Problem is, they're falling out of fifth-story windows. It would appear that what's going to happen is what's going to happen, and to let those who want to play the market do as they will.

Bonddad thought there would be a bounce before this latest plunge, and Barry Ritholtz got burned putting in trades at a technical support level. Mish seems to think this is wave three in a five-wave cycle, implying a bounce and then the "big one." The traders on the floor are asking, "where are the buyers?" but if that's the case, today and Monday will be worse. Could be that everyone is shifting their 401(k) money out of equities. Some are saying that the stock market was a balloon also, and that the crash will continue until P/E ratios will be ridiculously attractive.

Even if that happens, all the wealth destruction will lead to layoffs, unemployment, poor Christmas sales, weak earnings. Then lower stock prices and higher P/E ratios.

My feeling is that we have to go lower, and that stocks are finding their real values.

When facing a large economic contraction. Stock prices have to reflect the new (lower) p/e ratios that will happen as demand contracts.

Is this, not as Stirling has written, the penultimate crisis, but the crisis?
I don't have that answer, but I'm inclined to think it isn't the big one, as it were.

While history repeats itself, it doesn't often do so in precisely the same way. However, looking back at the previous "big one," the market crashed in October (coincidence?), 1929, and things didn't completely unravel until several years later. After deflation had taken hold, it was really only WWII that finally turned things around, and things didn't actually take off again until several years after the war was over.

As I remember, it was only in 1949 that folks began to fell that things were back to normal and the buying began that drove the consumer economy. My dad traded in his 1936 Ford for a 1949 Ford, and you could buy bubble gum again, which I had heard about but which wasn't available during the war. While I wasn't around for the Great Depression, you can bet I heard all about it from my relatives, many of whom worshipped FDR, even the ones who were moderate Republicans.

If this crisis repeats anything like that pattern, this could be a decade long unravelling or even more, after which the world will have completely changed and a new order will reign, as it did post-WWII. That world order is now coming to an end, although it may die hard.

I think we may see a similar pattern of down-stepping as things unravel this time, and "the big one" won't be evident for awhile. In the interim there will be periods in which many think that things have bottomed out when it is just a bear rally.

The probabilities favor a fairly long-term bear, given the amount of bad paper involved, coupled with the problems that the global real economy faces at this juncture. If so, there will be lots of false positives along the way as the trend unfolds, so don't fall for any bear traps.

The best strategy is to be greedy when everyone else is fearful (buy low), and fearful when everyone else is greedy (sell high) . Easier said than done, especially in bear times.

No one yet has mentioned raising taxes, have they? Any kind of shared sacrifice for the common good?

Cut taxes in good times and raise them in bad? Recipe for double disaster.

The US is tapped out, and we will be lucky to escape without a monetary crisis. Even though the dollar is gaining relative strength at the moment, don't be fooled. The US is in deep doo-doo due to all the debt profligacy that it has no choice now but to increase. "Printing" is going to increase, perhaps exponentially as conditions worsen and deflation (delevering) spirals, asset values plummet, and prices plunge in a down trend lasting some time.

These are going to be difficult times unless or until human intelligence and enduring values replace self-interest and self-preservation.

here.

I did inhale.

AP - The government will buy an ownership stake in a broad array of American banks for the first time since the Great Depression, Treasury Secretary Henry Paulson said late Friday, announcing the historic step after stock markets jolted still lower around the world despite all efforts to slow the selling stampede. more

_{"The mythical John McCain is an affable, straight-talking, moderately conservative war hero who is an expert on foreign policy" - Bob Herbert}

As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929, the House of JP Morgan—have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.

Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.
Behind the Panic: Financial Warfare and the Future of Global Bank Power