For the week 10/6-10/10

I liked this comment following Thursday’s crashette from an old friend and former Wall Streeter, Pete M. 

“It looks more and more like what the terrorists couldn’t do we did to ourselves. Thanks a lot to the borrowers who bought way more than they could afford and their enablers; the mortgage brokers, banks, and Wall Street ‘professionals’ who provided ‘innovative’ financing. And let’s not forget the [idiots] in Washington, the Greenspan Fed….” 

Or as Pete, a diehard Boston fan, concluded, “Somehow the Red Sox in the playoffs doesn’t seem so important these days.” 

I watched the Wake Forest-Clemson football game Thursday night and the announcers must have brought up the financial crisis at least six times during the broadcast. There is no escaping it. I also couldn’t help but look at the crowd, particularly the students, and wonder what was going through their heads. Which ones suddenly have fears they may not be back next spring? Which ones’ parents are suddenly in dire straits, and/or can the student obtain a needed loan? In a normal economic slowdown or market swoon, relatively few are truly devastated and it’s more of a basic set back, but today, hundreds of millions or more, around the world, have been decimated. 

Americans are fearful and depressed, as a CNN/Opinion Research poll taken last weekend found that 60% felt a depression was at least ‘somewhat likely.’ That was before the carnage of this week. 

A USA Today/Gallup poll, completed Sept. 23 but just released the other day, revealed 40% felt afraid and 53% were angry. I imagine those figures are now 80% and 85%, respectively. I’m certainly afraid and angry, myself, though also frustrated. 

As we’re all too well aware, there has been no place to hide in the investment world, unless you were short, except in cash or Treasuries. Gold? Don’t get sucked up in this one.  

The following is typical of the damage thus far in 2008, as represented by year-to-date returns for stock funds as of Thursday, courtesy of Lipper Inc. 

The uniformity of performance, with one mild exception, is stunning. Good funds with great managers are suffering with the rest. 

[And while I’m not putting Fidelity Magellan in the category of the above two, everyone knows of it and many of you have it somewhere in your portfolio. Through Thursday, it was down 47.3 percent.] 

Even Lipper’s Intermediate Investment Grade bond index, a standard benchmark for a quality fixed income fund, was off 6.1% thru Thursday.  

During the discussion on the bailout, after the House first rejected it and the Dow Jones dropped a record 777 points, it was popular to talk of the $1.2 trillion hit investors took that day. Now try $8.5 trillion the past year. And then consider that when one thinks about basic pension plans, the average state fund has an allocation of 60% equities, 30% bonds, 5% real estate and 5% other, so they are hardly doing well either. [Wait till the damage in some of these is reported…in many cases it will be scandalous.] 

But what now? Take the $700 billion rescue/bailout plan. It still boils down to whether or not the financial institutions that benefit and reliquefy actually then take the next step and start lending again. Nor will my favored option, injecting capital directly into the banks, which Treasury Secretary Paulson meagerly offered up on Friday night, guarantee the same. 

And it doesn’t help when Federal Reserve Chairman Ben Bernanke, even if being honest, tells us “The combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased.” Or as the International Monetary Fund put it, “The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s.” 

For all those talking that we have to be near a bottom, the fundamentals keep slapping us in the face. Just this week we had word from five major, meaningful corporations spanning the gamut of economic activity. IBM beat on earnings but fell far short on revenue estimates as it released its earnings early. General Electric matched already lowered expectations, but had little good to say except, importantly, it saw a lessening of pressures in the commercial paper market (at least for the day). Alcoa fell far short on a number of levels, software giant SAP spoke of a sudden drop in activity end of the quarter, owing to a blanket “budget freeze” among corporations worldwide, and Bank of America, recently heralded as a hero, released its earnings early and missed by a mile, after which it was forced to accept $22 a share for a $10 billion capital raise, $10 below where the stock sat the day before.  

In my three-legged stool example, the consumer, housing and capital spending, both cap-ex and the consumer are now finally rolling over. And in another classic cascading effect, local and state municipalities are not just scrambling but rather panicking to figure out how to match sliding revenues with what were in most cases ever-rising expenditures. The potential for unemployment to soar, well above 10%, is there. 

Globally, now you have an idea why I featured Iceland in the front of my commentary last time. I have a list on the site of the countries I’ve visited the last almost ten years, which means I don’t include a week I spent in Iceland back in 1982. My first night in Reykjavik I met a guy from North Carolina who was a contractor at the NATO base in Keflavik (where the U.S. was stationing its AWACS planes in those days) for Westinghouse and he took me out on the town. Iceland didn’t have beer then (due largely to a very unflattering “60 Minutes” piece I’ll never forget on its drinking habits) and so I ordered a vodka tonic. After just two I was feeling it.  “What do they put in the drinks?” I asked my guide. “I was waiting to see if you’d say anything,” he said. “When you order a drink here, they automatically give you two shots.” 

Yup, that’s Iceland. One shot isn’t enough. Let’s have two. Or in terms of its banks and their ill-conceived behavior, let’s leverage up like there’s no tomorrow, while offering the best yields on a savings account, in which by doing so we’ll attract $billions from all over the world and then we’ll lever that up even more. I’m assuming before this week’s collapse in this land of just 300,000 that when you ordered a vodka tonic, you received three shots, not just two. 

So Iceland’s government had to take over and nationalize its three big banks, with the fate of $billions in investor cash unknown as of this writing and tensions between the U.K. and Iceland, in particular, rising. [More on this below, as well as the Russia angle.]  

For his part, British Prime Minister Gordon Brown said the global crisis “has come from America” as he nationalized the British banking system, at least to the tune of up to a 30% interest, while Europe as a whole is ticked off at the Irish for its uncoordinated response to the crisis in its banking system in guaranteeing deposits, which caused a rush out of British, German and French banks, for example, into Irish ones. French President Sarkozy was moved to say “We want a capitalism of entrepreneurs, not of speculators.” 

