2008-09-30

Financial Bailout Failed to Pass the House

The $700B financial bailout failed to pass the House.

The Dow Jones went down 7%. The S&P went down 8%.

In 1987, the Down Jones went down 20%, and we survived.

If the market assessment on the importance of the bailout is only 7%, then the whole thing has been another "weapons of mass destruction" error in intelligence.

Which isn't too surprising, since it was all just one guy's opinion.

This sums it up:


This financial calamity is not like other disasters we've faced. The drip, drip of the global financial catastrophe is a sort of invisible disaster. Last week my bank failed. Failed. In an instant, Washington Mutual went from "Whoo hoo" to "uh-oh." And what changed for me? Nothing, as far as I can tell.
[Update:]
My wife got a flyer in the mail from WaMu suggesting we refinance. She called them yesterday [2008/09/30 - after the bank failed and was sold of to JP Morgan Chase] and it turns out we have a better interest rate than they are currently offering. But the lady on the phone was pushing us to get a second mortgage!

There is no credit shortage.

[Update:]
Okay, maybe there is:

“The money markets have completely broken down, with no trading taking place at all,” said Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt. “There is no market any more. Central banks are the only providers of cash to the market; no one else is lending.”

But why would it last? People in the business of loaning money will still loan money - they'll just be more selective, as they have been for the last six months or so.

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