I thought things were kind of getting better and I was optimistic which is somewhat of a change for me but I believe these last two weeks will be
remembered as the final blow... here is why!
1. Usually if you look over the last few weeks stocks went down only to recover almost all of the previous day's losses, since the beginning of
October something different is happening! In the entire month of September about 800 points was lost, compare that to the beginning of October in
which we have lost 1300 points. This loss is despite the governments bailout plan and all their other tinkering!
I think tomorrow we will have another at least 200 point drop in the dow. I think we are done rebounding for a good long while.
2. Usually like good sheep investors get all excited when the fed does something like the purchasing of short term loans by the fed this helped
somewhat but the market never rebounded. This is BAD VERY VERY BAD it means the market has become recalcitrant to improvements there is nothing the
fed is going to be able to do now no matter how much they try to improve the market. The spiraling collapse has begun! Even the dollar which was
starting to make ground over the euro has plummeted!
3. Confidence, confidence, confidence... seem to me to be about as important to our financial market as location, location, location is in real
estate! While confidence has been decreasing for a while the average Joe American was content to sit back and do what everyone has told him just hold
on to your 401K and just wait by retirement you will be all set! Ride it out, right? Well not anymore! You now have financial experts telling people
to pull at least some of their money out of their 401K. Many experts are now predicting the Dow to continue to drop, with 7,700 being a real
possibility! Bernake hung us out to dry today with his comments he secured the fate of the market!
"There is this feeling that no matter what is done, it won't be enough, " said Darin Pope, chief investment officer at United Advisors of Secaucus,
The main problem I have with this is why have they waited so long? Why not have given warning when it maybe could have changed something?!? Seems to
me we all have been lied to for sometime!
4. It has become increasingly obvious to me that the “bail out plan” has not done anything to help these banks many of whom since Monday have seen
their stock plummet!
Bank of America is looking like it is going to completely fail as well, and what happens to Meryl Lynch when it does? It lost 27% of it value today
Wells Fargo- has lost nearly 10% of its value today
Citigroup- has lost nearly 13% of its value today
At what point does the FED fail? How can we continue to afford these losses?
5. Spill over into retail- The problems are like a dam failing, first a little trickle spills out then a little more and finally the entire dam
breaks! Retail is going to be the next to fall! Holiday sales are going to be the worst in record, you can count on that! When you combine the
possibility of credit is getting tighter, with consumers losing their jobs or working less with economic fear we are setting up a PERFECT storm
scenario. The only thing we have going for us is a decrease in oil HOWEVER predictions are that heating costs are going to be significantly higher.
“Users of electricity to heat homes will see the smallest increase, about 10% on average, followed by propane, 11%; natural gas, which is used in
more than half of the nation's homes, 18%; and heating oil, used widely in the Northeast, 23%.”
Retailers are not getting as many seasonal employees as well which is going to put a strain on an already strained job market!
This is combined with gasoline prices over 0.6 dollars a gallon more than last year at this time! When was the last time anyone went food shopping my
food bill has nearly doubled in the last 12 months!
All of this means come January, I believe we will see MANY large retailers either closing stores or going out of business (sears and JC Penny are my
tops picks to bite the bankruptcy bullet come January) which means more unemployment which I predict will spike in late December or January!
What is going to be the spill over point? When will our dam break? Will the change happen so slowly that most people won’t totally notice the
changes until it is too late (we have always been at war with eurasia!)? Or will there be a flash point where everything spirals out of control very
quickly? What are the next things we should be watching for? Has anyone noticed further change in military movements? What does the passage of today
10/07 mean, the predictions were wrong or could it mean we were expecting the wrong things and something significant but not completely extreme
happened (like the failure of the markets to respond to further fed changes)?