“Now, as a recognition of a systemic period of capitalistic instability becomes apparent, the focus has legitimately shifted to a systemic solution. Much of the focus has been on U.S. policy and rightly so. It is here where the excesses of exuberance were most pronounced. But, up until the Treasury’s $850 billion rescue package, the policy responses may have been necessary and significant, but they were ad hoc and perhaps insufficient. A systemic delivering likely requires a systemic solution, which moves beyond cyclical interest rate cuts, liquidity provisions, or even the purchase of subprime mortgage-backed bonds. We believe that the Federal Reserve must now act as a clearing house, guaranteeing that institutional transactions clear (and investors receive) their Big Macs at the second window. They must also take another bold step: outright purchases of commercial paper. They should also cut interest rates to 1%, because we are experiencing asset deflation, and the threat of headline inflation is long past…. 

“Future economic textbooks will likely teach that while capitalism is the most dynamic and productive system ever conceived, it is most efficient when there is a delicate balance between private incentive and government oversight. The benevolent fist of government will now join hands with Adam Smith in a most visible manner. Because it will, expect a lengthy recession but not depression, accelerating government deficits approaching a trillion dollars as forecast several months ago, and the eventual rise of inflation and longer dated bond yields. For now however, it is best to focus on the potential unfreezing of commercial paper and a globally coordinated policy rate cut….Stay liquid, remain in high quality.”  

“Today, the financial crisis has reached a critical point. The sharp decline in the stock market and its volatility dramatically make the point. More important if less visible, the flow of credit through the banking system and the financial markets is seriously impaired – even in part frozen. 

“For months, the real economy, apart from housing, had not been much affected by the developing crisis. Now, a full-scale recession appears unavoidable. Important state and local governments face deficits they may be unable to finance. Recessionary forces are apparent in other countries and exchange rates are unstable…. 

“The inevitable recession can be moderated. The groundwork can be laid for reconstructing the financial system and the regulatory and supervisory arrangements from the bottom up. The extraordinary interventions by the government (and taxpayer) should be ended as soon as reasonably feasible. 

“That rebuilding will be the job of another day – of a new administration here in the U.S., of finance ministries and central banks working together. It must draw upon the strength of the now chastened private sector. It will require more understanding of the risks embedded in so-called financial engineering and of the perverse compensation incentives that have exalted risk over prudence. 

“There is, and must be, recognition of the essential role that free and competitive financial markets play in a vigorous, innovative economic system. There needs to be understanding, in that context, that financial ups and downs – and financial crises – will be inevitable, even with responsible economic policies and sensible regulation. But never again should so much economic damage be risked by a financial structure so fragile, so overextended, so opaque as that of recent years.” 

But in terms of equities and those trying to divine the future, you keep seeing people come on CNBC saying things like “I’m looking at stocks trading at X multiple and they are incredibly cheap,” or “American companies are fine.” How do we know? How do we really know where the economy is headed, and thus earnings? How can you make blanket statements about anything these days? You can’t, because as I’m fond of saying we’re in an environment where the best advice is to wait 24 hours. 

–It was the worst week in the U.S. stock market, as well as on many global bourses, ever, as the Dow Jones lost 18.2%, 1,874 points, to finish the week at 8451, its lowest finish in almost 5 ½ years. The Dow is now down 40% from its all-time high of 14164 set last Oct. 9, its biggest decline since the 1973-74 bear market. Friday also witnessed the wildest day ever, in terms of point range, a full 1,000-point swing. The past two weeks have been like a sporting event. Just when you thought you’d seen it all, the market confounded you one more time. And we’ve now had an unprecedented seven straight, 100-point declines in the Dow, a 22% loss in just the first eight days of October. Ah, but as many of you know, according to history September is the worst month for stocks, while October is not only known for its crashes, it also is a time for making market bottoms. 

As for the S&P 500, it too dropped 18.2% to 899 (it’s amazing just typing these figures) and Nasdaq fell 15.3% to 1649. One of the causes of Friday’s action in particular was a flood of margin calls. You know Chesapeake Energy Corp. CEO Aubrey McClendon, the guy who has been running ads touting natural gas alongside Boone Pickens’ commercials? It turns out McClendon was forced to sell nearly his entire stake in the company to meet a margin call. Unreal. 

And in looking ahead, while we may hit a bottom this month, Monday could offer more of the same unless the news environment improves over the weekend because Treasury Secretary Paulson’s announcement on Friday evening following an initial meeting with G-7 finance ministers was disappointing. There does not appear to be any coordinated plan, outside of the extraordinary rate cut engineered earlier in the week by the U.S., European Central Bank, Bank of England, Bank of Canada, and even China. Aside from this, it remains every nation for itself, though the ministers have vowed not to effect any legislation that would harm the others, such as the protectionist measures that helped lead to the Great Depression. 

Also, in looking at initial reports from the Financial Accounting Standards Board, which was to clarify a rule on determining so-called fair value of assets such as illiquid securities, the FASB does not appear to have offered the clarity sought by many market participants, though I’ll have far more on this next time as warranted. 

Lastly, on Thursday, shares in General Motors hit their lowest level, $4.75, since 1951, while on Friday, Ford shares traded below $2; this as both fight rumors they will be forced to file for bankruptcy. GM and Ford denied this was going to be the case, but there is late word GM is now considering a merger with Chrysler. 

In another sign of the times in the auto industry, Capital One Financial Corp. announced it would no longer finance auto dealers’ inventories in New York and New Jersey. 

–U.S. Treasury Yields 

The short end of the curve seized up again as the yield on a one-month T’bill was essentially 0.00% at times. And LIBOR, after improving some, finished the week at huge spreads to fed funds, with the latter now at 1.50% after the above-mentioned coordinated global rate cut. 

David Greenlaw, Morgan Stanley’s chief economist, notes the U.S. federal budget deficit could be close to $2 trillion next year, or 12.5% of GDP, more than twice the record 6% set in 1983. This is extraordinary. When President Bush spoke from the Rose Garden on Friday, he said America is a “prosperous nation.” Oh really? Sounds like smoke and mirrors to me. 

