Dead Cat Bounce

[Guest]

What appears to be happening on Wall Street today (Tuesday 9/30) is known as a "dead cat bounce". The reference seems to be that if you drop a dead cat far enough (like a 788 point drop yesterday), even the dead cat will bounce. It's not an unusual market occurrence. The bounce is based on very, very light trading volume--less than 1/4 of a normal day on the NYSE. Owners of equities just don't know what to do and today there were a few more buyers than sellers (the low volume) that drove the index up.

There's little doubt among the market makers that our economy is headed for some very rough times. Some say the Dow will continue to drop to possibly the 8,000-8,500 level (down another 20-25% from where it'll close on this afternoon--Tuesday). That would represent the loss of another $3-4 trillion in the value of the stocks owned by investors. In round numbers, our investments are expected to decline about 40% from what they were last Friday.

But the economic pain will be more the result of the closedown of the credit markets, which pretty much has already happened as of this afternoon. There is absolutely no market--no buyers--for corporate bonds or commercial paper, the credit vehicles commonly used by corporations to finance their businesses. Banks in Europe aren;t lending either; LIBOR (the London Interbank Offer Rate) is up to 7%, signaling that very little money is available to borrow, therefore the very high rate. And the banks that have survived thus far have largely withdrawn their corporate credit lines, the next most expensive way corporations finance themselves. Any corporate credit commitments from the banks that have already failed or been absorbed are null and void, of course. There is a flood of investment money headed for fixed income securities, but only to T-bills and other similar obligations of the U.S. government. The flood of money trying to buy T-bills is so much more than the supply that the short-term interest rate being paid is down in the 2/10 to 3/10% range. Even today, there is evidence that many big companies have put an absolute freeze on hiring and some retailers are already looking at closing down stores so that they can afford the inventory for the Christmas season. No, it's going to be bad for all of us, even if Congress gets around to legislating something. The tide has turned and it'll be slow and difficult to reverse it.

The stock market will be more erratic--like today's bounce--but it will still head down significantly over coming months as corporate earnings are battered by weakening economies thruut the world. There has already been almost a $1.4 trillion loss of wealth in just one day--already more than twice the amount of the proposed bailout. Much greater losses will occur as the absence of credit works itself thru the economy. And not just the U.S. economy, by the way. This recession/depression will be world-wide, started here in the U.S. The only good news from today's bounce is the anecdotal evidence that investors haven't given up completely. A few at least still want to buy. If the Congress can do something to create liquidity in the credit markets quickly, there still may be an outside chance we can avoid huge personal losses.

When the public realizes how little the members of the House knew when they rejected the idea of assistance to the financial industry, and realize how much more they will lose than the amount of the proposed bailout, they'll be even more enraged than they are now--if that's even possible. There'll be no amount of posturing and partisan sniping that the public will either believe or find acceptable.

[Guest]

Village Kahuna. As has been discussed in recent hours since yesterday by those now politically posturing to "put lipstick on a pig" it is too bad the Bill was labelled as a bail out. If one accepts the position being presented that so called toxic loans and associated assets will be RESCUED. Many of which will be sold and the resulting funds returned to the treasury. Some of the assets obtained will be held until the market comes back and sold at a gain. Again turned back to the treasury.

Now they are scrambling to better educate the masses exactly what the bill is and how it works.....so they can in good conscience vote for it....and wrankle fewer constituents. Now does it not make one wonder why this was not done sooner?

Because they know they have to do something. And the long term impact is NO WHERE near what the nay sayers have been pumping.

It is wrongfully tagged as a bailout. Recovery is much more appropriate, truth be known. Unfortunately it will not be played that way by the media.

As was stated on one of the networks today....it is an advantage for BHO to have as much uncertainty surrounding the economy as can be painted.

Both parties constituents life and retirement savings are on the line, and like it or not responsible politicians KNOW something needs to be done.

