Will It Ever End???

Like everyone else I know, I have been watching my money disappear. The money I worked 14 hour days for. 7 days a week sometimes. For years and years. The money that can’t be replaced with new earnings – because my industry is so changed and diminished. And because my demographic is not – shall we say – desired by my changed and diminished industry. The money that I – and many others on the far side of the moon - may not live long enough to see again.

With every announcement out of Washington, with every “coordinated” action in Europe and Asia, the financial wizards pronounce the panic attack in the markets over. And then traders and investors and most of all the short-selling hedge funds focus on something else – like the real and now so obviously recessionary economy.

Today -- with the U.S. plan in place to invest $250 billion dollars in the country’s banks – and similar moves around the world – the frozen credit markets are showing small signs of defrosting. But also today Fed Chairman Ben Bernanke said again it will take time – perhaps quite a bit of time – for things to return to normal.

Bernanke – answering questions from economists in New York – also drew on his expertise as a Depression scholar – saying the economy then – and now are not comparable. And pointing out how swiftly global governments have acted to stem the slide this time – instead of waiting three, bank-failure-filled years, as the U.S. government did in the early 1930’s, before declaring a bank holiday.

He convinced me, anyhow. But that was at noon. 4 hours later as the U.S. market closed – the Dow had plunged 733 points, NASDAQ fell 150 and the S and P was down 90. The single worst day for stocks since the 1987 market crash.

OhmyGod.

Once again the prognosticators are talking about the confidence game. As in “a vote of no confidence”. No confidence that this unholy amount of money the world is throwing at these banks is enough. (Question: how much money CAN governments throw into the pot – until the world simply runs out of money???)

So OK – the retail sales pullback in September proved what everyone already knows. Even factoring out those tottering auto sales, high gasoline prices (slowly falling now), dwindling home values and retirement funds -- and growing job fears have finally convinced the infamous American consumer that maybe those 20 maxed out credit cards aren’t the best way to live right now. We already have warnings from chain stores and malls and shopper surveys that holiday sales this year won’t be exactly stellar. It’s NOT news.

But the market mavens must have selective hearing. And blinders on both eyes. The market moves not on fundamentals these days but on emotion. Mostly on fear. And for the rest of the week we’ll have a lot of 3rd quarter earnings reports from major companies to fear.

Traders down on the NYSE floor suggested hedge funds were still selling off assets to cover margin calls or redemptions. That’s why the losses accelerated so during the final hour of trading. Who really knows.

In the end we are still throwing money at banks and firms and companies who got us into this mess in the first place. Because they’re too big to fail; because the financial system is too crucial to our economy to fail.

When you think about it – what should REALLY put the fear of God into the market is this: the brilliant financial minds who basically screwed up the system –like the former Goldman Sachs CEO, now Treasury secretary Henry Paulson – are now in charge of fixing it. Fortunately the man who may be most responsible for the housing bubble and the pyramid scheme that leveraged it around the world – is not part of the solution right now. That would be Alan Greenspan – the Fed chairman for 18 years – beloved by Wall Street because under his rule -- whatever Wall Street wanted, Wall Street got.

OhmyGod indeed!