Nor is it over.  (Beware the bear market rally - which I see coming soon, with a peak to perhaps 11,000 that will sucker yet more of the hopeful and desperate, only to fall again.  That is the way of serious bear markets.  There were at least 5 bear market rallies during the great depression that eventually flayed every last shred of flesh off the remaining bulls). 

The CDOs and the insurance shoes have not yet dropped.  I do not think this will be over for at least another year, possibly for another two or three years, and I will not buy above 5,000 until at least 3 years have passed.

Praying with you Canon Harmon…

My broker tried to talk me out of bailing at around 10,700…I wasn’t having it and sold it all into a boring tax-free bond fund.  How long before we get into a robust market again will depend a lot on how much intrusion we get in the markets by washed-up poli-sci majors in the next year or so.  If we can let things find their own level without too much meddling, I’d say we’ll be back on our feet in maybe 18 months.

This is a moral univrrse. 
There is no free lunch
What goes around, comes around. 
The law of sowing and reaping is still in effect.
The love of money is the root of all evil.
If we could learn those few things out of this, maybe we can yet survive as a civilization.

This, coupled with the biggest ponzi scheme ever invented (Social Security), means that most of us will be on the “treadmill” until the end.  I have no plans of “retiring” - EVER.

Maybe this crash will cause some to sit up and take notice of Social Security’s inherent instability.  I’d like to think that, but there’s too much power to be grabbed and had in the present to think that we’ll do anything but kick the can down the alley.

Thanks, Republican Free-market Capitalists!

And too many votes to be gained by demagoging any proposed solution.

#7,  Everybody played a role in this debacle.  Republicans, Democrats, Independents, No Party Affiliation…  Everybody

Can anyone reduce the impact of this financial crisis on the church finances?  How are the endowments and trust funds doing?  Since much of the litigation is financed through the endowments, is this going to reduce the ability of the church to push these suits forward?

One of the things I am wondering is how much of the decline is as a result of the sudden loss of value of the dollar - Oil down, gold down, market down - perhaps the linked item is the number of dollars in circulation?

#10, What sudden loss of value of the dollar? The dollar has been up lately against most major currencies, other than the Japanese Yen. It’s at a one year high against the Euro.

What sudden loss of value of the dollar?
The dollar is up against the Euro because the Euro is collapsing faster. It’s down in real value - look at the value of most commodities (except oil - which is a demand driven special case)...

We have no one to blame but ourselves.  We are ALL at fault!

Thanks, Republican Free-market Capitalists!

Good thing you’re long on North Korean stone soup futures.

The S and P 500 is back to 2003 levels.  Five years of gains gone in a year, and much of that decline in the last month.

“What ... loss of value of the dollar?”—-Random Joe [#12]

From 2001 through this April, the dollar fell 73% against the price of oil, 69% against gold, and 41% against the euro.

The sad thing is that no one seems to understand that bad government policy- several types, all to blame- promoted the bubble and in great measure caused this disaster. The disaster is assuring that we voters will hand ALL of the controls in Washington to the cabal whose policies are certain to lengthen the crisis and impede any recovery. It’s like bad comedy. We may need WW III to bring us out but can anyone survive that this time?

2003 values are probably not far from “fair market value” for our economy but things always overcorrect.

Padre Mickey: If only this were a free market and not one manipulated, controlled and tampered with by Washington politicians, the Federal Reserve and crooked Wall Street types.
  If this were a free market our government wouldn’t have purchased $700 billion in bad paper to save our economy. (Didn’t work so well, did it?
  For those of us who bought houses we could afford and who have cleared all our debt in recent years, we’ll survive, but our nest eggs are now scrambled for the foreseeable future.
  Don’t worry, McBama will make sure that whatever we have left is taxed into oblivion.

“Bad government policy—-several types, all to blame—-promoted the bubble and in great measure caused this disaster”—-VU [#17]

How exactly did government policy cause “total devastation in the equity markets”?
_ _ _ _ _ _ _ _ _

BTW, how would you account for the parallels between the current crisis and old-style panics like the Panic of 1907, which occurred when the United States had no central bank and little government regulation?

The Nikkei average is down 10% today.

RE: “If we can let things find their own level without too much meddling. . . .”

HAH HAH HAH HAH HAH HAH HAH HAH HAH HAH!!!!!!!!!

RE: “Thanks, Republican Free-market Capitalists!”

Well, actually it should be “conservative free-market capitalists” rather than “Republican” as the latter merely believes in slower State-control than the Democrats.

But thank you!  Does this mean you’ll let the conservatives have a hand, now that the Big State people have so drastically failed?

