"We are riding this bucket all the way down."

Unfortunately, I am not enjoying this ride.

have the power to eliminate the pork barreling and refuse to bail the bankers out from the bill that's coming before them? i.e. can House representatives modify a bill that's been passed by the Senate? I'm hearing there will be no vote that affects market conditions downward unless there are enough votes for it to pass.

has no draft language prepared, nor does the rule allow any to be considered.

Sometimes Thanatos and the family just have to have their day. Personally, I prefer the days of Eros, but then, don't we all.
D'ya think Paulson is playing the role of Charon?

"Counted among Thanatos' siblings were other negative personifications such as Geras (Old Age), Oizys (Suffering), Moros (Doom), Apate (Deception), Momos (Blame), Eris (Strife), Nemesis (Retribution) and even the Stygian boatman Charon"

I'm just speaking technically, because your fundamental analysis is absolutely correct. But at the moment, the stock market is heavily oversold, and cyclical analysis suggests we are due for a month or two of recovery. That would mean we have seen the lows for the year, though these cycles do occasionally get out of sync, and we could move down lower from here in one last capitulation panic. The odds of that, however, seem to be slipping away given all the bad news and the tendency this week for stocks to hold to their lows.

Once this recovery has run its course, the dry rot in the banking system will reassert itself, especially since the government now wants to hide as much of the problem as it can.

By TIM PARADIS, AP Business Writer 50 minutes ago

NEW YORK - Stocks surged while credit markets remained strained Friday ahead of an expected House vote on the government's $700 billion financial rescue plan and after Wells Fargo Co. agreed to buy Wachovia Corp. in a $15.1 billion deal. The Dow Jones industrial average rose nearly 250 points.

Investors also appear relieved that the government's September employment report wasn't worse, although the Labor Department said payrolls shrank by 159,000, more than the 100,000 economists predicted. The nation's unemployment rate remained flat at 6.1 percent, as expected.

Investors are eager for unemployment to remain in check because widespread job losses could further curb consumer spending, which accounts for more than two-thirds of the nation's economic activity.
http://news.yahoo.com/s/ap/20081003/ap_on_bi_st_ma_re/wall_street

By Hossein Askari and Noureddine Krichene

Asia Times ...Bernanke and Paulson have formulated a plan that no banker could have dreamt of or asked for. It was their pure invention and the proposal of such a plan has had a detrimental effect. It has raised expectations, divided policymakers, destabilized markets, and those who have interest have jumped on board.

By endorsing the Paulson-Bernanke plan, presidential candidates John McCain and Barack Obama will extend, whichever becomes president, not for four more years, but for a much longer time, the Bush administration's financial chaos. The new administration will inherit, not only the largest fiscal and external deficits in US history, but a huge fiscal debt at about 90% of gross domestic product (GDP), and totally lose control of monetary policy, which cannot be reined in without sending interest rates skyrocketing. The debt crisis may become even more unsustainable if defaults continue, both nationally and internationally.

The gap between the Fed and the banking system has grown too large. The Fed is still trying very hard to push banks to renew a credit boom, make people live beyond their means, re-inflate the economy, and aggravate external deficits with presumably the intention to strengthen the financial system and stimulate the economy.

However, you can lead the horse to water, but you cannot make it drink. Bankers are no longer in the mood to repeat the credit orgy of recent years and shower loans that will never be recovered. Foreclosure studies show that in all foreclosure cases, mortgages were totally irreconcilable with incomes, absorbing at least 40% of gross income. There is no way for a family with $40,000 per year to service a mortgage loan of $600,000 and above.

Besides banks becoming increasingly prudent, households have also become reluctant to take on more financial burden. With credit increasing at very high rate of 12% during 2001-2008, and total outstanding credit at 350% of GDP, there is no way to avoid dramatic credit defaults in the event it becomes harder to renew a credit boom. Repeating from the above, banks have the money but they do not want to lend.

The financial disorder of Bernanke and his predecessor as chairman Alan Greenspan over a decade cannot be fixed, and should not be fixed, in five minutes time. A "quick and clean" bailout will certainly transfer huge wealth to bankers and debtors, and will make them enjoy their wealth without paying anything for it. As there is no real credit freeze to the productive sector of the economy (that is, definitely excluding the housing sector), the TARP will not address the present economic and financial problems of the US economy. It will only worsen the macroeconomic imbalances.

It is a fact that central banks have largely exceeded their mandate of managing liquidity in the economy and have evolved into the main bodies that manage all of an economy. They have thus neglected the regulatory aspects and the control of credit.