BTK

[Guest]

Why the President didn't call an "all hands on deck" state-of-the-union type address in prime time before the entire Congress in the capital and broadcast on every TV channel is beyond me. Instead he did a couple of walk-thru short speeches in the morning from the rose garden. With a major address, he could have spent as much time as he needed to explain the risks of not passing the bailout/restructuring/economic rescue, or whatever name he put on the program to both the Congress and the public. It's not as if some very smart and experienced people didn't predict exactly what is now happening and could have assisted Bush in explaining how the existence of the "toxic" mortgage loans would impact the financial system. In fact, I would have found it very impressive if both Senators McCain and Obama came together and supported the President in selling the program. Instead, they brought their campaign back to the capital and further confused the negotiations by bringing in their partisan and backward-looking arguments.

So now, on Monday afternoon, more than twice the amount of the proposed bailout has been lost from the collective wealth of the public, with much more likely as the economy continues to shut down. Only now the members of Congress are realizing the losses and pain their narrow-minded inaction has and will cause to the public. And now, I'll bet that as soon as they get back from their holiday recess, they'll pass something in a New York minute. There will be more posturing and partisan sniping and then they'll head home and campaign like crazy so that they can be re-elected to those sweet jobs with all the lobbyist contributions beginning in the 111th Congress.

If the public is smart, they'll throw them all out and let them get a real job and try to make a living like we do, without the big money coming from the special interest lobbyists. There's only a couple of them that I'll have anything to say about and I already know how I'll vote.

[Guest]

What appears to be happening on Wall Street today (Monday 9/30) is known as a "dead cat bounce". The reference seems to be that if you drop a dead cat far enough (like a 788 point drop yesterday), even the dead cat will bounce. It's not an unusual market occurrence. The bounce is based on very, very light trading volume--less than 1/4 of a normal day on the NYSE. Owners of equities just don't know what to do and today there were a few more buyers than sellers (the low volume) that drove the index up.

There's little doubt among the market makers that our economy is headed for some very rough times. Some say the Dow will continue to drop to possibly the 8,000-8,500 level (down another 20-25% from where it'll close on this afternoon--Monday). That would represent the loss of another $3-4 trillion in the value of the stocks owned by investors. In round numbers, our investments are expected to decline about 40% from what they were last Friday.

But the economic pain will be more the result of the closedown of the credit markets, which pretty much has already happened as of this afternoon. There is absolutely no market--no buyers--for corporate bonds or commercial paper, the credit vehicles commonly used by corporations to finance their businesses. And the surviving banks have largely withdrawn their corporate credit lines, the next most expensive way corporations finance themselves. Any corporate credit commitments from the banks that have already failed or been absorbed are null and void, of course. There is a flood of investment money headed for fixed income securities, but only to T-bills and other similar obligations of the U.S. government. The flood of money trying to buy T-bills is so much more than the supply that the short-term interest rate being paid is down in the 2/10 to 3/10% range. Even today, there is evidence that many big companies have put an absolute freeze on hiring and some retailers are already looking at closing down stores so that they can afford the inventory for the Christmas season. No, it's going to be bad for all of us, even if Congress gets around to legislating something. The tide has turned and it'll be slow and difficult to reverse it.

The stock market will be more erratic--like today's bounce--but it will still head down significantly over coming months. There has already been almost a $1.4 trillion loss of wealth in just one day--already more than twice the amount of the proposed bailout. Much greater losses will occur as the absence of credit works itself thru the economy. And not just the U.S. economy, by the way. This recession/depression will be world-wide, started here in the U.S. The only good news from today's bounce is the anecdotal evidence that investors haven't given up completely. A few at least still want to buy. If the Congress can do something to create liquidity in the credit markets quickly, there still may be an outside chance we can avoid huge personal losses.

When the public realizes how little the members of the House knew when they rejected the idea of assistance to the financial industry, and realize how much more they will lose than the amount of the proposed bailout, they'll be even more enraged than they are now--if that's even possible. There'll be no amount of posturing and partisan sniping that the public will either believe or find acceptable.

