Fear Returns to the Markets
The watchword during much of the current sell-off has been complacency.
We had major denial as to the breadth and depth of the problem. Remember back when Housing issues were "contained?" Do you recall that sub-prime "did not matter?" That the "Goldilocks economy" was just fine?
Those phrases will go down in history as aphorisms of the clueless, excuses by those who should have known better. Hopefully, someone will hold the perma-bulls, the money-losers, the idealogues, accountable.
Meanwhile, as the market panic has now increased to palpable levels, creating a tiny ray of hope: Fear has returned.
As the VIX chart below shows, there is some measure of panic. We have now spiked above all of the recent panics of the past 2 years — but not nearly as much as we have seen in the 2,000, mid-2001, and 9/11. Those 3 prior panics set up the 2002/03 lows 2 years later.
The only question for traders is whether or not this sell off is closer to the ones seen over the past 2 years (in which case you can buy ‘em here) or more like the 2000- 03 period (in which case we have more selling to go).
>
VIX Chart, 2000-08
click for ginormous chart
>
September 18th, 2008 at 1:38 pm
I bought some UYG today (ultra-financials). It’ll probably go lower over the next couple of weeks, but I’m betting that I’ll see a profit by December.
September 18th, 2008 at 1:39 pm
We have just put in a hammer/doji/pin at the lows, after a bullish reversal wedge was broken. This is a swing low now. Look out above.
September 18th, 2008 at 1:42 pm
more like 73-74
September 18th, 2008 at 1:42 pm
They don’t ring the bell at the bottom of a bear market.
September 18th, 2008 at 1:45 pm
How long till we get to Dow 9,000?
I have $20.00 on Halloween 2008.
Who’s with me?
September 18th, 2008 at 1:45 pm
They don’t forbid short selling at the bottom of a bear market either.
September 18th, 2008 at 1:46 pm
UK bans new shorts on Financials till Jan.
Won’t this cause the end of the pair trade… among other unintended consequences?
September 18th, 2008 at 1:47 pm
I am not a technician but do a 10 year chart of the S&P. Isn’t it a beautiful (or scary) example of a double top?
September 18th, 2008 at 1:47 pm
Speaking of fear:
U.K. bars short sales
http://www.marketwatch.com/news/story/britain-bans-short-selling-citing-extreme/story.aspx?guid={844E5B8E-C1AE-4C34-AD80-20193FF1B292}
September 18th, 2008 at 1:49 pm
http://www.ft.com/cms/s/0/16102460-85a0-11dd-a1ac-0000779fd18c.html?nclick_check=1
UK ban on short-selling financials
September 18th, 2008 at 1:52 pm
They should ban long selling too..
September 18th, 2008 at 1:53 pm
You should be happy the VIX is so high. You can make money on volatility, as the market takes a long, confused march rather than a straight shot to hell.
America’s denial reflex is strong, as shown by today, so as CNBC used to tell us, “Profit from it”.
September 18th, 2008 at 1:58 pm
NO way this is THE bottom. This changes nothing in terms of the value of stocks, P/Es aren’t going to get any better.
But this is a Farrell bottom – give the guy his due, he did correctly identify what scientists call “local minima” and this is very likely going to be tradeable, and if they are successful with this maneouvre they might even be able to kick the can down the road into the election.
C’mon guys, you didn’t think that Hank would let GS go down with the Titanic did you? No wonder old Corzine seemed chipper this morning on the TV, even with GS and MS in the sights of the shorts…
You know that they wanted to hurt the hedgies in the worst possible way, they are not really aiming at small traders.
September 18th, 2008 at 2:01 pm
The last few days have started to have the feel of a bizarro world version of the late 90’s. So maybe someone like Albert Edwards, the perma-bear from SocGen, is a bizarro version of the tech flacks of the 90’s. Suddenly people are listening to him, so his targets for a bottom just get lower and lower, in the same way the tech flacks targets got higher and higher. (This morning Edwards issued a note saying the S&P would be a buy when it reached 500.)
