Markets are free markets--they do what they do. Tomorrow, we could be up 600 points. Traders and speculators are having a field day as they take advantage of all of the emotion. If you don't know, the markets are driven by two major things: Fear (of Loss) and Greed ( for gain) pension funds, holders of massive amounts of stock can (and do) unload stocks. The prices go down! The average joe sees his stocks value lumetting. What wiil he do? He'll sell it. Those sharres move into the hands of traders who are willing to pick up "joe's shares at bargain prices. When the market goes up, the value of the shares they bought will increase. The market will go down again, and they will sell there shares before it tanks at a nice profit.
My hunch is that after today's 300 point move up, the market will trade sideways until the geniuses in Washington do what's best for the country--we hope--anything short of that will send this market down.
The news media made much of the drop and couched it in terms of the bailouts proposed cost (700,000,000,000) Well the market is not the bailout and the markets have "recovered" for the last 26 years. The drop in the markets value will be "made up in time and I believe things will begin to smooth out after the air clears in Washington and we get a good solution.
This is America.
From The Arab News:
"THE aim is for the US government to buy the "bad apples" out of the basket of debt some major banks have incurred by doling out bad loans. This will hopefully free up liquidity so banks will resume a normal rate of lending to each other. Meanwhile, House Republicans are in revolt, demanding their own solutions that include a moratorium on capital gains taxes. This proposal arguably does nothing to deal with the liquidity crunch; it would benefit speculators the most.
The solution worked out by Congress has done little to address the fundamental question of whether this is the best way to confront this crisis. Former New York Times Pulitzer Prize-winning finance reporter David Cay Johnston has questioned the motives of the bailout and launched a tough criticism of the media for diving wholeheartedly into promoting the administration's claims.
"The fact that we had a couple of Wall Street banks fail - that's capitalism!" said Cay Johnston in an interview on NPR's On The Media. "If you look around, you'll notice that banks are still making ordinary loans to ordinary businesses. Your mailbox is still filled with proposals to sell you credit cards and extend you debt. The Internet still has ads for these very toxic mortgages that are at the heart of this."
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