House Republicans Reject Package, Dow Falls Over 700 Pts

[ezodisy]

Dow at 2000.

!!!!!!!!!!!!!!!!!!! I'm with you! haha

[ezodisy]

Credit default swaps I suppose. Indeed, I am very scared of that 55 trillion dollar shadow market:

http://money.cnn.com/2008/09/29/magazines/fortune/varchaver_derivatives.fortune/

Some companies have probably balanced their books but we are going to see a lot of horror stories crawling out of the woodwork.

"A unit of Primus Guaranty Ltd., a Bermuda-based company that has sold more than $24 billion in credit-default swaps, said last month it guaranteed $80 million of Lehman debt. The firm sold protection on $215 million of Fannie and Freddie debt and $16.1 million on WaMu. Yesterday, it said it also had made bets of $68.2 million on Kaupthing Bank hf, which the Icelandic government seized.

Primus said last week it had $820 million in cash and liquid investments to meet claims on the contracts. The stock was halted from trading on the New York Stock Exchange yesterday after falling to 99 cents. The shares, down 89 percent this year, slumped 15 cents, or 17 percent, to 75 cents. "


horror: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afx8Y_fuZW7o

[ezodisy]

WHERE WILL THE DJI BE AT THE END OF NEXT WEEK?

a few things to point out. After closing at 8451, Dow futures fell to around 8300. More importantly the first chart below shows that on the hourly time frame the Dow could not stay above the 50 MA line which signals a continuing decline for now. Second chart shows the Dow's 11 year historical support at approximately 7500. If it falls below this, then goodnight nurse.

[Catison]

And the basis for all this prescience is . . . . ?

There are a lot of places, but they are all pointing this way.  We just had the housing bubble, after the tech bubble, and the next one will be the commodities bubble.  This is the final bubble before the whole system bursts.  Combine that with the retirement of most of the baby boomers is on the way.  This is the sh*t hitting the fan.

[ezodisy]

   Oil is at $78/bbl. It will continue to go down, even if OPEC cuts.

I agree, it's not too late to short crude. US light crude (Nov) closed at $79.85 and will likely fall to $60, maybe 50 or 40, with relief rallies of course. Annual support around $87 has already been broken.

[drogulus]

   

I agree, it's not too late to short crude. US light crude (Nov) closed at $79.85 and will likely fall to $60, maybe 50 or 40, with relief rallies of course. Annual support around $87 has already been broken.

      My observation about oil was just pointing out an effect (market collapse causes commodity price collapse in anticipation of even lower demand) that becomes a cause, since the lower prices will make recovery easier.

     Incidentally, this is the perfect time to introduce an energy policy with advanced carbon trading features, new mileage requirements for cars, light trucks, etc., higher efficiency standards for appliances, tax credits built into construction codes for new buildings, and a huge tax break for clean coal implementation (preferably a "giveaway to the energy companies" ). The heightened efficiency will, as usual, pay for itself many times over and boost the economy hugely. The next recovery will be green technology driven anyway, so lets go with it and "pick a winner" for once. 

[karlhenning]

Very good points, Ernie.  Few in a position of power, though, it may be, would heed such a suggestion.

[adamdavid80]

Very good points, Ernie.  Few in a position of power, though, it may be, would heed such a suggestion.

You think not?  This would be the PERFECT opportunity for Bush to bring these things to his legacy...very similar to Nixon.  He's been given all this credit for creating the EPA, but it was only after years of pressure from lefties, and only towards the end of his tenure.

Which TWO would be the best, most readily accomplished priorities in your estimations?

[drogulus]

     Carbon trading yes, higher MPG standards possibly, tax breaks for clean coal (carbon sequestration, clean gasification) probably, subsidies for solar and wind continued and intensified definitely, energy efficient building codes maybe not. I'm just guessing. I think either McCain or Obama will do these things. McCain is temperamentally more radical than Obama so he'd probably enjoy sticking it to the big interests in his "C'mon, It'll be fun" mode. Obama is more the stroke your chin "see the other guys point of view" type of guy. He thinks he can negotiate with energy companies like they were terrorists! No, no, no...you have to nuke'em. 

[adamdavid80]

Fits neatly into the discussion...

http://news.yahoo.com/s/ap/20081012/ap_on_go_co/meltdown_global_warming

[adamdavid80]

This was the DJI history during Clinton's tenure as President  (I hope...having issues setting it)...

http://finance.yahoo.com/echarts?s=%5EDJI#chart4:symbol=^dji;range=19930104,20001002;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

This predates my involvement in the market...but what about such a dramatic rise, nearly quadrupling?  I know this was a great deal due to "the tech bubble", and the country was heading towards a recession as his tenure concluded, but was this considered as a whole a successful economy during his tenure? 