–Earnings for the third quarter will start flowing through in earnest this coming week and the guidance for the fourth quarter and beyond will not be good. How the heck can management offer up any clarity? 

–Trader George and I were laughing at how some commentators foamed at the mouth over the tumbling price of oil, down to $80 as there was ongoing liquidation on the part of hedge funds, and how consumers were saving all kinds of money at the pump, like maybe $1,000 or more a year if the trend holds. That’s great, but what about the $40,000 to $100,000 hits, or more, in many portfolios? I’ll have far more on energy next time. I nailed this one. 

–CNBC’s Jim Cramer created quite a stir this week. Back on 7/26 in this space I wrote, “On Thursday before the market opened, Jim Cramer said ‘we hit the bottom (in the stock market) ten days ago…forever.’ Cramer deserves credit for being spot on in his coverage of the Fed, Fannie et al, but such reckless b.s. as the preceding is what makes him look like a clown.” 

The low he was referring to in the S&P 500 was 1214, July 15. I received some criticism for my remark because by Aug. 11, the S&P had closed at 1305. 

So on Monday morning, Cramer appeared on “Today” and proceeded to say, “Whatever money you may need for the next five years, take it out of the stock market. Right now. This week.” 

Oh, sure, the market then plunged 1,870 Dow points, but this was the guy who had you in the market at 1300 on the S&P and it was 1099 before he made his call. 

So assuming you got out at his price point (which was an impossibility the way the market opened on Monday), you were then expected to be glued to the tube for the coming all-clear signal. But wait, he told you to get out with any money you needed for the next five years and it’s just a week or two later, I imagine, before we see a solid rally over that time. It’s absurd. Cramer’s playing investors hanging on his every word like chumps. Or as I maintain, he’s a reckless clown. It’s too bad he hasn’t learned to stick to straight commentary. 

–As for moi, I’m proud I’ve been advocating an 80% cash / 20% equities split for over two years now, but I only wish I had moved to 100% cash. My model allocation is simply that, a model, and it’s designed to help judge my work. I also have to admit that as of two weeks ago, I firmly believed we would finish the year down just 3 to 5 percent on the major market averages as I predicted last Dec. 31. Alas, so much for this one though at least I had the direction right. I also have to note I’m not into playing games like other strategists, such as Citi’s Tobias Levkovich, who this week threw in the towel on his 1450 or thereabouts prediction for the S&P by year’s end. Nice miss, Tobias. At this stage in the year, I live and die with my original predictions until it’s time to look ahead to 2009. Here’s a preview. That 80% cash level? It’s coming way down. 

–Since Aug. 31 of this year, we have seen five, 500-point declines in the Dow Jones; that’s five out of a total of nine in Wall Street history. 

–Citigroup pulled out of its attempt to acquire Wachovia because it did not want the Charlotte-based bank’s bad assets without government help, whereas Wells Fargo was willing to take it all on. Citi will, however, pursue its $60 billion suit for damages against Wells and Wachovia for the latter’s breaching an agreement that gave it the exclusive right to negotiate. Just a big disaster for Citi all around. 

–Shares in Morgan Stanley plummeted below $8 before finishing the week at $9.65 amidst renewed short-selling (following a lifting of the ban), ongoing uncertainty over just what MS has on its books, and the status of a $9 billion investment by Mitsubishi UFJ Financial Group. Morgan’s survival will be determined by Tuesday.  

–AIG has borrowed $70.3 billion in loans from the government in just three weeks to meet massive demands from its trading partners as the company rushes to sell assets to then pay them off. What was once thought to be an $85 billion loan from the U.S. was raised to $122.8 billion this week and could go far higher. As the Journal reports, “The lion’s share of the Fed’s original loan has gone for two things: providing collateral to AIG’s trading partners on complex derivatives known as credit default swaps, and covering losses in AIG’s securities-lending program. When the threat of losses from the lending program mounted, the Fed had to step in again this week.” 

AIG’s credit default swap positions require it to post additional collateral to the owners of the swaps when the value of insured investments falls; in other words, margin calls from its counterparties. This is the classic nightmare some of us worried about, though as noted above there isn’t anyone who can say they nailed the extent of the problem that we would find ourselves in, let alone the speed. [Even the perma-bears didn’t forecast the commercial paper/credit market freeze and crisis in confidence.] 

But in congressional testimony former CEO Martin Sullivan blamed “mark-to-market” accounting, not AIG’s reckless behavior, while we also learned of a sales conference at a resort in California costing $440,000 just days after the taxpayers bailed AIG out. 

–The amount local British governments had invested in high interest rate savings accounts in Iceland is close to $2 billion, all now frozen with Iceland’s government nationalizing the banks as it tries to get a handle on the books. The split between the U.K. and Iceland over this is as severe as any in history, including the 1970s cod war. 

Iceland has about $100 billion in foreign liabilities, this for an economy that is just $14 billion. Prime Minister Geir Haarde: “There is a very real danger, fellow citizens, that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy.” Ye olde black hole.

–From Week in Review, 9/13: “The Journal had a blurb on the recent pain in some of the Middle East markets, many of which have fallen about 30% since early in the year. No one should be surprised this is yet another bubble and not just because of oil. Take real estate. 

“For example, if you received the Sunday New York Times Magazine, Sept. 7, I hope you glanced through a large advertising supplement concerning ‘The latest boomtown for investment, lifestyle and tourism,’ Ajman. 

“Now I feel like I’ve been around and keep up on things, but I had never heard of the place. Turns out it is the smallest of the United Arab Emirates, but ‘also one of the fastest growing and most ambitious.’ 

“If you haven’t thrown it out, spend a few minutes looking at this. I’m guessing 90% of you will just shake your head, as in ‘there simply isn’t enough demand for another Dubai (which is next to Ajman) when we all know that Dubai itself will crash.’ It has to. Trust me. These guys aren’t that smart either. Or to put it another way, they’ll prove to be as stupid as our own financial leaders have been.” 

