500 Points

I’m not convinced we’re in as much trouble as Wall Street would have us believe. Today, the DOW is up 500 which, to me at least, means that the markets are only 200+ points less confident than they were yesterday. More importantly, the S&P is up 61 points. Go with me here. Also, understand that I have no idea what I am talking about…

I think we’re being played. I think that the bigwigs on Wall Street decided they were going to make as much money on the mortage market as possible. Nothing wrong with that, except for the part that was fraud. Honest people made money too. But what’s going on now is a bunch of people telling us the sky will fall if we don’t act. I don’t believe this. Maybe it should be tougher to get credit. Maybe it should be tougher for businesses who count on short term loans to meet payroll to get those loans. Maybe they should revise their contracts to get more money upfront and not count on loans to meet obligations that should be met just by making money.

This is a major correction, and perhaps we’re due for this. If my 401k has to take a hit, then so be it.

I just don’t believe that this is as serious for everyday people as the powers that be would have us believe. If it is, then more regulation is the answer. Throwing money at it is not. I’m told that I shouldn’t use credit to buy luxuries. Sounds sane. So I don’t.

But what the hell do I know? I just don’t trust anyone. And I don’t know what I’m talking about.

And John McCain is a fuckhead, which is probably the only coherent thought in this post.






65 replies
  1. 1
    BombIranForChrist says:

    You could be right, but what if you are wrong?

    That is the real problem with all of this.

    If you are wrong, it’s going to be very, very bad. It won’t be the CEO’s in the soup lines. It will be us.

    If you are right, everything will be fine.

    So where do you place your 700 billion dollar bet? I dunno. But I sure feel like hedging on either bet, rather than going all in on one.

  2. 2
    Zifnab says:

    I’m told that I shouldn’t use credit to buy luxuries. Sounds sane. So I don’t.

    Oh silly Mike. You’ve got the Wall Street wisdom backwards. ALWAYS use credit to buy luxuries. Then, when the check comes due, let it bounce and run for the boarder. Some people might call it “theft”. I call it benefiting myself to the betterment of everyone that is me.

  3. 3
    Bob in Denver says:

    Maybe it should be tougher to get credit. Maybe it should be tougher for businesses who count on short term loans to meet payroll to get those loans. Maybe they should revise their contracts to get more money upfront and not count on loans to meet obligations that should be met just by making money.

    Agreed. It’s ridiculuous that the U.S. and other economies are completely dependent on credit to operate on a day-to-day basis. It’s time for a needed correction, and a severe one at that.

  4. 4
    Michael D. says:

    BombIranForChrist: I admit, I am WAY out of my league here. I have no idea. I just don’t trust anyone.

  5. 5
    Just Some Fuckhead says:

    And John McCain is a fuckhead

    Don’t be a playa hata, dawg.

  6. 6
    Michael D. says:

    One thing that bothers me is people saying “Oh, we’ll get our money back in a few years when the market recovers.”

    Well, if that’s true, then why the fuck don’t private investors buy this crap? After all, if they’re going to make money in a few years…

    If I was an investor and was told it would take me a few years to get a return, I would… especially if I had billions to invest.

  7. 7
    jakester says:

    yeah but

    I mean, we have to remember that the thing that really precipitated all this crisis mode was not the wild swings of the Dow but rather the failure of very large financial institutions (big shitpile) that have been around for decades or a century, one on top of another, at a very rapid pace. Even as the government bailed out one, another one would pop up its head and be in crisis mode. Lehman, AIG, Wachovia, WaMu, Freddie Mac, Fannie Mac, Morgan Stanley, Goldman Sachs … ALL of them fail/get rescued/massively change, all within a month of each other. With several other institutions not that far behind. “Let them fail” may be what everyone’s saying, but this many failures, this close together, on the top of the other major structural problems we’ve got in the economy and the FACT that we’re in a recession. I’m not saying the “bailout” is what we have to do, but boy are dee, it does seem to be kind of a momentous time in our economic history – and not in a good way.

  8. 8

    It’s called a Dead Cat bounce.

    Given a sufficient enough height from which to fall, even a dead cat will bounce.

