Why are the markets down today (sep 29) including DJIA futures? I read Bailout plan is agreed by the House and I thought market was looking for it. Can someone explain?
market may not like the fact that WB will likely be gone by lunchtime tomorrow…we’ll see.
Because this is not about a subprime bailout. Take a look at what is happening across the globe, large institutions are falling to their knees. Derivative markets anyone?
Citi and Wells are after Wachovia, so if it is acquired by any one of them, it is still going to be better than failing like WaMu so market should be positive on that?
I think the market does NOT like the bailout because it seems to dance around the whole issue of FALLING HOME PRICES. Isn’t that the whole point here? We’re talking an awful lot about bailing out this bank and that bank so that we can get banks to start lending again. Why? So that even more unqualified people can get 16 credit cards or houses they cannot afford? They are missing the point that - and I forget the exact stat - but something like for ever house that defaults in a neighborhood the rest of the houses take a $5,000 hair cut on average. Willy
WillyR Wrote: ------------------------------------------------------- > I think the market does NOT like the bailout > because it seems to dance around the whole issue > of FALLING HOME PRICES. Isn’t that the whole point > here? We’re talking an awful lot about bailing out > this bank and that bank so that we can get banks > to start lending again. Why? So that even more > unqualified people can get 16 credit cards or > houses they cannot afford? They are missing the > point that - and I forget the exact stat - but > something like for ever house that defaults in a > neighborhood the rest of the houses take a $5,000 > hair cut on average. > > Willy I think you guys are missing the big picture here, this is about the potential collapse of the short term fixed income markets. We are just at the beginning of seeing the widespread failure of financial insitutions on a global basis. The bailout is a minor cog in the systemic problems we are facing.
Maybe it’s because it looks like European banks are now about to slip, suggesting that this is by no means contained to the US. I remember Joey saying “it’s hard to make money when things are contracting generally.” At the time, I thought “why would this be, if you can take short positions?” Of course now you can’t take short positions, and even cash might be eaten by inflation. Even if you could short, the most you can make is 2x your initial position, unless you leverage, which, of course is part of the rol this trouble. So yeah, I can see now, it’s hard to make money in a declining environment.
bchadwick Wrote: ------------------------------------------------------- > Maybe it’s because it looks like European banks > are now about to slip, suggesting that this is by > no means contained to the US. > > I remember Joey saying “it’s hard to make money > when things are contracting generally.” At the > time, I thought “why would this be, if you can > take short positions?” Of course now you can’t > take short positions, and even cash might be eaten > by inflation. Even if you could short, the most > you can make is 2x your initial position, unless > you leverage, which, of course is part of the rol > this trouble. > > So yeah, I can see now, it’s hard to make money in > a declining environment. If you look at the history of financial panics, international propogation occurs quite frequently. The mechanisms are detailed quite lucidly in Kindleberger’s book, so this should not come as a surprise to anyone.
I’m not surprised by international propagation, and I read parts of Kindleberger in college eons ago. But *some* people are going to be surprised by international propagation, and the shift in the mindset of those people may be what is making DJIA go down.
bchadwick Wrote: ------------------------------------------------------- > I’m not surprised by international propagation, > and I read parts of Kindleberger in college eons > ago. But *some* people are going to be surprised > by international propagation, and the shift in the > mindset of those people may be what is making DJIA > go down. Without question, our entire morning meeting was spent speculating on the implementation mechanics of the bailout with our bond team. All the while mega insitutions are falling to their knees in europe.