Well, since the above comments, Middle Eastern equity markets have totally cratered, including daily losses of 10% in the likes of Saudi Arabia. In fact on Monday, all 124 stocks that trade on the Saudi exchange dropped by close to the 10% max allowed under Saudi law. [Dubai on Monday was down 8% the same day.] Yesterday, the Journal ran another headline “Dubai’s Heavy Debt Load Stirs Concern.” Don’t look for any capital infusions for U.S. financial institutions from already burned sovereign wealth funds here.

–Reserve Management Co., owner of the Primary Fund which broke the buck and helped precipitate the current phase of the financial crisis, plans to liquidate 14 municipal money-market funds. But Reserve can’t say when investors will get their money back.

–The World Economic Forum’s ranking of the soundest banking systems: 

The United States? No. 40.  

–Ah, but the U.S. is still the most competitive, according to the same organization. 

1. U.S. 2. Switzerland 3. Denmark 4. Sweden 5. Singapore 

–A Wall Street Journal story said one in five middle-aged workers stopped contributing to their retirement plans in the last year, according to the AARP. But this survey was conducted last month. Imagine what it is today. 

–In a speck of good news for California and other states’ homeowners, Countrywide Financial owner Bank of America has agreed to modify as many as 400,000 mortgages nationwide and reduce payments to settle charges of lending abuse brought by the states. 

For those who feel they may qualify, understand, as reported by the Los Angeles Times, that “The program will first identify customers who have fallen behind on their mortgages by more than 60 days or are likely to do so because of loan features such as rate or payment increases. These customers will be contacted by Countrywide starting Dec. 1.” Be proactive. 

“This is more than a mortgage problem. We live in a world in which trillions of dollars can move instantly, but they are in the hands of human beings who are, by nature, limited in knowledge, and subject to self-deceptions and social contagions. By one count, financial crises are twice as prevalent now as they were 100 years ago. 

“In his astonishingly prescient book, ‘The World Is Curved: Hidden Dangers to the Global Economy,’ David M. Smick argues that we have inherited an impressive global economic system. It, with the U.S. as the hub, has produced unprecedented levels of global prosperity. But it has now spun wildly out of control. It can’t be fixed with the shock and awe of a $700 billion rescue package, Smick says. The fundamental architecture needs to be reformed. 

“It will take, he suggests, a global leadership class that can answer essential questions: How much leverage should be allowed? Can we preserve the development model in which certain nations pile up giant reserves and park them in the U.S.? 

“Until these and other issues are addressed, the global markets will lack confidence in asset values. Bankers will cower, afraid to lend. America’s role as the global hub will be threatened. Europeans will drift toward nationalization. Neomercantilists will fill the vacuum. 

“This is the test. This is the problem that will consume the next president. Meanwhile, the two candidates for that office are talking about Bill Ayers and Charles Keating.” 

–Investor George Soros, as reported by Paul Sheehan of the Sydney Morning Herald. 

“We are, Soros warns, not just in a rapidly deflating asset bubble caused by cheap money, lax standards and excessive debt: ‘We are currently experiencing the bursting of a credit bubble that has involved the entire financial system and, at the same time, a rise and eventual fall in the prices of oil and other commodities that have some characteristics of a bubble, and the two phenomena are connected in what I call a super-bubble. The fundamental trend in the super-bubble has been the ever-increasing use of leverage – borrowing money to finance consumption and investment – and the misconception about that trend was what I call market fundamentalism, the belief that markets assure the best allocation of resources.” 

–For the archives, and the ongoing history of Fannie and Freddie. Charles Duhigg / New York Times: 

“Had Fannie been a private entity, its comeuppance might have happened a year ago. But the White House, Wall Street and Capitol Hill were more concerned about the trillions of dollars in other loans that were poisoning financial institutions and banks. 

“Lawmakers, particularly Democrats, leaned on Fannie and Freddie to buy and hold those troubled debts, hoping that removing them from the system would help the economy recover. The companies, eager to regain market share and buy what they thought were undervalued loans, rushed to comply. 

“The White House also pitched in. James B. Lockhart, the chief regulator of Fannie and Freddie, adjusted the companies’ lending standards so they could purchase as much as $40 billion in new subprime loans. Some in Congress praised the move. 

“ ‘I’m not worried about Fannie and Freddie’s health, I’m worried that they won’t do enough to help out the economy,’ the chairman of the House Financial Services Committee, Barney Frank, Democrat of Massachusetts, said at the time. ‘That’s why I’ve supported them all these years – so that they can help at a time like this.’” 

–Russia’s billionaire oligarchs lost an estimated $230 billion between May 19 and Oct. 6, based on the declines in the equity markets. So much for them propping up high-end real estate in New York and the French Riviera, let alone the art market. This is one of the few things these days that gives me pleasure. 

–Talk about market manipulation, on Wednesday, Russian authorities said the stock market would be shut until Friday, following another plunge. But on Thursday, the market unexpectedly opened up again, the fact of which was made public just 45 minutes beforehand. It did work, with the RTS gaining 7%, but imagine the anger and confusion on the part of some investors who didn’t get the news in time. 

–Incredibly, MGM Mirage received a $1.8 billion credit facility from a group of unnamed banks for its gigantic CityCenter project of hotels, condos, retail stores and restaurants in Las Vegas. MGM Mirage needs another $1.2 billion, though, to finish the project. The total price tag is $9.3 billion. Wait two years and you’ll be able to move in for $49.95. 

–EBay announced it is laying off 1,600, 10% of its work force. 

–For the record, Alan Fishman, who signed his contract with Washington Mutual just weeks before it was seized by federal regulators and sold to JPMorgan Chase, is keeping his $7.5 million signing bonus but will not take the $11.6 million severance package, though legal experts say he would have prevailed had he chosen to fight it out.  

