On This Day — Black Monday (October 19 1987)

“Many people remember the events leading up to October 19, 1987. Unfortunately, very few of them recall the specifics. When many people talk about the dramatic drop in the overall stock market, they either blame a single cause (portfolio insurance) or treat the market fall as if it were something that came from out of the blue. Far from being a lightning strike or an act of God, the crash was a single event caused by a complex series of interconnected events.”

Black Monday — The Motley Fool

“That (the 1988 US shoot down of Iran Air Flight 655), in itself, generates a sequence of events that comes back to haunt us. So it’s interesting to look at these in hindsight. We used to look at them as kind of discrete events, not tied to each other, and seen in a vacuum. But from a distance, I think we can see more of a pattern.”

Vincent Cannistraro — Director of Intelligence Programs for the U. S. National Security Council (1984 to 1987)

In the morning October 19, 1987, two U.S. warships shelled an Iranian oil platform in the Persian Gulf in response to Iran’s Silkworm missile attack on the Sea Isle City. The stock market crashed as the Dow Jones Industrial Average plunged 508 points, or 22.6 percent in value, its largest single-day percentage drop. The day became known as “Black Monday”.

In a FRONTLINE interview, Former CIA Vincent Cannistraro explained his view on the whole affair going from the Iran-Contra scandal (November 3 1986) to the shoot down of Iran Airbus 655 (July 3 1988), and eventually to the Lockerbie tragedy (December 21 1988). Follow us on Twitter: @INTEL_TODAY

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TIMELINE

October 15, 1987 — Iran fired a Silkworm missile at an American owned tanker flying a Liberian flag.

As the New Your Times reported, “The Regan administration ruled out a response because the ship was not flying the American flag and was not in international waters.”

October 16, 1987 —  Iranian missiles hit a U.S.-flagged tanker off of the coast of Kuwait.

October 19, 1987 —  In the early morning, two U.S. warships shell an Iranian oil platform in the Persian Gulf.

Combined with a myriad of economic factors, this helps to set off an unprecedented 508 point downpour in the Dow Jones Industrial Average, leaving it at 1738.74.

The 22.6% deluge is the worst one-day beating the index has taken since hostilities were initiated in World War I and causes the 12.8% decline of October 28, 1929 to pale in comparison.

Flashback

Vincent Cannistraro was Director of Intelligence Programs for the United States National Security Council (NSC) from 1984 to 1987; Special assistant for Intelligence in the Office of the Secretary of Defense until 1988; and Chief of Operations and Analysis at the Central Intelligence Agency’s (CIA) Counterterrorist Center until 1991.

Before 1984, he was an officer with the CIA’s Directorate of Operations in the Middle East, Africa, Europe, and Central America. [Wikipedia]

In a FRONTLINE interview, Former CIA Vincent Cannistraro explained his view on the whole affair going from the Iran-Contra scandal (November 3 1986) to the shoot down of Iran Airbus 655 (July 3 1988), and eventually to the Lockerbie tragedy (December 21 1988).

No, Colin (Powell) becomes deputy national security adviser by the end of 1986, early 1987, after Iran-Contra when John Poindexter is fired and they bring in Frank Carlucci. Frank brings in Colin as his deputy. So most of those major battles are over by that time. And of course, by the time they come in, what has resulted is Iran-Contra and kind of a major disaster, both for the administration, but also policy-wise for the United States. Its credibility in that part of the world is damaged very, very seriously.

You might say that the major policy debate after that is, what we do to repair the damage, and how do we regain credibility with countries in the Gulf that are important to us? One of the results was Kuwait and the flagging with American flags of Kuwaiti vessels that were being challenged by the Iranian Revolutionary Guard in the Gulf. We protected those with American flags and with U.S. naval power to escort Kuwaiti ships in order to protect them against challenge from the Iranian navy. And that’s kind of the fallout, that we get involved in the Gulf on the side of Kuwait against Iran.

And of course, one of the great tragedies that emerges in the summer of 1988 is one of our naval vessels shoots down an Iranian Airbus, by mistake, but nevertheless with a great loss of civilian life on this civilian airliner. That, in itself, generates a sequence of events that comes back to haunt us. So it’s interesting to look at these in hindsight. We used to look at them as kind of discrete events, not tied to each other, and seen in a vacuum. But from a distance, I think we can see more of a pattern.

The practical result of that is the Iranians initiate the sponsorship of a number of terrorist plans against the United States. The immediate reaction is to agree with the Ahmed Jibril group to conduct a series of operations against the United States, revenge operations, the settlement of a blood debt. Intelligence is following this very closely.

That leads to the establishment of [Popular Front for the Liberation of Palestine] cells in Germany. So that basically initiates a whole series of plans against the United States. (…)

Ronald Reagan; The Middle East, Iran and the War Powers Act 

At a News Conference in late 1987 President Reagan talks about Iran firing a silkworm missile at a Kuwaiti oil platform, the war powers act, and a little about the Iran-Iraq War.

REFERENCES

1987 Revisited — The Motley Fool

Vincent Cannistraro — Interview FRONTLINE

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On This Day — Black Monday (October 19 1987)

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