I’ve been watching the market tick-by-tick this week and it’s been nothing but failed bounces and hard selling.
Credit is most assuredly locked again like it was at the end of 2007. This time, insurance (AIG) and mortgage lenders (Fannie Mae and Freddie Mac) are included. It’s not just investment firms, hedgies, etc. anymore.
The Fed has shot its wad in cash infusions although it’s pumped a lot more in this week.
All those failed firms this week will have had to have sold much of their positions, driving down prices for invested companies as well.
I am almost positive that a lock on credit markets has reduced new business investment to next to nothing — compounded by businesses’ fear of their own dwindling demand — and so the economy should finally slip into solid negative growth. So far economic growth has managed to hang on but I don’t think there’s any escape this time.
Interestingly, people are blaming this as a nationalizing socialist move, when in fact it’s propping up the system. The guys in power are as anti-socialist as you can get and no one really cares about the little guy here. You don’t hear Bush on the air at all trying to calm the people. The people can go fuck themselves, as far as the people on the top are concerned. This is purely about saving the system that they’re bailing out firms like AIG.
Speaking of Bush:
It’s not clear whether the entire financial system will collapse in the next week or two. Chances are pretty high that they won’t, and I’ve been looking for a big bounce to happen, without success so far.
But businesses are deathly scared; where will any new economic opportunity come from until this all clears out?