Excuse me, Padre M.  You’re dead wrong.  Government meddling and interference with the markets is what caused this.  Here is an article from a liberal newspaper that you might find interesting:

“Subject: BAIL OUT
For those interested in what really is causing our economic crisis this is a great article published by the San Francisco Chronicle. I cannot believe that such an extremely liberal newspaper in the most liberal town in our nation had it in them to publish this within 40 days of the election. The article is factually accurate and worth the read…....
‘The average American listening to all the news of bank failures, and Fannie Mae and Freddie Mac (who?) being taken over by the government, and now a bail-out of large, privately owned and well known companies, is at first bewildered, and then angry. The average American should be furious.
But whom should Americans be furious? That seems to be the big question as political fingers are pointing in every direction. Was it greedy CEOs with their golden parachutes? Was it the Democrats? Was it the Republicans? Was it Wall Street? (Who, exactly IS Wall Street?) The simple answer is that it is all of the above.
Treasury Secretary Henry Paulson, Jr., and Federal Reserve Chairman Ben S. Bernanke were on Capital Hill taking a verbal beating from some of the very people who should not be asking the questions, but answering them and answering those questions under oath.
Senator Chris Dodd, (D-Conn.) and Congressman Barney Frank, (D-Mass.) are the first two who should be grilled, not by fellow politicians, but by an independent and hopefully very clever, angry, and mean attorney hired by the American people. No one from the present Justice Department need apply. Both should be asked how much money they have taken from lobbyists hired by the CEOs of Freddie Mac and Fannie Mae. Since that is public record, they should then be asked what Fannie and Freddie got in return for that money.
Barney Frank should be questioned about his House Bill, H.R. 3838, that is clearly designed to keep Fannie and Freddie afloat as long as possible despite all the signs that there was serious trouble ahead. But all his bill did was make the hole bigger in the side of the Titanic. Basically all H. R. 3838 did was: To temporarily increase the portfolio caps applicable to Freddie Mac and Fannie Mae, to provide the necessary financing to curb foreclosures by facilitating the refinancing of at-risk sub-prime borrowers into safe, affordable loans, and for other purposes.
Barney Frank and his counterpart in the Senate, Chuck Schumer, (D-N.Y.) did everything they could to delay and cover-up the outright fraud and book-cooking that was going on within Freddie and Fannie.
As far back as 2003, Freddie and Fannie were $9 billion dollars in debt because of bad loans that continued to be accepted on a daily basis. Pressure from liberals in Congress to continue giving out bad loans was relentless and for years it continued with CEOs, who happen to be friends of Dodd, Frank, Schumer, and Clinton, leaving with millions in their bank accounts as the companies they ran went under.
The truth is that this financial disaster for the American taxpayer didn’t begin under George Bush, or Bill Clinton, or George Herbert Walker Bush, or Ronald Reagan. It started under Jimmy Carter. It started with the passing of The Community Reinvestment Act in 1977. Basically, this act pushed local community banks and lenders, to bend the rules a little and give loans to low-income families. Like many liberal schemes, it seemed like a good idea at the time. There was a provision that protected the nervous lender in the clause that stated that loans should be given in a safe and sound manner. This gave the bank some leeway and choice in the loans that were given out.
Under Bill Clinton, The Community Reinvestment Act was revised. Basically, the revision started to put pressure on lenders to take more financial risks. It was felt that lenders were not being fair to minorities and the poor who only wanted to share in the American dream of owning their own home. Janet Reno began to outwardly threaten banks and mortgage lenders with prosecution if home loans were not approved for those who wanted to purchase homes that, in truth, they could not afford.
Fearing federal retribution, loans started being approved for people who had no down-payment, no jobs, no collateral, and absolutely no hope of ever being able to meet any mortgage payment after the grace period of low interest ran out.
Then, the greed took over. Banks would bundle up loans, good and bad, and sell them to Fannie Mae and Freddie Mac, making all their money up front for loans they knew would default eventually. As these loans did default, in larger and larger numbers, even Fannie and Freddie could no longer stand up under the hemorrhage of money loss. Wall Street panicked and so did the federal government.
Were there warning signs that a disaster was looming? Of course, there were. But there was money to be made and politicians and CEOs alike were not about to give up the gravy train of money being crammed in their pockets. The CEOs of Freddie and Fannie would hire lobbyists to slip money into the pockets of Senator Chris Dodd, (D-Conn.), chairman of the Senate banking committee, who was supposed to be overseeing the banking industry, to the tune of $133,900 since 1989. Barack Obama was number two at the trough with over $120,000 which was no small feat since he has only been in the Senate for three years. Dodd and Obama were closely followed by the last Democratic nominee, John Kerry, (D-Mass.) and then Senator Hillary Clinton, (D-N.Y.)
What were these lobbyists buying for the millions they sprinkled around the Senate and House of Representatives? They were buying a blind eye. They were buying little or no oversight into the juggernaut that has finally crashed on the heads of the American taxpayer. CEOs got rich, politicians got rich and they got votes, being able to tell minorities and the poor, See what we are doing for you? For years, the red flags were stuffed under the desk and ignored.
Early in his administration, George Bush sounded an alarm over the small amount of working capital Fannie and Freddie had on hand. He urged them to sell more shares to increase their reserve in funding and put them on more stable ground. He urged them to be more selective in the loans they bought. This suggestion was declined because the current stockholders would not make as much profit.
Franklin Raines, the Fannie Mae CEO from 1999 to 2004, decided to retire early, taking millions with him, under a cloud of accusations that he had cooked the books to make it appear the company was making money instead of going head-long into debt. Another player in this financial kabuki dance is Jamie Gorelick. That name should ring a bell with every American. She seems to surface right at the heart of every American disaster in the last 15 years. Ms. Gorelick was vice-chair of Fannie Mae from 1997 to 2003. Like all the others, she left with millions in her pocket while declaring that Fannie Mae is among the handful of top-quality institutions.’
The next year it was found that Fannie was $9 billion dollars in the red. Oddly, this $9 billion had been overlooked in the books Ms. Gorelick and Mr. Raines kept.
Lets put Mr. Raines and Ms. Gorelick on the stand. The American people deserve to hear how much they gave lobbyists to pass on to their friends in Congress to keep the blinders on. That number is a staggering $16.2 million dollars since 1997. That amount bought very large blinders. And, it bought time. It bought time for the likes of Raines and Gorelick to make their millions and bow out before the bottom fell out.
Republican nominee John McCain raised the alarm two years ago but his plan for more oversight was killed in the Democrat-controlled committee. Over 20-year span, McCain took $20,000 but this did not stop him from voicing his concerns. The problem was that Democrats didn’t want to hear about it.
President Bush’s warnings were also ignored. Should Bush have done more? Yes. Unfortunately, Bush was distracted by the 9/11 attack and wars in Afghanistan and Iraq. So now, nearly every hour Americans watch as a pompous Chris Dodd or Barney Frank struts to a microphone to declare the failed economic policies of the Bush administration are responsible for this mess.
No, Senator, he is not. YOU and your greedy friends are responsible. It took three decades to reach the point of no return and some were there with their hands out nearly all of those years.
The Federal Bureau of Investigation is launching a full investigation into all of this. This investigation will abruptly end should Barack Obama win in November. The last thing Democrats want is the American people learning how complicit so many of them are in the illegal practice at Fannie and Freddie that led to the taxpayers bearing the brunt of the their unbridled greed.
While politicians want oversight over the bail-out, there has been little outcry for an investigation into how all this evolved.
Its time for Americans to go to their windows and throw them open and yell, We are mad as hell and we aren’t going to take it anymore!
Then, in November, vote the lot of them out of office.’