Thanks Kahuna. You explained it beautifully. :eclipsee_gold_cup:

[Guest]

Why the President didn't call an "all hands on deck" state-of-the-union type address in prime time before the entire Congress in the capital and broadcast on every TV channel is beyond me. Instead he did a couple of walk-thru short speeches in the morning from the rose garden. With a major address, he could have spent as much time as he needed to explain the risks of not passing the bailout/restructuring/economic rescue, or whatever name he put on the program to both the Congress and the public. It's not as if some very smart and experienced people didn't predict exactly what is now happening and could have assisted Bush in explaining how the existence of the "toxic" mortgage loans would impact the financial system. In fact, I would have found it very impressive if both Senators McCain and Obama came together and supported the President in selling the program. Instead, they brought their campaign back to the capital and further confused the negotiations by bringing in their partisan and backward-looking arguments.

So now, on Monday afternoon, more than twice the amount of the proposed bailout has been lost from the collective wealth of the public, with much more likely as the economy continues to shut down. Only now the members of Congress are realizing the losses and pain their narrow-minded inaction has and will cause to the public. And now, I'll bet that as soon as they get back from their holiday recess, they'll pass something in a New York minute. There will be more posturing and partisan sniping and then they'll head home and campaign like crazy so that they can be re-elected to those sweet jobs with all the lobbyist contributions beginning in the 111th Congress.

If the public is smart, they'll throw them all out and let them get a real job and try to make a living like we do, without the big money coming from the special interest lobbyists. There's only a couple of them that I'll have anything to say about and I already know how I'll vote.

We agree that Congress needs a complete flush in order to get rid of those who lilned their pockets over their Congressional careers at their constituents' expense and ignorance.

We do not agree that a "credit crunch" is a bad thing. A company's assets, especially their Grade-A accounts receivables determine the company's credit-worthiness and what the company's cost-of-money will be. The higher the cost-of-money, then either the company's profits diminish or the company must raise prices for goods/services due to increased costs. That is universal business.

Nothing stops any lender from assuming a lot of risk in issuing a loan, and those that take risky loans do so at higher-than-prime interest rates and special terms/conditions, or hope to sell the loans (at a profit) to someone who rates the risk as a better value. However, taking risky loans is RISKY, and the lender can lose its gamble just as well as win.

All of the "propping up" of the credit market seems to be to continue the practice of giving (and selling) risky loan instruments so that the seller continues making money due to lower risk via "co-signer." That includes past loans and well as new stuff, since there is NO FIX to this problem in any bailout bill yet.

Before we are ready to bail out the fianacial industry, the first look should be with the borrower. If Uncle Sam wants to prevent home foreclosures and business closures, then Uncle Sam - on a case by case basis - deals with the borrower for an equity stake in the collateral, even if that equity stake is 150% and the borrower is now indebted to the government at negotiated terms/conditions. HUD and the Department of Commerce are the logical agencies to take care of the commercial and non-commercial borrowers, and authorizing these Departments to fulfill these roles is better than giving the Department of the Treasury carte blanche.

If we must do something, let's take care of those as the low end of the financial feed chain - they have less of an ability to rip us off and a better record of paying their debts. Those "professional money managers" who created this mess should be able to take care of themselves without taxpayer assistance.

I just can't see throwing money into financial institutions directly. That's just rewarding the fox for eating your chickens, and opening the hen-house door to him for another raid.

[Guest]

We agree that Congress needs a complete flush in order to get rid of those who lilned their pockets over their Congressional careers at their constituents' expense and ignorance.

We do not agree that a "credit crunch" is a bad thing. A company's assets, especially their Grade-A accounts receivables determine the company's credit-worthiness and what the company's cost-of-money will be. The higher the cost-of-money, then either the company's profits diminish or the company must raise prices for goods/services due to increased costs. That is universal business.

Nothing stops any lender from assuming a lot of risk in issuing a loan, and those that take risky loans do so at higher-than-prime interest rates and special terms/conditions, or hope to sell the loans (at a profit) to someone who rates the risk as a better value. However, taking risky loans is RISKY, and the lender can lose its gamble just as well as win.