    This is a dead cat bouncing.

  9. 9
    John says:

    Well, a lot of serious economists who warned about the housing bubble ahead of time seem to think there’s a real crisis, and that something needs to be done. So, on the one hand, we have them. On the other hand, we have you and Matt Stoller’s gut instincts…

    Maybe it should be tougher to get credit. Maybe it should be tougher for businesses who count on short term loans to meet payroll to get those loans. Maybe they should revise their contracts to get more money upfront and not count on loans to meet obligations that should be met just by making money.

    Why? Do you have any reason behind this belief? The economy functions on credit, and it always has. Without credit, economic growth is impossible. Yeah, we’re headed into a recession. But it seems like it woudl be best not to compound it by letting our whole financial system collapse so that credit is impossible to get.

    Otherwise, we should all just start stockpiling ammo and cigarettes.

  10. 10
    Michael says:

    I am thinking that the investors on the sidelines referred to in the Republican Proposal are shoring up the market to keep the defeat from costing more Republican seats. The market does not fix the big part of the problem which is the credit crunch either.

    I am questioning why the Treasury has to ask for the bill after seeing them pump over $630 billion into the World Markets yesterday.

    http://www.bloomberg.com/apps/.....=worldwide

    Maybe because we have to buy up these assets that a bill had to be formed through Congress.

  11. 11
    Everybody in the World says:

    It’s not the stock market that’s the problem, foo’, it’s the
    credit market

    !!

    And I don’t know what I’m talking about either!!

    He certainly is a fuckhead, though; I’m sure of that.

  12. 12
    dslak says:

    we should all just start stockpiling ammo and cigarettes.

    Maybe we should stockpole ammo and cigarettes.

  13. 13
    Michael D. says:

    Do you have any reason behind this belief?

    Nope. I haven’t got a clue. Maybe that’s evident by this post. I just don’t trust anyone here.

  14. 14
    dslak says:

    I just don’t trust anyone here.

    Now imagine if you were a bank, and you said that to other banks who approached you for loans. That’s what we’ve got here.

  15. 15
    John says:

    One thing that bothers me is people saying “Oh, we’ll get our money back in a few years when the market recovers.”

    Well, if that’s true, then why the fuck don’t private investors buy this crap?

    Err…because no credit’s available to them to do so. The government has tremendous resources that no private entity has. When nobody else can borrow money is exactly the time when it’s easiest for the government to do so. So the government has the ability to borrow money to recapitalize the banks, which nobody else has.

  16. 16
    ThatLeftTurnInABQ says:

    OK, since this thread is no longer suspended pending a bill from Congress, here goes:

    The problem is with the credit market, not the stock market. The latter may get its comeuppance eventually, but in the meantime the banks are so worried that nobody know who is insolvent and who isn’t that they effectively won’t lend money to each other Libor Surges to Nearly 7% But US Stock Futures Rise on Bailout Bill Revival Hopes, much less to anyone else.

    Read the other articles on that same blog for more details. See especially the 1st comment (by Richard Kline) in discussion on this post Merrill: Low Treasury Yields to Go Even Lower
    for a possible escape from this predicament – if he (Kline) is correct, then Main St. and Wall St. may be partially decoupled from one another, with more of the damage occurring on Wall St. than on Main St.

    From his keyboard to God’s monitor.

  17. 17
    ThymeZone says:

    The stock market is not the key element of the “crisis.”

    Credit and the availability of cash and the ability to move it around in large chunks is what the banking and credit system rely on. You may not like that, but that is the reality. And if you freeze that up, by, say, creating a crisis of confidence or liquidity that paralyzes the system, you bring the whole merry go round to a stop. Not the one that the fat cats are riding, the one that your job is riding on, and that your net worth and your retirement fund rest on. It’s you that will be left wondering what the hell hit you when you are not working and your kid gets sick and you are broke and fucked.

    Otherwise, we should all just start stockpiling ammo and cigarettes.

    Yes, at least somebody around here has a lick of sense. Not many, but a few do. Listen to them, not to the hyenas.

  18. 18
    ElBlot says:

    The plain language here is – as always appreciated. This is a scam.

