Daily Investment Interpretations

February 20, 2009

2009-2-20:  The markets dropped a little over 1% again today on Wall Street's fears of bank nationalization... i. e., the threat that taxpayers won't rescue bank investors. The NASDAQ was off 1.59 points (-0.11%) to close at 1,441,. the Dow shed 100.28  points (-1.34%) to 7,366, and the S&P 500 contracted 8.89 points (-1.14%) to end at 770. Oil finished up a trifle at $38.94 a barrel, and gold topped the $1,000 mark to close at $1,002.20. The VIX rose 2.22 to end at 49.30.
    It was a roller coaster ride today, with the market indices ending close to where they began. Among today's articles are: Volcker: Crisis May be Even Worse than Depression, Soros Sees No Bottom for World Financial "Collapse".These experts say that there's no hint of a bottom anywhere in sight. 
    Dr. Nouriel Roubini is more optimistic, positing that 2009 will be a recession year, but implying that 2010 will be better. Nowhere Near End of Crisis: Dr. Doom. 
    Some of the other articles are decidedly more optimistic, arguing that now is the time to buy, buy, buy:
Forestalling another 20% Drop
Don't Panic, This Decline Is Different!
No Patience, Some Hope. . . Looking for a Bottom
Podesta On Recovery
    One interesting tidbit: Bernard Madoff didn't buy stocks. Not the first one. All the blue chip stocks that he reported to his investors were in his portfolio weren't. 
   Paul Krugman's epistles include Permanent Link to Glorifying the Gilded Age in which takes issue with conservatives who want to let the economy heal itself the way it did in the "good, old days". As an example of what really happened in the "good, old days", he cites the Panic of 1873 that lasted until 1879.
    In Permanent Link to Against stupidity …, he quotes a discourse by Representative Boehner of Ohio in which Boehner demands to know why Fannie Mae and Freddie Mac are to be "rewarded with $200 billion in taxpayer dollars without first reforming these housing entities that were at the hear of the economic meltdown?" Apparently, Representative Boehner doesn't know that Fannie Mae and Freddie Mac have already been reformed, and are now owned by the taxpayers.
    In Who’ll Stop the Pain? Dr. Krugman points out that the measures enacted so far will slow the rate of decline, but no one seems to have any idea about just what besides normal wear and tear over a period of years will bring about a recovery. What's going to get the world's economies rolling again?