$700 billion bailout bill fails in Congress
09-30-2008, 05:48 PM
#47
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09-30-2008, 06:02 PM
#48
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Just like you can't count yesterday's single huge loss as an indicator of the market's overall direction, neither can you count a single day's huge gain as an indicator of overall direction. Not right now, at least.
09-30-2008, 11:09 PM
#50
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10-01-2008, 02:29 AM
#53
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Only problem with that is everyone's 401k will pretty much evaporate, since just about everyone's retirement is tangled up in investments.
I feel that's the only thing missing in all this: the lack of understanding that your retirement is tanking with the stocks your 401k is invested in. This ought to be a wakeup call to the "Every-regulation-and-government-intervention-is-bad" and the "Business-is-capable-of-running-itself-without-government-intervention" crowd here that has been intrestingly silent of late. Guess they finally got that memo that unrestricted "Free Market" doesn't work, and keeping government out of our lives takes a back seat when your retirement is about to be wiped out and the bank where you keep your life savings goes under and you get pennies on the dollar because their bank pushed the legal unregulated envelope.
Saying we should do nothing isn't an option anymore. At the same time, I feel that $700 billion is a nonstarter. We are already owned by China (thanks to the past 7 years), and another $0.7 trillion just makes our kneeling at China's feet complete.
If we do nothing, we go into the worst recession we've ever seen because there's no credit and therefore no one buys and therefore people get layed off, and even less buy and more gets layed off. If the cycle continues too far, we got ourselves a depression.
For those of you who watched the stock market fall yesterday, and are looking at today's gain as proof that everything's OK, you simply aren't paying attention.
1. Stocks are still lower than they have been in a very long time.
2. Finance stocks are taking a huge beating.
3. The dollar has fallen even faster recently.
4. ...and this is important... the stock market crash of 1929 wasn't a 1 day affair (it too had brief rebounds before falling even farther) and the crash of October 24th 1929 didn't create a depression on October 25. Or November 25th. Or December 25th. In fact, it took roughly 4 years to fully degrade into a depression.
Stocks took an initial heavy beating, the cycle of reduced purchases, layoffs, and farther reduced purchases combined with continuing falling stocks as companies made less and less profit was alot like rolling a boulder down a hill. Hard to get started, but once you do, it will pick up speed till it gets to a point where it's unstoppable until it hits the bottom.
Make no mistake, we're in some serious s*it right now. Either way we go, we're going to be feeling serious repercussions for many years.
I feel that's the only thing missing in all this: the lack of understanding that your retirement is tanking with the stocks your 401k is invested in. This ought to be a wakeup call to the "Every-regulation-and-government-intervention-is-bad" and the "Business-is-capable-of-running-itself-without-government-intervention" crowd here that has been intrestingly silent of late. Guess they finally got that memo that unrestricted "Free Market" doesn't work, and keeping government out of our lives takes a back seat when your retirement is about to be wiped out and the bank where you keep your life savings goes under and you get pennies on the dollar because their bank pushed the legal unregulated envelope.
Saying we should do nothing isn't an option anymore. At the same time, I feel that $700 billion is a nonstarter. We are already owned by China (thanks to the past 7 years), and another $0.7 trillion just makes our kneeling at China's feet complete.
If we do nothing, we go into the worst recession we've ever seen because there's no credit and therefore no one buys and therefore people get layed off, and even less buy and more gets layed off. If the cycle continues too far, we got ourselves a depression.
For those of you who watched the stock market fall yesterday, and are looking at today's gain as proof that everything's OK, you simply aren't paying attention.
1. Stocks are still lower than they have been in a very long time.
2. Finance stocks are taking a huge beating.
3. The dollar has fallen even faster recently.
4. ...and this is important... the stock market crash of 1929 wasn't a 1 day affair (it too had brief rebounds before falling even farther) and the crash of October 24th 1929 didn't create a depression on October 25. Or November 25th. Or December 25th. In fact, it took roughly 4 years to fully degrade into a depression.
Stocks took an initial heavy beating, the cycle of reduced purchases, layoffs, and farther reduced purchases combined with continuing falling stocks as companies made less and less profit was alot like rolling a boulder down a hill. Hard to get started, but once you do, it will pick up speed till it gets to a point where it's unstoppable until it hits the bottom.
Make no mistake, we're in some serious s*it right now. Either way we go, we're going to be feeling serious repercussions for many years.
10-01-2008, 03:39 AM
#54
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The stock market crash wasn't a 1 day affair, didn't create a depression over night (or over a number of months), and most important of all, it can actually be traced to September 1929 and didn't kick us into a depression till 1931. It wasn't even till into 1930 that we even started to have a recession.
After reaching an all time high in early September 1929, stocks faced a overall slide over the next month of 17%. Thursday October 24th, the market had a huge drop. The next day, a group of bankers including JP Morgan got together and started buying up stocks of US steel above market value to try to keep things from melt down, and it briefly worked. But that following Monday, investors started pulling out & prices dropped again. Black Tuesday, record numbers of shares were traded, dropping the market farther (something like 15-18% over the 2 days).
Next hit the market took was when Hoover decided not to veto a new law raising tarriffs (which caused other countries to retaliate). This caused another drop in the stock market. Stocks hit bottom in November, losing roughly 45% of it's overall value.
