Open thread: Wall Street; Update: Dow finishes down — slightly
posted at 9:19 am on October 10, 2008 by Allahpundit
It’s going to be a long, interesting, excruciating day, so let’s open a thread for chatter. Reading stuff like this and this feels like being told there’s a giant asteroid headed towards Earth and it’s probably going to hit but maybe not, so, you know, cross those fingers. For context:
“The closest I have seen to this in the last 10 to 20 years is the spike after 9/11,” said Richard Chaifetz, chief executive of ComPsych Corp., a Chicago-based company that coordinates mental health referrals for employers. “But this is more geographically dispersed and is not going to get better in a month.”
The Dow’s not the barometer of the underlying problem but it probably is a reasonably fair barometer of public panic, so that’s what we’re watching. The bell rings in 10 minutes. Exit question: Where will it close today?
Update: I’m guilty of this myself: “A second key factor is that some small investors in the US are throwing in the towel. It is thought that a lot of the overnight sell-off on Wall Street was driven by small investors cashing in mutual funds — the US equivalent of unit trusts — and forcing selling by fund managers in order to return cash to investors.”
Update: Down 521 in the first five minutes. Quote:
“We aren’t dealing with a fundamental economic issue any longer,” said James Paulsen, chief investment strategist for Wells Capital Management. “We are dealing with fear. And that doesn’t respond to economic medicine.”
Update: Much-needed optimism from Hugh Hewitt. I’m assuming that the bottom is approaching and that big investors are ready to go bargain hunting, but given that the underlying problem is with liquidity, who’s willing to sink cash back in?
After the first wave of panic selling, 10 minutes after the opening bell, it’s bounced back to -350 from about -700.
Update: In case you’re wondering. I feel faintly dizzy at the realization that we’re at the point of having to talk about this:
The Dow Jones industrial average would have to fall 1,100 points in a day to trigger the first halt [in trading]. Based on Thursday’s Dow close of 8,579, the threshold number to cause the market to stop on Friday would be 7,479. If that point is reached before 2 p.m., the market will shut down for an hour. If the threshold is breached between 2 p.m. and 2:30 p.m., the halt will last 30 minutes. No trading stops would take place if the plunge occurs after 2:30 p.m.
If the index were to fall 2,200 points before 1 p.m., the market would close for two hours. If such a decline took place between 1 p.m. and 2 p.m., there would be a one-hour pause. The market would close for the day if stocks sank to that level after 2 p.m.
In the event of a 3,350-point decline, the market would close for the day, regardless of the time.
It’s actually all the way back up to even at the moment.
Update: Tom Maguire expects a late afternoon rally in anticipation of good news from the G7 summit this weekend. Let’s hope; late afternoons haven’t been kind this week.
If you’re wondering where the bottom is historically for massive corrections, we’re pretty much there. But past results are no predictor of future etc etc etc.
Watch CBS Videos Online
Update: Maguire almost called it. The Dow was down around 450 at 3 p.m. when a monster rally broke and pushed it to +200 about five minutes before the closing bell. Whereupon it promptly dropped hundreds of points again. The exact number’s not set yet but it finished at around -120. Not good, but no crash, thank god.
This weekend’s task: Canned goods!
Blowback
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7% of subprimes have defaulted, but the money has been loaned and reloaned so many times, that the effect is multiplied. As of Tuesday, the writedown of mortgage backed securities on subprimes was over 50%, as if half of the subprimes had gone bad in a world without MBS.
Vashta.Nerada on October 10, 2008 at 10:23 AM
I think the market is crashing because of the confluence of several causes. One of them is the market’s uncertainty with a possible President Obama. His proposed eceonomic policiies will prolong the problem and the market knows it.
flyoverland on October 10, 2008 at 10:23 AM
atleast 2 IP’s traced to China
jp on October 10, 2008 at 10:19 AM
Do you get that crazy feeling?
Bishop on October 10, 2008 at 10:23 AM
Yep, and I’m one of them.
Vashta.Nerada on October 10, 2008 at 10:25 AM
oldnuke:
Gas is $2.88 in parts of Indiana.
Terrye on October 10, 2008 at 10:25 AM
Man, I wish I had got some XOM 45 minutes ago….
Vashta.Nerada on October 10, 2008 at 10:26 AM
At last! We’ve finally found that eeeevillll guy that sets those gas prices, and he’s been right here among us all the time. Quick call O’Reilly and let him know that Limerick’s the guy! :-)
Oldnuke on October 10, 2008 at 10:26 AM
I feel sick to my stomach. Literally, all partisanship aside, I feel sick.
