Dow 11-Year Low Reached

For immediate news on where the Dow is trading now go here.

The Dow Jones Industrial Average fell below its lowest close since 1997 on concerns that banks could be nationalized, marking the possible end of government-led bailouts.

Meanwhile, Chairman of the Economic Recovery Board, Paul Volcker, called the current recession "an exceptional crisis," while speaking at Columbia University Friday. He did add that "capitalism will survive" the current environment.

Citigroup and Bank of America, which have received a total of more than $90 billion in federal aid, fell more than 32%. The Dow fell 204.86 points, or 2.7%, to 7,261.09.

As investors fled to safety, gold topped $1,000 an ounce and Treasuries rose.

Comments

[CarmanK]

Never made a dime in the stock market. Invested money though. Good advice, good long term investments. Not!! So, I am very grateful for the 35 years of honorable government service my husband tendered to earn his pension. And thank God Social Security was not "in the market place", otherwise we would be eating mud like the poor in Haiti. I worry about my kids though!! Oba ma needs to rebuild the middle class. Unions need to be strengthened. The tax breaks for shipping jobs overseas need to be rescinded. Oil companies need to pay up the royalties owed American taxpayers. And international treaties have to really be fair, the lop sided deals made during the Bush administration have to be re negotiated. NAFTA has to be reviewed.

[JoeBlough]

Just hang on people. The Hip-Hop Republican Party has a parcel of Business Tax Cuts coming out soon that will fix everything. Milk and honey will flow once again.

[wdw505]

good

[Lillopa]

Wall street are causing this fall in market, all work for the rich corrupted men! They want Pres. Obama to fail. The new race card in America is....... rich vs poor --rich want to wipe out middle class---so they can have cheap labour, we are all now the rich man slaves !!!

[mitsie]

I may be wrong, however I feel that the people on Wall Street need to get on board and try to get us out of this mess. There are wealthy people out there who have the money to invest while the stock prices are down. Sometimes I wonder if these people want us to fail as well.

[billw8017]

When a reputable employer lists a dozen opening, hundreds of people show up. This indicates desperation, but it also indicates some resilience. Those people are trying to become better producers and better consumers. Their efforts will ultimately have effect.

A government of the people that works for the people will work by the people.

[ntmessage]

2/3
My Opportunity

As a big money vulture and speculator I see a flawed system, extreme overreaction, even hysteria and of course a huge opportunity.

1. I take short positions to drive down the market capitalization of the banks to create even more hysteria. If the common is wiped out (nationalized) I will make an immense amount of money.

2. The true market value of the bank is unknowable until a fair market exists. However I just manipulated the perceived capital value of the bank and long term shareholders who know the assets are worth something are scared into selling their stock, accelerating common share price declines.

3. Next, I get the PR machine working that the banks are technically insolvent, zombie banks and something must happen fast so the banks cough up the assets at distressed prices or are nationalized.

Here is the beauty of the strategy since I can wait 5-10 years for housing to stabilize.

1. I can use the money I made shorting the stock to buy the assets at their lower value, even if I helped create the hysteria! Now the best part...

2. I have no mark to market rules! I am unregulated! I am overseas! I just bought assets for a small fraction of what I will be able to sell them for five years hence with money I made shorting the common stock! I make 1000% even 3000%! (No typo)

[mitsie]

I had a retirement account in the bond market but did not play the stock market because I was afraid of losing money. My account grew steadily and when I need the money I was happily surprised at the amount I received. The bond market is insured by the federal govt. so the money is safe.

[ntmessage]

3/3
Why should the taxpayer care?

I would rather buy from the government instead of the banks who know the value. I need the bank executives and common shares out of the way.

1. Nationalization forces a tax write off full original value. The taxpayer just paid for the entire asset base with no congressional hearing or legislation. No visibility.

2. The write offs are greater than what is needed to recapitalize the banks.

3. I buy the assets from the government at fire sale prices, opaquely all paid for by the taxpayer.

There you have it, pay big money twice and get pennies in return, or insure, keep the common pay small loses later.

What I do not want you to do or know.

1. The government can simply back (insure) the assets and if the bank sells them later for less they pay back the difference to the government. Cost to the taxpayer? Zero. (Unless a bank goes under fair and square)

2. The government can use cash flow valuation instead of mark to market until a fair and transparent marketplace can be setup.

If either of these happen I lose big time, especially if the common is not wiped out. I fail in my bet against America and borderline criminal manipulation of a crisis.

[Right-turn]

Is this Obamanomics? I don't think I like it too much........

[WIpatriot]

It isn't. Examine your premise.

[mitsie]

How about Republicanomomics, they are reponsible for getting us in this position. They did away with regulations and free trade was bountiful. The problem was the fat cats got richer and we got poorer. Don't forget Bushonomics, he took us into a war by giving us info that was blatenly incorrect. This war has brough us to this point as well. We have been borrowing the money to fix Iraq back up, after we tore it down with missles. To tell you the truth, I'll take Obamanomics any day.....

[DeadPhish]

Viper -

Nice posts, thoughtful and balanced. Thank you.

Question: I have heard that there are a small handfull of wealthy families that fund the movements that benefit the top 1%. This is what was behind Reaganomics?

[blurredtruth]

Keep those crises speeches coming!

[WIpatriot]

Oh yeah, that's right, tell everyone the economy is sound. Stick your head in the sand.

[MJJM]

How about those full proof conservative financial principles??

The Bush era has really done us in folks!!

[NCRDIBULL]

And maddow just had on some jamoket talking about how great Barack's month has been ,,,,, Well Rache, as socialist communist , you probably do think Chairman Obama is doing well

[jimrs6]

Just released: "How to make a Bad Situation Worse" by Barry O.

[Viper]

Chapter 1) Re Elect BUSH a second time.

Regards

[wrenny]

I always find it odd to see people trying to cast some strange kind of negative light on the president by using a nickname he once used as a youth - as if a name has anything whatsoever to do with his abilities as a brilliant political leader.

[CarmanK]

I like Barry O myself. He makes me happy. We finally have a White House occupied by a real man in a White Hat. Truth is sooooo enlightening.!!!

[Viper]

An interesting point that Bernake revealed this week.

The Big banks have deposited r lots of their Tarp funds with the FED so they have cash reserves.

Many people,are going under the assumption that the money was used up... and thus talking insolvency and nationalization ( and a lot is crap being said by short sellers making money by talking banks stocks down and others who want the Mortgage securities liguidated at 8 cents on the dollar so they can go from millionaires to multi billionairs).

Wallstreet can make big bucks out of nationalization.. consulting fees as in the case of S&L bailout 600 bucks an hour back then... lots of economics professors will be l ining up for those jobs also, and then when you take 32% of our economy public again... big underwriting fees and etc.... Another trillion at least.

Follow the money.. Remember just six months ago oil was 150 heading for 200 per barrel... every day a rumor that would drive oil prices up was floated!

Regards

[noesis]

Very good point,but nationalization may be the best option at the moment. In any case, I'd hope that anti-trust clauses would be mandatory..so when the banks are resold, they won't be "too big to fail" again.

[jcollell]

Yay, more great news.

http://www.youspar.com/