What's going on in the stock markets?

To be honest, I do not understand the stock market and economics very well. Hearing that there was a drastic plunge the other day and knowing that this is bad is probably the extent of my knowledge! I also know that insider-trading is illegal, thanks to the Martha Stuart scandal. I assume that the market will close at a loss again today because of this? I'm glad that my retirement money is in a straight interest accumulation IRA. I know that it could possibly do better if invested in the market, but it could also do very poorly.

The technical correction you refer to is something I have noticed too, but I suspect it is influenced a lot more by factors other than a small insider trading scandal on the NYSE. I believe that this is one of the key signals for a southward trend in most bourses as well as real estate prices in the G7/G8 world. There are many interdependencies and linkages between markets in my understanding. Going back to the OPEC oil embargo of 1973 we saw market valuations drop almost 40% over a period of 18 months. And the interest rates not being allowed to go up (governments regulated interest and exchage rates more in those days). Energy costs represented approximately 8% of global GDP. Flitting past the changes in the eighties let me review the circumstances impact of George Sorros short selling the Thai baht in July 1997. Soros saw the inherent imbalances in the then fast growing Asian tigers and struck paydirt when he shorted the Thai Baht and took short positions on most Asian currencies.. sending all financial markets into a tailspin. This, followed by the year 2000 tech meltdown basically kept markets in place till about 4 years ago. We have had a fairly good run since then. 1. Credit supply is at an all time high. 2. Real estate prices have been skyrocketing in most countries. 3. The US$ has taken a pounding and has recovered some ground - but the underlying US deficit has continued to balloon during the Bush administration. 4. Interest rates in the developed countries have been low as in LOW. (which correlates to low bond prices and high stock values and increasing real estate values). 5. China & India's increase in demand has kept things flowing all around. 6. China - in 2007 has relaxed overseas investment rules for Chinese companies. (I speculate that this is to prepare for "free floating the Yuan). This will see huge outflows of Chinese Domestic capital into international investments before the Yuan is allowed to float. 7. Most bourse capital is short term capital and will fly the bourses at very short notice. The pressure on developed countries who are facing huge trade deficits with China and India to raise interest rates has been building. The ECB fired the first salvo in 2007 and the ripple domino effect will be felt in increasing waves. As interest rates rise ( I expect that to happen through out 2007 and into 2008) stock market valuation will go down at a rate faster than the rate of interest rate increase. The US markets will start to go into holding pattern around the time of the New Hampshire primaries and will not settle down till after the next presidency becomes clear. I have a feeling that the Yuan will go into free float around this time. I could keep going - but I am afraid I am getting a bit wooly. Will continue tomorrow. Cheers!

All to do with China is it not.Things were getting out of control,their stock market had went up by 50% since November so somthing had to give.Their had to be a correction some were along the liner. The only prob is that all the stock markets are linked in a way that if one dramatically changes it affects the rest. I have some shares in 3companies and have lost a bit of money not a great amount but still a lose,so i'm hopeing with abit of good fortune i'll atleast break even eventually.

well the stock market is ding real good now. S&P 500 keeps hitting all time highs. (check out my investing blog www.toddstocks.blogspot.com)