(If it doesn't come out, in Jan '93 the DJI was just above 3000, in Oct 2000, it was just below 11,000)

[ezodisy]

blowjob in the white house. best president ever.

[Lethevich]

Fits neatly into the discussion...

http://news.yahoo.com/s/ap/20081012/ap_on_go_co/meltdown_global_warming

Screw that. Think of what will happen if Palin becomes president. One of the few virtues of this election was that both candidates recognised the importance of conservation to some extent or other. Then along comes Cave Woman...

[Catison]

This was the DJI history during Clinton's tenure as President  (I hope...having issues setting it)...

http://finance.yahoo.com/echarts?s=%5EDJI#chart4:symbol=^dji;range=19930104,20001002;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

This predates my involvement in the market...but what about such a dramatic rise, nearly quadrupling?  I know this was a great deal due to "the tech bubble", and the country was heading towards a recession as his tenure concluded, but was this considered as a whole a successful economy during his tenure? 

(If it doesn't come out, in Jan '93 the DJI was just above 3000, in Oct 2000, it was just below 11,000)

One of the absolute greatest mistakes anyone can make in politics is that the president has something to do with the economy, especially the stock market.  The bubble happened because of the overhyped tech sector.  It was going to burst sooner or later, but often a change in the whitehouse forces people to reconsider their portfolios.

[adamdavid80]

One of the absolute greatest mistakes anyone can make in politics is that the president has something to do with the economy, especially the stock market.  The bubble happened because of the overhyped tech sector.  It was going to burst sooner or later, but often a change in the whitehouse forces people to reconsider their portfolios.

Mmmmm, to some extent true - it's the private sector, after all - but there IS a role the president plays in the economy.  The president overall is the Regulator in Chief.  He can create or diminish opportunity with a stroke of the pen.

Plus, the market is, as has been discussed, ruled, most of all, by belief: confidence and fear.  The market rose so dramatically in this time most of all bc people believed in the market and what it offered.

(You could of course point out that it was a republican majority in the congress during this time from '94 on)

[Jay F]

blowjob in the white house. best president ever.

More than likely, if it weren't for that silly "dont ask, don't tell" policy.

[Todd]

The president overall is the Regulator in Chief.  He can create or diminish opportunity with a stroke of the pen.

Congressional leaders would disagree.  It is Congress that creates regulatory agencies and laws, and, most importantly, sets the budget for the various agencies.  The President does not enjoy quite the sweeping powers you imagine.  He can't, for instance, force the Fed to do anything it doesn't want to.  He can't simply tell the SEC to ignore securities law - or create new ones.  He can't simply call the Treasury Secretary and demand that an additional $100 billion in Treasury bonds be issued.  Indeed, please provide some examples of what the President can do with the stroke of a pen as it pertains to regulating the economy or financial sector.

Presidents always receive far too much credit in good times and blame in bad times. 

[adamdavid80]

Congressional leaders would disagree.  It is Congress that creates regulatory agencies and laws, and, most importantly, sets the budget for the various agencies.  The President does not enjoy quite the sweeping powers you imagine.  He can't, for instance, force the Fed to do anything it doesn't want to.  He can't simply tell the SEC to ignore securities law - or create new ones.  He can't simply call the Treasury Secretary and demand that an additional $100 billion in Treasury bonds be issued.  Indeed, please provide some examples of what the President can do with the stroke of a pen as it pertains to regulating the economy or financial sector.

Presidents always receive far too much credit in good times and blame in bad times. 

I stand corrected.  When I was writing that, I did consider including that (which is essentially why I added the bit that it was a republican majority in the house and senate during clinton's tenure from 94 on, and THAT could be seen as why the economy rose), but felt it would have watered down my point.  If, say, Obama or McCain is our next President, you'll see - regardless of who is the majority in congress - a very different approach to energy.  Will it be a focus on ethanol or domestic drilling?  Nuclear power or solar?  That was essentially my point.

But you're right to bring it up.  Last i checked, the president can't even so much as take his morning crap without congressional approval and oversight.

[Todd]

If, say, Obama or McCain is our next President, you'll see - regardless of who is the majority in congress - a very different approach to energy.

I believe the next President will most certainly be either McCain or Obama, and I hope that a substantially new energy policy is formulated.  However, with oil prices dropping for now - and most likely trending down for as long as there is a global recession - and with the financial situation needing quick action, and with entrenched interests being what they are, and with the enormous cost of adopting new energy policies, I have my doubts that what the next Administration will formulate will be all it should be.

[bwv 1080]

Fortunately we still have a capitalist economy and are not dependant on the government to formulate an energy policy.  While the tax credits were renewed with the TARP legislation, which will help, ultimately high prices are the best incentive.