And then they voted...

And now we see what happens when you don't allow shorting (and thus short covering). Floor gone. Have we ever lost 777 Dow points in a day? And we did it without the shorts help - who knew? That's enough on the market, other than 2 things, first a historical point you should heed, and 2nd a rumor - both as a reminder to be VERY careful out there:

With these major moves, I'm sure there's lots of people rushing to short the hole or go all-in long. Before you do, let me offer a quick sanity check -- historical perspective from the '29-32 bear market.

On Oct. 24, 1929 the Dow droped 9%. That was followed by a rally the next day of <1%. The next two trading days (Oct 28-29) saw a 13% and a 12% drop respectively.

If you shorted the hole on Oct 25, you did well - a 23% plunge over 2 days. However, if you shorted the hole after the Oct 29 drop, you got ***********, not for a day but for SIX WHOLE MONTHS, until April '30 with a peak of darn near FIFTY PERCENT above the low after the '29 crash.

In the spring of '30, it probably felt like the bottom was in. After all, that huge crash had happened 6 months earlier, and the market had been steadily churning out gains. If Jim Cramer were on TV in 1930, he would have been patting himself on the back for half a year on his correct bottom call. Ooops - wrong: the next two years would have to Dow drop over EIGHTY PERCENT to a 20th century low of 41.22.

So my point of boring you with this history lesson is that while history never repeats exactly, it often rhymes. Please be VERY VERY careful with positions. Volatility cuts BOTH ways. Market timing is very difficult and rather unpredictable - don't get overconfident just because you've timed the market right in the past. We live in truly historic times which are and will continue to be market by truly historic market moves.

And the rumor (for entertainment purposes of course):

I just recived a e-mail form a source in the big windy

"Spoke with a good friend, well-connected pension fund guy in Manhattan, he is CERTAIN the market tomorrow will close up huge. He only knows the close will be bloody for shorts."

"can you say the Intel you have? Rate cut? FDIC limits raised can you point me in the right direction?"

"Our source says the democrats have come up with the needed votes, that's all he told us on his cell phone from some lower Manhattan rest/bar."

At the second I got that e-mail the /es (futures) started to move north.

Take it with for what it is worth

What are the odds, especially now that it has been posted publicly, hopefully it doesn't work like that (but it seems to) - but be careful both ways regardless, nothing wrong with straight cash. I hope.



And now the less important part of me saying whatever I want 'cause it's my blog:

Let me state one thing off the bat. The bailout plan was a horrible deal. Anyone that says "see, we need it" is wrong. People who are long because the goverment would save us are wrong. And anyone who bought something expecting everyone else to cover them if they are wrong is not very nice/smart regardless. Go to Vegas and see how that works out for you.

The bill fixed nothing and stole $700B from us to give to people who caused this mess. They will ask for more, they need probably 5 times that. They tried to tell us we'd make a profit to push this through. ZERO chance of that. They told us the world would end if it didn't get passed to try to scare us. They pulled Buffet in (a private citizen) to talk to Congress (but didn't allow economists in) - talk about a conflict of interest, of course Buffet says to pass it, his empire depends on it.

Feel free to look it up, banks borrowed an average of 188 Billion a day from the Fed last week (which is already more than the miracle 700B). Where did that get us? It's not liquidity - it's solvency.

What we need is TRUST. We have been lied to. The rules have been changed on us. We are supposed to now trust them when they ask for $5000 per taxpayer no strings attached?

Who the heck wants to invest/play in a completely rigged game. EVERYONE is taking their ball and going home. The market isn't tanking because of the shorts, or the lack of a bailout - it's tanking because you don't know what to trust anymore. Confidence is gone. Thanks a lot Hank and Ben, this is the system you have now created.

On the other hand, major props to Fedupusa.org for the leadership in informing congress etc through massive faxes/phone calls and round-the-clock work. Every media outlet told us ALL weekend and right up to the vote that it was a DONE DEAL. EVERY SINGLE ONE. Talk about trying to sway the vote. The Fedup folks talked to
so many congressmen and it was very clear to them that this wasn't a slam dunk - so how did the entire media get it wrong???????????

Don't get me wrong, something HAS to be done. I don't have the perfect answer, because one DOES NOT EXIST. Greed and leverage destroyed the system. Can't fix that in a day/week/month/year. Time will heal it, but in the meantime there will be a lot of pain no matter what they do. That is why I'm against mortgaging the future
of the country to make a few few people happy now - seems pretty selfish. Oh, and I had a large long position that got hit quite hard today, so trust me, I'd much rather have had the market surge today.

My point is that I have learned the hard way over the years that throwing good money after bad doesn't fix things. The Fed has done that for the past year and where has it gotten us - oil is way up, food is way up, mutiple 100+ year old companies are gone, the largest Savings and Loan, the largest insurance company - not a single good thing has come from any of it.

Let them blame it on the public, the shorts, now Congress - there will be MANY scapegoats. Ignore it, the problem was the laws and Greenspan catering to the market with low rates, and everyone being encouraged and wrangled into buying a home whether they could afford it or not. The things I've read/heard that people did and said to swindle the public are sickening.

You want a solution - Denninger makes some great points here:
http://tinyurl.com/4ht4ns

Otherwise, if you want to see the severity of the situation, read Roubini's latest - he has been SO far ahead of all of this, and SO accurate. This should make everyone sit up and pay attention!
http://tinyurl.com/4t8ru7