate: J.P. Morgan is still looking good, the proverbial best house in a bad neighborhood and McDonald's remains the pride of fast-food nation. IBM, Microsoft and Intel are hanging in there as well, monopolizing remnants of earlier tech strength. As for the rest, better not look. The VIX fear gauge is up to 63, higher than after 9/11 or at the bear market bottom exactly six years ago today, and quadruple its level at the bull market top exactly one year ago. Only the 1987 crash pushed it higher, and hardly anyone expects us to get off as easy as we did back then. Our panic is inarguably greater even if it took us a few days to realize it.

Today's top suspect was General Motors, which went from a historic skid into an off-the-cliff plunge after Standard and Poor's confirmed what everyone already new: that GM's money could run out sometime in 2009. Like everyone else, S&P was reminded of GM's precarious financial state after it confirmed a European sales slump. Europe was the region that had been sustaining GM during a bleak stretch for the domestic market.

Some will no doubt want to link the plunge to the return of short-sellers after their temporary ban from any stock having anything at all to do with money. But of course the short-sellers can hardly be blamed for the action during the preceding five days. The most honest thing to do would be to say that stocks are crashing because way not enough people want to buy them.

Welcome to socialism of a sort, arrived at not by government decree or popular demand, but simply because no one else seems to be willing to supply the necessary new capital to the companies that need it most. Wall Street has caught on to the fact that nothing will be the same ever again. But as we look at what the old system wrought, that's arguably the best thing about what's happening now.