  19. 19
    Shouting at the Rain says:

    Nope. I haven’t got a clue. Maybe that’s evident by this post. I just don’t trust anyone here.

    After 8 years of Bushian rule, I don’t either. But there are a lot of economists who know WAY more than I do, they don’t appear to have any agendas to push, and they seem to think that there is a real crisis. So I tend to believe them just a bit more.

    Doing nothing sounds like the wrong plan.

  20. 20
    Comrade The Moar You Know says:

    Can’t help myself:

    <img src=”http://i526.photobucket.com/albums/cc342/arbiterusa/01th_OMG.gif”>

  21. 21
    Svensker says:

    Saying “the stock market went up so there’s no economic crisis” is on par with saying “it was really cold today so there’s no such thing as global warming.”

    The big crisis that many have been predicting for years seems to have finally arrived. What no one is able to agree on is what to do. So far, Comrade the Moar You Know’s model (OMG, ONOZ!) wins.

  22. 22
    Glenn says:

    Throwing more $$ too the same crowd that screwed things up in the 1st place makes about sense as buying 10 yrs. worth of booze for an alky and expecting he’ll just quit now they he has plenty too drink.

  23. 23
    Comrade donovong says:

    I have given up on trying to figure this shit out. I am a fairly intelligent guy. I have watched CNBC and CNN and MSNBC and every other fucking news channel, read every finance website I can understand and informed opinion on blogs everywhere. I simply didn’t know who to believe until today.

    I decided that for the first time in longer than I can remember, I am going to trust my President. Not Bush, but Obama. He has access to more financial brainpower than I can even imagine. He is smarter than me. Obama says we need this fucking “bail-out,” and I am going to believe him.

    Finally, a politician I can believe in. Feels good.

  24. 24
    Henry says:

    Michael,

    Add me to the list of folks who are sure they don’t fully understand this whole mess. That said, I tend to fall in the ‘err on the side of caution’ side. A couples of thoughts:

    I don’t know about ‘dead cats’, but the stock market is not about actual value – never has been. It’s somewhere between perceived value and anticipated future perceived value. What happened today is a bunch of folks guess that the stock market was not going to stay down 777 points – so they started to buy anticipating prices would go up. It’s almost certain that there will be another major sell-off and requisite drop in value. Eventually, it will even out – the question is will it happen sooner or later, and what will it be worth when it does.

    The lack of credit, assuming this argument is true, has more impact than just ‘loans to make payroll’, though no loans to make payroll, means people get laid off.

    It also effects the value of housing – good or bad. Less credit means less mortgages (and higher interest rates). This means fewer buyers, and less demand – so housing prices will continue to drop.

    I’m certainly not convinced the bailout will work. I just don’t know if the risk is worth it.

  25. 25
    A la lanterne les aristos! says:

    Oh no, we can haz images in comments now?

  26. 26
    Jasper says:

    The problem isn’t the credit we understand that the “real” economy runs on. That’s the mortgage for a house. Those aren’t the issue. The wizards on Wall Street took that mortgage, sliced it into pieces, gathered them with other little pieces, sold them off to people who bought them using borrowed funds, who hedged their investment in crappy pieces of mortgages with derivatives and other arcane instruments only mathematicians and programmers understand, but which enabled them to leverage $1,000 in betting capital into a $100,000 or $1,000,000 wager, so that while they were on a winning streak allowed them to make big returns which they paid off in bonuses and to investors, and now that the “bet”, the credit that this economy is run on (the “mortgage”) is going bad, and the profits distributed, and the leverage unwinding, that one little piece of bad mortgage paper is bringing a dump truck load of crap down onto the financial system.

    I read today that of the $85 billion we paid to rescue AIG, $20 billion went to settle bets AIG had with Goldman Sachs, firm formerly headed by Treas. Minister H. Paulson. It wasn’t to pay off bad loans, rescue policy holders, bondholders, it was to settle complicated bets between bookie (AIG) and gambler (GS) or vice versa who knows.

  27. 27
    HyperIon says:

    Also, understand that I have no idea what I am talking about…

    roger that.

