Regardless of what the Fed, FDIC, Treasury, the White House or the Congress do, stocks continue to shed more and more of their value. Banking stocks are taking it in the shorts, the DOW is down over 170pts again and is approaching the 9000 level. Remember, just a a year ago, the DOW was approaching the 14000 level!
So from 14000 to 9000 in 12 months, the DOW has lost 5000 points or 35% in one year. That is very typical of a bear market so its not that we haven't seen this before, its just that it happens so quickly. Remember the reason for the faster slides in DOW than the slower rises: that's right - "fear trumps greed."
This should show you that the markets need to find their own levels of "resolution" before they will turn around. The most important thing to understand is that unless "THEY CHANGE THE RULES" which is a real possibility this time, the markets, like a sailboat with a center weight, will right themselves if left on their own.
However, the year more than any other, the US Government due to the 2008 election has decided to intervene most heavily into the US free-markets. The big question I will deal with over the next few days will be:
Will we ever get back to a true, free-market financial infrastructure?
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2 comments:
A 'true' free market economy...probably not. But, then again I question whether or not we've had a true free market economy for any real length of time. You have always told me that any system that doesn't effectively account for humanity is doomed to fail. I wonder if the market truly regulates itself, or if it just creates a situation where 'defectors' (a la Game Theory) will look to exploit anomalies and begin the progression towards the rich getting richer. While I don't relish the idea of government stepping in to play monopoly with tax payer's money, I'm not sure what the true alternative will be. Maybe this just what needs to happen for the next stage of 'the End' to take form?
-Ben
I concur; however, I believe that the only true role for a government that supports private property rights is that of "arbiter" to only ensure an open, transparent and level playing field. By its own intervention with the ability to change the rules, the US Government has subverted that role and moved us much more towards a centrally-planned and run socialistic profile.
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