Another rainy day on the bay… I see the city shrouded in mist from my balcony. Seems a fitting place to watch the ‘econolypse’ unfold.
Figure 1. 10:59 am Monday March 2nd, 2009 – My Balcony
The market has unfortunately followed the standard procedure when you establish lower lows. It has continued in the same direction. As I write this at 11:05 am, the S&P500 is down 25.36 trading at $709.73. As they say, ‘That’ll leave a mark.’ (for the record, since I am committing this to print, I judge the likelihood that the market will make me look foolish(er) by days end reasonably high.)
Must reading at the NY Times (Read articles here…) The only good news here is that most of these notables are all appropriately pessimistic. Some downright dour. That is good. We may yet have a chance to take proactive measures to mitigate the worst case scenarios such as deflation/inflation, productivity collapse, massive unemployment, etc…
Now if we could only stop throwing good money after bad as we did this morning with AIG. But the government is in a bind. From an investor perspective, you want to limit your losses and not throw good money after bad. Better to lose pride than money. However, a government’s legitimacy is based upon its willingness to complete what it starts so I am guessing the government’s perspective is to carry on and see it to finish. Perhaps this why it is a bad idea to mix government support with free markets. I recall George Soros making a lot of money off of the Bank of England on this very concept.