Investor Pessimism

Today the DOW has a fine new intra-day low of 7249 unless it collapses again toward the end of trading. The last time the DOW probed below that level was 11 APR 1997 when it closed at 6391. Market volume is up – currently approaching 530 million shares – well above the recent average. Supposedly Investors are concerned the governments plan will not help them. Well. Actually, I don’t think it was designed too. Investors are discovering the world is not about them – Surprise. Surprise. As this reality sinks in, stock prices are going down. Probably way down, perhaps down to levels not seen since 1994. Unfortunately we are still watching the house of cards collapse, and it aint flat yet, so there may be a ways to go before a bottom is declared. With so many rumors of nationalization, there must be fire or manipulation somewhere. Who is to profit if any of these banks are forced into collapse? It is hard to see, because with the current mentality, any successful banker knows it is his term tomorrow or the day after.

Then reality is the government may have no choice but to remove investors from the economic equation – at least for a short time. The governments problem is keeping everyone fed and entertained well enough so as to be relatively happy. Investors have an interest in this also. To do so, the the electronic payment and reconcilliation networks must be maintained. The FED simply can’t print enough cash to get around that problem. Think about how you are paid, and how you pay your bills – very little is done in cash these days, so the electronic funds networks are essential.

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