SlimyBill on October 10, 2008 at 10:26 AM
The bunker is deep, my friend. VERY deep ;)
Limerick on October 10, 2008 at 10:27 AM
Not to be belligerent, but are you (and CK Macleod) still touting McCain’s mortgage reduction plan today now that the govt is “thinking” of also using part of the bailout $ to buy bank stocks? And now Treas Sec has 700 bil with complete authority on what to do with it.
They are just making the problem worse as I expected. They look like they don’t know what they are doing, which they don’t. Everyone is going to get hurt this time.
Mr_Magoo on October 10, 2008 at 10:27 AM
Wow! We usually have lower prices here in Virginia than the Midwest. I only buy gas about once a month so maybe it’s under $3 here too. I’ll have to check the signs next time I go out.
Oldnuke on October 10, 2008 at 10:28 AM
I think that the stock market drop is mostly from the residual effects of the sub-prime mortgages and from the dollars going overseas because of the high gas prices. This is a normal market reaction. I’m not panicking. It is a normal, healthy free-market correction.
scrubjay on October 10, 2008 at 10:28 AM
Vashta.Nerada on October 10, 2008 at 10:23 AM
Well that’s not helpful “as if” doesn’t make it so. It is still only 7%. The money on 97% of the mortgages are still being paid. I am incapable of understanding this, so don’t get frustrated, just ignore me.
Cindy Munford on October 10, 2008 at 10:29 AM
Which is why someone has to pick apart those MBS and separate the bad loans from the good ones. Find out each individual loan that’s included, and if the borrower is making the payments, assign it face value, if the borrower has defaulted, it’s worth zero. If 7% of the subprimes defaulted, the MBS should be worth about 93% of face value.
This sounds something similar to what McCain proposed during the last debate. Will anyone give him credit?
Steve Z on October 10, 2008 at 10:29 AM
Actually, they are taking a crappy plan and improving upon it – kind of like extra mustard on a crap sandwich, but better than the original. Like I posted earlier, think of the ARM people as paid mercenaries in our war against Obama.
Vashta.Nerada on October 10, 2008 at 10:29 AM
Silver lining, Oil is now at $80 a barrel.
Lance Murdock on October 10, 2008 at 10:30 AM
I wrote a lengthy comment in another thread that no one will probably read, but I’ll just piggyback on carbon_footprint if that’s okay. McCain needs to do many things. But at a time when Americans are flipping out about the economy, McCain needs to point to the guy with no record (you know, “that one”), and point to his performance as chairman of the Chicago Annenberg Challenge are tell Americans that Obama, Ayers, and some moronic civic leaders had $49.2 million in Annenberg Foundation grant money, $49.2 million in matching city funds, and $49.2 matching donations at their disposal to reform/improve Chicago public schools–and they accomplished nothing, according to a follow-up report.
Can it be any plainer that Obama is not the guy who should be driving the American bus? Tie that into McCain’s efforts in 2005 to seek Fannie-Freddie regulation and Obama’s letter in 2007 only after about 25 banks had failed, and McCain clearly starts looking like the captain of the ship wwhile Obama looks like a spendthrift teenager.
All I can do, I suppose, is pray that McCain capitalizes on this point rather than coming out with another round of ridiculous proposals and suggestions for cabinet appointments. He cannot afford to shot himself in the foot anymore. I really do wish he’d hammer Obama on his performance as chairman of the Chicago Annenberg Challenge. It makes Obama look as if he’s not qualified to run a lemonade stand.
Paging Stanley Kurtz. Can you provide McCain with copies of your research and of your articles?
BuckeyeSam on October 10, 2008 at 10:31 AM
Think of it this way: mortgage A B C D and E are the market. If A is subprime and defaults, in a normal world, you have a slight problem. However, if the money to fund B C and D came from an expected cash flow from A, and you can’t tell how much from each, you’ve got a much bigger problem.
Vashta.Nerada on October 10, 2008 at 10:32 AM
The end of the world as we know it.
http://www.youtube.com/watch?v=cGqroT1FZ5Y
rishika on October 10, 2008 at 10:32 AM
Which is the REAL scary joker in the deck. One missle in the Straits and the world comes crashing down, and please don’t think that Dinnerjacket doesn’t know it.