  28. 28
    maxbaer (not the original) says:

    I am feeding my 401k heavily as I have been for years. Stock market crashes come and go. They’re no fun, but at some point the markets have always come back. Sorry to be overly optimistic.

  29. 29
    Scott H says:

    Short term credit lines even out the cash flow between fat and lean months for businesses. This is a good thing. If these lines of credit freeze up, it is a bad thing for everybody.

    Nothing to do with the stock market.

  30. 30
    Scrutinizer says:

    Lehman, AIG, Wachovia, WaMu, Freddie Mac, Fannie Mac, Morgan Stanley, Goldman Sachs … ALL of them fail/get rescued/massively change,

    Tip of the iceberg. There’ve been lots of foreign bank failures, as well.

    Agreed. It’s ridiculuous that the U.S. and other economies are completely dependent on credit to operate on a day-to-day basis.

    Well, we could go back to the 19th century.

    It’s amazing to me how many so-called progressives are talking the Tom Delay line.

  31. 31
    Ecks says:

    So as someone who only semi gets this stuff, I’m thinking why not have the feds go in and demand everyone throw open their books to show everything that regulation would have required them to reveal had it been in place. The gov gets all the info for 24 hours before it is released to the public, and decides from that if they want to do any pro-active rescue take overs, and then let sunshine clean the whole thing out.

    Is that insane?

  32. 32
    srv says:

    Crap. I tried putting in a pic the other day, and now Moar gets it to work.

  33. 33
    ksmiami says:

    ** To people who think the stocks go up and down and in time for you to reap the rewards. Pfft. Take the Japanese case. 10 years of FLAT FLAT FLAT. In reality we could be looking at a flat to slow growth era in conjunction with mod- high inflation – a toxic mix to anyone near or at retirement age esp in the USA which has a bare minimum of social welfare programs (SS and Medicare). No, this is a real “crisis”, but one in which a well thought out framework needs to be built and not overnight. I hope you all read the deLongs and Buffets on this because they are not making it up – we just need decent government to put it in place and that pretty much excludes anyone from the party of “Government Sucks and we are here to make sure of it!”

  34. 34
    Foxhunter says:

    I’ve seen this several times in the thread already, but this is absolutely about a frozen credit market. Tanking 401(k)s and IRAs are an ancillary benefit to credit fears market jitters.

    Big banks lend smaller banks money. The overnight spread on lending was 7%. This number is usually around prime. Do the math and you see how this ripples throughout the entire economy and affects everyone’s ability to buy shit, and in some cases, sell shit.

  35. 35
    srv says:

    I’m sure pumping all these dollars into a corporate bailout will do wonders for the dollar.

    FLAT FLAT FLAT?

    Try DOWN DOWN DOWN. Your 401k won’t be worth anything with a hyperinflated dollar.

  36. 36
    ksmiami says:

    Hey SRV, I know in terms of stock value, it means down, but I wan’t trying to scare people that much. I mean we could end up like Argentina esp. if the solution just means printing more money. And I am not discounting the credit issue – this country operates on credit, but you know, credit worthiness used to mean something and if it takes a hit to get back to some the more careful behaviors that we used to exhibit as a nation, then that might not be a bad thing.

  37. 37
    DP says:

    As much as I dont want the markets to tank it is indeed difficult to shake the perception that they have been looting the treasury for the last eight years and this is the last big grab before the GOP is banned from government for a generation.

  38. 38
    jrg says:

    The stock and bond holders of these failed institutions need to lose their investment before the taxpayer picks up the tab.

    If owing China $5000 more per person keeps us out of the soup lines, then I’m all for it, but we should not be running up our tab for the people who invested money in this pyramid scheme. That’s not the taxpayer’s job. If this was any other industry besides finance, there would be no question about the responsibility of the shareholders.

    Just buying up the bad loans with the worker’s dime is class warfare. Period.

  39. 39

    Someone on the TeeVee this morning said they’d be worried if the big drop yesterday was followed by a big recovery (defined as half or more of yesterdays losses). They said they’d be worried because it would be apparent the Market has no f’ing clue what is going on. Well guess what. They have no f’ing clue and no way to fix it.