–As a BusinessWeek story puts it, India is going to lose a ton of outsourcing business, 15% to 20% by its estimates, thanks to a shrinking info tech sector. I’d say that’s low. 

–Lost in the news by week’s end was the congressional testimony of Lehman Brothers CEO Richard Fuld. 

“Ultimately what happened to Lehman was caused by a lack of confidence. This was not a lack of confidence in just Lehman Brothers, but part of what has been called a storm of fear enveloping the entire investment-banking field and our financial institutions generally.” 

But Fuld then blamed accounting rules, a la AIG, among other items, and while he took “full responsibility,” he insisted Lehman “did not mislead investors.” Authorities will over time prove otherwise. 

“A $2.5 billion compensation package earmarked to pay out bonuses and severance to some 10,000 Lehman Brothers’ staffers may come under fire by its creditors…. 

“At issue is whether choice bonus payment deals were secured by an elite crew of Lehman executives – who would actually have earned significantly scaled-down bonuses if Lehman had managed to survive.” 

–And then there is this regarding severance packages for thousands of regular Lehman workers, from Clemente Lisi of the New York Post. 

“In a one-page letter dated Sept. 30, Lehman told workers that it ‘unfortunately [was] no longer able to provide the salary continuation or other benefits’ because it had declared bankruptcy. 

“ ‘As a result, you will not receive a payment on October 3, 2008 or thereafter,’ the letter states.” 

We aren’t talking the high-rollers here. We’re talking people like Ann Harvey, let go in March and mentioned in the piece, who made $65,000 and was promised a paycheck every two weeks and health insurance for 13 months ending in April 2009 after being there 16 years.” 

–Johnny Mac, retired Wall Streeter and friend of StocksandNews. “My bank did well today. By that I mean I drove by it and it wasn’t padlocked.” 

–I’ve been following the Irish part of the crisis closely and it’s just one bit of awful news after another. Aer Lingus is going to lay off 1,500 and employees are sure to strike in response. [The airline is seeking to outsource much of the work.] But, 15-year employees are entitled to 2 ½ years severance! Hell, I’d snap that up and ride it out, reading books, pubbing and playing golf. 

–You know the housing stats I told you about the other day when I spent the week in Avalon, N.J.? How many of the 100+ homes on the market for $2 million+ will be sold at even half that? Or, more like it, how many will ever be sold at any price? 

–Speaking of my week at the shore, I mused in these pages on how Avalon was the perfect place for a wind farm. The other day the New Jersey Board of Public Utilities approved plans for one that would power 125,000 homes, a rather massive project for an area extending from Avalon up to Atlantic City. 

–As a result of the Great Depression, it took until 1940 for the economy to return to the level of GDP we were churning out in 1929 before the Crash. We also had 20%+ unemployment for four years. 

“In the eastern half of the nation, people will look at the winter as bookends of cold,” Bastardi said Wednesday. December could be the most brutal month, followed by a classic January thaw. But then February roars back with more cold and snow. Ergo, while such forecasts are 50/50 at best, heating bills could soar at the worst possible time. 

–It will take at least a generation for people to look at their banks the same way they did just a year ago. 

–In reading up on China for an upcoming trip, I saw where 1,000 protested in Hong Kong over Lehman Brothers’ derivatives-related investments, pitched by local banks. It’s another sickening tale. Investors were left holding over $1.6 billion in “minibonds,” structured notes, as a result of the bankruptcy.  

–My portfolio: I’m shell-shocked as the few stocks I own are generally down far more than the overall market, though my lithium battery company is hanging in there for some reason. I haven’t sold anything in about six months, nor have I done more on the purchase side than to just round out a position. 

Iraq: Clashes between forces loyal to Moqtada Sadr and Iraqi troops broke out in Baghdad after the assassination of a popular Shia lawmaker. And another seven Christians were killed in separate attacks in Mosul, leaving about ten left in the country, or so it seems. 

I’ve been a supporter of the war throughout, but among the many stories that need airing from time to time when talk of success breaks out is the simple fact this is not the same country we entered when it comes to the makeup of the populace. Christians, in particular, have successfully been ethnically cleansed. That’s the only way you can put it. 

Afghanistan: A report from America’s intelligence community concludes that Afghanistan is in a “downward spiral”. A draft of the latest National Intelligence Estimate has been making the rounds in Washington, though the final version is not slated to be released until after the election. The problem is it’s not just about the Taliban, but rather a ton of problems of the Afghan government’s own making. 

While the Afghan military has made some good strides, the heroin trade, said to be up to 50% of the country’s economy, plays an immensely destabilizing role. Just this past Sunday, the New York Times reported that President Hamid Karzai’s own brother was heavily involved in heroin trafficking, thus further damaging the president’s already fragile credibility. 

Iran / Israel: Israeli Prime Minister Olmert, as lame a duck as you can get (even more so than Bush) didn’t indicate he had received any Russian pledge not to sell Iran weapons, including the S-300 air-defense system, in meetings Olmert had with President Medvedev and Foreign Minister Lavrov. Separately, the White House continues to block any Israeli strike on Iran over fears of retaliation against U.S. forces in Iraq. 

For their part Gulf officials are losing confidence in America, due not only to Russia’s invasion of Georgia, but also the ongoing wars in Iraq and Afghanistan. One leader told Defense News: 

“With the presence of a strong but unreliable ally, who needs enemies?” alluding to unfounded fears in the region that the United States will strike Iran. 

“The U.S. has not given enough assurances that an attack on Iran would not result in a massive Iranian missile attack on Arab Gulf states, and the closure of the Strait of Hormuz. We are not sure the U.S. can win this war or force Iran to surrender or succumb to its demands.” 

Enter Moscow, which has been working hard to improve its relations in the region, leaving some nations to improve ties with both Russia and Iran. Saudi Arabia, which reportedly has bought $billions worth of Russian tanks, helicopters and other arms in the past year, seems to want Russia as a friend to keep Iran in its place. 

