Thursday, October 16, 2008

We're Skating On Some Thin Ice

The Dow's down another 160pts (though it's been down 240) and we're now below the previous lowest close this month. We did dip down briefly to around 8,000 last friday. If we don't bounce off this level we could shoot right back down to that 8,000 level pretty quickly.

Separately, I think it's pretty telling that Sheila Blair, the FDIC Chair, is out bashing the bailout plan. "Federal Deposit Insurance Corp. Chairman Sheila Bair on Wednesday criticized the federal government for failing to take more aggressive steps to prevent Americans from losing their homes, highlighting a rift between her and other senior U.S. officials over terms of the $700 billion rescue package..

The government plan will help stabilize financial markets but it doesn't do enough to address home foreclosures, the root of the crisis, she said in an interview with The Wall Street Journal.

"Why there's been such a political focus on making sure we're not unduly helping borrowers but then we're providing all this massive assistance at the institutional level, I don't understand it," she said. "It's been a frustration for me."

I'll have some more thoughts on housing later, but suffice to say that none of the plans put in place today address the fact that homes are overvalued and the debts tied to those homes are in trouble (especially if unemployment goes up 50% or more next year as some predict).

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