Sunday, September 28, 2008

It took a week, but we have a deal.....

Main Street is running for the hills, people aren't talking about $3.50 gas anymore, or that one candidate is better then the other, they are not just worried about things, most are scary.

I usually try to believe the best in most things, that everything will work out, well that was up until September 2nd, when the market was retesting a .786 of the last swing, it make not sound like much, but we had to clear that 1305 or we were going to retest the low.....and we did on the 11th. Then as the market tried it's best to clear the .618 at 1280 and couldn't I thought....WOW.

The odds were we would go to a 1.272 extension and the world would just fall apart if we did. I was trading back in 1987 and in 1990, of course I was around in April of 2000 and in Sept of 2001 and had seen these conditions before.......the public was in a panic and the politicians were flapping their wings and smiling for the camera as Main Street screamed in the night and couldn't sleep for out of fear.

We moved everything over 100k into TIPS, just in case, the sky did fall but it appears now the world has been saved again. One could easy write a million words about the current mess and how we got here and who is to blame, but that is the only things that politicians seem to be able to do. A local bank here had just financed an upper end sub-division and was offering financing so you could buy a lot, (unofficially the theory would be to buy it, flip it in 2-3 months and made "X" profit...a no brainer), they were about 3 acres, and with no money down and no interest for 180 days, and then interest only. I was thinking to myself, no money down and no payments...what is wrong with this deal????? Now I see furniture companies advertise all the time...NO PAYMENTS UNTIL 2012, but this is real property and a real bank. It turns out, it was a disaster as now people are stuck with a building lot and no buyers. The developer has even gone back in an bought some lots so the comps would stay high and a fire sale didn't break out. Now when a community bank is willing to make deals like this.....well it's only a matter of time before it's over.

I wonder if the up tick rule was still around, you know that little rule that has been with us since......let's see......of yea...THE GREAT DEPRESSION would "they" have been able to run AIG, LEH, BS, MER and last but not least WM into the ground until their credit rating was downgraded and that required the feds to do something. Would that have slowed this train down? Would raising the 100k dollar limit, which I think has been around since 1861, to say 250k or 500k also helped prevent runs on the bank as people moved money all over the place the past two weeks in a panic know 100k in every bank in town or like we did into TIPS and out of the banking system entirely?

The sun will rise tomorrow, that is for sure, and the market will open and we will watch a relief rally no doubt, if for nothing else, the fact that a plan is in place, a good plan..most likely not, but at least it's something. And we can all get back to doing what we do for a living...and worry about how many cupcakes we need for the bake sale at the next soccer game. And when we gas get below 3 bucks a gallon so we can dust off those SUV's and hit the road.

It's nice to see things get back to normal and the only thing we have to fear is fear itself......or something like that. Now the media will take the entire week, until even they get bored with having Pelosi explain the entire 110 page bill, before they can find something else to whine about. The Nikkei is already up almost a full percentage point while the NZX is up .8%.

Thank goodness we had the media, the only thing that could have been worse would have been if Nancy Grace talking about economics and yelling the sky is falling the sky is falling the past two weeks.

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