Dow (below) 10,000: Stock investors continue to discover that there's a financial crisis

i look at the speed of the collapses and rescues as a contrarian indicator that we are in fact at bottom or very close. This is stuff I thought was going to take months to happen, not weeks. The fact that everyone is throwing in the towel and the kitchen sink all at once is a positive marker to me. Also, citi and WF FIGHTING over Wachovia - there's a spark of life in the machine! Again a positive indicator for me.

Of course, as many past blow ups have shown before, you can be long-term right and still get squashed in the short- to medium-term.

This crisis will end when somebody starts to lend again. Clearly, the banks are hesitant to do this and the whole economy is being held hostage.

I heard this morning that the Fed is considering lending directly to businesses if the banks don't lend. I think that is great idea. This may very well be the event that can unwedge the crisis. The Fed should perform the banking function temporarily and then spin it out as a new independent bank in 1 year. This new bank will have a clean balance sheet. Seeing competition, the banks will come to their senses and this whole thing will get resolved pretty fast.

Per Calculated Risk, but you don't think that this has anything to do with a market crash?

http://calculatedrisk.blogspot.com/2008/10/q2-2008-mortgage-equity-withdrawal.html

The US was withdrawing in the $600B-$800B range per year in home equity. People were spending well beyond their means, and now without equity withdrawls people can't. It accounted for 8% of disposable income in 2004 and 2005, but now it's down to a minuscule amount. The problem with the markets isn't frozen credit, but hundreds of billions of dollars in less spending per year versus a couple of years ago. Since banks now document income and require down payments we're finding out that many Americans were simply living far beyond their means. This propped up our economy for a while, but now it's falling apart.

Although I normally would not read anything nor comment upon anything that someone who is anonymous and/OR considers himself a dude, this particular time I do find agreement with him. We are today (Monday Oct 6) approaching (or might actually be in) a selling climax, an event that generally fortells a bottom in any declining market.

This just may be the time to BUY and BUY and BUY, but I'd be sure that I was not using money that I needed to again use in the very near term future. Any such purchases should come out of excess funds which any good investor (I'm not even considering the foolish amongst us who should be called speculators But if you've managed your finances properly, you should have some excess funds available today to BUY and BUY some more.

Michael Wein

When they talk of how much value this country lost this week, they need to add the 700 billion as part of that.