Limerick on October 10, 2008 at 10:32 AM
This is definitely America: expecting an instant solution to an incredibly complex situation.
The market is doing what it is supposed to do, it’s culling the herd, so to speak, of the idiots and poor performers.
Bishop on October 10, 2008 at 10:33 AM
I think it is more complex then that. I think it shows how the U.S. goes, so goes the world.
The posters who think the world is trying to take us down, that is why we are going down, could be right socially. But economically if we falter, the rest of the world falters at a much greater rate.
We are the economic-centric part of the world, the world economy revolves around us. As consumers, as producers, as exporters (not just controlling exports across our borders but others also), our breadth of economy is so great that the other nations will fall much harder. I think they are learning that lesson right know.
Chavez will learn in about 90 days what it means not to have the U.S. propping up there economy, France has learned that already, and the middle east is beginning to feel the effect.
The fact is, even in the weakest of times, we still control the world economy, they depend on us.
You will see a lot of blustering in the coming months, but behind it will be a renewed respect for how important we are to the world.
All of our military might will could not produce the results what an inept congress has done.
When this is all said and done, more lives will be lost, more families destroyed then all the wars combined. Such is the liberal mindset, control the economy even if it means destroying it.
right2bright on October 10, 2008 at 10:33 AM
Google up Credit Default Swaps and look at the extreme leverage they allow. Ticking time bombs.
a capella on October 10, 2008 at 10:34 AM
And fuel prices are finally catching up to the falling oil prices.
I paid $2.99 yesterday after paying an average of $3.89 over the summer. Using 8 gallons per day on my commute, this makes a huge difference in my ‘purse’.
carbon_footprint on October 10, 2008 at 10:34 AM
Boy, I got that wrong. The longer Bush talked, the lower the Dow got. I don’t think he has a clue! I can’t believe someone wrote this thinking it would help restore confidence. Sounded like it was written by one of McCain’s speech writers.
huckleberryfriend on October 10, 2008 at 10:35 AM
You’re supposed to say, ‘its not a purse, its a handbag.’
Vashta.Nerada on October 10, 2008 at 10:36 AM
Not after he voted for the bail out bill that rewards irresponsible businesses. Put another way, I’ve lost $30K in my IRA while Congress rewarded AIG’s CEO for doing a bad job. I’m not in the mood to give anybody credit for anything until taxpayers like me who live within their means get the same consideration as the deadbeats who took out loans they couldn’t possibly afford and businesses seek to recoup the millions paid out to lousy executives for doing a bad job.
highhopes on October 10, 2008 at 10:36 AM
At this point I try not to even think about it. I plan to just cut expenses down for the next few months in hopes that I don’t have to sell anything and wait this whole mess out.
Typhonsentra on October 10, 2008 at 10:36 AM
a portion of this weeks panic are hedge funds generating cash as they are forced to settle CDS (credit default swaps) on $800 billion of lehman, AIG etc –
expect a couple of large hedge funds to close their doors this weekend.
looks like the funds with “dry powder” came in on the morning sell off – if the day ends up even – it might mean the long equity funds are moving back into the market
the last two weeks are why some regulation and intervention is needed in the markets. The herd mentality is amazing – both up and down.
However bad regulation (mark-to-market on long term debt instruments) and social engineering in the marketplace (CRA) obviously magnifies the illogical periods of the market
phreshone on October 10, 2008 at 10:37 AM
Question for any people who work in Financial Services Industry or people who follow stocks very closely.
I look at GE’s price right now and it is very tempting to buy. What are your suggestions? When the price of the stock is below 20 bucks the stock seems very undervalue and it looks ripe for the picking, what are your opinions thanks.
Lance Murdock on October 10, 2008 at 10:37 AM
If you are standing on the ledge, go read the article right here at HA, by Casey Mulligan at the NYT. It will soothe you.
Bishop on October 10, 2008 at 10:37 AM
I just received my October statement for my mutual funds investments. I’ve lost 5% in a month.
It’s not as much as others have lost, but when they lose money, things really are looking bleak. They are supposed to be one of the safest ways to invest.
Logic tells me that this is bad, but hold on, because it WILL turn around. But emotionally, between this, ACORN, Obama in general, the polls…. I welcome that giant asteroid.
tru2tx on October 10, 2008 at 10:38 AM
I was over-pessimistic here. If these are home loans, the house is collateral even on a defaulted loan, and it has some intrinsic value even in a depressed market. If the bank forecloses and sells the house, it limits the losses.
