Market Votes Nay on Bailout Plan; Dow Off 330
I never like to read into the day-to-day movements of market gyration. The shorter the term action, the more noisy it is. Intraday is the noisiest of all.
Still, I cannot help but feel that this is a repudiation of a very flawed bailout plan. No doubt, that is my bias, but . . .
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Monday, September 29, 2008 | 10:13 AM | Permalink
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Comments
free falling is right
who is gonna squeeze us out of a crash now?
no shorts could mean no bottom
Posted by: Zo | Sep 29, 2008 10:20:43 AM
Barry,
Last weak's volume was very low...how about this morning.
thanks
Posted by: tbapple | Sep 29, 2008 10:22:39 AM
Coupled with the increase when the bill's future looked shakier. I'd say there is something there.
I swore politics would never drive me to drink but that was before the last two weeks.
Posted by: Darkness | Sep 29, 2008 10:22:57 AM
I think it's more a reflection of the likelihood of the bill not passing. The markets reacted very positively to the initial announcement of the plan last week, after all.
Posted by: mappo | Sep 29, 2008 10:24:59 AM
Also there are no TOMO's today. NONE. The Fed is not propping up the market today. I think it's a ploy to try to help guide the vote of the House. Subliminal of course.
Posted by: Juhuti | Sep 29, 2008 10:27:04 AM
Not that I'm a huge fan of this entire fiasco - but the first hour of trading is typically overdone to the up or downside.
On the other hand, though losses may abate over the course of the day, I fear we have much farther to go in the coming weeks and months.
Regards,
George
Posted by: Agoracom - George | Sep 29, 2008 10:28:28 AM
Maybe, But when I put on my skeptic's hat, it occurs to me that this market fiasco is exactly what Paulson needs to panic congress and stuff his bill down their throats.
Posted by: Hedgie | Sep 29, 2008 10:28:29 AM
Mandadory Short Covering...coming soon to a 'free' market near you!
Posted by: Minmex | Sep 29, 2008 10:28:58 AM
The markets reacted very positively to the initial announcement of the plan last week, after all.
Yeah, well last week's plan was 2.5 pages that summed up as $700B in free money to be handed out like candy at a parade.
Posted by: daveNYC | Sep 29, 2008 10:40:16 AM
FYI: cspan.com has a live feed on the debate in the house or reps. interesting to watch.
Posted by: man from nantucket | Sep 29, 2008 10:41:41 AM
The bill hasn't passed yet, so it would be surprising if we had a disorderly panic sell-off until that is resolved. Gold is looking strong today, and consumer staples are holding up. We are seeing the biggest selling in energy and financials, so this is definitely not looking like one of those massive index selling days when they dump everything. So far...
I suspect that some of this is a reaction to the recent news on the banking problems in Europe. It's not surprising, it's only a surprise that it has taken this long for major failures since Northern Rock. Wish there was a British SKF we could trade here, those banks have been overdue for a huge sell-off.
Posted by: leftback | Sep 29, 2008 10:42:38 AM
does anyone know when Wachovia's stock is gonna open?
I have some puts and am just waiting to see what they're gonna be worth today.
Posted by: Jerry | Sep 29, 2008 10:43:01 AM
"The markets reacted very positively to the initial announcement..."
Um. Well.
OK. Maybe you might think that, but what I observed was an "engineered" massive short covering rally. The market made it's highs at the open and has been selling off ever since.
The government CANNOT put a bottom in the markets. The market must do it on its own. They will learn this lesson.
- AT
Posted by: Andy Tabbo | Sep 29, 2008 10:46:31 AM
Mappo's got it right. The opening market action is a reaction to the House's pushback, and the chance the bill won't pass.
Posted by: Public Pain, Private Gain | Sep 29, 2008 10:48:13 AM
The way Paulson staked the whole future of the financial markets on the bailout was frankly irresponsible. He essentially said the market would go to hell without the bailout. Now, if the bailout does not work, he has destroyed any residual confidence in it. Everyone here knows I am calling for Dow 5000, but that was supposed to be in the 2010s! I was hoping for the market to descend to levels of reality without a panic.
I will try to avoid offering any conspiracy theory ideas rattling around in my head.
Posted by: CNBC Sucks | Sep 29, 2008 10:48:21 AM
I think the market reaction is a vote on the fact that the global economy--as evidenced by Fortis, B&B and Hypo--is starting to suck wind, that the ECB is still in tightening mode, and the US consumer is toast.
In a way, this is a vote that the bailout won't help the economy. But to me, the bailout wasn't about the economy, it was about the financial system's potential collapse.
Posted by: Don | Sep 29, 2008 10:49:41 AM
Might the redemptions (end of Sept, right?) at hedge funds be having an discernable effect here?
Posted by: Jeff M. | Sep 29, 2008 10:50:51 AM
I think we are reflecting Europe with the contagion now having appeared to spread.
In truth it did not spread it was there all along...
Posted by: Patrick Neid | Sep 29, 2008 11:00:25 AM
@CNBC Sucks
Right on. Paulson came out and said - 'Hey I need $700 Billion or the markets are going to crash'. And his boss said 'this sucker is going down'... So I guess they have to now. Way to not panic Hank.
Posted by: Jay | Sep 29, 2008 11:00:36 AM
Jeff M., I suspect the same. Did you see Tom Wolff's article in the nytimes yesterday?
http://www.nytimes.com/2008/09/28/opinion/28wolfe.html?_r=1&scp=2&sq=tom%20wolfe&st=cse&oref=slogin
I think you'll enjoy it; or it'll scare the cr*p out of you as it did me :)
Posted by: karen | Sep 29, 2008 11:03:51 AM
Georgie is the best president... 8 years ago know one could have called this nor his excellent ability to rally millions of angry unemployed americans to vote for a black man.
Georgie has forced the next administration to fix the issues America has without delay... this will be his legacy. I don't think as Americans we should let the next president off on blaming Bush. All those tough issues that were political landmines will have to be resolved and not just passed off to deal with tomorrow. The political game of blaming Bush should not be accepted.
Obama or McCain will have to fix the issues and should be held accountable.
Posted by: Mattie | Sep 29, 2008 11:08:07 AM
@karen: Saw that as well. Looking like the Paulson plan might not even delay the inevitable by that much at all, but will just pour more salt in "Main Street's" wounds, as many get slapped by the market tanking AND having to bail out the culprits who caused this mess, not to mention many losing their jobs. Now how's that for the Daily Double or Triple?
Just wondering when we'll see the anger spill over into the streets or at all?
Posted by: Jeff M. | Sep 29, 2008 11:16:06 AM
We are in self-destruction mode. Thanks to our gov, wall street and the consumer.
Posted by: manhattanguy | Sep 29, 2008 11:16:21 AM
The only way that buying the questionable assets will increase capital on the liability side of the balance sheet is if the Treasury overpays for them.
A better approach would be for the government to provide capital directly, in the form of a “super-bond,” in an amount no greater than the debt to bondholders. The “super-bond” would be subordinate to customer liabilities, so it could be counted as capital for the purpose of capital requirements, and would be seen by customers as a legitimate cushion of protection. However, in the event of bankruptcy, it would have a senior claim in front of both stockholders and even senior bondholders. Do that, and you've actually got a mechanism to protect the financial system while at the same time protecting customers and taxpayers.
http://www.hussmanfunds.com/wmc/wmc080929.htm.
Posted by: A HARVEY | Sep 29, 2008 11:16:58 AM
another one of those "Paid for by: Bill Perkins" full page sketches/advertisements in the nytimes today, p A11.
Posted by: karen | Sep 29, 2008 11:17:18 AM