The stock market then continually recovered, regaining over half of it's losses by April 1930. The market began another slide in April 1931 that didn't bottom out till the summer of 1932 when it lost about 30% of it's peak of April 1930 and about 90% of it's September 1929 peak.
The depression didn't really start to take ahold till about 1931/1932, lasting almost up till 1939 when we recovered our export market... making supplies & armaments and shipping them to Europe.
The stock market didn't suddenly end up with a 89% loss over it's peak in ond day, one month, or even one year. It took 3 years which the stock market had as many rallys as it did fallings. It's just that the fallings were a bit bigger.
Today, there's mechinisms in place keeping stocks from losing more than a very small percentage in a single day. Stocks drop too fast, the market shuts down. But it doesn't stop downward spirals.
In short, it's completely dumb to look at a single day's gain and think everything's OK. The REAL guide is stock trends.
October 9th 2007, the Dow Jones peaked at over 14,000.
Today it closed at 10,800.
That, my friend, is a 23% drop in less than a year.
That's a quicker drop than the 2nd stage of the stock slide that led to the depression of the 1930s.
I wouldn't be as sarcastic about the chance of a depression based solely on today's meager rally if I were you. Even over just yesterday, we're still down 300 points (stocks recovered 485 versus yesterday's loss of 777) and overall it's worth only 77% of what it was last October. That's pretty close to the rate of the 2nd phase of stock declines leading up to the depression...
.... and that's with the mechinisms slowing the fall that didn't exist back then.
I'm not saying a depression will definately happen soon, but it would be foolish to look at what's happening now and pretend the ingredients aren't there.
Last edited by guionM; 10-01-2008 at 04:07 AM.
10-01-2008, 09:35 AM
#56
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This ought to be a wakeup call to the "Every-regulation-and-government-intervention-is-bad" and the "Business-is-capable-of-running-itself-without-government-intervention" crowd here that has been intrestingly silent of late. Guess they finally got that memo that unrestricted "Free Market" doesn't work, and keeping government out of our lives takes a back seat when your retirement is about to be wiped out and the bank where you keep your life savings goes under and you get pennies on the dollar because their bank pushed the legal unregulated envelope.
Keep in mind that much of this big effin mess lies at the feet of certain people in Congress, who for years, directed Fannie and Freddie to influence, pressure, even threaten banks to make hundreds of thousands of loans to unqualified people. Corruption, plain and simple.
There is PLENTY of blame to go around here, including government meddling - or at least meddling from government individuals with their own agendas.
With that said, some government intervention is now needed. But it needs to be the right solution, the smart solution. This is too important and too big to simply create a quick, kneejerk plan with everyone's BS pork attached to it. Let's hope that the politicians can put their own self-serving interests momentarily aside, and work together to effectively do the 'people's business'. Everyone should take a deep breathe and relax for a moment. I'd rather wait afew more days for the right plan - or at least a better plan - than rushing an inadequate one through.
The stakes are huge here, let's not blow it.
Last edited by Z284ever; 10-01-2008 at 10:05 AM.
10-01-2008, 10:11 AM
#57
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10-01-2008, 11:34 AM
#58
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http://www.youtube.com/watch?v=1RZVw...d=event_597487
Like others have said, there is plenty of blame to go around. But some would give Fannie, Freddie, and their buddies in Congress a complete pass on the matter and lay 100% of the blame at the feet of the market. It is complete and utter knee-jerk idiocy.
We've left the foxes in charge of the henhouse for so long that not only are the hens all gone but the henhouse itself has been burned to the ground. And now the foxes themselves intend to rebuild the house and it's only going to cost $700 billion. Here's the contract, sign here or else.
And let's not forget Sarbanes-Oxley, which gave us mark-to-market accounting.
http://www.ftportfolios.com/Commenta...-market_mayhem
But oh no, it's all the free market. Government tinkering and meddling played no part in this. Guy, Hujass, you've got it all figured out.
Like others have said, there is plenty of blame to go around. But some would give Fannie, Freddie, and their buddies in Congress a complete pass on the matter and lay 100% of the blame at the feet of the market. It is complete and utter knee-jerk idiocy.
We've left the foxes in charge of the henhouse for so long that not only are the hens all gone but the henhouse itself has been burned to the ground. And now the foxes themselves intend to rebuild the house and it's only going to cost $700 billion. Here's the contract, sign here or else.
And let's not forget Sarbanes-Oxley, which gave us mark-to-market accounting.
http://www.ftportfolios.com/Commenta...-market_mayhem
But oh no, it's all the free market. Government tinkering and meddling played no part in this. Guy, Hujass, you've got it all figured out.
Last edited by Dest98; 10-01-2008 at 11:53 AM.
10-01-2008, 12:12 PM
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10-01-2008, 12:47 PM
#60
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One thing you forgot to mention about the drepression fo the 30's is unemployement was at 25%. Today we are at 6%. That is a huge factor. At least people are still working and still can buy things. Lets also not fopget about the people who just walked away from their house because they were upside down on the what the home is worth. These people still have money and will keep on spending. I doubt we are heading for a depression, we have a lot of people panicing, just like when oil went through the roof.