“The old paradigm just doesn’t work anymore,” says Taipan Daily editor Justice Litle. And that’s why the crazy quotient just seems to be rising and rising rather than falling back in line.
– The worlds financial markets are waking up to a harsh reality this morning: the financial crisis has moved far beyond US subprime-mortgage meltdown to a fundamental breakdown of trust in the money markets that is dragging the sick and the healthy down alike. Yesterday’s drop below the 10,000 mark for the Dow is ample evidence that the Bush administration’s pork-laden plan to rescue the US banks has fallen short of its stated goal of shoring up confidence in the markets.
– As quoted in Agora Financial’s 5 Min. Forecast, “The idea of the bailout,” one trader told CNBC soon after the close on Friday “sounded better than the actual bailout.”
Stock ‘guru’ Jim Cramer says it’s time for investors to get out of stocks.
According to a report on MSNBC, Cramer told Ann Curry on TODAY Monday: “Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.”
The Big Picture blogger, Barry Ritholz, says Cramer’s strong sell recommendation could be a strong buy signal for contrarian investors.
Remember when 11,000 was the “psychological barrier” for the Dow? Well, today the index broke below 10,000 points in one of the most dizzying falls in history.
In the first 30 minutes of trading, investors had pushed the Dow industrials down over 300 points. This from AP:
Wall Street tumbled Monday, joining a selloff around the world as fears grew that the financial crisis will cascade through economies globally despite bailout efforts by the U.S. and other governments.
These are worrying times. Not only for investors, but also for anyone with their savings in US banks. Already, some of the biggest names in banking have gone belly up. How do you know whether you bank is safe or not? Keith Fitz-Gerald in Money Morning says there are three steps you can take to make sure your bank is safe.
– The credit crisis has spread. Over the weekend, Germany issued a blanket guarantee of consumer bank deposits. The German government also bailed out lender Hypo Real Estate Holding AG that was close to collapse after private lenders pulled out of an their own bailout plan.
– European stocks are getting trashed. According to the Financial Times, “Dizzying falls across the [financial] sector came across the continent and led to big overall losses on leading indices.”
– There are calls for a European-wide fund to recapitalize banks. So far, European governments are acting individually to stem the crisis.
– After a week of grim news, could Friday provide a happy ending to the week? Some in Washington certainly hope so. According to the WSJ, the bailout bill “appeared to gather momentum in the House of Representatives” after the strong bipartisan showing in the Senate.
– US stock futures reflect the brighter mood on Capitol Hill. “S&P 500 futures rose 9 points to 1,133.40 and Nasdaq 100 futures climbed 10.25 points to 1,520.75. Dow industrial futures rose 73 points,” according to MarketWatch.
– Also adding to the positivity is news that Wells Fargo (NYSE:WFC) is to buy Wachovia (NYSE:WB)in a $15.4 billion takeover.
The bailout bill has passed the Senate. But US stock markets are still highly volatile in the absence of any concrete deal passing Congress. Where can investors hide in these conditions? Sean Hyman says the answer lies in low-yielding currencies such as the yen and the Swiss franc.
– The Senate has passed a modified version of the $700 billion bailout bill Congress shot down on Monday. The bill passed 74 to 25.
– The bill passed by the Senate includes provisions to increase the FDIC’s bank deposit insurance limits and a $150.5 billion package tax cuts.
– Despite the passing of the bill in the upper house, US stock futures slipped this morning. MarketWatch reports that “S&P 500 futures fell 9.9 points to 1,158.50 and Nasdaq 100 futures dropped 5.5 points to 1,573.25. Dow industrial futures dropped 71 points.”
The $700 billion bailout is dead in the water. For now. Does this save working American’s tax dollars? Not according to Taipan Daily editor Justice Litle. In the absence of a bailout passing into law, Bernanke & Co will simply crank up the printing press and try to inflate the problem away. This is taxation by another means. It just doesn’t feel like it.
