Friday, October 3, 2008

House Passes Bailout Bill, Bush Signs, Markets Reel

All major US stock indices were higher at the outset of trading on Friday as passage of the massive financial industry bailout bill (let's call a spade a spade) by the House of Representatives seemed likely.

The Dow was up more than 300 points by mid-day, but once news that the bill had passed the House and was en route to a sure signing by President Bush, a general sell-off ensued, taking down all indices.

What was once a 300-point gain on the Dow had turned into a 157-point loss. Worse yet was the fact that the major indices had all fallen below where they had closed on Monday, September 29, the day the House initially rejected the bill.

It was as though the Wall Street Fat Cats had been playing the American public and the congress and said, "Thanks, but screw you." The sudden selling spree left many with a knot in their stomach as though they had just given away the farm. No doubt, there will be much discussion in coming days, weeks and months over the entire episode.

Unfortunately, it is now too late to retrieve the money and whatever else is left of the US financial system. For two weeks, all we heard from the President, his Treasury Secretary and the supine, lap-dog media was that there was a crisis and congress must act. The pressure to pass legislation to buy up the mostly-worthless assets from the very same banks and financial firms which took imprudent risks was severe.

The vote to give in to the pressure and give away more than $700 billion of taxpayer money (all of which will need to be borrowed, mostly from foreign entities) will likely go down in history as one of the greatest swindles by government ever achieved.

It is my hope that the recipients of the nation's largess suffer the worst fates imaginable, and that goes twofold for the gutless legislators who folded under pressure to pass this ridiculous piece of legislation. My sentiments toward the sitting president and the grossly incompetent bunch of liars and thieves he so glibly calls the administration is already well known.

I am not one to pass judgment upon entire classes of people, but in this case, there is little doubt that those who pushed along this legislation and passed this monstrosity were not working in the public interest but in their own self-interests, by padding the wallets of every lobbyist and high-dollar campaign contributor via a deceptive and offensive abuse of the public trust.

Sadly, signatories to this bill include both presidential candidates along with Joe Biden, the Democratic party's vice-presidential candidate. Whichever eventually wins the election will be saddled with not only the huge outlay and management of this unwieldy program, but, more importantly, must work overtime to regain the trust of the American public, which has been severely compromised.

Dow 10,325.38 -157.47; NASDAQ 1,947.39 -29.33; S&P 500 1,099.23 -15.05; NYSE Composite 7,088.94 -66.47

Declining issues topped advancers, 4323-2019. New lows were once more ahead of new highs, 1103-23. Volume was on the high side, especially on the NASDAQ, and considering the resoluteness of the late-day trades, all indications are that the bottom is still a way off.

NYSE Volume 1,419,507,000
NASDAQ Volume 2,531,149,000

The other news, which went largely unnoticed, was the loss of another 159,000 jobs in September, according to the Commerce Department's Nonfarm payroll figures released prior to the market's opening. This horrendous figure underscores the depth of the problems facing the US economy. We have been going in reverse for some 14 months now, and, with the elections a month ahead and three more months before any new administration can get around to any kind of serious problem-solving, the government's answer to the people is quite clear and somewhat astonishing: "Vote for us in November, but until February of next year, you're on your own."

Commodity markets were rather calm. Oil lost a mere 9 cents, at $93.88. Gold finished $11.10 lower, at $833.20, and silver gained 21 cents, closing at $11.33.

It was an historic, tumultuous week on Wall Street, whose principals have been made whole by the US taxpayers, but whose principles are still at the height of ruthlessness, greed and avarice. Those of us on Main Street have given them a free pass via our ineffectual government, but for many American citizens, this episode will not be soon forgotten.

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