Just as people couldn’t stop buying dotcoms in the 90’s, people now can’t stop selling any company with the slightest connection to a financial. Look what happened to Constellation Energy Group this week. It had a small line of credit from Lehman as well as some commodity counter-party risk. At any other time all that would have been very manageable. It opened Tuesday at 47, traded as low as 13, and then this morning Warren Buffet steps in and buys it for 26.50. The company is basically a freakin utility, it will make over 5 dollar profit this year, but if Buffet had not stepped in it would have gone under
September 18th, 2008 at 2:01 pm
I know there was a serious amount of selling volume on a number of the Futures ETFs (QQQQ, SPY, DIA) this past week sometimes marking market capitulation and coupled with the 50% retracement on the yearly chart for the past 7 or 8 years, how is it that the VIX is still such a powerful, solo indicator? Shouldn’t it be considered in conjunction with these other indicators?
September 18th, 2008 at 2:03 pm
they were going to do it here overnight but Bernanke would not let them. Clinton and Schumer are pushing hard for it because their buddy John Mack tells them it needs to be done.
September 18th, 2008 at 2:03 pm
Im afraid weve gotten to the point where the rest of the world has figured out the USA isnt a safe place for their money and they are in the process of bringing it all back home.
September 18th, 2008 at 2:06 pm
Leftback:
I bet you a double cheese Big Mac with supersize fries (and Lipitor and aspirin with it) that we close in the red this afternoon.It is 1:08 and we are up 72 points..
Bruce in Tennessee
September 18th, 2008 at 2:09 pm
@Bruce in Tenn: I for one am NOT taking that bet. I agree with you. If we’re not down at the close today, we will be tomorrow or the next day and big……
The slow (but increasing in velocity) drain on the D-Train continues…..
September 18th, 2008 at 2:09 pm
Sample size is too low to really generalize but cyclical bears in the midst of strong credit and real estate contractions tend to be more protracted and deeper than the norm. The current convulsions and rank fear in the bond markets also do not support the premise of a real low — e.g., for the first time in my memory, or in any data series I have access to, the 3-month t-bill nominal yield turned negative — so if we are indeed approaching a bottom it is probably intermediate.
Frankly I don’t worry much about catching bottoms IAC: Most of the research I’ve seen suggests concerns about ‘missing’ a bottom tend to lead to more bad calls than good and that money can be made more reliably (albeit perhaps less spectacularly) climbing aboard trends that have had a chance to establish themselves.
September 18th, 2008 at 2:10 pm
I was encouraged by the VIX action yesterday but I agree with many here that we still aren’t at THE bottom. Simply put, housing hasn’t bottomed yet and my thought is until it does, the market will not.
One question of my own is why put a lot of weight in the VIX after 9/11? I think it would be foolish not to understand the fear created by the event but how useful is that date as a comparison point for what we are seeing today or other spikes in the VIX, isn’t that just a completely different ballgame.
What does everyone else think?
September 18th, 2008 at 2:11 pm
Is there a pool on the future order of bailouts and amounts? Don’t you wish the Republicans had been more specific in the past when they talked up ‘The Ownership Society’? Would have been nice to know this is what they meant!
September 18th, 2008 at 2:12 pm
You should be happy the VIX is so high. You can make money on volatility, as the market takes a long, confused march rather than a straight shot to hell.
Posted by: CNBC Sucks | Sep 18, 2008 1:53:11 PM
if they are successful with this maneouvre they might even be able to kick the can down the road into the election.
Posted by: leftback | Sep 18, 2008 1:58:27 PM
I’ll be the first one shocked if the DJIA is allowed a closing print of 9,xxx pre- 4 Novo..
If that happens, we’re gonna see a VIX spike a la ‘87 with a ’straight shot to hell.’
~
How long till we get to Dow 9,000?
I have $20.00 on Halloween 2008.
Who’s with me?
Posted by: NY stock guy | Sep 18, 2008 1:45:22 PM
“Sold to You” you’re on, say the word, we’ll clear through BR..