Irenaeus:

The above article is a general summary of some of the Government policies which caused the unsustainable “housing bubble” which is unwinding at present.

To that I would add the policies of the Greenspan Fed. Two decades of effort to abolish the business cycle and prevent the “junk clearing” effects of even gentle recessions caused the entire US economy to be one huge bubble. The housing bubble is just piled on top of a general one. You can add the destruction of the dollar argument here if you wish.

Now we will have a correction that they cannot control. It will be a huge one because there is so much junk value that has been protected over the last many years. Almost everything is intrinsically overvalued and the revaluations will not be pretty. The “total devastation” is a loss of phantom value and these corrections always overshoot.

We are worth something just not as much as we all thought.

As to the government’s role in this I would say “too much” promotion of bogus homeowning and interference with the currency and the business cycle and “not enough” regulation of mortgages, leverage and (especially) derivatives is a fair summary.

Free markets always have ups and downs and there have been numerous financial crises throughout US History. My point is that before we try to see the government as a solution to something we should acknowledge that is is often as much a part of the problem as a potential solution.

HAH HAH HAH HAH HAH HAH HAH HAH HAH HAH!!!!!!!!!

Yeah, I know, like Dr. Johnson’s quip about second marriages, the triumph of hope over experience.

vu82 [#24]: Many thanks for your thoughtful reply.