Holy crap!! I just looked at cnnmoney, and saw where the Dow closed!

[Critters2]

That bailout doesn't seem to have calmed things on Wall Street.

Now I'm starting to worry.

[CountAllVotes]

1. you should have been worred before the bailout

now we are another $700 billion in the hole.

[whistle]

2. The bailout can be frozen, congress needs to put it's own people in the U.S. Treasury

[CountAllVotes]

9. that is what should be done

I just got through reading up on Bernanke. His so called, "dissertation" (?) entitled "Essays on the Great Depression by Ben Bernanke" is online to read.

I am not impressed. I have noted that a great deal of this book deals with gold and the gold standard. :think:

Read it yourself right here:

http://books.google.com/books/princeton?hl=en&q=Essays+on+the+Great+Depression&vid=ISBN0691016984&btnG.x=4&btnG.y=14&btnG=Search+This+Book#PPA21,M1

:kick:

[KoKo]

37. Yeah...but Congress doesn't come back until after Election/Nov...then they break again

for TG...and a week or two...and then Christmas until the Inauguration.

:shrug: Don't think it's much time to "fix" given the way congress moves at "snail pace." :shrug:

[magellan]

13. Obama should have a team ready to go into the Treasury when he's elected! n/t

[whistle]

22. Correct, not next January

[Critters2]

6. Yeah, I was told to worry before the Iraq war, too.

After a while, my worrying parts get exhausted.

[The_Casual_Observer]

3. My guess is that it will go down to below 5000.

[Mira]

12. I called my "assistant" at ED Jones in July and

told her to get me out of all stocks foreign and domestic, except for gold stocks.
She worked hard to try to convince me to not do that. I don't have that much, and I wondered why she cared.

When I told her that I foresaw a DOW of 7000 by year's end I could tell she thought that my elevator did not go all the way to the top, and she did what I asked without further ado.

I've been wondering if she has thought of me lately......

[daninthemoon]

4. Did you really think the money would go toward fixing this? We just

paid the first installment to the extortionists. It appears that things have now spread far beyond our shores, and we might not have any choice but to ride it out. That $800 billion "bailout" is already in the pockets of some of the main villains in the whole mess.

[stray cat]

5. The bail out was to prevent catastrophy if possible - no one claimed it was a quick fix

Now we wait and see how bad it gets. The trouble is we will never know what would happen without intervention compared to what is actually going to happen. Recovery if possible may be 5-10 years. People planning to retire are now being advised not to.

[Critters2]

10. The way it was being presented to laypeople like myself

made it sound like a quick fix. And since I'm payin' for it, it should've been explained more accurately.

[magellan]

15. Amen. It definitely was not sold as "this will take time"

...it was sold as "we need to do this YESTERDAY or there will be a catastrophe!"

[lapfog_1]

18. The two statements are not inconsistent.

It DID need to be done "yesterday" to stop a catastrophe, it is NOT a quick fix.

It was never intended to forestall a market crash. It IS intended to get in the game of commercial paper i.e. the credit crunch. The Fed, acting now because they have some confidence in the bailout "fix", has now become a commercial paper buyer (short term unsecured loans). In a week or less, businesses will be able to make payrolls and buy inventory. That keeps most of us employed (averting the catastrophe). Then, the plan is for the TARP to buy the "toxic" assets of the remaining banks... the banks will then get back to buying commercial paper and making money off the transactions. The Fed gets out of the commercial paper market... and things return to JUST having a recession (which, in large part, is due to the WAR IN IRAQ and the steep increase in oil / gasoline). Eventually, we will work our way out of recession. The TARP will sell the assets purchased... and we taxpayers will likely lose something in the transaction (but not the whole $700 B). Depends on how long the TARP holds the assets.

[magellan]

19. The point is that isn't how it was billed. n/t

[nadinbrzezinski]

23. I told that to every congress criter aide I talked to

that this needed to be splained, and that people needed to be told how bad this was

Truth be told... and no defense either... I doubt 80% of congress critters and staff got it either... and I am being generous

[anigbrowl]

32. Unfortunately you're right. Most people want simple answers.

Indeed, that preference for simple answers and easy 'no-brainer' solutions is part of how we wound up here in the first place. Just like banks failed to ask hard questions about their borrowers, people getting mortgages didn't ask hard questions of their broker or lender, hedge fund managers didn't ask hard questions of securities underwriters...well, you get the idea.