September 18th, 2008 at 2:13 pm
I am quite anxious to read the rants tonight. This is truly rant-worthy, there is no doubt about it. Just think of all the forced unwinding that must be going in at some of the hedge funds. Anyone who gets too greedy in this environment on either side of the ball is being slaughtered.
Last night after the 3-month bill went to zero, I was thinking of a line from one of Barry’s favorite bands: “when the demon is at your door, in the morning it won’t be there, no more…. any major dude can tell you”
Of course the demon is still there. The Hunt for Red October anyone?
September 18th, 2008 at 2:15 pm
Barry, when you compare VIX measures between ‘01 and today’s bear markets, you also have to consider the valuations from which you started. Stocks were more overvalued in ‘00 than they were as of recent. Perhaps the fall will not be as precipitious for that reason.
September 18th, 2008 at 2:17 pm
Catman – it’s the opposite. Global markets are getting hit worse; the money is flowing here where it’s relatively safer. This is why the dollar hasn’t tanked (so far, anyway), among other things.
An interesting study is the collection of episodes where the Dow put in 4% losses on multiple days in a short time span… sometimes it marked the bottom of a bear; other times it market a local minimum on the way to a bottom. And then there was the Crash of 1929, which had 4% down days in clusters from 1929-1933, where buying the first few dips was just one more way to lose most of your money on the way to the real bottom.
September 18th, 2008 at 2:24 pm
Bruce and Jeff:
I am not disagreeing with your general thesis, guys. We may indeed sell off today or tomorrow, I have my stops set. On the other hand they could crank up the PPT and we might get the Mother of All Short Squeezes into expiration. Who knows?
I am a fellow D-train rider, as a rule, as you probably know. (In fact, Jeff, that is originally MY D-train™ you are driving there… but you are welcome).
I’m just trading – for today. Tomorrow, that’s another ball of wax. I would offer that a lot of this business is psychology and that’s why Barry pays attention to the VIX as a fear gauge. Once the emotions turn, the results never cease to amaze.
All aboard !!!
September 18th, 2008 at 2:30 pm
Boy oh boy, I love the bet on Dow 9xxx before Election Day. I would say you would not be allowed to see that with Bruce’s PPT, but with the Fed holding on Tuesday, I don’t know. I would love to see this debate continue.
The Dow has been up and down like a yo-yo, even touching red for a few minutes. It is more disorderly than it was on Monday! The PPT is off today.
September 18th, 2008 at 2:32 pm
barry, “someone” should hold them accountable? it’s us. we’re the someone. the first result for their names should be compendiums of their hack-y numerological paeans to Bush, tax cuts for the rich, and financial calvinball. all the bad calls, all the scapegoats, all the nonsense: it should be their legacy on the internet forever.
September 18th, 2008 at 2:34 pm
@leftback: I’m happy (well, not “happy”) to ride on your D-Train. I agree with that call wholeheartedly.
September 18th, 2008 at 2:36 pm
Forget selloffs and rallies for a moment, and consider that the 10-year market returns haven’t been this bad since the 1973-1983 interval.
With the boomers retiring, the scaling back of loose credit, and ongoing global rebalancing, does anyone expect the next ten years to be better?
Has the market stopped making money?
September 18th, 2008 at 2:43 pm
@ Jeff M: you are a gentleman. Enjoy the ride.
@Bruce in TN: I will pass on the Big Mac, but I would like to request that you deliver a Whopper™ to my Manhattan office, please, but hold the fries. I will enjoy it with a half bottle of Perrier-Jouet that I keep on hand for just such occasions. Not shaken, or stirred.
September 18th, 2008 at 2:48 pm
Must watch prediction from 2006, at a Mortgage bankers association seminar
September 18th, 2008 at 2:51 pm
PPT back in force in final hour of trading?
September 18th, 2008 at 2:57 pm
Be careful Barry!
After banning shorts in the UK, who knows whats next?
