OT Tuesday am Stock Market Futures

[keno]

The futures are up as of now indicating a higher market open. Who knows how the trading day will proceed? It will be interesting to see how the markets behave over the next two days, as congress is adjourned over Rosh Hashonah, and D.C. sturm und drang will have limited effect on the markets. Some may take the evidence of these two days as a prediction of what might happen with no "bailout" bill at all.

keno

[Kevan]

What if the proceeds didn't setout to rescue the drowning? What if instead the government came forth with the money to support new projects that address the concerns we have for the future? Like FDR's road works projects, we could use this money to stimulate new transportation-alternative projects that will reduce our oil dependence, and help our environment.

The talk in my neighborhood is the replacement of the Tappan Zee Bridge which crosses the Hudson River just north of NYC, but is a major commuting route for communities in NJ, Rockland and Westchester Co.s and CT. If they added a commuter rail, supporting the three rail lines leading in and out of the city, the impact on reducing car usage could be tremendous. This in only one project, I'm sure there are hundreds if not thousands of other potential projects across the country that have similar requirements and likely make a large impact on both the economy and reducing polution. So give the money to these types of projects and watch how the economy improves.

Sorry Keno for turning your train around, just wanted to get my 2 cents in on a thread that hasn't been closed.

[1centaur]

or, the market might breathe a sigh of relief that world markets did not go down and come to the collective conclusion that all those people playing politics (see the closed thread) will find amongst their numbers 12 to switch sides "for the good of the country." Today's stock market rally says the consensus is that a bailout gets signed within a week. In credit markets, the reality of the day was very, very dismal.

As a heads up, a lot of hedge funds are expected to liquidate over the next two months into a market that does not want to step up and take risk and into dealers who want minimal capital on the table. Liquidation means taking whatever price is offered. There could be some scary price action even assuming a bailout passes.

Still, I remember August as a fairly pleasant month. Things can turn very quickly, in either direction.

[1centaur]

While it should not be called bailout because average citizens get confused, the point is to make the banking system work, make it provide the necessary lubrication for the economy. Infrastructure projects can be good job creators, but that's not the immediate problem.

[CNY rider]

or, the market might breathe a sigh of relief that world markets did not go down and come to the collective conclusion that all those people playing politics (see the closed thread) will find amongst their numbers 12 to switch sides "for the good of the country." Today's stock market rally says the consensus is that a bailout gets signed within a week. In credit markets, the reality of the day was very, very dismal.

As a heads up, a lot of hedge funds are expected to liquidate over the next two months into a market that does not want to step up and take risk and into dealers who want minimal capital on the table. Liquidation means taking whatever price is offered. There could be some scary price action even assuming a bailout passes.

Still, I remember August as a fairly pleasant month. Things can turn very quickly, in either direction.

It was actually good to see the huge puke in stocks yesterday. First indication I've seen that we may try to find a bottom here. The serial bottom callers they constantly trot out on CNBC are total morons.

I think this rally may have some legs but I won't feel comfortable until we do a re-test of yesterday's low, preferably in a few months time. I can see that happening as we get closer to year end and more liquidations take place.

[BumbleBeeDave]

What if the proceeds didn't setout to rescue the drowning? What if instead the government came forth with the money to support new projects that address the concerns we have for the future? Like FDR's road works projects, we could use this money to stimulate new transporation-alternative projects that will reduce our dependence and help our environment.

The talk in my neighborhood is the replacement of the Tappan Zee Bridge which crosses the Hudson River just north of NYC, but is a major commuting route for communities in NJ, Rockland and Westchester Co.s and CT. If they added a commuter rail, supporting the three rail lines leading in and out of the city, the impact on reducing car usage could be tremendous. This in only one project, I'm sure there are hundreds if not thousands of other potential projects across the country that have similar requirements. So give the money to these types of projects and watch how the economy improves.

Sorry Keno for turning your train around, just wanted to get my 2 cents in on a thread that hasn't been closed.

. . . because that implies that some-ONE is being bailed out, and the inevitable conclusion by the public is that it's the Wall Street fat cats and CEO's who are being bailed out, not the economy as a whole.