All of the "propping up" of the credit market seems to be to continue the practice of giving (and selling) risky loan instruments so that the seller continues making money due to lower risk via "co-signer." That includes past loans and well as new stuff, since there is NO FIX to this problem in any bailout bill yet.

Before we are ready to bail out the fianacial industry, the first look should be with the borrower. If Uncle Sam wants to prevent home foreclosures and business closures, then Uncle Sam - on a case by case basis - deals with the borrower for an equity stake in the collateral, even if that equity stake is 150% and the borrower is now indebted to the government at negotiated terms/conditions. HUD and the Department of Commerce are the logical agencies to take care of the commercial and non-commercial borrowers, and authorizing these Departments to fulfill these roles is better than giving the Department of the Treasury carte blanche.

If we must do something, let's take care of those as the low end of the financial feed chain - they have less of an ability to rip us off and a better record of paying their debts. Those "professional money managers" who created this mess should be able to take care of themselves without taxpayer assistance.

I just can't see throwing money into financial institutions directly. That's just rewarding the fox for eating your chickens, and opening the hen-house door to him for another raid.

You're still not getting it SteveZ and I don't think you will get the Credit Crunch until it hits you or one of your family. No one's talking about "risky" loans. We're talking about Loans PERIOD! This is not "all about you". It's about our country and the liquidity of it. You'll see.

[Guest]

You're still not getting it SteveZ and I don't think you will get the Credit Crunch until it hits you or one of your family. No one's talking about "risky" loans. We're talking about Loans PERIOD! This is not "all about you". It's about our country and the liquidity of it. You'll see.
I do "get it," and I know a con when I see one. This is about our country, and doing things without thought and one pure emotion, and that emotion being fear, is the biggest risk of all.

Where you get this "all about you" stuff mystifies me. "Liquidity" means nothing if it end in default. The financial market has had a wake-up call, and the grand pyramid scheme has reached its acme.

What really scares me is that people want to just throw money into the air and pray that those who made the mess will make it all better with no fix to the problem. Why is that?

[Guest]

I dont get how someone can make this a personal issue and slam you for your opinion, but knowing that......how can our congress throw this much of our money around with NO explanation beforehand of what is in the bill ?

I am opposed to the bail out TOTALLY. This country needs a wake up call......we do this and THERE WILL BE MORE TO COME. I have read enough the last 24 hours to realize that NO bail out will NOT spell disaster. I do feel bad for those who believe all the stuff they were sold about how they can have this american dream under any and all circumstances.

Today, I had lunch with two folks who worked in the mortgage business and they told me how you could use welfare as income in order to buy a home at times..imagine ! They told me of folks who borrowed 20% for the down money from one place and the other 80% from somewhere else and got a no closing cost deal and they didnt even have a job.

They also told me, and this I have not even tried to validate, but they said that their bosses albeit with limited insight were warning of this about Fanniemae and Freddymac years ago...with limited knowledge.

This is not my strong suit (economics) thus I have been asking a lot of questions. Bottom line.....MANY MANY folks saw this coming with certainity...since the 90's companies were actually being begged to make risky loans by the government (not sure who that indicts at all).....it became from Washington the patriotic thing to do..make home ownership very easy....and this has been going on for about 15 years !!!

[Guest]

Ok...I am so tired from reading all of these long posts....and I am still confused!

I hate to sound like I have no clue....but I know how to make money and spend it....the rest I leave to my financial guy.....

Would someone....or several of you....give me bullet points....

The Pros and Cons to the Bail out.....tell me what would happen in plain english if we do it...if we don't...

Just bullet points....plain english....PLEASE!

[Guest]

Bucco and SteveZ, you are both against EVERY economy expert I've listened to. I'm completely baffled. Do you both know more than they do?

