Respect to congress

The irony is, the market was turning down ANYWAY, no matter which way the vote went. The local banks in my area and credit unions are in good shape (they don't own any of the crap, (including FNM, FRE, etc.) This was a nice whack, but not the defining moment, I think in the next 2-4 weeks, (anyone remember Black Monday- October 87?) will in fact bring that moment when we're down 800-1000 points and NO ONE wants to own anything at any price. That will be the time to buy. In fact, by expressing concern with respect to sitting tight, if we're all doing that(running away from gold,shorts, everything), then that's the day we run to the brokers with our wallets open and buy and go long. At this point, it's just preparing a shopping list.

I'd get right with God.

addendum: I'm not a doomsdayer, I don't buy doomsday theories, but what's happening now is going to lead to WWIII I have no doubt of it. Get right with God, buy tangible assets, be wise and prudent.

If you live in a big city make emegency plans to GET OUT the cities are going to be war zones as food runs out, etc. It's coming and I don't think anything can stop it.

I'm expecting a state of emergency to be declared any time and martial law, amd siezure of property, assets, etc.

Don't count on plastic (debit.credit cards) at some point they will cease to function.

Consumer confidence just came in they say it's up. I don't believe it. If you believe that then you probably believe inflation is only 3% and the economy grew at 3.8%, niether of which is possibly true.

"Just remember that it's a grand illusion"

To think that we could have another 800-1000 point decline in the market in the next few weeks is hard to imagine, albeit possible. One would have wonder what kind of event could trigger another massive decline. My thoughts:

1. A bill is not passed within the next two weeks due to election year politics - credit markets freeze and there is a run on the banks for real this time.

2. McCain wins the election, dies from being overjoyed and Palin is the new commander in chief.

3. WWIII starts over a minor dispute.

All three are plausible and could have dire consequences for the financial markets. As for the bill not being passed, I'm on the sidelines until it does pass. Too difficult to figure out where we go from here and I don't want to give up any of my gains from the past week.

A wise and prudent decision

There is no single event like October , 1987 where the Sec. of Treasury made some dumbass comment about the dollar and it sold off in Asia overnight and came flying in to the US and we were down 20% in a day.

What MIGHT trigger "the event" is if Paulson comes out and says the US is "BANKRUPT!!" and defaults on all its treasuries etc. - then yeah, that would be hell, then yes, china and Russia will declare war on us. along with other dire consequences - my portfolio would drop. :-)

All that said, the market is doing what 's supposed to be doing- it's carving up the sick and taking the healthy parts and leaving the carcass to rot. (nasty analogy- sorry). Deposit bases are being sold, garbage mortgages are being written off, etc. Itruly believe it was going to drop whether they passed the bill or not. Legislation created ina crisis is ALWAYS bad legislation.

This truly seems to me to be a Wall Street/Washington DC problem - look at your own local banks and credit unions - they aren't having these issues (at least not in my neck of the woods.) Local banks are still lending, but have reasonable requirements (i.e. 20% down!)

All the shit has hit the fan and the WS guys were standing right in front of it and now they want us to towel them off. I say good riddance to liars and thieves who should be grateful their choice hasn't been jail time or jumping out a window. There are so many who should be going to jail on this, that we'd need new jails to house them all - better option if your politician is the incumbent, vote them out.

Somehow it's hard for me to see DJD's apocalyptic scenario coming to life.. people are still pumping gas and going to the Apple store to get the latest gadget.. It's true personal spending may be tight across the board but I think Starbucks and Wallmart should be more worried than others. I wouldn't touch any 'discretionary spending' stocks until we're out of the dark side of this moon.
I'm also not convinced that China will go to war over a postponed debt - what good would that do them?
I'm more along the lines of the beancounter - Banks will start lending responsibly and the brunt of the storm will affect financial institutions - it was they who got stuck without a chair when the music stopped and it is them that are going out of business.. the rest will survive and I think will be back to their normal selves in 3-4 months.

Hmmm DJD WW3 sounds a little far fetched what makes you say that? Are you using Kondratieff Waves to predict WW3? Just wondering? i.e recession is followed by boom with war??

http://tinyurl.com/5aku6 - Kondratieff Waves

I still blame Pelosi for the failure of the bill, if she had just kept it shut the bill would have gone through, the markets would have been supported and we would not have seen the drop off that we saw yesterday.
In my mind congress is a group of incompetent corrupt idiots who vote for policies that make them better off, rather than the people they supposedly represent.
Over the last 24 hours all I’ve heard is democrats and republicans saying that they didn’t want to give wall street fat cats tax payers money, end of day who do we the taxpayer pay year upon year every year, for doing sweet FA!! The politicians and bureaucrats!!! Who we are all getting royally screwed over by!!!
Just think who is really to blame the fat cats who have lost all the money or the bureaucrats who let them loose all the money by not regulating?