But what may be most notable here is not the package itself or its size, but the inescapable fact that legislators from BOTH sides of the aisle bucked their leaders and actually--Gasp!--represented the interests of their constituents, who seem to be overwhelming angry about government "bailing" out all the high rollers who got us into this mess in the first place.

A refreshing change even if it does lead to financial hardship for many. it certainly represents "change"--and we aren't even to the election yet!

BBD

[Tobias]

As a heads up, a lot of hedge funds are expected to liquidate over the next two months into a market that does not want to step up and take risk and into dealers who want minimal capital on the table. Liquidation means taking whatever price is offered. There could be some scary price action even assuming a bailout passes.Not to be overly skeptical and all that, but knowing the serious cash hedge funds have at stake, is it possible these guys are pressuring some in power to act on their behalf? And if they don’t get the price they want, who benefits? I assume buyers who get a great deal, but who will those be?

Also, if the credit crisis originated due to credit being too easy, why shouldn’t we expect the crisis to self correct when credit is tightened? Initially we seem to be going through some over tightening but isn’t that a normal human over-reaction? Given a little time why won’t credit stabilize?

[gomez308]

When are they gonna bail out my 401(k)??

[rounder]

Not to be overly skeptical and all that, but knowing the serious cash hedge funds have at stake, is it possible these guys are pressuring some in power to act on their behalf? And if they don’t get the price they want, who benefits? I assume buyers who get a great deal, but who will those be?

Also, if the credit crisis originated due to credit being too easy, why shouldn’t we expect the crisis to self correct when credit is tightened? Initially we seem to be going through some over tightening but isn’t that a normal human over-reaction? Given a little time why won’t credit stabilize?

I feel like i am becoming more skeptical than ever before. You read the papers and you can see that there is outrage on main street. But when you read what they have to say, it is "why should we bail out the wall street gucci guys or why should my tax dollars bail out my neighbor who shouldn't have bought the house in the first place if he knew that he couldn't afford it." It has not been explained to them that the problem goes way beyond the gucci guys or the neighbor with the hummer who can't afford his mortgage. Meanwhile, the presidential candidates seem like they are trying to score points, tearing into each other and ranting about how each is a moron (Palin is no way qualified to be a heartbeat from the presidency, etc....like Biden is??). I originally had doubts when it became clear that both had no real experience other than than their years in congress ...if that. Am now starting to believe that neither has the faintist clue how to be the leader of the "strongest country in the free world."

I think we need someone like Mr. Smith Goes to Washington to step up and explain to everyone that this is a worldwide issue and, regardless how we got here, we are here and we need to do something huge and soon. Otherwise, we will be sticking this problem to our kids and granchildren who will already have to figure out how to deal with paying for our share of social security and medicair (hope the kids are all geniuses and hardworking).

I have doubts about the rescue plan (and really don't blame anyone in congress who voted against it). But am not planning to buy any new bikes, cars, houses, etc. until prospects start looking better.

There...i said it. end of rant.

[1centaur]

Not to be overly skeptical and all that, but knowing the serious cash hedge funds have at stake, is it possible these guys are pressuring some in power to act on their behalf? And if they don’t get the price they want, who benefits? I assume buyers who get a great deal, but who will those be?

Also, if the credit crisis originated due to credit being too easy, why shouldn’t we expect the crisis to self correct when credit is tightened? Initially we seem to be going through some over tightening but isn’t that a normal human over-reaction? Given a little time why won’t credit stabilize?

Hedge funds will liquidate regardless of the bailout bill. Strategies have not worked, and there was a bubble in hedge funds. The big ones won't disappear, but many smaller ones will. Also, as lobbying powers, the hedge funds are not strong vs. banks and the business roundtable.

Credit markets must self correct almost by definition, but the Great Depression could be viewed as one such correction. Not being willing or able (due to insufficient capital) to lend for a long time would be a big problem - it's the path to the correction we're trying to determine at this point.

[Ray]

But what may be most notable here is not the package itself or its size, but the inescapable fact that legislators from BOTH sides of the aisle bucked their leaders and actually--Gasp!--represented the interests of their constituents, who seem to be overwhelming angry about government "bailing" out all the high rollers who got us into this mess in the first place.