  40. 40
    wasabi gasp says:

    I believe the market bounced off the 250 range to the closing price based on talk of a re-vote by Mitch McConnell.

  41. 41
    cleek says:

    500? BFD

    it’s down 3200 for the year

  42. 42
    ThymeZone says:

    Throwing more $$ too the same crowd that screwed things up in the 1st place makes about sense as buying 10 yrs. worth of booze for an alky and expecting he’ll just quit now they he has plenty too drink.

    Pretty sure — I’d have to go back and do some research, which I am much too lazy to do — but that is almost certainly the worst analogy I have ever seen in my entire life.

  43. 43
    Mary says:

    I say take a deep breath, exhale and relax. You are being played as you have been for quite sometime. This is the last big ultimate drain on the Treasury. If you paid attention, they told you what they were going to do, “drown the government in a bath tub”. The frozen credit market, they are playing you, the gas shortage down south, they are playing you, the stock market drop, they were playing you. The reality is that dollar holders aboard were played as well but they can not do anything about it either.

    And they can play us alot more painful ways. Electricity & water & food.

    If Goldman and Morgan Stanley and Chase and Bank of America and Citigroup fail, now take another deep breath, so what. Just happily default on your mortgage or your credit cards and your student loans. Better the bailout from the government (you & me) come to the rescue of your loans (and mine), not their crappy derivatives.

    Look I know you are saying that is just crazy talk, but there are more of us than there are of them. Did you see what has happened to people in an emergency recently in this country? The rescue workers at 9/11 who were told the air was fine but cannot get decent health care for horrendous health problems; the veterans coming back from Iraq who are getting jerked around about treatment and billed for their meals in the hospital because now they are inactive; the people who have suffered natural disasters like Katrina and Ike. Do you see what is happening to your neighbors and your relatives with issues like health care? People in this very wealthy country have choosing between food and prescription drugs for some time but the change recently to even less drugs is even alarming the drug dealing pharmaceutical companies.

    So if you are thinking that we have to do this bailout so we will be safe, forget it. You are not safe. You have not been safe. You will not be safe. Basically we have to bite the bullet and help each other. We have to abandon our elective officials unless they put us first. Which maybe the few good ones cannot even do now.

    If you are old enough, you remember the films of the last rescues out of Vietnam and people clinging to helicopters to get out. The extremely wealthy are counting on the newly built retainment centers to control you but if not, they are out of here with the money they have stashed way away from here and it will be a much more luxcurious ride out of town, maybe to Paraguay.

    We have to be prepared to deal with the aftermath. We have been keeping the company running already, we refine the oil and mine the coal and run the power generation plants and the hospitals and are the fire and police forces, doctors and nurses and lawyers and farmers. We can do this with out an extreme profit skimmed off the top. We can do this!

  44. 44

    I don’t know much about economics either, but I do know that looking at the Dow only gives you a limited view of what’s going on in the economy. It’s the equivalent of judging a pitcher by how many walks he gives up–it’s valuable information in a particular context, but it doesn’t tell you nearly enough of the story if you’re trying to decide who to put in as a reliever with the game on the line.

  45. 45
    wasabi gasp says:

    LOL, Mary!

    If the shit tumbles down, I’ll just be happy if I don’t have kill people in defense of my patio tomatoes.

  46. 46
    John says:

    What’s fascinating here is that the liberals who knows nothing about economics sound exactly the same as the conservatives who know nothing about economics.

    My general sense of online opinion about the bailout:

    People who proudly know nothing about economics – Insist that there’s no real crisis, that Paulson and Bernanke are trying to pull one over on us, etc. We shouldn’t be so dependent on credit anyway, right? Why should businesses manage payroll based on short term credit? Why should anyone need credit at all?

    People who do know something about economics – this is some serious shit. We need to do something, quickly. (Not necessarily the Paulson/Dodd/Frank plan, though)

    When it comes to choosing between Paul Krugman, on one side and Matt Stoller (and Michael, unfortunately) on the other, I know where I stand.

  47. 47
    mcd410x says:

    The DJIA being up 485 today is just as meaningless as being down 777 yesterday.