Banning bloggers as you as well.
This sounds more and more as good ole` Russia.
September 18th, 2008 at 2:59 pm
UK prohibits short-selling on financials?
Big deal! Ma’…I’m soooo scared.
Haven’t these disciples of the General Asshatery ever heard of put options?
Give me a freaking break.
September 18th, 2008 at 3:02 pm
warning! those banned from shorting UK financials will be driving to short in our market. surely the SEC will have to follow suit with a similar ruling.
September 18th, 2008 at 3:04 pm
Leftback and Jeff,
Thanks for the comments. I do appreciate that this blog site has members that often reach me with new insights about my investing. I never get enough education….
It is left to me to separate the wheat from the chaff. (As it is to every single one of us.)
Bruce in Tennessee
September 18th, 2008 at 3:04 pm
Jeff M.: Forget the PPT, it’s a veritable one-hour sucker’s rally! +225 as I hit “Post”. God grief!
Any explanations???
September 18th, 2008 at 3:07 pm
2pm and were setting up for tomorrows expiration. GE is going to 25. Wonder how many others we can close on the number. Then what?
September 18th, 2008 at 3:10 pm
sorry about the typos in my last post… and i hope you got my drift.
if the sec doesn’t follow thru with a similar ruling, US financials could be susceptible to increased short interest.
i willfully forgave a lot of opportunities today long and short, trying put a little more weight on the smart vs lucky trade.
September 18th, 2008 at 3:11 pm
If you add up how much the Treasury and Fed have pledged or made available for loans so far, it’s close to $800 billion.
The Savings & Loan crisis of the early 1990s cost taxpayers a net of $124 billion in 1999 dollars
Wow this is going to be ugly !
September 18th, 2008 at 3:12 pm
the rally is on! but we’ve seen this picture before and it hasnt turned out well. given the recent destruction to the financial system i’d think the VIX would have to be twice as high to evidence true panic. market still complacent, hoping Bush et al will but every losing position
September 18th, 2008 at 3:12 pm
@Jeff: PPT back in force in final hour of trading?
Quite possibly, keep your eye on Treasuries, if they start selling off, then you know what will happen next.
@Karen – I believe that they will do anything more or less to save GS.
@ François – I agree about puts. Especially January and February QQQQ puts after the miserable holiday retail season, and the Q4 earnings start to dribble out. But it could be sooner. I am bearish, how can you be anything else?
@Bruce: it’s 3pm and I can almost smell the hamburger.
September 18th, 2008 at 3:13 pm
Why doesn’t anyone (want to?) listen to me…bullish reversal wedge + reversal setup hitting it out the park as promised
The built up divergence was basically begging for this reaction..
So, I guess we will close slightly green today!
September 18th, 2008 at 3:16 pm
Nothing like a 500 point intra-day reversal
in a free market..
I can only guess what the media/fraudsters
are saying and are going to say.
September 18th, 2008 at 3:23 pm
The one-hour sucker’s rally is not due to the PPT after all.
The government has not only gotten into the mortgage business, it has once again gotten into the real estate development business. All to elect a Naval Academy flunkie and a community college and tanning booth bimbo.
Happy trails, everyone!
September 18th, 2008 at 3:23 pm
TA is it: I am hearin’ you man, loud and clear…!!
Time to buy Japan, dude, they are oversold and there is nothing like a little time-zone arbitrage…
September 18th, 2008 at 3:23 pm
Interesting chart. It looks like the 11 year sun spot cycle with a reduced time frame.
September 18th, 2008 at 3:24 pm
These kinds of wild intraday market swings…
I wonder how Jesse Livermore would be remembered if he were trading today instead of the last century….
September 18th, 2008 at 3:24 pm
For mere mortals, the speed that events unfold with is clearly too fast for any hope of a meatware mind to assess and react to — perhaps it exceeds the ability of programmed trading systems as well, when the wheels finally come off the cart.
It’s a good bet that order entry systems will fail when a large trading public, whose attention has been meticulously collected over the past months, all decide to act at once.
