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'Don't Mess with Mother Nature': Markets Send Govt. a Message

Posted Oct 02, 2008 12:52pm EDT by Aaron Task in Investing, Recession, Banking

Is the market saying House passage of the bailout plan is in doubt, or the bailout won't help? Or both?

These and related questions are on traders minds Thursday as the stock market's tumble resumed and credit market's freeze deepened despite the Senate passage of the bailout bill. The bill is just the most obvious of a series of government efforts that, to date, have failed to stop the market's decline, the most recent including:

Rather than alleviating the crisis, the government has "messed with Mother Nature," which is having a huge negative affect on market psychology, says Todd Harrison, CEO of Minyanville.com, and a former trader at Galleon Group, Cramer Berkowitz and JPMorgan.

The government has effectively "suspended the free market system [but] you can't change free will," Harrison says: Stopping short selling doesn't prevent long-only investors from dumping their shares.

So what's next? Shutting down the market entirely, like the Russians did? Don't laugh. Pakistan banned short selling before the U.S. and U.K. did and the government "can do anything they want," Harrison says -- it just might not work.

103 Comments

Gary
Gary - Thursday October 02, 2008 01:36PM EDT

agreed..the bailout will only postpone what will happen. Let's keep our 700B. The world will not end if the Dow goes to 6000.

Edwardh
Edwardh - Thursday October 02, 2008 01:37PM EDT

Obama and Chavez must be emailing each other like crazy. Obama is going to grasp this moment to turn us into the United State of Europe. Start tearing down the shopping malls now, one car per household and our way of life comes to an end. Less than half the American people pay taxes now as it is.. Is capitalism dead? Really hope not! :(

eNewss
eNewss - Thursday October 02, 2008 01:37PM EDT

Let markets take their own course of action. The more we fight it, the more we loose it. Its long due for a correction. Correct from cheap money, too much debt. Throw stones at the following people a) Who say that economy runs on debt b) Who say, public transportation is un-american

St
St - Thursday October 02, 2008 01:38PM EDT

Aaron can your next video be in the Subject of asking Todd what this "New Golden Age" will look like, I guess what I’m saying is Todd your talking intangibles lets get to some specifics, what will this "New age" look like in your opinion? Specifically how will systems work in this "new future" can you go into details? plus you are both talking about "messing with nature" and if in the future there are less players, would you agree that that means inherently more monopoly? , how will this harbour a "better market system"? or aren’t you talking about a market system? is the golden age of globalisation based on a market? I genuinely want to hear you talk about this. i think Americans would like to genuinely understand your opinion of what this will look like also.

rish
rish - Thursday October 02, 2008 01:39PM EDT

how about fed let market fall another 20-25% and then bailout to get more discount!!!!????

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 01:40PM EDT

Do they really know what they are doing? What if it does not work? How can we get the 700b back then?

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 01:42PM EDT

These banks are all laughing at how stupid we are. Everyone should buy a fireproof safe. Then we should pull all of our money out of the banks for a month and see who would be laughing then. No deposits, then no BS mortgages. I already have my safe and I'm filling out my withdrawl slips right now.

Jamie
Jamie - Thursday October 02, 2008 01:43PM EDT

Lets keep in mind the real problem here.Atleast 95% of these people had PMI insurance(if they default insurance picks it up).The problem is the banks can not pay these large lump sums in insurace claims.That is why Bush wants to push this bill threw with no accountabilty for where it goes!The tax payers will not even be getting any assets for most of this money.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday October 02, 2008 01:45PM EDT

Make sure on Nov 4, you remember which of your Congress members voted for this bailout. "Change your leaders, not your lightbulbs"

Brandon
Brandon - Thursday October 02, 2008 01:46PM EDT

This statement about there being a credit freeze is a bunch of bull. I made the effort to call a few banks in my area and each of them said they are having no problem getting the money to loan. As long as I had the down payment of about 20%, they would loan the money to me. I believe that this crisis is being manufactured by the media and by congress just to get the bill passed.

valueman
valueman - Thursday October 02, 2008 01:49PM EDT

I support the rescue plan 100%, because I understand the ramifications of frozen credit markets. Too bad most of the people on here don't. Well, do you want to experience Great Depression 2?

