Stocks surge: biggest in five years

[Yurt]

Stocks surge

NEW YORK - Wall Street stormed higher Tuesday as investors, optimistic following stronger-than-expected earnings from two big investment banks, were also galvanized by the Federal Reserve's decision to cut interest rates by three-quarters of a percentage point. The Dow Jones industrial average soared 420 points, its biggest one-day point gain in more than five years.

http://news.yahoo.com/s/ap/20080318/ap_on_bi_st_ma_re/wall_street

[gabosaurus]

It's a kneejerk reaction to the interest rate cut. Not to mention being a correction to the previous downfalls.
The economy is still in hella trouble.

[Yurt]

It's a kneejerk reaction to the interest rate cut. Not to mention being a correction to the previous downfalls.
The economy is still in hella trouble.

whats your husband's take? does he really think recession or just trouble that is really the market correcting itself.

[theHawk]

More bad news for liberals.

I love how the MSM keeps harping that 'most Americans believe we are in a recession' crap. Recessions are not determined by how people on the streets "feel". Its by hard numbers that show two straight quarters of negative or zero growth. Ealiest we can even know its a recession is July. But the MSM is trying is hardest to sell to the public that our economy is in complete turmoil.

[truthmatters]

I quess the economy is now perfect.

Thanks for fixing it all guys.

[gabosaurus]

I have stated my husband's take on this in another thread. I believe it is still on the front page.

The real investors and financial gurus do not place much value on single days. Each time there is good news, the market goes up. When there is bad news, the market goes down. What you need to do is study the rate values of certain stocks over a period of several weeks.
Another indication is the price of commodities, which are more indicative than stock prices. The bond market is another good indicator.

The stock market is normally extremely volatile. A lot of the major brokers have automatic buy and sell points for certain stocks.

[manu1959]

the market is simply seeking its level.......relax......it has don this before......

as long as the feds keep banks liquid and debt available this will all settle out.....

inflation will be the price we pay to avoid a banking collapse......

[middleground]

I wonder if the fed is trying to fix the economy or the stock market. I understand that the markets, the DOW especially, are sensitive to the news, but it seems that whenever the Dow tries to find its bottom, the Fed jumps in to cut rates or offers some plan to placate banks. The last thing we need is a fed that over reacts to the news cycle.

The market wont see a real turnaround until we see the job data turnaround. And that wont happen until we see some stable new market to create jobs. But current corporate myopia is going to make that difficult.

Once thing is certain. Simply cutting the interest rates and dumping more money in the system does nnot fix the real problem, it adds to it. Our economy is not only stagnating, it lacks any coherent direction. I don't think a structural change in the economy can be managed by markets as the existing markets have grown up under the old structure. The indicators that the market are using my no longer be representative of the new economy. I smell the New Deal V2.0 on the way.

[manu1959]

I wonder if the fed is trying to fix the economy or the stock market. I understand that the markets, the DOW especially, are sensitive to the news, but it seems that whenever the Dow tries to find its bottom, the Fed jumps in to cut rates or offers some plan to placate banks. The last thing we need is a fed that over reacts to the news cycle.

The market wont see a real turnaround until we see the job data turnaround. And that wont happen until we see some stable new market to create jobs. But current corporate myopia is going to make that difficult.

Once thing is certain. Simply cutting the interest rates and dumping more money in the system does nnot fix the real problem, it adds to it. Our economy is not only stagnating, it lacks any coherent direction. I don't think a structural change in the economy can be managed by markets as the existing markets have grown up under the old structure. The indicators that the market are using my no longer be representative of the new economy. I smell the New Deal V2.0 on the way.

the real problem is liquidity of the banks and their ability to borrow and lend money.....so cutting rates and injecting money is one way to deal with it....the result will probably be inflation and a falling dollar.....which means shit will cost americans more but the rest of the world will see america as something they can buy on the cheap and will......

as for the stock market......it is simply legalized gambling and people betting on what might happen....and it is no more volitile now than it was during the blow job years......it just seems jumpy as it has been the calmest it has been in 20 years....

[middleground]

the real problem is liquidity of the banks and their ability to borrow and lend money.....so cutting rates and injecting money is one way to deal with it....the result will probably be inflation and a falling dollar.....which means shit will cost americans more but the rest of the world will see america as something they can buy on the cheap and will......

as for the stock market......it is simply legalized gambling and people betting on what might happen....and it is no more volitile now than it was during the blow job years......it just seems jumpy as it has been the calmest it has been in 20 years....

