I think today is shaping up (this is only morning, so who knows how we close...the button pushers are still out there) to be the first real manifestation of that downside testing I was talking about two days ago.
The bulls have been wedging up this market ever since the Fed move on ever decreasing volume. But there is more bad news coming out of the woodwork again, more banks getting crunched, so why again is a Fed easing supposed to help this mortgage mess? Oh, yeah, something about "confidence"...i.e. bullshit. There are still billions of dollars in bad mortgage paper in the system, and I'm sorry but there ain't no way to fix it. Suppose our buddy Ben Bernanke decides to buy all the bad paper; how is that going to instill confidence in the American financial system? By weakening the monetary system even further? Bernanke and the Bush administration has been pursuing a policy of systemic inflation for years now; at what point will the market say, "ENOUGH"! That's the bigger danger I think.
Arrogance. Pure Arrogance. To think that real estate is the perfect investment that simply goes up forever, and that when this huge bubble pops that it won't bleed through the banking system. Anybody off the street could tell you that, but don't ask the Larry Kudlows, or our politicians, or the Goldman Sachs puppets.
Also worth noting on bubblevision a few days ago there was a European equity strategist that called the American economy "planned"...this sent shivers down my spine!! But what is sad is that this fellow had a point! In some aspects the European markets are now less manipulated than the American markets...plus there are now corporate tax havens showing up in the EU that make it (gasp) cheaper than operating in America...quelle horror!
If we get more socialists at the next election cycle, lookout markets! The health care segment has already been slammed because of expectations of a hostile Congress and Senate in 2006. But so far they've been busy trying to run Bush out of office...but what happens when they move on to something else?
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