Steve Z on October 10, 2008 at 10:38 AM
Very true – and a source of chilly comfort for me. If we go down, the whole motherfarking world goes down with us.
ManlyRash on October 10, 2008 at 10:39 AM
LOL
carbon_footprint on October 10, 2008 at 10:39 AM
Dinnerjacket needs his oil revenue. If the Iranian economy goes to hell, there will be a rebellion, and he and the mullahs will be swinging from lamposts. He knows that.
a capella on October 10, 2008 at 10:39 AM
right2bright:
That is very true, if we down, we will take them with us. No doubt about it. I have heard that a lot of people are wondering if China did this, well maybe, but where will China be if we don’t buy their stuff?
Terrye on October 10, 2008 at 10:40 AM
Their P/E is just over 9, which is tempting.
Vashta.Nerada on October 10, 2008 at 10:40 AM
Sometimes it’s just a bad day.
http://www.youtube.com/watch?v=jBWdRMQfjdo&feature=related
rishika on October 10, 2008 at 10:40 AM
Bishop @10:33 AM
Yes, yes, yes, yes! It is time to buy fellow HAers! Come out of the money market funds that you prudently stashed you cash in and buy! Wisely!
Vince on October 10, 2008 at 10:41 AM
The sub-prime loans was a catalyst, the primer, the firing pin, that set off the explosion.
Don’t be so distracted that the sub-prime was the only thing wrong.
We were exporting at a huge deficit, our energy costs were going through the roof (and an economy runs on energy). We allowed other coutries (China) to “dump” product into our market, and allowed them to under-sell our companies, against international trade laws. We allowed China to set their prices against our dollar (illegal under trade agreements), we bought oil at a huge loss (as opposed to producing at a profit), we allowed off shore bank accounts (like Soros) to take, and not give. We allowed illegal immigration to “export” money without proper taxing.
The sub-prime was the one brick that was taken out of the wall, and it happened to be the last brick that was holding up the wall. But the economic wall was already torn apart by mindless economic (read foreign lobbyists) policies.
right2bright on October 10, 2008 at 10:41 AM
I see him as more of a suicide bomber. Both out to change the world for the better. A world they will never see.
Limerick on October 10, 2008 at 10:41 AM
but where will China be if we don’t buy their stuff?
Terrye on October 10, 2008 at 10:40 AM
Marching towards the middle east.
Bishop on October 10, 2008 at 10:41 AM
That’s a long commute, unless you’re driving a tank.
Mine’s in that ballpark, too.
mikeyboss on October 10, 2008 at 10:41 AM
Problem……….with oil tanking, gas prices will come down. Voters will forget about paying $4.25 a gallon. Democrats will use lower fuel prices to push their alternative fuels initiatives instead of drilling and producing gasoline here.
Dr.Cwac.Cwac on October 10, 2008 at 10:41 AM
I know what will make everyone feel better.
This.
MadisonConservative on October 10, 2008 at 10:41 AM
a capella on October 10, 2008 at 10:34 AM
So you’re telling me it hurts when we put a stick in our eye but no one is smart enough to put the stick down? I’ll go read.
Cindy Munford on October 10, 2008 at 10:41 AM
Steve:
This is true, I think a lot of people are forgetting that these mortgages are attached to real property. There is always some value there.
Terrye on October 10, 2008 at 10:41 AM
Remarkably, McCain seems completely oblivious to the economic issues. I guess that is what comes from decades living in DC on the public dole and married to an heiress. He just doesn’t interact with real people and it is showing in the fact that he’s ignoring the economic issues in favor of pointing out Obama’s ties to terrorists.
highhopes on October 10, 2008 at 10:42 AM
tru2tx on October 10, 2008 at 10:42 AM
Sure, but that brick was a $40 trillion brick.
Vashta.Nerada on October 10, 2008 at 10:43 AM
My expertise is in small cap stocks, but yes, I think GE looks attractive here.
phronesis on October 10, 2008 at 10:43 AM
We’re not going down. The herd is being culled and there will be some collateral damage. I’m trying to look at it as a necessary catharsis unknowingly administered by nitwits in Washington.( hands in pockets, strolling past graveyard, whistling, glancing fearfully left to right).
a capella on October 10, 2008 at 10:44 AM
MadisonConservative on October 10, 2008 at 10:41 AM
hahaha…. got me.
tru2tx on October 10, 2008 at 10:44 AM
Short. The long term of all this is totally lost.
lorien1973 on October 10, 2008 at 10:45 AM
I hope that no one is selling now. If you can’t buy or won’t buy, then hang tight!
