29 September 2008
Pass the ipecac, please
Bailout doesn't pass, DOW falls ~800 (7%), and the pundits talk like this is the end of the world because it's the market's "biggest point loss." Some of the may not be old enough to remember 1987, when the markets fell 20% in one day. I remember watching that day as a year's worth of profits was erased in one trading session, and how I slept like a baby* that night.
Days like today are cathartic. The financial system is getting toxic instruments out of its system, if not in fact, then in principle, by agreeing that things are not worth what they were perceived as being worth in the recent past.
Congress is virtually helpless, in what amounts to a bipartisan effort, and perhaps that's not bad, because it's not the responsibility of legislative bodies to stabilize the stock market or the bond market. If today's bill didn't pass it is unlikely that any variations will pass in the near future.
Foreign markets will reel tonight and the world will enter an overall economic slowdown. As this happens a whole generation of investors and consumers will come face-to-face with the harsh realities of thrift, budgets, savings, spending limits (and about greed and fear). It's sad that people will get hurt in the process, but stretching it out over a longer period of time would not have changed the ultimate result. It's better to get this over with.
*woke up every hour and cried.
(image credit here)