Subsequently, they have caused immense price distortions in the economy, as reflected by negative real interest rates, exorbitant housing and commodity prices, high energy and food inflation, and unstable exchange rates. Worse, they have created a most uncertain economic environment. As the Nobel economist Maurice Allais has put it: the whole world's financial markets have become casino tables. Monetary policy has become entirely subordinated to financial markets and turned as volatile as these markets. The notion of independent central banking has totally vanished. It is impossible to make any sound forecast or investment decision in such a volatile environment. It has only become propitious for speculation....

article

When the bill failed a few days ago the stock market tanked. Everybody argued it tanked because the bill failed, a sign of the disaster that would follow. Today it passed and the market tanked. Why aren't people arguing that it tanked because of the bill passing?

http://news.cnet.com/8301-13578_3-10057618-38.html

Growth for the sake of growth is the ideology of the cancer cell.

I did inhale.

How can this be? How can the passage of the Bailout Bill find stocks limping awkwardly into the close? Wasn't this supposed to be our finest hour? The desperate resolution to the year-long crisis? Well, the reality we have tried to reveal here in Minyanville is that the Bailout simply will not work.

The credit markets have spoken. And they are saying - no, they have been saying all along - that the $700 billion Bailout Bill is nothing but a gnat attacking a buffalo. There has been an ongoing disconnect between stocks and credit markets for months now and even the action on Monday did little to correct it.

There is only one thing necessary to understanding what is happening and it is this: no one at U.S. Banks, no one at the Federal Reserve and no one in politics can accept the reality that real estate assets in this country remain oversupplied, overpriced and overleveraged.

It is that simple.

TAF, TSLF, SuperSIV, TARP, none of that matters. No matter what acronym is created to disguise the fact that assets are overpriced, or what government intervention is created to prop up those asset prices, the market will inevitably overpower it. This time is not different. In fact, it is continuing to play out almost exactly as the Great Depression did. The bottom line is that despite the bailout, risk in owning stocks has increased, not decreased.

Keven Depew quoted by Mish

emphasis added

I would argue that they understand this full well and are trying desperately to prop up RE values. They will do this even at the expense of eventually tanking the dollar because the cost of this project is in the trillions, not hundreds of billions, all in the hope that reflating will preserve nominal asset values. Depew has it right, the market will overwhelm this attempt to control its inevitable correction. The dislocations are greater than the ability of the government to throw money at it without undermining the currency.

The bailout figure of 700 billion was picked out of the thin air air because the bill allows for virtually unlimited rolling over with no upper limit. The Treasury is going to assume this toxic waste with the plan to revalue it by giving it a Treasury guarantee, with the taxpayers taking the hit and eating whatever defaults emerge.

This doesn't mean that the dollar won't show strength for awhile, e.g., rising against the euro. But the US crisis has gone viral and the global economy is reeling. All fiat currencies are relative to each other, and relative to tangible value. Eventually, as the inevitable correction is put off through monetization, the realization will begin to set in that the monetary system itself, under dollar hegemony, is giving way.

Of course, the authorities could throw in the towel at some point to same the monetary system and let the markets correct. That will entail spiraling deflation and a global depression like no one has ever experienced.

Another scenario involves the elite starting a wider war as a distraction from the economic pain that is unfolding. This is certainly a possibility, especially should If McCain prevail, in the event that OBL mounts another attack in the attempt to deliver an economic coup de grace to the reeling US economy.

ON the other hand, sanity could prevail and progressive economic measures could triumph either if the elite is willing to quit the field (unlikely), or a politically progressive populist revolt should occur. The later probably won't get any legs until the depression is well underway.

Credit markets to Washington: Bailout isn't enough:

The credit markets finally got a bailout bill, but the stranglehold hasn't let up -- a troubling sign that lenders and investors believe the package will only be a baby step in the long road to economic recovery.

The credit markets, where companies go to get cash loans, have seized up since the bankruptcy of Lehman Brothers Holdings Inc. and in anticipation of the $700 billion plan initially voted down by the House. The House passed a revised version of it Friday following the Senate's approval earlier this week, but anxiety about its effectiveness kept demand for Treasury bills high and nearly nonexistent for other types of debt.

Buffett said in this interview we must do it to really keep disaster from happening...not that it will be a real cure, but to prevent the cancer from spreading...and millions from losing jobs, etc....

What do you all think? PLEASE!

http://www.charlierose.com/shows/2008/10/1/1/an-exclusive-conversation-with-warren-buffett

1700: "Abolish slavery!"
1800: Woman's Suffrage!"
2000:"World Peace!"