[anigbrowl]

31. It wasn't sold well, but unfortunately people stop listening 30 secs into an economics lecture

Kinda like when you post something complex on DU and some people just reply to the subject line instead o the whole message. I quite agree that they made a hash of it, but on past form they were likely afraid that if they went into detail people would just complain that they didn't understand what the politicians were talking about.

[maxsolomon]

7. time for Europe to step up to the plate & take a swing

frankly, they have a lot to answer for.

[anigbrowl]

8. Methinks someone hasn't been keeping up

1) while they had their own overheated real estate market there, they're importin more of our economic pain than the other way around

2) the ECB has been pretty much on top of matters, and the Europeans have been dealing with their own bank failures.

What, exactly, do you think Europe is doing wrong? Perhaps you should look at more financial news sites or so, because European banking/financial/treasury affairs don't get much coverage in the mainstream American media.

[maxsolomon]

25. they need to pass a pointless trillion dollar bail out, too

you're right, i haven't been paying attention. my bad.

[MissMarple]

11. Someone is going to start buying. They won't be able to ignore a fire sale.

People are buying now, just not enough to make a difference. What is Apple at today? It might be a bargain. It may still drop, but it will come back and past the point that one jumped in. One could still make money. I think the buyers are waiting to see how this jells out, but they won't wait forever. They can't help themselves. This is what they do. Is this like short selling? And did make any sense at all? I know more about kids than I do about economics. :silly:

[Critters2]

14. That's what I thought a week ago. nt

[garlicmilkshake]

21. Yeah but most people want to wait until the fire is out before going to the sale...

:shrug:

[MissMarple]

34. But not until the ashes are stone cold and sifted through.

;) Buyers are watching each other. They can't help it. It's like gambling. Some will come back because they don't want to be left out of a real deal opportunity. A lot of people will test the edges, then walk right in regardless of the heat. The think they are invulnerable, and some of them actually are.

[lapfog_1]

16. The bailout was never intended to calm things on Wall Street.

at least as far as the stock market.

It was intended to ease the credit crunch.

It hasn't even started yet.

It was always going to be too late to stop the recession (which is what the market is now reacting to), yet to be seen if it was in time (and sufficient) to stop the depression.

[Critters2]

17. Then why have the media been using the Dow as a barometer?

And before you answer, let me say, pre-emptively, "Yes, they have".

[lapfog_1]

20. The media isn't all that clever.

Other than Keith and Rachael, I haven't noticed a lot of "big brains" in the media, have you?

They also tend to focus on disasters more than "everything is normal" stories. The market dropping almost 900 points over two days is a disaster in the making. We are in (or will be in) a recession. No bailout was going to fix that. And it wasn't sold that way. It was sold as a way to prevent 12% or 15% unemployment in 2 to 4 weeks as many businesses could not obtain short term (revolving) lines of credit from bank, i.e. commercial paper. They also would not be able to maintain inventory. Business drys up, people are laid off, cycle deepens... possibly to a depression.

The bailout is, along with the Fed action of the last two days, HOPEFULLY going to avert a depression. But not a stock market drop.

[renate]

24. the media need to do a better job of explaining that "Dow Jones" does not equal "The Economy"

The single number of the Dow Jones Industrial Average is a lot easier for us to understand than predictions of unemployment rates, preferred lending rates, etc. Most reporters and editorial writers don't know a whole lot more about the complexities of the economy than anybody else. So they all focus on the DJIA, and therefore we all focus on the DJIA (and on our 401(k)s), and assume that the bailout was completely ineffective, when we really don't know what would have happened without it--probably something a lot worse than what did happen.

[Geek_Girl]

27. On NPR they were reporting on the TED Spread

and what that meant. I guess that's the indicator to determine if the bailout is working. Apparently it's not looking good either.

