The Treasury wanted 800 billion to prop up ailing banks, and Nancy Pelosi couldn't seal the deal. She herself, personally, screwed the pooch so completely that the blame for this debacle should fall on her.
Then, declaring it a crisis, Congress recesses till Thursday.
I can see my boss, the Sheriff, in an important meeting. "We're in a crisis, ladies and gentlemen. Take off two days and come back on Thursday morning."
Pelosi is an idiot. One third of her party voted against her. She's so pathetic that she couldn't get her own people behind her. The Democrats are in the majority, remember? If she could lead, she could do anything she wanted.
And now I understand that Treasury is going to pump 630 billion dollars into the ailing banks anyway. What did they need Congress for?
The Dow, on news of Pelosi's screwup, fell 777 points. Which is to say, not even 10%. If the Dow had been at 5000, then 777 points would have been something to worry about. But it's not. It closed yesterday over 10,000 which five years ago was considered Fairy-Tale land. If the Dow had lost 4000 points yesterday, that would have been a crisis. A drop of less than 10% is only a blip.
This won't be a crisis until it starts looking like a crisis.
3 comments:
"It closed yesterday over 10,000 which five years ago was considered Fairy-Tale land."
Huh? Five years ago (Sept 03) the Dow was in the 9000's. Four years before that (Dec 99) it topped at nearly 11,500. Now it's below where it was last decade.
Yesterday's drop removed a trillion dollars of market value from the stock market. I agree it's not a crisis, but... it won't take much more than that before it's a political crisis.
That's right, oyster. In 2003 it was at 9000, give or take. I thought that the 1999 figures were an aberration, and that the market wasn't really worth much over 10K. I didn't think that the economy had grown enough to support those figures. The market corrected itself, like it's supposed to.
In the crunch yesterday we didn't lose nearly the amount of value that we lost in 1987. At that time the S&P lost 20% of it's value and the Dow lost from the mid 2200s to the mid 1700s. It was quite a shock, but it didn't require government intervention in the form of a bailout. IIRC, the Fed propped up liquidity and the market rebounded after a short time.
Back in the day when I was in B-School, I was taught that a rational investor had to take a long-term appreciation in the market, and that a short-term attitude was doomed to fail. Nowadays, everyone is myopic in the extreme. The market might reward some short-term positions, but mostly it rewards the long term investor.
For the past ten years, the market and the traders have been extremely myopic and it's costing them.
Yep, bears make money, bulls make money, but pigs (need to) get slaughtered.
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