Therefore, I am planning to place (some) ridiculously low buy orders out there on a GTC basis, backed by a substantial cash position I have been building as things got worse and worser. Stuff like GOOG at 200 or AAPL at 80 (which might be too high, but is still a hell of a bargain). When the hammer falls, it might be best to have some orders like this already in the system.
I’m fishing for comments here — naive? stoopid?
September 18th, 2008 at 3:26 pm
Comrades Bush, Paulson, and Bernanke may be planning to solve the current financial turmoil using a Resolution Trust Corporation-type solution similar to the 1980s savings and loan crisis.
If you add up how much the Treasury and Fed have pledged or made available for loans so far, it’s close to $800 billion.
The Savings & Loan crisis of the early 1990s cost taxpayers a net of $124 billion in 1999 dollars
Americans taxpayers bend over and grab your ankles and prepare to take it 5X times deeper and harder !
September 18th, 2008 at 3:30 pm
@constant:
Steve Barry will tell you that GOOG and AAPL might be considered as accidents that haven’t happened yet. Take a look at the P/E ratios on those puppies… that’s all I’m sayin’…
September 18th, 2008 at 3:37 pm
Bruce — is that “double cheese Big Mac with supersize fries (and Lipitor and aspirin with it) ” deal open to anyone, or just Leftback?
September 18th, 2008 at 3:39 pm
So now the taxpayers are on the hook
for any and all of the banks bad debt.
http://biz.yahoo.com/ap/080918/wall_street.html
that is why the +400 move.
RINSE AND REPEAT
and no jail time for anyone!!!
The Keaton 5 strike again!!!
September 18th, 2008 at 3:44 pm
Slight update…
Comrades Bush, Paulson, and Bernanke may be planning to solve the current financial turmoil using a Resolution Trust Corporation-type solution similar to the 1980s savings and loan crisis but “the devil’s in the details.”
So where is this financial toxic waste going to be stored and who is going to pay for it ?
FACT: If you add up how much the Treasury and Fed have pledged or made available for loans so far, it’s close to $800 billion.
FACT:The Savings & Loan crisis of the early 1990s cost taxpayers a net of $124 billion in 1999 dollars
American taxpayers bend over and grab your ankles and prepare to take it 5X times deeper and harder.
Massive US financial ponzi scheme needed to keep the fake bullshit US economy going wins again !
September 18th, 2008 at 3:49 pm
Posted by: leftback | Sep 18, 2008 3:30:56 PM
esp. AAPL, personally, I wouldn’t own that thing @40
there are going to alot of iPhone wanna-be upgraders thinking thrice –going forward.
and, by then, GOOG’s Android will be fully-fledged
as always, your Orbit may perturb..
September 18th, 2008 at 4:00 pm
any mkt veterans out there that invested/traded through 72-80, 87, 98, 01-03 periods??? is this period more frustrating? does this period stand out as more volatile, or the strangest you remember? I’ve been investing since 93 and maybe this feels the craziest because it’s the most recent but this period feels the strangest ever to me. what say ye.
September 18th, 2008 at 4:03 pm
Leftback — I agree, that’s why I picked those prices. If you look at an 80 price alongside even only 80% of AAPL’s current earnings, the PE gets reasonable. Looking at historical charts of PE over the past decade or so, you have to go back to 2001, when AAPL was just on this side of Death’s doorstep, to find a PE lower than that.
But maybe trying to guess at a low based on historical PE’s might be just another way to catch a falling knife.
Seems like there oughter be a reasonable way to guess at a dirt-cheap price, something that an overshoot downward might trigger, but that would look pretty nice a month or so out.
thanx for the cautionary words.
September 18th, 2008 at 4:06 pm
contstantnormal:
Leftback cheated, that was all his own money that went into the market in the last 30 minutes…
I didn’t know he had more money than the Queen of England.
September 18th, 2008 at 4:08 pm
constantnormal:
I now here that Leftback’s last name is Buffett….
