What happened today on the stock market is clear to all of us-even those without economic PHDs

[Politics_Guy25]

I an not an economist nor do I have a PHd but the rise in the stock market is easy to explain today. Hopefully, by posting of this, others with about the same amount of knowledge that I have will understand. The market soared today because there are assurances that a bailout bill will pass and will pass on Thursday or Friday. The injection of liquidity and other temporary stop gap measures such as the idea of the FDIC insurance cap being raised also contributed to this 400 point rise today. However, make no mistake, if no bailout bill is passed and the idea of a bailout bill completely dies, the stock market will crash hundreds if not thousands of points, and it will be Sept/Oct 1929 all over again.

Today was all about expectations. If those expectations aren't met, an epic collapse will ensue.

[Cronus Protagonist]

1. Yeah, right, and I have a bridge in Alaska to sell you

I you don't buy it right now it will collapse.

[Politics_Guy25]

3. If the bailout deal completely dies.....

And the speaker announces something equivalent to "no legislation before the election", we will see an epic crash I believe. Unless, Chairman Bernanke and Secretary Paulson use measures that don't require congressional approval to stabilize the credit markets and the stock market.

[Cronus Protagonist]

8. Now you're talking

See what happens when you take the cake off the table? The carrot soup seems a little more attractive.

[sendero]

17. We're going to see an ...

... epic crash no matter WHAT. It might be fast, or it might be slow, but a year from now stock will be worth substantially less than they are now.

Deal with it.

[anigbrowl]

19. So why are spreads on commercial paper still going up?

you're fooling yourself if you think this bailout bill is designed to shore up the stock market.

[Cronus Protagonist]

20. I certainly don't thnk the bill is designed to shore up the stock market

I know it's designed to put money in the pockets of G. W. Bush's friends and his base, people earning big bucks in Wall Street. And that spread on commercial paper? It's probably Cheese Wiz.

[nebenaube]

2. Bullshit...

Bargain hunters bought in. If it goes down again, no one will be able to sell until it hits rock bottom.

[spanone]

6. yep

[HiFructosePronSyrup]

4. Really?

I also don't have an PhD in economics, but I figured the stock market went up today because it went down yesterday, and people wanted to buy low.

Stocks go up. Stocks go down.

[fascisthunter]

5. yeah... "...and if we don't get our way..."

your concern has been noted. :eyes:

[napi21]

7. Hmmmm....maybe, but there's always the greedy btds who were just buying

stock in decent companies at bargain basement prices.

[TexasObserver]

9. It will not be October 1929, no matter what happens this week.

It won't even be October 1987.

It will be October, 2008, the worst economy since Daddy Bush was president.

[Speck Tater]

10. What happened is clear alright...

Wall Street panicked on Monday. Tuesday, the grownups swooped in for the kill and bought up all those cheap, artificially depressed stocks and made a killing on them.

The cooler heads, the investors with REAL money, recognized a bargain when they saw one. They will sell them high and wait patiently for the next time the children panic. Probably Thursday.

That said, I still think the REAL economy (not just the make-believe Wall Street "economy") is falling apart. But the Wall Street bailout does nothing for the REAL economy.

[Winterblues]

14. The killing hasn't been made just yet

To make a killing they have to sell at a higher price than they bought them for and unless stocks continue to rise there won't be a killing at least not in the short term..

[Speck Tater]

23. They bought, before the sucker rally. They're out already. NT

[Double T]

11. Take another shot of wall street kool-aid; it's time to take the crack candy away from the.........

addicted babies. The 700 billion only allows them to continue their manipulation and abuse of the economic and financial world, at ALL of our expense.

[dkofos]

12. I see it as business as usual on wall street. Money could be made

so people made money.

[TroglodyteScholar]

13. I think it's called market volatility for a reason

Nobody knows what's going to happen, and nobody knows if there's anything that will fix our troubles.

[polichick]

15. Actually, buyers would be in the day after ANY 777 pt. fall - that's how money is made.

[wundermaus]

16. I guess it depends on which end of the coke vial you are looking from...

because that is not the way I see it at all... it is a game of extortion, a powerful mob of crooks have gained enough economic and political power to threaten us by holding back on our daily fix of credit or they will cut off the supply and we will go into economic cold turkey. The politicians are nothing more than corrupt enablers doing the bidding of their payola bosses. It's a classic shake down in the true traditions of the mafia only now on the global scale. These people can not to be reasoned with nor appeased, they will get what they want and when they get it, they will taste the blood and want ever more... the end result is fascism with a perverted feudalism based on debt slavery. There was only one way into this mess - complacency - and there is only one way out of it - http://www.youtube.com/watch?v=ib81M9HLtL4">Liberty or Death.

[A HERETIC I AM]

18. Not necessarily.

People often forget that the price bid for an individual stock, and correspondingly any index it is included in, has much to do with perceived or expected future earnings of the particular company or group (index) of companies.

What we all saw yesterday was the market pricing in the effect Congress's action would have on potential earnings.

A large part of today's rally can be attributed to investors doing some bargain hunting as well as the reason you state.

But whether or not we will see "thousands of points" is speculation. We have already seen thousands of points shaved off the Dow.

Nearly 4000. The Dow ended the day yesterday at 10365. The intraday peak last October was just under 14200. That's a 27% pullback.

How much more is left is anyone's guess. From market top to bottom in the late 1920's through the 30's was almost 90% (from 380 to around 45 or so.) but this is a very different market from those days in most respects.

[ddeclue]

21. Oh HORSESHIT....

The sky is NOT falling...

95% of what goes on on Wall Street is head games...not reality.

We aren't buying and there are plenty of economists who are willing to state that the cure is far worse than the disease anyways - hyperinflation will be the result if the bailout is passed.

I dont trust these Bush bastards and I for one am happy to wait 6 months until Obama can get in and has time to appoint new people to look at the problem. We need to reregulate these people first before they get one damned dime! I'd love to see how quickly Wall Street cures their own problems when threatened with re-regulation!

Doug D.

[rucky]

22. Who sets these expectations & demands?

What time on Friday is the deadline? Eastern or Pacific?

If we bring the money, how can we be sure they'll hand over the baby?

No cops. We promise.

[avaistheone1]

24. Read any book about the stock market. It is irrational.

It operates on fear and greed.

Bailout in haste, repent at leisure.

[avaistheone1]

25. Read any book about the stock market. It is irrational.

It operates on fear and greed.

Bailout in haste, repent at leisure.

[Greyhound]

26. A lesson learned at daddy's knee. Lying a short term rally is easy.

Sustaining it is a different matter, though pouring $700B into the market will surely buy a few months, the cause has not been addressed.

The stock market is not the economy.