In a related matter, Israel accused North Korea of supplying half a dozen Mideast governments with nuclear technology or conventional arms, though it didn’t identify the six by name. [Iran and Syria are obviously two of them.]  

Russia: Along the lines of the above, President Medvedev blasted the United States on Wednesday, telling European leaders in Evian, France that “A desire by the United States to consolidate its global domination led to it missing an historical chance” after the Sept. 11, 2001 attacks “to build a truly democratic world order.” Medvedev is proposing a new trans-Atlantic organization in which the U.S. would no longer be dominant; this after invading Georgia and seeing its stock market plunge 70% in months. Talk about chutzpah. Joseph Collins, a professor at the National War College, told USA Today’s Andrea Stone, Russia “has a little Rodney Dangerfield in it” these days. “They’re starved for respect.” 

Notice how a desperate Moscow pulled out of some contentious border zones in Georgia this week as part of its attempt to change the conversation. 

“Relations between the West and Russia have entered a period of extraordinary mistrust and mutual disdain. Indeed, after the conflict in Georgia, the description ‘cold war’ risks looking like an understatement. Russia has shown that it is prepared to use military force against another country; the West has shown that it will not fight and will merely respond with a token protest. Some in the European Union, such as Nicolas Sarkozy, president of France, may see the Kremlin-dictated truce that stopped the fighting (though not the ethnic cleansing, which continues apace) as a triumph. From Russia’s point of view, the lesson of Georgian adventure is simple: we got away with it. 

“News last week that a Russian nuclear bomber simulated an attack on a city in northern England, combined with the biggest military maneuvers since the collapse of the Warsaw Pact and the dispatch of a Russian naval squadron to the Caribbean, raise two pressing questions: what is Russia up to and what should we do in response?” 

Lucas talks of Russia’s aim being the recreation of a ‘lite’ version of the Soviet empire, based not on military might but on economic dominance and pipeline monopolies; and that it wants the ‘Finlandization’ of Western Europe. That involves the use of money, above and below board, to cultivate friendly lobbies. One example is this week’s dramatic $5.5 billion Kremlin bailout of Iceland. Another is the former German chancellor Gerhard Schroeder chairing a Russian-German gas pipeline consortium.

To combat this, Lucas proposes the West keep the lines of communication open to “help slow (Russia’s) paranoia and adventurism.” We need to rethink our energy policy. “If the European Commission can bring Microsoft to heel over its outrageous behavior with Windows software, it can do the same with Gazprom: not just as a tool of Kremlin foreign policy, but also as a flagrant price-fixer and competition inhibitor (for example in its refusal to allow third-party access to its pipelines).” Also, it’s time to stop the flow of dirty money (not just from Russia) into our banks and markets. Lucas concludes we are running out of time. 

By the way, Russian media is not covering the financial meltdown there. As stocks were plunging 19% (yes, 19%) on Monday, the three main television channels showed billionaire Mikhail Fridman telling President Medvedev that the global financial meltdown offered new opportunities for Russian companies abroad. 

“I am convinced that the Russian financial system is protected from such a fundamental shock to a greater degree than many other countries,” Fridman told Medvedev. As Anna Smolchenko writes in the Moscow Times, “When faced with unpleasant news, the government has often resorted to a strategy that can be summed up as: ‘If we don’t report it, it didn’t happen.’” 

Such were the delays in news about the Beslan attack in 2004, the Kursk submarine sinking in 2000, and Brezhnev’s death in 1982. 

“Something even larger is blocking Russia’s march. Recent decades, most notably since the breakup of the Soviet Union in 1991, have seen an appalling deterioration in the health of the Russian population, anchoring Russia not in the forefront of developed countries but among the most backward of nations…. 

“According to U.N. figures, the average life expectancy for a Russia man is 59 years – putting the country at about 166th place in the world longevity sweepstakes, one notch above Gambia.” 

You know the culprits; HIV/AIDS, tuberculosis, alcoholism, cancer, heart disease, smoking, traffic accidents…but the policies to combat the health crisis in particular “seem unlikely to change as the bear lumbers along, driven by disastrously misplaced priorities and the blindingly unrealistic expectations of a resentment-driven political leadership. Moscow remains bent on ignoring the devastating truth.” 

But suddenly, Russia became very popular, at least in Iceland, as the Reykjavik government pleaded with Moscow for the $5 billion loan. Russia jumped at the opportunity. After all, Iceland’s fellow NATO allies didn’t step forward. Former U.S. Treasury Secretary Larry Summers observed, “I have to say that the news on today’s Bloomberg that Iceland was negotiating a stabilization loan with Russia did not fill me with a sense of comfort about the political implications and the ways in which the world is moving.” [You can be sure the Kremlin is scouting out sites for a new naval base there, eh? Now that’s a way to stick it to NATO.] 

Lastly, you know how I’ve taken liberties by writing of “drunken Russian soldiers”? Here is a Reuters headline from Wed., Oct. 8: 

“ ‘Drunk’ Russia Soldiers Return For Georgia Pullback” 

“Two Russian soldiers almost missed their unit’s withdrawal from Georgia on Wednesday after spending the night sobering up in a police cell, Georgian police said. 

“The uniformed soldiers were handed over by Georgian police to the Russian military at the Karaleti checkpoint, just hours before Russian troops were expected to pull back from positions inside core Georgia.” 

Driving around drunk when pulled over late on Tuesday, the two asked arresting officers, “Where are we?” 

Ukraine: President Viktor Yushchenko finally dissolved parliament and called for an early election on Dec. 7. The coalition Yushchenko had with Prime Minister Timoshenko broke up on Sept. 3 and Ukraine has been in limbo since. Timoshenko and her allies garner 24% in the polls while opposition leader Viktor Yanukovych has 23%. Yushchenko? 3.8%. Which means that Yushchenko could easily face an even more rebellious parliament, while waiting in the weeds is Russia, looking to take advantage of the coming chaos. 