September 18th, 2008 at 4:09 pm
hear
September 18th, 2008 at 4:32 pm
Bush really knows how to throw a nice going away party. Otherwise maybe it’s just about american public meeting karma.
September 18th, 2008 at 4:35 pm
Posted by: man from nantucket | Sep 18, 2008 4:00:26 PM
manfromnan,
check the charts, there were some crzy ‘nifty fifty’ charts from the ’70’s, and others going fwd:, though, to me, these recent models might be beyond, even Dali, to interpret–seems like Pollack might have to be called back..there’s been some crzy paintin’ goin’ on..
but, sit tight, this things is just getting warmed up–though, we better hope BR’s post on Russia isn’t an omen( Hindenburg, or otherwise ), it could happen here…
September 18th, 2008 at 5:03 pm
Nantucket –
I was trading in all those periods, but the only one that sticks out in my mind, as a mere mortal trading via retail brokers, was the Adventure of ‘87.
I was lucky enough to get my broker (at We the People, God rest their souls) on the phone very early on the Big Day, and had him “sell everything” at market. Their order entry systems collapsed under the load (it wasn’t just me selling), and it took me three days to get any kind of confirmation from their systems (not through the mail, but just on their computers), so I could be sure that I had even made any sales or what my account looked like. That was pretty scary. I finally got my confirmation, and things seemed to have bottomed, so I went all in the next day, and made reasonable, (not outstanding) profits through it all.
I eventually came to believe that they just made up sale prices to clear the order book.
Whoever watches over drunks and small children had my back that week.
September 18th, 2008 at 5:18 pm
Clearly, Paulson and the PPT are still firmly in control.
Even the “rumor” of a giant federal bureaucracy to make our financial problems disappear scares the willies out of me.
It will do for the national economy what the TSA has done for air travel.
Tomorrow should be a most entertaining options expiration day.
Break out the Dramamine and buckle up.
September 18th, 2008 at 5:36 pm
My 2 cents worth.
While making my garden-grown tomato sandwich, my mind would not allow me to think of anything other than the fact that this morning we were told that the US, Brits and somebody else was passing money around in the order of $100B to $250B because lending in other Countries was seizing up.
Why do I think a significant portion of this money was used to drive up the market in the last couple of hours as a means of endorsing the newly talked about RTC plan in a dramatic fashion.
My gut tells me that the Fed and Treasury are getting increasingly scared in regard to what they have already thrown at this problem with no clear improvement in investor sentiment and that they are STILL losing the ship at this point in time.
Now, they are really getting desperate in turning this thing around ASAP any way possible. This RTC plan sounds pretty damn desperate to me. This stuff is really getting bizarre.
It feels to me like the US Government has walked into a snare and is now deeply impaled. The more she moves the deeper the spears are embedded and the more pain inflicted.
(By the way, the sandwich was excellent.)
September 18th, 2008 at 5:48 pm
The traders are starting to look like Loyd Bridges in the movie “Airplane”.
I seem to be having a bit of luck with predictions. As I predicted monday after the market tanked, the dow would be above 11,000 by tomorrow (friday). I also said next friday the system freezes with a bank holiday. I think that isn’t extreme enough now. I predict the market will be shut down due to panic selling next friday. Get out while you can, folks. If you didn’t sell into today’s rally, you’ve got one more chance tomorrow. And forget about shorting. The government is actively “persuading” brokers to severely curtail short selling.
September 18th, 2008 at 6:10 pm
God, even Cramer is advising selling tomorrow…when is the next meeting of the flat earth society?? I may not have renewed my membership, though…
September 18th, 2008 at 6:11 pm
God, even Cramer is advising selling tomorrow…when is the next meeting of the flat earth society?? I may not have renewed my membership, though…
September 18th, 2008 at 8:18 pm
The traders are starting to look like Loyd Bridges in the movie “Airplane”.