  48. 48

    THE POINT BEING, on the one hand fine, so these guys are putting one over on us, don’t bail them out, fine. On the other hand, what they are telling us is that they have hosed us SO much that they are ‘too big to fail’: that the imaginary money is SO much that allowing it to collapse will have real heavy consequences for all of us.

    Fine. My question being-

    If you’ve produced such inflated imaginary money that the world totters on the brink of destruction in the event that it goes ‘poof’ and we’re stuck with regular old wealth, goods, products and services, WHY ARE YOU TRYING TO FURTHER THAT SITUATION MORE?

    Seriously. It’s like saying, “Surprise! ALL of your house is on fire! So you’d better not try to put any of it out, because you can’t put all of it out with your one stupid firehose!”

    Knowing what we now know- that the ‘imaginary fake money’ has become so huge that it’s impossible to survive having the bubble burst, the answer is NOT TO JUST MAKE IT WORSE AND KEEP IT GOING MORE!

    Seriously. Let’s fall back on our actual wealth and take the hit and LEARN from what has happened.

  49. 49
    whocoodanode says:

    It’s the timing of this that brings suspicion for me. The Administration and Wall Street knew about this problem while stalling with happy-talk, and sprung it on America and are trying to stampede us into this dark solution. Healthy suspicion is quite warranted and the patriotic approach, I believe.

    Part of the problem is that we’ve been fooled once by this group. No one wants the shame of being “fooled again.” So there’s no trust, which may be an ironic undoing of the upper class. Still, We the People should be critical of poor government. If the 20th Century taught anything, it is that you cannot blindly trust “pro-active” governments.

    I say slow this thing down, grit our teeth and focus on the real (regulated) banks–not IB’s–and foreclosures and helping the working classes to restore the nation from the bottom up. Enough of the trickle already.

    Really good post, Michael. Many Americans are having thoughts like yours.

  50. 50

    Part of the problem is that we’ve been fooled once by this group. No one wants the shame of being “fooled again.” So there’s no trust, which may be an ironic undoing of the upper class. Still, We the People should be critical of poor government. If the 20th Century taught anything, it is that you cannot blindly trust “pro-active” governments.

    It feels very much like the story of the boy who cried wolf. But remember how that story ended? There really was a wolf, and it fucked everybody’s shit up. Now, I’m with those people who suggest cutting the shit out of the current plan and funding it through the end of the Bush administration, as long as there’s real oversight and our exposure is limited. Then revisit it with a Democratic President who should have a massive popular mandate and increased majorities in both houses of Congress.

  51. 51
    Mary says:

    That is exactly the point. We do not have to kill each other over patio tomatoes, we can share our patio tomatoes. And if the immediately we do not have any more patio tomatoes, we can find someone who does and trade some electricity, or do without. Seriously, why are you so certain some mysteriously market forces make things appear. It is just the hard labor of you and me and we can do it without giving up our safety, health or security.

  52. 52
    skippy says:

    well, many here have already made my point, that the stock market performance is reflective and not indicative (ie, a blister is a symptom but not the cause of an std).

    credit is the issue here, not investments, tho the investments, along w/your ability to get a payroll check or a car loan, are dependent on credit.

    you are right that mcmuffin is a fuck head tho.

    and tho i believe something needs to be done, the current bill before congress is the pits.

  53. 53
    mey says:

    Michael, your instincts are right. It’s not a liquidity crisis. It’s not a credit crisis (the new meme making the rounds). It’s a SOLVENCY crisis. The “rescue” plan is going to exacerberate the underlying problem. It will help delay the immediate pain, but only in the way that a junkie relieves the pain of withdrawal by taking a hit. The country as a whole is in serious, serious, serious debt without future earnings (and a willingness to change to a more frugal lifestyle) to cover our current debt. This bailout is giving an unlimited credit line to someone who is bankrupt so they can pick and choose who gets paid and who doesn’t. It’s pretty sick (in the bad way) if you’re not friends with the person that gets to decide which companies succeed and which fail. But awfully wicked-awesome-sick for whoever Paulson decides gets a piece of this pie.

  54. 54
    TedskiTX says:

    And John McCain is a fuckhead, which is probably the only coherent thought in this post.

