Tuesday, October 7, 2008


Today, October 7, 2008, the Dow Jones Industrial Average was off 508.39, another 5%. It ended 9447.11. What? The Bailout isn't working in investors eyes? Duh. It wasn't a bailout anyway it was a porkout. Obama is creeping up in the polls and tonight is the second and second to last debate between Obama and McCain. It is McCain's last chance.

As I wrote to myself just after last Thursday's only debate between Joe Biden and Sarah Palin:

Gov. Palin should have...but now Sen. McCain must go after Obama.

“Sen. Obama you are the problem. You and Sen. Biden are Democratic senators, him for 35 years. Do you know how many pages the Medicare regulations are? Nearly 150,000 pages of believing doctors, nurses, therapists and administrators are crooks. That is why healthcare is so expensive and unattainable for many. And Democrat mandates -- such as parity of mental and physical health slipped into a bailout bill. What does that bailout? It increases costs for all of us...well not us, we are politicians and different. McCain/Palin is for slashing regulations and allowing doctors, nurses and therapists to make the decisions they were trained for. We trust them! McCain/Palin believes in the free enterprise system is all its imperfections it is the best system ever invented. Senator, business creates jobs...8 million in the last 8 years, although it's slipping now. Government income has skyrocketed since the 2004 (?) tax cuts. Business creates jobs, government does not. Business creates wealth for us all, government does not. And it isn't government, it isn't regulation that saves us from the present crisis, it's the people. But government doesn't listen to the people enough, it's busily re-engineering society, as you are wanting to do with income taxes. Senator, that does not work...Senator, that has never worked for the benefit of anyone except politicians like yourself.

"Now. Senator, is it true that you plan to nationalize all banks?

"Now, Senator, is it true that you’ll launch a witch-hunt against all banking executives and officers of financial institutions if you become president? Accompanied by class-action lawsuits launched by your major backers?

"Now, Senator, do you believe profits of big companies are good?

"McCain/Palin is for the jobs that have created the best society known to humanity. We support the businesses that create the jobs."

If McCain doesn't emerge the perceived "winner" tonoght, I believe the market will crash again tomorrow.

Update October 1, 2008: He didn't. Headline in the Wall Street Journal today, "Wild Day Caps Worst Day Ever for Stocks". “Dow Jones Industrials Lost 18% in Their Worst Week Ever” (P. B3 Wall Street Journal). 22% in the eight days after the debate. Friday's close the 10th was 10,325.38 a week later it was 8451.19, with the close capping the most volatile day in the Dow's 112 year history, swinging 1,000 points. During the week, Wells Fargo Banktook over Wachovia, one of the largest mortgage lenders in the country, literally snapping it out of the hands of Citigroup’s deal, which involved a federal backstop after Citi would have taken something like $50 billion of losses in Wachovia’s portfolio and the U. S. taxpayer the rest. Wells’ deal involves no federal risk. And mighty Morgan Stanley negotiated last week a deal from Mitsubishi UFJ Financial for $9 billion for a 21% stake, valuing Morgan at nearly $43 billon; however its market value at the close Friday, October 10 was only $10.3 billion. Perhaps one of the greatest buying opportunities in my lifetime (unless it's like Washington Mutual’s $7 billion infusion from a group of private equity investors last March or so which is worth zero now.) On Friday the Dow had a 1,000 -- 11% -- swing from hitting a high of 8,901.28, a low of 7,882.51 and closing down 128 points, off 1.5% to 8,451.19. The commercial paper market which earlier in the week seemed frozen was operating some again, with GE using the market with no problem. General Motors at 4.89 was up from Thursday’s close which was the lowest GM has traded since 1950, off 46% for the week. Ford did little better.

I believe much of this is the Obamacrash. Not only from the absolute cerainty that Obama will raise income taxes, capital gains taxes, dividend taxes and allow Bush's tax cuts to expire -- raiding taxes by a trillion dollars more or less. Certainly the general worldwide market and loan meltdown is the cover and cause of some of the declines, but Obama's upturn in the polls is a significant cause also.

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