Washington DC
As the House of Representatives are pandering to the most resentful and least educated of their respective constituents, the economists on Wall Street started another sell off.
The results, about 8% loss. Of course, this depends on what index you are looking at, but 8% seems to be right about in the middle. The Dow is down 777 points or 6.98%. The Russel 1000 is down 8.69%. Nasdaq Composite is down 199 points or 9.14%
I also feel that there is some risk in the behavior of congress talking about bailouts. I get the feeling that some of the most recent bank mergers are so that companies with less exposure can gain more exposure, and get some of the bail-out pie. However, those are the breaks. The government either can get involved, and start buying companies that are "too big to fail" ... or the government can stop claiming that this is in the works.
For all the folks who are protesting about the largess of Wall Street and high rolling CEO types, keep in mind that it's not the CEO that approved his own golden parachute... the CEO merely signed up with the best golden parachute offered by the boards of directors that are out there. The CEO gets the golden parachute because they are being given a job where they know beforehand that they will be fired if something goes wrong. That's the nature of business, a certain amount of risk is necessary to move a business forward, and balancing that risk against safety is always a difficult proposition.
Any CEO or market manager who didn't try to take advantage of the forward market trends in real-estate (a rising trend for well over 10 years straight), was bound to get fired for not taking enough risk.
Either way, today is a day where the markets are down 8%. This is because of market panic, and the market panicked because it didn't expect that the government money was at risk of being taken off the table. Wall Street ALWAYS panics when something unexpected happens. I'm not an economist or anything ... I learned this from listening to radio shows.
Why have my congressional representatives not figured this out yet?
Full Text of current proposed law (as defeated today):
http://i.cdn.turner.com/cnn/2008/images/09/28/ayo08c04_xml.pdf