Will this all just blow over?
So today Congress is sitting at home enjoying a well-deserved Rosh Hashana holiday and playing with their dreidels. There is no incipient new deal. And really, there is no evidence that one will be worked out on Thursday. But the market is swinging back up.
If we lost 1 Trillion dollars in the market yesterday, we recaptured $335 Billion in the first hour or so this morning– meaning that doing nothing cost less than the bailout, and didn’t put the taxpayer at risk.
This is my surprised look.
I believe that by Friday we will recover at least another third of yesterday’s loss, resulting in a HEALTHY correction of about $330M dollars. And the big losses will be concentrated on the big risktakers.
Chase and BofA and Goldman just bought a bunch of new customers. Do they care about the asset base? Sure, the additional deposits are nice. But I believe the real boon to them is a bunch of new customers to market to. Banks are in teh business of lending money. That’s how they make money. A bank that isn’t lending isn’t earning. And with all these new customers to market to, it will be brief time before credit is loosened up again and any one who is credit worthy will be offered loans and those stupid ’sucker-bet’ checks.
So, how about No Bailout At All!
Some win, some lose. That’s the American way.