[The next presidential vote isn’t slated until 2010, but Timoshenko is vowing to move the date up. None of this is pleasing to Washington.] 

Pakistan: President Zardari, eager for good relations with India because he is scared of it, got himself in more hot water by calling Islamic militants fighting Indian rule in Kashmir, “terrorists.” Most Pakistanis call them “freedom fighters,” so in some militant circles, Zardari is today a traitor. Meanwhile, the U.S. continued to strike suspected Taliban hideouts in the tribal regions, against Zardari’s wishes. Do you think he’s in a bit of a box these days, all of about four weeks into his presidency? 

North Korea: Whoever is in control these days (and we really have no clue…even as “Dear Leader” made a second appearance, as shown on state television Saturday) is reversing the disablement at Yongbyon and has been firing short-range bottle rockets into the Yellow Sea; this as South Korea’s top military official said the North is trying to develop a small nuclear warhead to fit on a missile, though it wasn’t clear if they’ve been successful. 

But then there were all kinds of reports Washington was about to take Pyongyang off the terrorism blacklist, this as ABC News said North Korea was preparing another nuclear test. The White House is a confused bunch these days. Nice legacy. 

China / Taiwan: The head of Taipei’s National Security Bureau accused China of developing the deadly SARS virus as a biological weapon, not exactly the kind of talk you like to see between two sides that are now trying to improve relations. 

And in following up on my comments from last week, that the Bush administration was holding off on an $11 billion arms sale to Taiwan, the White House reversed course and notified Congress it was approving $6.5 billion. In protest, China told the U.S. it would not proceed with several senior-level visits and other plans for military cooperation. 

[Taipei is nonetheless soon to receive two giant pandas from the mainland as a gift, assuming the previously announced offer goes through. In exchange, Taiwan is sending China “a rare goat and deer.” I’m thinking Taiwan is getting the better of the deal.] 

South Africa: Well, I’ve been warning of coming chaos here and on Monday, the New York Times’ Barry Bearak wrote a piece titled “Post-Apartheid South Africa Enters Anxious Era.” 

Last week I wrote of the demographics here and white flight. Barry Bearak adds: 

“Since 1996, the black population has risen to a projected 38.5 million from 31.8 million, according to government statistics. The white population has dropped to a projected 4.5 million from 4.8 million.” 

But this week the plot thickened as the ruling African National Congress party threatened to split into two factions; those allied with ousted former president Thabo Mbeki, and the new rulers led by the nut-case Jacob Zuma, who will become president in elections next spring. [There is a caretaker president, an ally of Zuma, today.] Zuma still faces corruption allegations resulting from a multibillion-rand arms scandal in 1999-2000. He was acquitted of rape in 2006, but was forced to admit that he had had unprotected sex with an HIV-positive woman half his age. 

Zimbabwe: And then there is this hellhole. President Robert Mugabe’s henchmen are determined to drive out the last white farmers (see a pattern coupled with the story above?) Recall in 2000, Mugabe commenced his campaign of “land reform,” expropriating white farms, 4,100 of 4,500. Now the remaining 400 are being targeted and the white owners are subjected to violent attempts to drive them off. 

In case you forgot, half of Zimbabwe’s population faces starvation. 

Somalia: An international taskforce is being assembled to put an end to the piracy threat off the Somali coast. It’s time to unleash our frustrations of the past two months, thanks to the financial crisis, and take it out on these bastards. 

Mexico: In one week, 57 were killed in Tijuana as a result of the drug war. 57. 

Austria: Far right leader Jorg Haider, who burst on the scene in 2000, died in a car accident today. 

–The campaign will be an ugly mess these last few weeks and in light of the financial crisis, I couldn’t help but think this was really a time for Michael Bloomberg. I’ve been following his speeches and comments the past month or so and while it’s clear that if he had been a third-party candidate, he might have been stuck around 10% by Labor Day, the media would have flocked to him, and it would become quickly apparent to the American public that this was the man we needed for the times. Bloomberg’s support by today would have then been in the 25-30% range, pulling equally from both McCain and Obama, as the mayor unleashed an ad campaign of titanic proportions. By Nov. 4, no one would be able to tell what was going to happen. Alas, this is now just the stuff of novels. 

–As Sen. John McCain slides in the polls, with the latest Gallup and Newsweek surveys showing Barack Obama with an 11-point lead, 52-41, while an NBC/Wall Street Journal poll puts it at a more surmountable six, 49-43, the tone of McCain’s rallies is getting ugly as the electoral map picture worsens as well. In Wisconsin on Thursday, at a large town hall meeting, the following comments were made to McCain and running mate Sarah Palin, standing alongside. 

“It is absolutely vital that you take it to Obama, that you hit him where it hurts, there’s a soft spot,” said local radio talk show host James T. Harris. “We have the good Reverend Wright. We have [the Rev. Michael L.] Pfleger. We have all of these shady characters that have surrounded him. We have corruption here in Wisconsin and voting across the nation. I am begging you, sir. I am begging you. Take it to him.” 

“I’m mad! I’m really mad!” another man said, according to a Washington Post report by Michael D. Shear and Perry Bacon Jr., ‘taking the microphone and refusing to surrender it easily, even when McCain tried to agree with him.’” 

“Will you assure us,” another woman said, “that, as president, you will take immediate action to investigate, prosecute and name the names of the people actually responsible?” 

Charles Krauthammer / Washington Post 

“Convicted felon Tony Rezko. Unrepentant terrorist Bill Ayers. And the race-baiting Rev. Jeremiah Wright. It is hard to think of any presidential candidate before Barack Obama sporting associations with three more execrable characters. Yet the McCain campaign raised the issue, and the mainstream media began fulminating about dirty campaigning tinged with racism and McCarthyite guilt by association. 

“But associations are important. They provide a significant insight into character. They are particularly relevant in relation to a potential president as new, unknown, opaque and self-contained as Obama. With the economy overshadowing everything, it may be too late politically to be raising this issue. But that does not make it, as conventional wisdom holds, in any way illegitimate."