    Not the ONLY coherent thought, but one which certainly doesn’t require a course in ECON-101 to come up with.

  55. 55
    fledermaus says:

    Mary and jasper make good points. For those who keep pointing to libor as proof that the world is coming to an end and everyone’s paychecks are going to bounce are overlooking that this is the rate banks lend to each other not related to corporate revolving commerical paper

    There is plenty of liquidy, the fed has been flooding the banks with cheap money.

    Any plan along the lines of what was rejected will make things worse. Because when wall street gets their money and sloughs off the shit paper they are going to plow that money into the safest place they can find. In this case I would expect them to create a new bubble in commodities oil food and energy jacking prices for the rest of us. If you liked gas at $4 you ain’t seen nothing yet

  56. 56
    Marshall says:

    The sky is not falling, but the interest rate spreads are bad. BUT

    This dead cat bounce will make it harder to twist arms in the Congress.

  57. 57
    Nellcote says:

    The *crisis is real but BushCo thought he could stall it off until Jan. when it would be someone else’s problem. That’s why no one is prepared to deal with it. I mean who could have predicted…

  58. 58
    scojo says:

    I trade stocks and options for a living, and have been following this crisis for quite a while. Rest assured, it is a huge problem, and the bailout is not likely to solve it.

    There are quite a few alternative solutions that appear better, including Pete DeFazio’s plan and this one from John Hussman: http://www.hussmanfunds.com/wmc/wmc080929.htm

    Michael D, you should study markets more before you’re out making statements such as the one about today’s rally. Just a normal countertrend rally on low volume, doesn’t mean much.

  59. 59
    CIRCVS MAXIMVS MMVIII says:

    I’m sick of talking about this bailout, I want to laugh at the inept Sarah Palin (Please McCain, Free Sarah Now!) and I can’t find the proper place to do it… Please Mr. Cole, may we have some Open (Sarah can’t name a single newspaper or magazine she reads regularly in interview with Couric so she just says “Any of them, all of them”) Thread? Pretty please with sugar on top? ;)

  60. 60
    TenguPhule says:

    The extremely wealthy are counting on the newly built retainment centers to control you but if not, they are out of here with the money they have stashed way away from here and it will be a much more luxcurious ride out of town, maybe to Paraguay.

    Fortunately the ban on targeted assasinations by the CIA was waved by the fuckheads in charge.

    I forsee a good market for Hellfire missiles in the near future.

  61. 61
    Redleg says:

    It will be more than just a hit to the stock market and our 401K accounts. The tightening of credit will likely have a substantial effect on business investment and capital expenditures as well as on our own spending, especially via credit.

  62. 62
    Redleg says:

    Mey, it is likely the credit crunch will result from the solvency problem you mentioned. The effects of this “crisis” will be felt deep and wide in the economy.

  63. 63
    Bill H says:

    The economy functions on credit, and it always has.

    First part yes, second part no. And that is the problem. You can only run an economy on credit for a limited time. Time’s up.

  64. 64

    First, the stock market is not where the real issues are. If you think the stock markets tell you what is happening, then you are stupider than I thought.

    It’s LIBOR and interbank lending that tells you what’s happening. The US and global stock markets are playing reaction to hopes the Americans will get its act together.

    The actual place where credit action is taking place, interbank markets being the most visible, but also commercial paper, have effectively shut down. That means spikes in cost of credit.

    And it is frankly droolingly idiotic to rant on as supra by many against credit as such.

    Credit is like …. machine oil. Used in the right amount, rather helps the engine operate. Too much and the engine gets overlubricated, and bad things happen, although fixable things. No credit and it bloody locks up, and very very very bad things happen to the moving parts.

    Economies run on credit, and can run with credit forever. Debt running ahead of real growth, well that is another issue.

  65. 65
    comrade chopper says:

    500? BFD

    it’s down 3200 for the year

    take a look at what the DOW was at in 2001 when bush took office.

    note that the dow is at about the same level 7.5 years later.

    note also that in 2001 the dollar was worth 1.22 of today’s dollars. now for shits and giggles adjust the DOW for the value of the dollar.

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