Black Monday

Monday, October 19th, 1987 has been designated Black Monday, the day the stock markets crashed all around the globe. According to time zones, Japan was the first to crash. Europe crashed on the heels of this and then the United States took a big hit.

The Dow Jones plunged over 500 points. Australia and New Zealand refer to the day as Black Tuesday because of the difference in time zones. New Zealand was hurt the worst, as their market fell by over 60%. Japan was also a very big loser, as the Hong Kong market fell by 45%. It can take several years to recover fully from a crash of this magnitude. In the meantime, an atmosphere of fear and uncertainty prevailed among the general populace, in addition to market traders.

Illiquidity, over-inflation, program trading, over-valued stocks and psychological factors were all being considered as the possible cause of the crash. Economists from various nations met in Washington, D.C. in an effort to determine the cause. Fear of inflation was blamed, as was program trading. Program trading, with the use of computer technology, created quick trades, where the entire business of trading out-excels itself.

There was no final conclusion from that economic meeting-of-the-minds in Washington D.C., and today, the arguments concerning the cause still go on. The free-market cause for Black Monday would center on a deal made between Japan and the US that devalued the dollar considerably. The stock market crash was therefore the result of that currency realignment.

After that fateful day, investors worried intensely and continuously about their stock portfolio. Many markets closed down for a short period of time in an effort to slow down trading and allow the market to settle at its new level. In the US, the Federal Reserve was said to have illegally instructed banks to purchase all manner of securities to ensure that the plunge was finally halted and that the instability did not return.

The creation of the so-called Plunge Protection Team, a Washington-based government/private banking group, also dates to 1987's Black Monday. It can be said, therefore, that the 1987 crash contributed significantly to the illegal propping-up of markets in America and perhaps throughout the West.

There are other references to Black Monday that have little to do with finance. Black Monday in Ireland, particularly Dublin, refers to the year of 1209 and the Monday after Easter. New settlers left the protection of the walled city of Dublin and went out into the countryside to celebrate Easter Monday. These settlers were killed by members of the Gaelic tribe, the O'Byrne clan. This is still a memorable day among some of the Irish people.