[Guest]

Bucco and SteveZ, you are both against EVERY economy expert I've listened to. I'm completely baffled. Do you both know more than they do?

For a start here is one from Time that I posted last night..

http://www.time.com/time/business/article/0,8599,1845209,00.html?cnn=yes

[Guest]

Here is website called STOPTHEBAILOUT with a number of links supplied and I have not linked to any of them so will not vouch for them

http://www.stopthehousingbailout.com/

[Guest]

From the library of Economics and Liberty

http://econlog.econlib.org/archives/2008/09/the_case_agains_1.html

[Guest]

An older article referring to the Fannie Mae/Freddy mac situation beginning of Sept

http://www.motherjones.com/commentary/columns/2008/09/fannie-mae-freddie-mac-bailout-socialism.html

I might add that I have yet to see a poll (and we love to use polls) that does not show that most americans oppose it

[Guest]

Bucco and SteveZ, you are both against EVERY economy expert I've listened to. I'm completely baffled. Do you both know more than they do?

No more links tonight, but Lou Dobbs has had quite a few economist who totally are against this bail out !!!! Maybe check a few of his last shows !

[Guest]

Oh my Bucco.....you are making my head spin with all those posts!!! ;)


I don't think I can read them all....couldn't you paraphrase for me? :confused:

[Guest]

,,,in any debate, where the parties can only agree to disagree, I think we're there on this issue.

Based on experience, I attempted to describe what was happening, what was likely to continue to happen, and why. Unfortunately, so far my scenario is playing out accurately. Investors in the U.S. stock market have already lost more than twice the amount of the proposed bailout. They are almost certain to lose a multiple of that more in coming weeks and months. The much larger losers will be American workers and their families and others around the world. There will be a dramatiic slowdown of economic activity, business failures, unemployment, a reforming of the economy around the world. It has begun. This is not debatable. The statistics and anecdotal evidence is overwhelming. But there still is a reasonable chance that further losses--financial, economic and personal--can be lessened. Had the proposed bailout been authorized when proposed there was a chance the economic damage might have been slowed, but probably not avoided because the fundamental economic damage has already been done. If legislation is passed by the U.S. Congress later this week, there still is a chance the damage will be ameliorated. The probability will be lessened because the process of the shutting down of the worldwide credit markets has already begun. The investment of $700 billion, even at this late date, still has a chance of paying reasonable dividends in loss avoidance. But there is no guarantee.

What I have talked about in supporting the distasteful, infuriating investment of public funds is a lessening of the financial damage and a shortening of its duration. What others have talked about here is economic and business theory as well as references to public opinion on the propriety of both those guilty and innocent of causing this problem being beneficiaries of the expenditure of the funds. That theory, criticisms and opinion are worthy of consideration. But unfortunately the description of what is happening and what is likely to happen has been more accurate thus far. The only differences remaining to be determined, based on whether or not the Congress decides to use public funds to create liquidity in the credit markets, are in the depth of the losses, the personal pain people will feel, and the duration of the economic damage.

I have purposely avoided discussion of the undefinable costs associated with the erosion of American influence in world political and financial affairs. But make no mistake, those costs exist as well.

So there's no need to continue the debate. We can wait and see what happens. There should be no satisfaction as the result of who's beliefs turn out to be more accurate because one other thing is an absolute certainty--each and every one of us will be effected. Unfortunately, generations of our progeny will as well.

[Guest]

Bucco and SteveZ, you are both against EVERY economy expert I've listened to. I'm completely baffled. Do you both know more than they do?

Then we listen to different people, and the ones I hear (from UnivMaryland & ColumbiaUniv especially) say this is all reaction without common sense.

Perhaps the difference in opinion comes from who will make money out of the "sugar daddy" bailout and who won't. Listening to folk with a vested interest for a cash infusion is like believing the used car sales who says, "Trust me, this is a great car and a steal at this price!"