Leaving aside the current issue and partisan politics for a minute, isn't the role of REPRESENTATIVE democracy a little different than just reacting to your constituents righteous anger? Lets accept for the sake of discussion that much of what government does involves layers of complexity that it takes experts to understand. Not all of it is that complex, but a lot of is. This bailout or rescue or whatever you want to call it is a perfect example of this. Most of us don't have the faintest idea how all of these financial pieces fit together and I'm grateful for those who do. We send people to congress to take the time to study these issues, become adequately versed to make educated (rather than solely emotional) decisions and make those decisions in our interests. If we don't like the overall results, we can replace them in the next election. But should they always be putting their finger to the wind to represent what we think we want right now?

I understand there are representatives on both sides of the aisle and on both sides of the issue who voted what they really believed was in the best interest of their constituents on this. And I have nothing but respect for that whether I agree with their individual decisions or not. But there are also people who may have thought that the legislation before them was a really good idea, who believed they understood the costs and benefits of the bill better than their constituents, and who voted against it because they were getting a lot of angry phone calls from the folks back home. Conversely, there were probably some (or may yet be some) who fully oppose it based on all of their knowledge of the issues, who either have or will vote in favor of it based on pressure from business groups either back home or elsewhere. I have a lot less respect for these folks. They're just giving into the pressures of the moment instead of using their knowledge and judgment to do what they think is right for their constituents. I don't think just representing the emotions of your constituents TODAY is necessarily the same thing as representing the "interests" of your constituents.

I actually have some respect for both presidential candidates on this. Although they've gone about it differently, both have taken positions that run against the current politically popular position for what I'd imagine they perceive to be the good of the country. They've both tried to play that position to its best political advantage obviously, but neither one of them has done the politically easy thing, which would be to oppose it with populist fury that would probably help them next month.

-Ray

[keno]

it is the politics, unfortunately, that rule the day. I have, and you have, as well, I expect, read that much engineering was going on around the vote, the the dem's objective being that ultimately the reps could be given the dubious victory for a plan that 80% of Americans are against. I think that the inside story on what was going on would be fascinating to know.

keno

[Ray]

it is the politics, unfortunately, that rule the day. I have, and you have, as well, I expect, read that much engineering was going on around the vote, the the dem's objective being that ultimately the reps could be given the dubious victory for a plan that 80% of Americans are against. I think that the inside story on what was going on would be fascinating to know.

keno
Yeah, I guess having this happen a month out from the election makes it impossible for the immediate political concerns not to be the over-riding driver. It would be interesting to be able to compare how the vote would go down next February or March instead of this week or next. I think the Dems at least want the Republicans to share in that "dubious victory" so they're not hanging out there alone on it. I think the leadership on both sides gave their members who are in tough, contested races right now an out and let them / made them vote against it. But given how set in stone so many house seats are, the fact that so many in "safe" seats still voted against it (on both sides) is a pretty strong indicator of just how unpopular this is.

-Ray

[dekindy]

Not to be overly skeptical and all that, but knowing the serious cash hedge funds have at stake, is it possible these guys are pressuring some in power to act on their behalf? And if they don’t get the price they want, who benefits? I assume buyers who get a great deal, but who will those be?

Also, if the credit crisis originated due to credit being too easy, why shouldn’t we expect the crisis to self correct when credit is tightened? Initially we seem to be going through some over tightening but isn’t that a normal human over-reaction? Given a little time why won’t credit stabilize?

Make no mistake, intervention is necessary. This is a loss of confidence and the credit market will not correct in this situation because nobody knows the value of anything right now. Extreme forms of liquidity preference by irrational investors will perpetuate itself.

The fact that foreigners are financing our deficit spending should not be overlooked either. If the credit market freezes up and the resulting economic slowdown and high unemployment, which would definitely go to double digits immediately, and the stock market loses another trillion dollars, which it easily could, foreigners might not only quit buying our debt but begin liquidating the debt they currently hold. Then we will see a real crisis.

[dekindy]

While it should not be called bailout because average citizens get confused, the point is to make the banking system work, make it provide the necessary lubrication for the economy. Infrastructure projects can be good job creators, but that's not the immediate problem.

Very well said. Succinct and right on point. You have an excellent grasp of the problem.

[Pete Serotta]

Wednesday and there is a meeting so we are into a new world... closing TUESDAY but it can still be read. Ken, among others, hopefully update us on today's possible and acutual events ;)