Wednesday, January 21, 2009
The Market's Verdict On Hope N' Change...Not So Good
Wall Street and the financial markets had their own reaction to Obama's inauguration yesterday...the worst Inauguration Day sell-off in history: U.S. stocks sank, sending the Dow Jones Industrial Average to its worst Inauguration Day decline, as speculation banks must raise more capital sent financial shares to an almost 14-year low.
State Street Corp., the largest money manager for institutions, tumbled 59 percent after unrealized bond losses almost doubled. Wells Fargo & Co. and Bank of America Corp. slumped more than 23 percent on an analyst’s prediction that they’ll need to take steps to shore up their balance sheets. The Dow’s 4 percent slide was the most on an Inauguration Day in the measure’s 112-year history, according to data compiled by Bloomberg and the Stock Trader’s Almanac.
“All the banks are going to have to recapitalize,” said Greg Woodard, portfolio strategist at Manning & Napier Advisors Inc., which manages $16 billion in Fairport, New York. “That’s not done. That’s in front of them, and we don’t want to try to get in front of that trade.”
The S&P 500 plunged 5.3 percent to 805.22. The S&P 500 Financials Index fell 17 percent to below its lowest closing level since March 1995 as concern European banks need more capital also weighed on the group. The Dow average slid 332.13 points to 7,949.09. Both the Dow and S&P 500 retreated to two- month lows.
The S&P 500 is off to its worst start to a year, shattering the biggest rally since World War II, as analysts cut earnings estimates by a record 83 percentage points and companies signal worse to come.
The S&P 500 is down 11 percent in the first 12 trading days of 2009, exceeding last year’s 9.2 percent drop, according to data compiled by Bloomberg going back to 1928. The decline helped erase more than two-thirds of a 24 percent rally since Nov. 20 as optimism that government spending would revive the economy evaporated.
The 'rally' they're talking about involved the smarter players eithe rpicking up corporate assets at fire sale prices or dumping most of their holdings and getting into cash. That part of the action's over, which is why trading volume is down. What's happening now is that the rest of the herd is catching on and playing follow the leader.
From the day Obama was elected to his inauguration the S&P 500 index has lost 17% of its value, after taking a look at Obama's proposed cabinet and hearing the gist of his economic plan. That can't be blamed on Bush. It counts as the "Obama crash".
Unless the new president offers something very different, and quickly,he's going to be the modern equivalent of Herbert Hoover, and his fall in the public esteem could be even quicker than his rise. Bush is history, and while the media and the Democrats will try to spin it, if the economy continues to deteriorate there will be no one left standing to blame but Obama.
Before the US entered World War II, Franklin Delano Roosevelt borrowed no more than 6% of gross national product as deficit spending in any one year. During his first year in office, Obama will have borrowed roughly double that amount.
Not good.Watcher's Council Nominations, 1/21/08
The Watcher's Council is a group of some of the most incisive blogs in the`sphere. Every week, the members nominate two posts each, one of their own and one from outside the group for consideration by the whole Council.
So, let's see what we have this week....and do check out the Watcher'stake on the recent inaugural...
COUNCIL
Joshuapundit - Israel Capitulates - Once again, the weakest and most corrupt government in Israel's history allowed itself to be pressured into a farcical and meaningless ceasefire that snatched defeat from the jaws of victory.
This is a defeat for both Israel and the West, and both will regret it in the future.
Rhymes With Right - And Where Does He Get His Life Back? - Greg examines the case of a fellow educator falsely accused of molesting a 15-year-old girl who was recently acquitted.
The Glittering Eye - Fallacy of Composition -As usual, Dave Schuler looks beyond the hype and gets to the heart of the matter...in this case the mortgage crisis. He's totally correct that the vast majority of the problem exists in a handful of states and especially in southern California. As one who lives there, I had to smile at his notion of 'fixing ' California as he advocates. That would involve the feds taking over the state, deposing the governor, most of the state's elected officials, the legislature, and perhaps a number of county supervisors as well as rescinding several laws that directly contribute to the problem. It would also include dealing effectively with California's illegal alien problem, the 500 pound gorilla in the room that has had a fairly large impact on both inflated housing costs and foreclosures as well as California's general economic malaise.
Since that's unlikely, either the feds will simply rev up the printing presses and throw more money at the state and exacerbate the final reckoning,or the locals will finally demand that their elected officials take the necessary action once the state is bankrupt and vital services start being curtailed, or the more productive residents of the state will simply leave and go elsewhere, a trend that is already in evidence.