I disagree. Lending money is like pouring gasoline on the fire. Not only will it increase inflation it doesn't address the root of the problem, instead it aggravates it. Consumer debt is the problem. The banks are all screwed up becuase of the poor lending decisions they made. They got stuck with unquantifiable risk. What you are suggesting is that they continue to loan money to consumers that cant afford it ... simply kick the can down the road. Until the Economy has some tangible direction nothing will work. What is America's role in the global economy? Does anyone have an answer to that? We cant afford to be the worlds consumer anymore thats how the debt got out of control in the first place.

I dont see inflation of the dollar being beneficial in the global market place unless it really gets out of control and the dollar is disconnected from oil. But that comes with a new set of problems. I get the feeling sometimes that some are trying to position the US as the top of a global economic bureaucracy, but I think we are finding that we dont have the leverage to pull that off. So whats left? debt and no mechanism to work our way out of it.

[manu1959]

I disagree. Lending money is like pouring gasoline on the fire. Not only will it increase inflation it doesn't address the root of the problem, instead it aggravates it. Consumer debt is the problem. The banks are all screwed up becuase of the poor lending decisions they made. They got stuck with unquantifiable risk. What you are suggesting is that they continue to loan money to consumers that cant afford it ... simply kick the can down the road. Until the Economy has some tangible direction nothing will work. What is America's role in the global economy? Does anyone have an answer to that? We cant afford to be the worlds consumer anymore thats how the debt got out of control in the first place.

I dont see inflation of the dollar being beneficial in the global market place unless it really gets out of control and the dollar is disconnected from oil. But that comes with a new set of problems. I get the feeling sometimes that some are trying to position the US as the top of a global economic bureaucracy, but I think we are finding that we dont have the leverage to pull that off. So whats left? debt and no mechanism to work our way out of it.

never said any such thing.....as that you suggest in bold......

consumer debt is a choice ..... why should the fed bail out the consumer for bad decisions but not the bank....

would you rather the feds let the banks fold .....

[middleground]

never said any such thing.....as that you suggest in bold......

consumer debt is a choice ..... why should the fed bail out the consumer for bad decisions but not the bank....

would you rather the feds let the banks fold .....

I wasn't aware that the Fed was bailing out consumers? I haven't heard of any debt forgiveness. Simply letting the consumer refinance mortgages will only stop the bleeding, it doesn't fix the problem. It gives the banks the ability to quantify their risk, but it still doesn't solve the consumer side of the problem. If consumers dont feel safe taking on more debt, then it isn't going to happen. If they do it out of desperation, then we are right back where we started.

As for letting the banks fold, those that made poor business decisions should be allowed to fail. How can the market correct itself if those who make the bad decisions are allowed to prosper and continue making the bad decisions into the future. Saying that we cant let the banks fail sends the wrong message to those who run the banks. What we should be asking ourselves is, should any economic entity be allowed to be so big that we, as a nation, cannot allow it to fail? How can the marketplace work under those conditions, without competition or consequence?

[manu1959]

I wasn't aware that the Fed was bailing out consumers? I haven't heard of any debt forgiveness. Simply letting the consumer refinance mortgages will only stop the bleeding, it doesn't fix the problem. It gives the banks the ability to quantify their risk, but it still doesn't solve the consumer side of the problem. If consumers dont feel safe taking on more debt, then it isn't going to happen. If they do it out of desperation, then we are right back where we started.

As for letting the banks fold, those that made poor business decisions should be allowed to fail. How can the market correct itself if those who make the bad decisions are allowed to prosper and continue making the bad decisions into the future. Saying that we cant let the banks fail sends the wrong message to those who run the banks. What we should be asking ourselves is, should any economic entity be allowed to be so big that we, as a nation, cannot allow it to fail? How can the marketplace work under those conditions, without competition or consequence?

must have missunderstood the drop in rates and feds asking banks to work with borrowers and creating "programs" to help those that took out loans they could not afford..... well you will end up with several banks folding like 29 ..... i gues we will find out who is smarter....you or the feds.....if the economy folds......then you win....if it doesn't they win.....

[middleground]

must have missunderstood the drop in rates and feds asking banks to work with borrowers and creating "programs" to help those that took out loans they could not afford..... well you will end up with several banks folding like 29 ..... i gues we will find out who is smarter....you or the feds.....if the economy folds......then you win....if it doesn't they win.....

I thought there was a process to borrowing money from a bank. Just becuase a consumer request a loan doesn't mean they get one. The banks have experts that are supposed to review the customers finances to ensure that they can afford it.

Now you can argue that there were economic factors that were beyond the vision of those giving the loans, but if the banks cant see it coming, can you expect the consumer?