I seem to be having a bit of luck with predictions. As I predicted monday after the market tanked, the dow would be above 11,000 by tomorrow (friday). I also said next friday the system freezes with a bank holiday. I think that isn’t extreme enough now. I predict the market will be shut down due to panic selling next friday. Get out while you can, folks. If you didn’t sell into today’s rally, you’ve got one more chance tomorrow. And forget about shorting. The government is actively “persuading” brokers to severely curtail short selling.
Posted by: AGG | Sep 18, 2008 5:48:46 PM
sounds, to me, like a seriously good idea.
even if the markets stay open and zoom higher–there will be other days with other rays..
~
“It will do for the national economy what the TSA has done for air travel.”
constant, I wonder if you know how accurate you are..
http://en.wikipedia.org/wiki/Computer_Assisted_Passenger_Prescreening_System_II
http://www.unrealid.com/what.html
September 18th, 2008 at 8:31 pm
I cashed out of the Casino.
Just after I cashed out of every equity, today’s rally started.
I’m still glad I’m out. If it goes up 2K points, I don’t care. I think a Dow of 9K is very real eventually in early 2009.
With all the crap accounting & oversight that has been going on, how can the Dow legitimately go over 14K or continue to sustain anywhere near the current levels??
These asshats have done what Enron couldn’t.
The faith of the U.S. Market has been destroyed or at least seriously damaged both here and around the world.
It looks to me like it could be deja vu all over again looking at the 0ct. ‘72-Dec.’73 dump.
My tinfoil cap tells me something isn’t right. How can there be such strength in the market today (with so little volume for the most part of the day) when I would expect there shouldn’t be, given the total inept economic stewardship of the Administration, FEC, Congress and financial talking puppeteers on T.V. AND the lack of underpinnings of real value — somewhere??
Whatever happens in the market, I hope the movements whack the market players that are not conducive to an efficient and fair market.
I also hope this whole thing puts the fear of god in every incumbent politician that they will be working at a soon to be extinct, as they know it, Freddie and Fannie or possibly out of a job asking for handouts.
I hope there is a significant jolt to bring real management and value back to our market and economy.
That means Nat’s newscasters reading a teleprompter making 100K rather then millions.
That means a CEO that doesn’t grow and make the company profitable, the don’t walk away with millions.
That means if diversification is good for investors, it’s good for the economy…stop the monopolization….but hey I’m a nobody..what do I know.
Oh yeah…and bring back manufacturing to the U.S.A so we can be a country again.
September 18th, 2008 at 9:14 pm
I hate this sort of “it’s OK, we’re bigger now” stuff, but there is a certain element of truth to it.
I’ll take km4’s numbers of $124B for the cost of the RTC, and $800B as our “investment” to date … from the St Louis Fed, here are some numbers for GDP (1980 – $2.8B) and most recent reported ($14.3B). If we use the ratio of the GDP price deflators to convert the 1999 dollar cost for the RTC to current-comparable numbers we come up with a RTC-equivalent cost of about $291B, so the ratio of RTC:GDP is about 1:10, and the ratio of our fix (to date) to GDP is about 1:18.
This is all incredibly sloppy, but I think it’s in the ballpark.
I invite some more perspicacious knit-picking soul to reproduce this with more detail and accuracy, but by my lights, we can handle another $700B before the impact is as great as the RTC, all things being equal (which they ain’t, we’re carrying a boatload more debt, thanks to Dubya).
Not that I am eager to go this route, but it seems to be possible.
September 18th, 2008 at 9:33 pm
“I hope the movements whack the market players that are not conducive to an efficient and fair market.”
Clint, surely you wouldn’t want anything untoward to happen to the PPT?
Starting to see come capitulations.
I cashed out of everything I regard as liquid Wednesday, and am starting to liquidate selected mutual fund holdings. Better late than never. I too think that the bottom lies sufficiently far below to merit salvaging the remains of my assets. Hopefully my money funds will hold up. I’m pretty sure that some will not (beyond the ill-fated Putnam Prime Money Market Fund).
Clear the streets of the wimmen and chillen, it’s High Noon.