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 01:51PM EDT

I don't think the average american home buyer was necessarily greedy. I think they were just scared. Home prices were rising so fast they were afraid that if they didn't get on the band wagon now they would never be able to afford a home. Now buyers are scared. Seems the average person always gets it wrong. They listen too much to the media.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday October 02, 2008 01:52PM EDT

PIG HEAD

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 01:52PM EDT

It's great point. Please do not waste our taxpayer's money and give away $700B for nothing. Please vote the bailout down tomorrow at house.

Nocturnal_Insomniac
Nocturnal_Insomniac - Thursday October 02, 2008 01:52PM EDT

The government is the latest in a string of culprits. The FED is one of the earliest, since they have kept rates artifically low since 2001, and there after should have started to raise them at some point but they would rather fuel the the housing bubble then tighten the money supply. To be honest I am against the bailout for this reason, I realy think they should be saving that money for unemployment coffers. They are going to need them.

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 01:53PM EDT

Does not matter how do you look, it is two way sword. Main street is loser whether you do it or donot do it. Only God can save main street, damages are done and continue.

Manuel
Manuel - Thursday October 02, 2008 01:54PM EDT

You know how in some Third World countries they harvest organs from those in society they deem "less desirable" and give them to the wealthy aristocrats who have lived a life of debauchery and their own organs can no longer sustain them? Well this bail out is just like that. The government has decided that us "less desirables" aka working- class-people, who pay their bills, play by their rules and live within a budget should now give up our organs($700B) so those who have abused themselves can continue.....

Yahoo! Finance User
Yahoo! Finance User - Thursday October 02, 2008 02:00PM EDT

So if you have a security that is less than stellar at is currently selling at 20 cents on the dollar when in reality, if it wasn't for the hysteria, it would probably be worth closer to 40 cents on the dollar then isn't it a good deal? Most American families when they bought their houses were not in over their heads and so long as they keep their job they'll continue to pay on time until the note is paid. If you don't do the bail-out then those people who are now paying will loose their jobs and then they won't be paying, at which point you have a self fulfilling prophecy.

Malay
Malay - Thursday October 02, 2008 02:02PM EDT

You make sure you fire every single senator who voted for this foolish piece of corruption. I can't believe both presidential nominee shamelessly voted for this. Let's elect an indepedent as a president this time. There is no honesty left in washington. Majority of the general public is against this for a simple reason....they have brain left unlike others. And they are telling us we don't know what's good for us...Where did we lose our common sense america?? This must stop in the house...

PLAYBIG
PLAYBIG - Thursday October 02, 2008 02:02PM EDT

"The USA Govnerment Obvously FAILED ECONOMIC 101 Misserably!" The market has always been about "Supply vs Demand" With the Govn. interferring of late. It takes away it's key function, that in a "Capitalistic Economy" the Strong survive (thus lessening the - "Supply" and the Weak FAIL (thus increasing the demand) Yes, It's a horrible thing to see people lose their job's, businesses, homes, and so. But, that is how the market will find it's only level and streighten things out. The anology here is like a little kid .. When it doesn't get it's way it can't just cry and scream till it does... That teaches nothing! Besides, with today's Econ Data ,, that isn't even good enough to be terrible! There's little doubt that the Govn. the BushED Admin is thinking "We better pass this 700 bill fast, Becuase we're going need more money after that! This was caused by one thing GREED!!!! Period!!! end of discussion! If it's not GREED! then, why doesn't the Gonv. simply just OUTLAW and END completley the "Credit Default Swaps" I know why it doesn't because Hank Paulson and Compay "Croonies" Stand to lose a ton of $$ at JPM and GS if they do! Sounds more like BS to me!!! Anyone who doesn't understand what a CDS is. Should read about them and then they'll really see why Paulson and Company are total CROOKS! It's not like if the bill doesn't pass the market will just stop functioning all together.. It's just that it will need to drop a whole lot as it should before it does! There's little doubt however reguardless of what the Govn does the USA Economy is headed into a major recession that will almost surely see the DOW erase all of the gains it saw during the BushED Admin That Means DOW 7,162.00 is coming again sooner than later..

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