[anigbrowl]

29. Because they're lazy and it's simple

Most of the time, it's adequate as a general indicator of the economic weather. Some outlets, like NPR and CNN, have been trying to give a more in-depth explanation in recent days, though they've left it pretty late. I feel much of the hostility towards the bailout etc. stems from people not knowing much bout the how the financial system works...though if we had a well-informed population, we probably wouldn't be in this mess to begin with.

[Alcibiades]

36. They always do

It's part of the ownership society! This is a society for the owners, so they track the value of equities. Not unemployment, or real inflation, or wages, or anything else, but the price of equity assets.

Plus they go up and down every day, which generates news, so they like the Dow.

[readmoreoften]

26. If the bailout was supposed to ease the crunch, then why is the Fed going to start lending directly?

You'd think that since they added a new strategy 2 days after the bailout, that might mean it didn't work as planned.

[anigbrowl]

30. Well, they were hoping for a psychological boost

which they didn't get, but on the other hand they probably weren't expecting a bunch of EU institutions to go belly up last week either. The bailout plan itself wouldn't show direct effects for several weeks anyway (just due to logistics), but having a bunch of bank failures in Europe racheted up the pressure yet again - something Paulson and co. can't reasonably be expected to predict, since those European institutions aren't regulated by the US. Obviously they would know that Europe was also having a financial situation, but not all the day-to-day specifics.

[a la izquierda]

28. I spoke to my uncle before the bailout bs passed.

He works for NY Life and has worked in the industry for 25 years. He is a staunch democrat, even though he is among those who would see a tax increase under Obama. He doesn't care about that. He wrote to several congresspeople, urging them NOT to pass the bailout: as he saw it, no guarantees it would pass, entirely too risky, not what the economy needed to be jumpstarted, etc. But he told me not to pull my IRA, because I'm not retiring for decades; in the same breath, he also said not to invest in stocks quite yet, because the market was still in for a rollercoaster, whether the bailout passed or not. My husband wanted to invest because we can probably afford to throw a little bit in there now...but we can't afford to lose what we do invest. So, for now, my IRA will lose money (not much in there anyway).


My mom has her retirement in CDs, after the disaster that was the post-9/11 stock market. She lost everything, then gained it back and pulled it out.

[Hannah Bell]

33. They don't explain well because they're "lazy," "stupid," "simple.." Ha!

They don't want people to understand. That's why.

Occams razor - the universality of the bad explanation leaves "they don't want to educate" as the simplest answer.

"The more you watch, the less you know."

[endthewar]

35. It's going to get much worse. Banks don't want to lend to each other.

[sarcasmo]

38. Where are the thank God DUers who were clapping that this free money passed?

[lelgt60]

39. A little perspective might help calm your fears...

I remember sitting in front of my television in 1987 watching the Dow go down 22% IN ONE DAY! Australia's index was down 41%, Spain 31%. It was, of course, scary. But, I woke up with everyone else the next day, and just went to work. Six months later I got laid off. On October 27, 1997, the Dow went down over 7% in one day. I just got up the next day and went to work. And got laid off one month later. Now, the layoffs actually had nothing to do with the stock market (poorly run relatively small companies). I'll bet you can guess which hurt more - the market or the layoff.

As of today, the Dow is down 28.6% for the year. That's not that much compared to past bear markets. Here's the thing. You've heard it before, but think carefully. The key is to buy low and sell high. Unfortunately, most people cannot get themselves to buy low, because the only time anything good is low is when everybody is scared.

So, here's what I'm going to do (I really don't like giving advice - I cannot see the future - but some people seem really scared):

1) Wait until the market volatility settles down. Doing anything now is just a gamble because the rules are changing out from under you. I have everything in a money market. The volatility (my simple definition for now :maximum daily change over 5 consecutive days) needs to be under 100 Dow points.

2) Wait until the Dow closes above 10900 for 5 consecutive days.

3) Split my money into 5 equal parts

4) Buy one Morningstar 5 star mutual fund, including one high dividend fund, once a week for five weeks

This won't get the max gain from the bottom, but, remember, Bulls Make Money, Bears Make Money, Pigs Get Slaughtered.

I really believe having Obama elected will help calm the markets. Bush is just an idiot, rigid, and corrupt, and EVERYONE can see it. Someone thoughtful and intelligent is what we need.

Good luck to everyone.