Titanic Sinking, No Worries. 
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Several market sources communicated late in the trading session Wednesday 19 that there was a modest sangfroid in the selling. The short attack on Goldman Sachs was blinked away as
what goes around comes around. The apparent indifference to Citibank's torture was not even a headline issue. Instead the attack on GS spread to an attack on Bank of America (BAC). My trader source wrote,"If it's financial, they are all bankrupt." Another source wrote, "When Citi goes, can JPM and Morgan and BAC be far behind?" The short attacks were workmanlike and nimble. No one sounded alarm that the whole financial sector has now been tagged as a loser. Fifteen days after the election of an unknown, inexperienced, uncertain young man as the next president, the market has retreated 15%. Five of the last seven days have been down. The markets look so oversold that it is hard to imagine who is selling, and perhaps human beings are no longer involved, just clerks pushing clicks as the funds liquidate assets regardless in order to stay credible. However the so-called support at 8000 is gone. No one, not even Jim Cramer, wants to own anything. And in Washington, the auto-makers and their UAW companion were again in front of the cameras pleading for access to the TARP bailout. Genuinely pleading. At least there is fear in Detroit, because there seems no fear in the markets. Lower and lower, with expectations grimmer and darker. Overnight the Asia markets are off 5% and look ordinary. Everyone is shrugging. There is no fear. Why? Because we believe, as the central bankers propose, that the printing presses can save the economy? Because, we believe, as Larry Kudlow and the supply-siders propose, that there is a tax cut coming to save us? Because we believe that a Cabinet of familiar Democratic Party personalities will be able to reverse what a Cabinet of familiar Republican Party
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personalities could not? Dr. Doom, aka Nouriel Roubini (above right), told Bloomberg TV that we already have deflation in a recession, which is pushing commodity prices much lower and will push unemployment as high as 9%. Housing prices have not bottomed, Mr. Roubini asserts, and there might not be a bottom. Banks, autos, airlines, hotels, retail, all are staggered and still. No one is consuming. And still no fear. A mystery. The dark age, but narcotized. In 1935, unemployment was still a stunning 21% but no one much remarked, since it wasn't 30% like 1932-33. Is that the explanation? We are not fearful, because we have gotten used to the luxury liner sinking by the bow?
What good would being afraid do?
ah, good ol' CNBC:
http://www.cnbc.com/id/15840232?video=931599105
Plunge Protection Team? Never heard of such a thing!
I'm SHOCKED to learn there is gambling in Casablanca!
There's no fear because we're all going down together. This thing is bigger than any one of us. We find ourselves in the middle of a storm. All we can do is batten down the hatches and wait 'till the weather clears. It's not the same as with global warming where, we are told, we can stave off disaster by simply turning the lights off; take fewer showers; inflate our tires; etc. There's still something, we are told, we can do.
In this market drop, there's nothing to do but wait for the chips to settle. Resignation is the appropriate approach – like being resigned to the fact that some day we will die. At some point, we will once again assert ourselves and apportion blame. We will once again seek to engage our reason in an effort to determine what went wrong. Our innate prejudice will no doubt color our approach and our base assumptions by which we attempt to structure a recovery will likely be wrong-headed. This will no doubt prolong our pain.
The most effective strategy would be one forced on us by outside events – way outside. Reset: pull the plug; start; run a virus scan and repair; restart. Unfortunately, this solution, in political terms, usually translates into war.
"Unfortunately, this solution, in political terms, usually translates into war."
Peter,
What makes you think that's not coming our way whether we desire it or not?
As JB noted cryptically in an earlier post "Putin is unstable".
Gangsters with nukes in economic depressions (in a world with a unilateralist precedent we have set that they can now exploit should they choose...) don't tend to make the best of friends.
Kirlroy - War is never desired. It is a part of the natural cycle however. It is not Putin's instability I fear; it is our own. Our own instability translates into ripple effects across the globe. No doubt this will motivate some who are worse off than we are to seek extreme solutions. Will our instability preclude appropriate responses on our part? We have already witnessed inappropriate responses to Russia's aggression in Georgia and with regard to the pirate situation off the coast of Somalia. How much worse can it get? Try an attack on Israel; Taiwan; Columbia; South Korea; Ukraine; just to name a few of the flashpoints around the world. The list is endless. No one is safe while the cop is sits bound and gagged by good but toothless intentions in some anonymous cellar helplessly awaiting divine intervention to set him free.
It looks like we had the war first.
It's an interesting situation in the sales/trading room here. People are almost indifferent, ... resigned, to the idea of this bottomless pit.
I am glad I can also work with my hands.
vsk
The market was greatly overvalued. It is simply
descending to values that are closer to reality.
Just as the banks and the government went nuts
don't forget a lot of citizens did too.
The party lasted a long time but at some point
the guests have to leave and somebody has to
clean up. Time to actually have money for your
purchases. Applies all around.
Not everyone is invested and there is a lot of
money out there waiting to be reinvested. In
a few years people will buy because they have to
and a recovery will come. Nothing lasts forever.
Barack's dinner party has been transformed into a facebook community. The internet has not seen the bubble yet, but wait until all the retailers who have been advertising on google go belly up after the first of the year and google tanks. Then we will see fear and panic.
The question will be which country has civil unrest first.
The CDS created synthetic liquidity which allowed consumers to overextend credit. The worst thing about is that geniuses like Buffett are doing it to.
It is great to see that the SEC is investigating the Wachovia Golden West deal. The Bush Administration should open and make public investigations on some of the corrupt practices and see how Obama administration reacts when some of its sponsors will be implicated.
If Chris Cox gets a job at one of Soros' front organizations, we'll know where the buck really stops.
Maybe US not responding to Somali pirates to make Saudis either forgive debt or pay Americ to protect them
Speaking of the Soros/Obama connection - see this story which ran on Bloomberg on Tuesday:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aF7fB1PF0NPg
"Soros-Funded Democratic Idea Factory Becomes Obama Policy Font" by Edwin Chen.
Thanks for the article, mombam. It's a keeper as a roadmap to Democratic overreach.
Peter:
If there is nothing to fear because we are all going down the vortex, then why did we give them almost a trillion dollars? What's the difference how fast it happens?