[Guest]

There are certainly opinions and theories on both sides of the bailout proposal. And lots of emotion as well. But where the rubber meets the road is what really happens to the economy. The credit markets have already shut down and the economy will suffer serious damage in the coming weeks and months as the result. Depending on what Congress does and when will determine the extent and duration of the damage. But the damage won't be the least bit theoretical or opinionated. It'll be real...for sure.

[Guest]

There are certainly opinions and theories on both sides of the bailout proposal. And lots of emotion as well. But where the rubber meets the road is what really happens to the economy. The credit markets have already shut down and the economy will suffer serious damage in the coming weeks and months as the result. Depending on what Congress does and when will determine the extent and duration of the damage. But the damage won't be the least bit theoretical or opinionated. It'll be real...for sure.

Kahuna....either way it goes...bail out or no bail out...Damage regardless?

[Guest]

There are certainly opinions and theories on both sides of the bailout proposal. And lots of emotion as well. But where the rubber meets the road is what really happens to the economy. The credit markets have already shut down and the economy will suffer serious damage in the coming weeks and months as the result. Depending on what Congress does and when will determine the extent and duration of the damage. But the damage won't be the least bit theoretical or opinionated. It'll be real...for sure.

I'm really interested in which credit markets have shut down? People and companies with decent credit ratings can still get loans. I went car-shopping yesterday and there was no problem, so that market is still alive.

If the shakier credit customers find fewer lenders or higher interest rates, that's the market at work. Who in his right mind lends money to a probable deadbeat?

Perhaps this is an "adjustment" that is necessary because of all the credit fraud, shaky transactions and outright gambles?

[Guest]

Steve, thank you for the your usual balanced, articulate and thoughtful insight.

Your street smarts and avoidance of lofty rhetoric are evident in your "both feet" on the ground observation "Who in his right mind lends money to a probable deadbeat?". Your style is refreshing and appreciated.

Most of the guys I grew up with in Jersey became cops, priests or have had their pictures displayed in the post office. Funny thing, no one welshed on a loan from the post office guys. When the first payment was missed you got a warning, the second you lost a finger, the third they broke your leg with a bat, etc., etc., etc. Most of the loans were paid up by the first etc.

Maybe the government should hire the boys from the old neighborhood and start collecting on those bad loans.

Relax, I'm just kidding.......although.......

[Guest]

Steve, thank you for the your usual balanced, articulate and thoughtful insight.

Your street smarts and avoidance of lofty rhetoric are evident in your "both feet" on the ground observation "Who in his right mind lends money to a probable deadbeat?". Your style is refreshing and appreciated.

Most of the guys I grew up with in Jersey became cops, priests or have had their pictures displayed in the post office. Funny thing, no one welshed on a loan from the post office guys. When the first payment was missed you got a warning, the second you lost a finger, the third they broke your leg with a bat, etc., etc., etc. Most of the loans were paid up by the first etc.

Maybe the government should hire the boys from the old neighborhood and start collecting on those bad loans.

Relax, I'm just kidding.......although.......


Thank you.

The irony is business is business, whether at the street-corner level or in the tallest skyscrapers. The basic rules are the same, and when people try to make it seem more complicated than it is, that's when to watch your wallet.

[Guest]

if this market turmoil teaches us anything, it is everybody just can't have what they want.

I sort of look forward to the old values, personal as well as business.

Remember the days if you had bad credit you didn't get the money.
If you didn't have the money you didn't get it.

I look forward to the end of the vicious incestuous business practices of today.

I will share what a car dealer told me once when I asked how some of the young folks could afford to buy all the new cars. He said, most can't. When we loan them the money at a high interest rate we make money on the car...we make money on the loan....and we make even more money when we repossess the car!!!!!!!!!

