2 posts in one day!!
Let me tell you, if you bought at noon on Thursday, you are a God.
As of right now (2:50 on Friday afternoon, an hour and ten minutes to close) the Dow is at 11,400. That is a 400 point GAIN over opening bell on Monday. Every day this week has seen triple-digit swings in the Dow. At noon yesterday the Dow was just a smidge above 10,400, so it's had a 1,000 point gain since mid-day yesterday.
The rise today was in response to the government essentially saying they would bail out wall-street and the banking industry by garaunteeing all this bad debt from the sub-prime crisis. This after Ben Bernake and Henry M. Paulson essentially gave congressional leaders a "the sky really is falling" lecture on Thursday Night in Nancy Pelosi's office. Apparently, the doom and gloom was so deep that one senator said he had never heard language like that. I guess they spelled out the prospect of financial Armageddon.
I don't know. The free market economist in me says that an adjustment is needed. It also says that a foreclosure is like death: it is a natural part of the process that actually helps, not hurts, the overall economy. the reason so many people make money in foreclosures is because there is money to be made in them: they stimulate the economy by creating opportunity. Yes, it is on the pain of someone else, but usually, but the time someone steps up and buys a house in foreclosure, the people selling it are grateful to get rid of it. How different would AIG be (we are certainly going to find out with Lehman)?
But I also feel people's pain and I realize the huge upheaval that would come from a complete meltdown (which still might occur, you know). We don't need another great depression.
The cynic in me, however, can't help but see this as a way to bail out John McCain. The stock market seems to have recovered because the Fed has essentially said "don't worry, go crazy, we are here to protect you." It can only lead to more excess and craziness in the future, just like with the teenager whose parents keep bailing him out and then lending him the car even though he speeds and drives drunk. This is everything the Reganite's have been saying the government should not do for the past thirty eight years. They've been trying to roll back depression era regulation and now that it's lead to the inevitable they are suddenly engaging in the biggest financial bailout in history. We are nationalizing mortgage debt, for crying out loud! We are nationalizing AIG! How can these conservative economists look into the camera and tell us that we should be doing this? It is the biggest piece of cororate welfare ever! Milton Friedman's casket has probably exploded at this point. But is it shores up Wall Street, bails out the corporations.
I wonder if the nutcases over at Fox will finally admit that the economy is in dire straits now that the Fed chairman and the treasury secretary have essentially come out and said that the sky is falling. On 9/11 Sean Hannity absolutely exploded on economist Robert Kutner when he said that the economy was in dire straits. Hannity and the rest of the GOP (including John McCain, with his argument that "the fundamentals of the American economy are strong) know that a bad economy is bad for the GOP, so thaty have to lie and say everything is rosy. Hannity, in typical bullying fashion, did this to Kutner. Check it out.
So, just out of curiosity: are you better off than you were eight years ago?
Cross posted to Live Journal