As I pointed out in an earlier piece on the subject,California is usually ahead of the curve on these kinds of trends..and we just inaugurated exactly the same kind of political set up on a national level - but with the single exception that the Feds can print their own money and make things even worse.
The Razor - Seeds of Destruction - The seed Scott writes about is the kernel of greed and corruption that occurs when one party controls things. And as he points out, neither party is immune.
Mere Rhetoric - I’m Going To Miss Westminster Abbey - Britain Hands Itself Over To Radical Islam, Blames Israel -Omri notes the trend towards dhimmification in Britain.
The Colossus of Rhodey - The entertainment of moral ambiguity - Hube has an interesting piece this week, comparing the 're-inventing' of the theme and meme of the sci-fi show Battlestar Galactica with the reinventing and distortion of the facts surrounding Israel and the Middle East.
Bookworm Room - The Inspirational President - Ms. Bookworm recounts yet another futile political discussion with Mr. Bookworm, this time over the nature of President Obama's qualifications for office.
Soccer Dad - Teaching Thomas - Soccer Dad does a fine job pointing out the fallacies and misinformation in New York Time's columnist Thamas Friedman's take on the recent Gaza War. As for teaching him...well, having run into him publicly once at a lecture and observing the drivel he normally writes, I'm reminded of WC Field's old line on the futility of trying to teach a pig to sing.
Cheat-Seeking Missiles - U.N. Complicity Behind Shelling of its Compound- Laer looks at the evidence behind the Israeli attack on the UN compound in Gaza after the IDF forces were fired upon from within the compound.
This is not new. Contrary to popular belief, neither the UN or the International Committee of the Red Cross are neutral bodies in the War against the Jews. UNRWA is notorious for allowing anti-Semitic incitement in its schools, sheltering armed combatants and even allowing the storing of arms and munitions in its facilities in violation of its own UN instructions. They also routinely ignore a UN directive requiring them to screen recipients of aid to make sure they are not affiliated with terrorist groups.
The ICRC also has a long and despicable history of anti-Israel bias. For years, the Israeli Red Mogen Dovid was prohibited from membership by the organization, while the Palestinian Red Crescent was cheerfully accepted.
During the intifada, the Red Crescent was used by Arafat, Abbas and their friends to transport armed combatants, homicide bombers and explosives and they were caught at it numerous times.
On one occasion, the Palestinians wired an ambulance as a car bomb they planned to drive into the heart of Jerusalem and had the explosives trip wired underneath a ten-year-old child 'patient'. The IDF, after intercepting the ambulance determined that the explosives could not be safely removed, and actually called in officials of the ICRC to show them the ambulance and the explosives, and then detonated it safely in front of them.
The Palestinian Red Crescent was never disciplined or sanctioned bythe parent body in the slightest for these war crimes, even though the ICRC was well aware they were occuring...and I have a letter response to my concerns on this matter in my files from Dr. Kellenberger, head of the ICRC to prove it.
Right Truth - Obama, he’s only human - Debbie Hamilton does not care for our new president, and especially not for the air of adulation surrounding him.
The Provocateur - The Insider Story of ACORN - And speaking of President Obama, Mike Volpe has a capsule history on ACORN, a very questionable organization the president helped push in his days as a community organizer.
NON-COUNCIL
Submitted By: Joshuapundit - Robert Avrech/Big Hollywood - The Real Battle Of Algiers, Part 2
Submitted By: Soccer Dad - Daled Amos/strong> - Did Monty Python Negotiate Israel’s Ceasefire?
Submitted By: Rhymes With Right - NewsBusters - AP Describes Black Minister’s Mockery of Whites as Not Right As ‘Note of Racial Caution’
Submitted By: The Glittering Eye - Pajamas Media - We Have Overcome Today
Submitted By: Bookworm Room - Badger Blogger - A call to action for Wisconsin conservatives
Submitted By: Mere Rhetoric - Middle East Forum - Syria Can’t Be Flipped
Submitted By: The Colossus of Rhodey - BookForum.com - Onward and Downward
Submitted By: Bookworm Room - Jeff Jacoby’s Pundicity - Questions for Obama’s science guy
Submitted By: Cheat-Seeking Missiles - Armed and Dangerous - Gramscian Damage
Submitted By: Right Truth - African Crisis - Zimbabwe: Mugabe accuses the Whites of trying to Foment unrest - Campaign to Intimidate & arrest the last few Whites
Submitted By: The Provocateur - Washington Post - Voting Rights Anachronism
Wednesday, 21 January 2009
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