Actually the ones to blame are the Representatives that are up for re-election in a close race. They are the ones who didn't have the balls to pass the bill. They hoped the rest of the house would pass it for them so they would look good to their districts.

Hey phantom wow kond waves haven't thought about those for a long time! I was too young to appreciate long term cycles back then...

Just going by what I see...Economic dysfunction and saber rattling and history.


Market gained back 2/3 or so of drop today, have to check fibbo #s maybe to make any kind of sense of it. BAsically the market is in panic mode. Panic up and panic doown...Increased volatility.

Credit could easily freeze completely.

I am sorry guys but I just don't see the big deal. This will get done and i would bet that when we really see what we could have got with BILL#1 versus what we are going to get with the final version...we are going to be glad things went awry yesterday.

Out here in "fly-over" country life goes on with nary a hitch. I have not lost a dime because I have not SOLD anything. Yes, it is distressing to see my portfolio tank but I am putting the rest of 2008 retirement money in now to get some cash available. I am looking for blue chips that have gotten crushed. Does anyone really think that BA is worth 1/2 of what it was 6 months ago? Look at the Defense ETF PPA. A chance to pick it up at $17 down 30% from last October.

This is from the WSJ on 9/27.
"As part of a continuing resolution, lawmakers set aside $487.7 billion for the Defense Department, ensuring a smooth transition for the Pentagon's big defense contracts ahead of the next administration."

No matter who wins the White House we are still going to have to deal with Russia, China, and Al Queda (sp? but then who cares!!).

The world is going to go on. This was a cleansing. The Hollow Men on Wall Street and those that sold on the way down are the loosers.

I disagree that a down stock hasn't lost anything. Try to borrow money on the old value. Selling. on the other hand realizes the loss and you get a tax credit.

Also look at the dollar from the moment the bailout failed...

And think about what the dollar would do if it passed.

What is of primary interest is that the SEC changed some accounting rules. I don't know the details but the markets rallied another two hundred points on the news.

The Legacy of Fastow and Skilling Continue (Enron)
"THE ROLE OF MARK-TO-MARKET ACCOUNTING

Enron incorporated “mark-to-market accounting” for the energy trading business in the mid-1990s and used it on an unprecedented scale for its trading transactions. Under mark-to-market rules, whenever companies have outstanding energy-related or other derivative contracts (either assets or liabilities) on their balance sheets at the end of a particular quarter, they must adjust them to fair market value, booking unrealized gains or losses to the income statement of the period. A difficulty with application of these rules in accounting for long-term futures contracts in commodities such as gas is that there are often no quoted prices upon which to base valuations. Companies having these types of derivative instruments are free to develop and use discretionary valuation models based on their own assumptions and methods.

The Financial Accounting Standards Board’s (FASB) emerging issues task force has debated the subject of how to value and disclose energy-related contracts for several years. It has been able to conclude only that a one-size-fits-all approach will not work and that to require companies to disclose all of the assumptions and estimates underlying earnings would produce disclosures that were so voluminous they would be of little value."

Spiked on the possibility of repeal. Not likely to happen quickly. FASB does not move quickly.
"The U.S. Securities & Exchange Commission Tuesday decided to ease “mark to market” accounting rules which have hurt banks, mortgage lenders and the housing sector during the downturn.

Mark to market is a Sarbanes Oxley accounting rule that requires holdings, assets, and loans be valued at their current value. It was aimed at keeping company’s books on the up and up but it has devastated banks and mortgage lenders in the housing slump.

On Tuesday the SEC said companies and financial institutions have some leeway in assessing value, not just the current market, which is of course way down.

There is also some talk in Congress of a temporary or permanent mark to market repeal to allow for a more long-term valuation of assets and loans."

Anyone who likes to read a great novel that outlines a realistic book on the collapse of american society

Dies The Fire by S.M. Stirling

It seems everyone is in favor of this thing getting passed, and I ask why?

So the treasury dept has more sweeping power to do whatever they want?

This thing screams authoritarianism. Hasn't the Bush presidency seized enough power.

You know who was one of the most eloquent on the whole Enron, rate lowering thing under Greenspan, etc? Paul Volcker. I know that he might not politically sit well with many (he didn't with me really) but I read his writings and his speeches lately and my god,this guy predicted ALL of this. Just google Volcker speeches and you'll have your pick of good reads - best to start at Reagan b/c his speeches were great.

Well it has passed, so I guess we have averted WW3?