A One Day Stock Market Plunge Of 48%! A Major Financial Crisis In Argentina Is Happening Right Now

A One Day Stock Market Plunge Of 48%! A Major Financial Crisis In Argentina Is Happening Right Now by  for The Economic Collapse Blog

We are watching a complete and utter financial meltdown unfold in Argentina, and many are concerned that the panic could start spreading elsewhere.  When you go into way too much debt and you just keep devaluing your currency, this sort of thing is inevitably going to happen, and this is why I am endlessly criticizing the path that the United States is currently on.  If we do not reverse course, we will end up just like them.  On Monday, we witnessed the second largest one day stock market decline that we have seen anywhere in the world since 1950.  It is hard to believe, but the most important stock market index in Argentina actually plummeted 48 percent in a single trading session…

The S&P Merval Index plummeted 48% Monday, the second-largest single-day drop in any global stock market since 1950, according to Bloomberg. The Argentine peso also declined, losing 15% of its value against the US dollar Monday and falling further Tuesday to a new low.

This is what a financial implosion looks like, and it wasn’t supposed to happen.  In fact, we are being told that there was only a .006% chance that such a sell-off would take place

There was a 99.994% probability that an event like Monday’s sell-off in Argentina wouldn’t happen.

But it did. And it served to underscore the need for investors to protect against extreme events that look very unlikely but can have outsize impact if they do occur.

As I keep reminding my readers, stocks tend to fall a lot faster than they rise, and when some sort of trigger event causes panic things can escalate rather quickly.

In this case, the trigger event was an election result

So much for the polls. Forgetting the electoral shocks of Donald Trump and Brexit, investors displayed herd-like faith in surveys showing that reform-minded Argentine President Mauricio Macri would run close in an Aug. 11 primary, positioning him for re-election in October. They bid up assets accordingly. The GlobalX MSCI Argentina exchange-traded stock fund (ticker: ARGT) soared 42% in the year to Aug. 9. It lost all that the day after voters behaved the way you’d think voters might in a country afflicted by near-zero growth and near-50% inflation.

Investors had been hoping that Argentine President Mauricio Macri would win re-election, but now that possibility appears to be extremely remote.  In the primary vote, Macri was soundly defeated by Alberto Fernandez…

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Michael Snyder

Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com