Record drop in the Dow today

– I’m really surprised that anyone who calls themselves a Republican dares to even show their face out of doors after this mess.   ‘The party of Deregulation’, ‘the party of free markets’.   Yow, the party that finally destroyed the country be removing all the bars to greedy behavior.

– There are a couple of posts out there today that I want to reference.  They catch the flavor of where we are right now, in my opinion.

– First , here’s a bit from James Kunstler’s Cluster Fuck Nation Blog.  I always love his analysis and his ability to scathe the ground down to bedrock.

The big effort of Mr. Paulson and his working group has been to ram through legislation that at all costs avoids any attempt to place a reality-based value on this bad debt. He managed it by holding a gun to Congress’s collective head, telling them in plain English that a genuine “work-out” of these “toxic” investments would set in motion a fatal cascade of credit default swaps which would leave the entire banking landscape a smoldering wasteland — with the result that virtually every retirement account and pension fund would go up in a vapor, the Federal Reserve and the FDIC would melt away to twin piles of goo, scores of millions of lives would be ruined, and the USA would be left a basket case among nations, making us envy even the fate of Haiti and Zimbabwe. Talk like that might prompt a congress-person to do any fool thing.

– More of this…

– – – – – – – – – – – – –

– And then there’s what I might call “The school of the other shoe dropping“.  

– Oh, there have been many dire predictions and a lot of scoffing.    Followed, at some point later, by a glowing crater where the issue in question used to be.  

– Remember, just a few weeks ago the statements coming out of WaMu about how healthy they were and how there was no doubt that they could weather the storm?   Right.

– So here’s a story I’ve been watching for a week or more now.   Little murmurings about the slight (oh, really – just very small) possibility that the Hedge Funds might be the next part of the market to crater.  

– See what you think.  Here’s Kevin Drum, who is now with Mother Jones:

HEDGE FUND WATCH….The end of the third quarter is nearly upon us, and hedge fund managers are feeling nervous:

Even as Washington reached a tentative agreement on Sunday over what may become the largest financial bailout in American history, new worries were building inside the nearly $2 trillion world of hedge funds. After years of explosive growth, losses are mounting — and so are concerns that some investors will head for the exits.

….The big worry is that a spate of hurried sales could unleash a vicious circle within the hedge fund industry, with the sales leading to more losses, and those losses leading to more withdrawals, and so on. A big test will come on Tuesday, when many funds are scheduled to accept withdrawal requests for the end of the year.

“Everybody’s watching for redemptions,” said James McKee, director of hedge fund research at Callan Associates, a consulting firm in San Francisco. “And there could be a cascading effect, where redemptions cause other redemptions.”

The article says optimistically that “No one expects a wholesale flight from hedge funds.” But no one ever does, do they?

– To the original…

– Yep.  I don’t think we’ve seen the end of this yet.   And I say that after the worst one-day drop the Dow has ever seen.

– I wonder what the odds are of the Republicans getting the White House again?   One would hope that the odds are slim after this fiasco.  But then this country seems to be populated with a very large number of mostly clueless people who disdain intellectualism, science, reason, and common sense.  So, who knows?

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