Vince on October 10, 2008 at 10:45 AM
I never said we were. Reread what I wrote.
ManlyRash on October 10, 2008 at 10:45 AM
Exactly, we may be the country sitting on top of the “heap” rather then the hill.
Fortunately or farming community is strong, our production of food is strong (if you control energy costs), and that may, if things get really bad, end up being our lifeline.
The banks, come and go, but we must keep our agriculture business strong.
right2bright on October 10, 2008 at 10:46 AM
GE is in the tank with the Dems and stands to land tons of Govt. contracts related to Global Warming. They’ll be making money down the road under the ObamaMessiah
jp on October 10, 2008 at 10:46 AM
GE is a classic example of Liberal Fascism though, and they own NBC. ideologically i hate to support them, plus their dealings with iran
jp on October 10, 2008 at 10:46 AM
Anybody recall offhand the largest trading day in history a couple of weeks ago? I was thinking it was 2 billion shares. Maybe we break that record today.
Vashta.Nerada on October 10, 2008 at 10:47 AM
Abso-friggin-lutely. The US is also positioned to bounce back the quickest. I am reminded of something I read a while back, and it was about the size of the world’s economy right after the end of WWII. On paper, the US economy was about the same size as the rest of the world combined (!) No small potatoes. However, the point of the article was that due to the basic infrastructure and “hard” assets that the US possessed, there reality was that the US ecomony WAS the world economy. There simply was no world economy without the US.
Today, sure, massive growth in Asia, etc., but the US hasn’t been standing still either. Per captia GDP, and “worlds biggest debt nation” stuff aside, you’ll see poeple voting with thier feet pretty soon. In fact it’s happening already: the US dollar is climbing and will continue to do so.
Waterboy on October 10, 2008 at 10:47 AM
Cindy is dead right. This isn’t 1929. People may be rethinking big purchases, but life goes on. Anyone who has a 10 year + investment horizon should consider buying stocks today. Bargains abound.
Bob L on October 10, 2008 at 10:47 AM
Where’s the Japanese fleet when you need it?
Bishop on October 10, 2008 at 10:48 AM
Karl Denninger is really upbeat about this crisis (/sarc)
flyfisher on October 10, 2008 at 10:48 AM
OPEC and Iran can’t do very much to stop oil from going down, IMO. The demand destruction is too overwhelming a force. The decoupling thesis, which was really the biggest support to oil as it became obvious that the US economy was slowing down, has been refuted.
phronesis on October 10, 2008 at 10:49 AM
Off Midway, right where we left it.
Oldnuke on October 10, 2008 at 10:50 AM
A word of advice I got in grad school: ‘never buy a stock, unless you plan to hold it at least 5 years’. Has worked like a charm for me.
Vashta.Nerada on October 10, 2008 at 10:50 AM
highopes:
I don’t think McCain is completely oblivious to economic issues and when it comes to the economy he does not scare me half as much as Obama. You just don’t like McCain, never did and even the midst of a crisis you can not resist making a gratuitous swipe at the man.
Terrye on October 10, 2008 at 10:50 AM
True, but I want our leaders to prepare for the worse. That was the same attitude about the S & L’s, then the mortagages…see the dems leaders saying there was nothing wrong?
I want our leaders to assume the worst, prepare for it, then take actions to stop us from getting there.
We can be optimist (and so can they), but I want realists, leaders who will step out and say “we must take this action, or…”. Instead we have leaders saying, “everything will be okay”, just like they did a few years ago to the Republicans when they raised questions about FM’s.
right2bright on October 10, 2008 at 10:50 AM
All I know is that I’m voting Obarfo. I want to give the reins of the economy over to the biggest, most naive dipshit the DFL has ever nominated.
Bishop on October 10, 2008 at 10:50 AM
Unless you’re a lot older than I think, you shouldn’t have done it, unless you’re going to get back in while it’s still below where you got out.
misterpeasea on October 10, 2008 at 10:51 AM
ZZZZZZING!!!
Waterboy on October 10, 2008 at 10:52 AM
phronesis:
Remember Operation Preying Mantis? Back in the 80′s Iran tried to use its military to stop the flow of oil. It took the US Navy a couple of days to drive them right back to land.