BTK

[Guest]

Steve,
I believe from your previous posts that you work for the Federal Government. You are very fortunate in that your job is relatively secure and will probably not be eliminated. Government employees are not the norm as far as most American Workers go. They are not as dependent on the economy and therefore have more job security. If you are able to look beyond your own situation and look at the U.S. Economy as a whole you may be able to understand the fear that many are experiencing reference our economy. Many hard working Americans are in trouble through no fault of their own. They followed the rules worked hard,lived within their means and now they find themselves in a situation they could never imagine, without a job and possibly without a home. I don't have the answers to the current problems, I wish I did but I do know doing nothing is not a solution. Just being tough and telling everyone to suck it up will not work. This is a time when we need the proven (successful) experts on the Economy to work together to do what is best for the country as a whole.

[Guest]

Steve,
I believe from your previous posts that you work for the Federal Government. You are very fortunate in that your job is relatively secure and will probably not be eliminated. Government employees are not the norm as far as most American Workers go. They are not as dependent on the economy and therefore have more job security. If you are able to look beyond your own situation and look at the U.S. Economy as a whole you may be able to understand the fear that many are experiencing reference our economy. Many hard working Americans are in trouble through no fault of their own. They followed the rules worked hard,lived within their means and now they find themselves in a situation they could never imagine, without a job and possibly without a home. I don't have the answers to the current problems, I wish I did but I do know doing nothing is not a solution. Just being tough and telling everyone to suck it up will not work. This is a time when we need the proven (successful) experts on the Economy to work together to do what is best for the country as a whole.

You are correct. I work for the Government - started in April 2004 and will end in April 2009. Came onboard, as did many others from the private sector, because of homeland security issues. So, in that sense, my job is "self-eliminated" in 6 months. Then the commuting between TV and DC ceases.

Prior to that (except for the Army time) is all private sector, running my business and those of others. That includes qualifying for and receiving lines-of-credit for operations flexibility, dealing in currency exchanges (present and futures market), and all of the other business rigamarole to include marketing, personnel matter, cost-and-pricing determinations et al. That 3+ decades of experience as a businessman is why this "credit crunch" stuff makes no sense in the honest marketplace. It also makes me question all of this "panic" mode, as I was taught that panic-buying-or-selling is folly.

From today's mail I shredded three unsolicited credit card applications and two unsolicited "here's checks to go with your credit card" sheets. On the radio I heard commercials for "LendingTree.com" and two banks. On television last night the financial services firms still advertised, telling me how they will make investing so much easier. What credit crunch? ? ?

The reality is not matching up to the hype.

I listened to Sen. Obama's comments regarding the upcoming Senate vote on the bailout/rescue/snowjob as "Think of this like a fire. First you put the fire out, and then you fix the blame."

Sounds really pretty, but most firemen I know what to know what started the fire and what is accellerating it, so they know what to use on it to put it out. Sometimes there really isn't a fire and it's all "smoke" with no impact. Sometimes throwing "water" on it makes things worse, and a different suppression means is necessary. Sometimes you must fight fire with fire to break the cycle.

In this case, these particular politicians want to use money like water, without knowing if that will actually put out any fire or make things worse. That's not too smart at all, but we are supposed to be too dumb to question that.

[Guest]

SteveZ, you're swimming upstream. The credit crunch will touch everyone, including you.

[Guest]

SteveZ, you're swimming upstream. The credit crunch will touch everyone, including you.

I don't expect a free lunch. I also don't think throwing $700B with no fix to the problem being made at the same time is good business, especially when the money is going to persons-unnamed-at-this-time to be determined by Secretary Paulson at his discretion.

Your guess is that this undefined "credit crunch" - a great buzzphrase if there ever was to cause fear - will cost you, me and everyone else more money. It probably will in higher interest rates to cover even more losses yet to be disclosed due to those who can't or won't live within their means. That may seem like a heartless concept, but I was raised to buy only what I could afford, not what I could get by hoping the collection agent was slow in coming by.

I get a kick when so many people screamed about the President and Congress (yes, they are culpable, too)for going from zero deficit to $9+ Trillion. Yet when these same politicos (who make money from the financial industry lobbyists as we type on this board) whipsaw panic and want a hurried, no discussion, no hearing, no proof, just-trust-me $700B which will be borrowed from China or the Saudis, that's peachy keen.