So we either need to accept that 1) banks knowingly engaged in reckless lending practices or 2) the experts that run the countries economy no longer can predict where we are headed economically.

if case one is true, it reeks of hubris. That they know that they wont be allowed to fail so they purposely engage in reckless practices to see just how far the can push it.

if case two is true, then the economy is changing in a unpredictable way and something more appropriate needs to be done rather than simply pushing the same old buttons.

if the economy folds we all lose. But pretending that saving the banks saves the rest of us is a shortsighted and foolish. Banks are in the business of making money ... not saving the economy.

[manu1959]

I thought there was a process to borrowing money from a bank. Just becuase a consumer request a loan doesn't mean they get one. The banks have experts that are supposed to review the customers finances to ensure that they can afford it.

Now you can argue that there were economic factors that were beyond the vision of those giving the loans, but if the banks cant see it coming, can you expect the consumer?

So we either need to accept that 1) banks knowingly engaged in reckless lending practices or 2) the experts that run the countries economy no longer can predict where we are headed economically.

if case one is true, it reeks of hubris. That they know that they wont be allowed to fail so they purposely engage in reckless practices to see just how far the can push it.

if case two is true, then the economy is changing in a unpredictable way and something more appropriate needs to be done rather than simply pushing the same old buttons.

if the economy folds we all lose. But pretending that saving the banks saves the rest of us is a shortsighted and foolish. Banks are in the business of making money ... not saving the economy.

to hold banks accountable for selling something that an indivdual could not deal with....so car dealers should make sure people drive well before they sell them a car.....

well.....as i said we will get to find out if saving the banks is shortsighted and foolish.......btw do you know who saved the banks the last time....

[Yurt]

middleground;220175]I thought there was a process to borrowing money from a bank. Just becuase a consumer request a loan doesn't mean they get one. The banks have experts that are supposed to review the customers finances to ensure that they can afford it.

Now you can argue that there were economic factors that were beyond the vision of those giving the loans, but if the banks cant see it coming, can you expect the consumer?

what is your point?



So we either need to accept that 1) banks knowingly engaged in reckless lending practices

ok, so did borrowers


or 2) the experts that run the countries economy no longer can predict where we are headed economically.

here is your tinfoil hat. those that run this country on puppet strings own them......


if case one is true, it reeks of hubris. That they know that they wont be allowed to fail so they purposely engage in reckless practices to see just how far the can push it.

uh, no. don't use big words unless you actually mean to "use" them.


if case two is true, then the economy is changing in a unpredictable way and something more appropriate needs to be done rather than simply pushing the same old buttons.

see above



if the economy folds we all lose. But pretending that saving the banks saves the rest of us is a shortsighted and foolish. Banks are in the business of making money ... not saving the economy.

so then, who do you propose to save?

[middleground]

what is your point?


My point is that Manu suggested that it was simply a case of irresponsible borrowing but it takes two to make a loan. The banks are just as, if not more, responsible for the problem as they are the ones that are supposed to understand risk management. If a bank cannot accurately assess the risk of a loan, how can you expect a consumer?

[middleground]

here is your tinfoil hat. those that run this country on puppet strings own them......


I dont see where you get a tin foil hat out of that.

[middleground]

so then, who do you propose to save?

no one. Banks should be allowed to fail just like any other business. Here is your tin foil hat.

[gabosaurus]

Aren't we getting a bit off track here? As usual...

[5stringJeff]

no one. Banks should be allowed to fail just like any other business. Here is your tin foil hat.

I agree about banks being allowed to fail, middleground. Welcome to the board!

[Yurt]

no one. Banks should be allowed to fail just like any other business. Here is your tin foil hat.

how do i get a tin foil hat from asking you a question?

[middleground]

how do i get a tin foil hat from asking you a question?

How do I get a tin foil hat for stating an obvious problem?

[Yurt]

How do I get a tin foil hat for stating an obvious problem?

a question does not get a hat

a statement, that parades as "fact" gets you a tin foil hat.

[middleground]

a question does not get a hat

a statement, that parades as "fact" gets you a tin foil hat.

And what statement was that? That those who are supposed to understand risk management and economics dropped the ball? Yeah ... I supposed that is worthy of a tin foil hat. Presenting something as a possibility is not the same thing as presenting it as a fact. We should read before we attack.

Why dont you actually address my point rather than trying to tag me as a kook? I offered two scenarios as to why the banks have screwed up. To debate my point you can either debunk each case individually provide some other case that I didn't include.

So lets go over it again.

1) the banks/lenders either knowingly engaged in reckless behavior

or

2) those experts no longer understand the economy enough to do a risk analysis.

how do either of those get the "tin foil hat"? Neither masquerades as a fact and neither is so off the wall that it is out of the realm of possibility. I would love to hear your argument ... if you have one.