Terrye on October 10, 2008 at 10:52 AM
I agree, but I don’t want our leaders to think that way. They have to be planning for the worst, their job is to anticipate, not to be cheerleaders. If they do cheerlead, make sure they have a plan to lead with.
right2bright on October 10, 2008 at 10:53 AM
Off Midway, right where we left it.
Oldnuke on October 10, 2008 at 10:50 AM
HAHAAAA!
We should raise it, paint Chinese flags on the sides and declare we just discovered an invasion fleet.
Solve a whole slew of problems at the same time.
Bishop on October 10, 2008 at 10:53 AM
The reason for Allah’s panic is obvious. With Steve Jobs declaring that the iPod was doomed means that so is the iPhone. SELL Allah. SELL NOW!
Limerick on October 10, 2008 at 10:56 AM
Cindy:
I think maybe there is some truth to this being media driven. I am sure that the sense of hysteria is partly media driven and of course that leads to more panic.
Terrye on October 10, 2008 at 10:56 AM
Yeah, this whole economic crisis is all about me not liking McCain. I’m not that self-absorbed.
I’m critical of McCain for being oblivious to the economic issues. On a morning when the Dow is hovering around 8500, I really want the candidates for the presidency to be discussing economic policy not ties to terrorists. If you had half a brain the economy would concern you too.
highhopes on October 10, 2008 at 10:57 AM
the big down opening indicates that there was a lot of mutual fund liquidation. Fund managers can’t liquidate at the time they get the sell order because they want to do the liquidation in the most sane manner possible so the orders are matched overnight. When you have a lot of sales, naturally the price goes down which is what we saw this AM. Now you will have buy orders as some want in and sell orders as prices improve so it will see-saw until the bulls or the bears gain control.
There should be a lot of rumors and false bs all day as the battle rages.
Vince on October 10, 2008 at 10:57 AM
I think maybe there is some truth to this being media driven. I am sure that the sense of hysteria is partly media driven and of course that leads to more panic.
Terrye on October 10, 2008 at 10:56 AM
The media jerkoffs have a candidate to get elected, regardless of what they do to the public.
Bishop on October 10, 2008 at 10:58 AM
Some bargains but some pitfalls. The Dow is below where it was in 1998, so a buy and hold wouldn’t work too well if your starting bias was 1998 or 1999. Also, this may not be the bottom and even if it is we may not have a “V-shaped” recovery. Not impossible for us to go down another 20% and then just linger in the 7,000 to 9,000 levels for another decade.
More critically, all of the bad news with the international banks isn’t out yet and, as with Iceland, some failures can be bigger than a government’s ability to manage them. We haven’t seen the financial meltdown fully flow into earnings numbers but this quarter’s announcements will start to give us an indication of how low the “E” in 2009 “P/E” will actually be.
dedalus on October 10, 2008 at 10:58 AM
All,
True, the Dems will take advantage of the situation and we the American people will all pay in the end. This problem isn’t like Kennedy’s reaching the moon in a decade proposal. This is the complete overhaul of our electric grid system with technology that doesn’t exist yet.
This overhaul would take decades to change. It’s to bad people are too stupid to realize this and will vote for The Emperor anyway.
Drill here, Drill now!!!
Plus throw millions of dollars into alt fuel R&D!!!!
There is nothing wrong with living in eco-friendly environment, it’s just stupid that we think it can happen overnight.
I just can’t wait when The Emperor tries to starts his ‘overhaul’ of electric grid system when his same eco-allies block all his proposals since solar power energy will destroy desert life and wind power will endanger bird migration.
Lance Murdock on October 10, 2008 at 10:59 AM
Huh? I made no reference to you claiming we were going down. You reread it. You made a statement regarding our influence on the world economy. I said we weren’t going down. My statement had nothing to do with any projection by you, because you didn’t make one. Sheesh!
a capella on October 10, 2008 at 11:00 AM
highhopes, you are a butthead!
Vince on October 10, 2008 at 11:00 AM
Confound you, Madison!
First time I’ve laughed out loud all day.
hillbillyjim on October 10, 2008 at 11:00 AM
Whatever. At least my priorities are clear and rational.
highhopes on October 10, 2008 at 11:03 AM
Somewhere, Tyler Durden is smiling. Everything back to zero.
otcconan on October 10, 2008 at 11:06 AM
Heh.
