The Dow Jones Industrial Average tumbled 700 points Thursday, falling below 9,000. Since October last year, the Dow has lost 40 percent. The S&P has lost 45 percent.
At the start of The Great Depression, the stock market lost 89 percent between 1929 and 1932.
In the span of one year, we're already halfway there.
At first everyone was avoiding the "R" word: recession. At the start of the year analysts were calling it a slowdown, a downturn, a teetering, a hiccup, a housing bubble popping, a crunch, a possible "R" word.
After surprises in the spring and summer with the failure of Bear Sterns, IndyMac, Freddie Mac and Fannie Mae, the word "recession" came out of its shell, amended by other terms like crisis and market shock.
With the "financial woes" of Lehman Brothers, AIG and the failures of Washington Mutual and Wachovia, analysts are trying to avoid the "D" word.
Now we're heading for a "deep recession," according to analysts on CNBC and other financial media -- which is literally a "D" and an "R" word combined.
Regardless of whether we're heading for a deep "R" word or a "D" word, there can be no power vacuums this election year, no gray transition periods.
Before 1937, Inauguration Day was March 4. According to CNN economic commentator, Barry Eichengreen, Hoover and FDR failed to cooperate during the president-elect period from November 1932 to March 1933. The depression was allowed to worsen in the power vacuum.
As a result, a constitutional amendment was passed to move Inauguration Day to Jan. 20 which went into effect in 1937.
If this crisis continues through October, a similar move is needed. Inauguration Day needs to move to November.
Eichengreen proposed in recent CNN commentary that Treasury Secretary Henry Paulson should invite the president-elect into his office in November. Currently, Sen. Barack Obama has a 75 to 90 percent chance of winning the election, according to projections and predictions by FiveThirtyEight.com and Intrade.com.
Obama needs to announce immediately his picks for Secretary of Commerce, Secretary of Housing and Urban Development, Secretary of Labor and most importantly, Secretary of the Treasury (the guy who will oust Paulson).
During the second presidential debate Tuesday, both McCain and Obama mentioned they would be open to choosing Warren Buffet for Treasury secretary. Buffet supports Obama, according to reporting by Reuters, and is a widely respected figure in the financial world.
In the next few days, Obama needs to have critical sit-down meetings with Paulson and Federal Reserve Chairman Ben Bernanke. Coordination needs to be key so there is no rough transition period while the markets teeter in their vulnerable state. Buffet, or whoever lands up being Obama's pick, needs to be included in these pre-election meetings with current financial officials.
Congress then needs to vote immediately on moving Inauguration Day to the second week of November.
Superstition might disagree with my accelerated and presumption plan. It could be bad luck for Obama supporters to propose presidential action by Obama before he's elected, but this crisis calls to amend superstition and protocol into quick and coordinated action.