Heh hehehe.
hillbillyjim on October 10, 2008 at 11:06 AM
Terrye on October 10, 2008 at 10:56 AM
Add to that another obvious agenda and I am feeling played big time. Maybe I can be more cavalier because I am not retiring anytime soon and we are in decent shape but this thing stinks. It’s like Y2K multiplied by ten. And I think if they could do this on global warming we would all be walking everywhere.
Cindy Munford on October 10, 2008 at 11:07 AM
I’d suggest that they HAVE to be cheerleaders in public but they need to be planning for the worst case scenario in private- ready to anticipate any eventuality. Where I fault Congress over that bail out bill was that, from the beginning, it was clearly an election year knee jerk reaction without any chance at success and no plan B beyond hoping that throwing $700B at the economy would stop the downward spiral.
highhopes on October 10, 2008 at 11:08 AM
Let me see if I can get this right:
At the most basic level, the stock market exists to provide investment capital to companies selling their own stock. Theoretically, the value of the stock is in the dividends that the company will pay to the stock holder. A decrease in the value of the stock has no immediate affect on the dividends payed to the stock holder, but does decrease the amount of capital raised when a company sells stock.
The reported value of stocks are simply the most resent selling price. As such, nothing is actually lost to the real economy when stocks “crash.” No goods are destroyed.
The actual problem lies in the disruption of “business as usual,” a change in the business environment that makes previously efficient methods inefficient (sometimes to the point of non-functionality). But there is always some rate of change in circumstances, so some amount of disruption is inevitable periodically.
In this case, a housing bubble collapse (probably inflated in the first place by government intervention) has cause disruption much larger then the collapse itself because of the opaque way the home mortgages were financed. I have not seen a solid explanation of what caused that opaqueness, though I have seen plenty of evidence pointing to over regulation as the cause of the bubble.
As to what to do, I’m not sure. Clearly, the cause of the bubble needs to be excised. We should also see about giving more transparency to the opaque securities market (though, if this is a case of investor ignorance, future investors may well fix this on their own by demanding more information for their investment).
Other than that, we have a choice: let the whole tumbling structure settle, and then see what we have left in the end, or expend effort propping it up. If we choose the second, we need to be very careful, because putting efforts in the wrong places is exactly what turned the 30′s into an entire decade of depression.
Count to 10 on October 10, 2008 at 11:11 AM
McCain can not say anything about the economy that will make him appear like an accomplished economist. The only thing he can do is explain in simple terms how we got here and promise to make every effort to fix it with the people he will appoint to do the job.
The only thing that will help him to get elected is a direct appeal to us asking if we would be more comfortable with Obama or him. He needs to point out that Obama is a radical by his associations. They will call him racist but so what? The other side thinks we are all racist anyway so screw ‘em.
Yep! Fear or greed works every time. Obama’s conered the greed market, or will with his 30 minute infomercial on the Communist Broadcasting System so McCain needs to tell the story of what America will be like under Obama’s thumb.
Vince on October 10, 2008 at 11:14 AM
I’m buying lightly. Nibble, don’t try to pick the bottom. Keep some dry powder so you can cost average down.
swami on October 10, 2008 at 11:15 AM
Oh, and yes, I’m clinging bitterly to a Bible in one hand and a Remington 870 in the other.
otcconan on October 10, 2008 at 11:16 AM
Me too. Very, very cautious buying right now. I’ve never been in the market in any serious fashion, and as long as the wheels don’t fall off this is the perfect time to get in. But I’d much rather be on the backside of the rise than the frontside of a collapse.
BadgerHawk on October 10, 2008 at 11:20 AM
So apparently you are fine with the gov’t interfering with the free market because “something has to be done.” The gov’t possibly buying stock in companies. That works for you. Well good luck with that.
I’m against the fact that they created a plan at all. To you it may look like an improvement. To me – an average Joe – it looks like they don’t know what they are doing. By the looks of things on Main Street, it is creating unnecessary panic.
But you must be the experts since now you are all giving stock market advice. Works well with all the advice you gave two days ago.
Mr_Magoo on October 10, 2008 at 11:21 AM
It is a $40 trillion wall, the brick was a couple of trillion at the most. It was the catalyst that brought the wall down. If not that, then it would have been this winters oil prices. Or Social Security, it could have been any number of a “trillion” issues.
You can’t overspend, over entitle, under export, and expect to maintain the economy.
But you know it was congress (it always is) that allowed this to happen. It wasn’t the “free market”.
right2bright on October 10, 2008 at 11:27 AM
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