–George Will / Washington Post 

“Time was, the Baltimore Orioles’ manager was Earl Weaver, a short, irascible, Napoleonic figure who, when cranky, as he frequently was, would shout at an umpire, ‘Are you going to get any better or is this it?” With, mercifully, only one debate to go, that is the question about John McCain’s campaign. 

“In the closing days of his 10-year quest for the presidency, McCain finds it galling that Barack Obama is winning the first serious campaign he has ever run against a Republican. Before Tuesday night’s uneventful event, gall was fueling what might be the McCain-Palin campaign’s closing argument. It is less that Obama has bad ideas than that Obama is a bad person. 

“This, McCain and his female Sancho Panza say, is demonstrated by bad associations Obama had in Chicago, such as with William Ayers, the unrepentant terrorist. But the McCain-Palin charges have come just as the Obama campaign is benefiting from a mass mailing it is not paying for. Many millions of American households are gingerly opening envelopes containing reports of the third-quarter losses in their 401(k) and other retirement accounts – telling each household its portion of the nearly $2 trillion that Americans’ accounts have recently shed. In this context, the McCain-Palin campaign’s attempt to get Americans to focus on Obama’s Chicago associations seems surreal – or, as a British politician once said about criticism he was receiving, ‘like being salvaged by a dead sheep.’” 

–A Washington Post/ABC News poll of Ohio voters shows Obama with a 51-45 lead. No Republican has ever been elected president without winning Ohio. And as the Post pointed out, the state’s 20 electoral votes are critical. “If (McCain) were to win every other state that President Bush carried four years ago, but lose Ohio, he would fall four electoral votes short of the 270 needed.” 

–According to the above-mentioned NBC/Wall Street Journal survey more than 50% believe Gov. Palin is not qualified to be president. Other polls reach similar conclusions. [I didn’t have time to look through the ‘abuse of power’ conclusions of the Alaska state legislature report.] 

I’ve gotten a kick out of how John McCain touts Palin’s energy expertise. It’s laughable. On Thursday, at the Wisconsin rally noted above, a questioner asked her about oil drilled in Alaska and whether 75% of it was being sold to China, and, if true, why? 

“No,” said Palin. “It’s not 75% of our oil being exported,” suggesting that some of Alaska’s oil, in fact, may be going abroad but not that much. “In fact, Congress is pretty strict on, um, export bans of oil and gas especially.” 

No Alaska oil has been exported since 2004, and little if any since 2000, according to the Energy Information Administration, while an old congressional ban dating back to the 70s was lifted in 1996 when there was more Alaskan crude from the North Slope and U.S. demand was soft. The Alaska ban has never been reinstated. [H. Josef Hebert / AP] 

“The heart of (Sarah Palin’s) message (during her recent debate) was a complete populist pitch. ‘Joe Six-Pack’ and ‘soccer moms’ should unite to fight the tormentors who forced mortgages on us. She spoke of ‘Main Streeters like me.’ A question is at what point shiny, happy populism becomes cheerful manipulation…. 

“We saw this week, too, a turn in the McCain campaign’s response to criticisms of Mrs. Palin. I find obnoxious the political game in which if you expressed doubts about the vice presidential nominee, or criticized her, you were treated as if you were knocking the real America – small towns, sound values. ‘It’s time that normal Joe Six-Pack America is finally represented in the position of vice presidency,’ Mrs. Palin told talk show host Hugh Hewitt. This left me trying to imagine Abe Lincoln saying he represents ‘backwoods types,’ or FDR announcing that the fading New York aristocracy deserves another moment in the sun. I’m not sure the McCain campaign is aware of it – it’s possible they are – but this is subtly divisive. As for the dismissal of conservative critics of Mrs. Palin as ‘Georgetown cocktail party types’ (that was Mr. McCain), well, my goodness. That is the authentic sound of the aggression, and phony populism, of the Bush White House. Good move. That ended well.” 

“A key argument for Palin, in essence, is this: Washington and Wall Street are serving their own interests rather than those of the broad whole of the country, and the moment requires a vice president who will, Cincinnatus-like, help a new president come to the rescue. The problem with the argument is that Cincinnatus knew things…. 

“Is this an elitist point of view? Perhaps, though it seems only reasonable and patriotic to hold candidates for high office to high standards. Elitism in this sense is not about educational or class credentials, not about where you went to school or whether you use ‘summer’ as a verb. It is, rather, about the pursuit of excellence no matter where you started out in life. Jackson, Lincoln, Truman, Eisenhower, Johnson, Nixon, Ford, Carter, Reagan and Clinton were born to ordinary families, but they spent their lives doing extraordinary things, demonstrating an interest in, and a curiosity about, the world around them. This is much less evident in Palin’s case. 

“John McCain is a man of accomplishment and curiosity, of wide and deep reading, travel and experience. He is smart without being a snob. He has authored legislation and books. He is a man of parts – the kind of figure whom one could effortlessly imagine being president. Are there many politically attuned people in America now who can honestly say the same thing of Sarah Palin?…. 

“She is a governor, and she has the courage to go into the arena. For that she should be honored and respected. If she were seeking a Senate seat, or being nominated for a cabinet post – secretary of energy, say, or interior – the conversation about her would be totally different. 

“But she is not seeking a Senate seat, nor is she being nominated for a cabinet post, and so it is only prudent to ask whether she is in fact someone who should be president of the United States in the event of disaster….Would we muddle through if Palin were to become president? Yes, we would, but it is worth asking whether we should have to.” 

–Voting in Ohio is already an absolute mess amidst a burgeoning vote fraud scandal involving the community activist group ACORN, a shill for Obama, that evidence proves has been encouraging voters to register multiple times. The major risk is on the absentee ballot side.  

“It’s widely thought that the biggest gamble President Bush ever took was deciding to invade Iraq in 2003. It wasn’t. His riskiest move was actually one made right after the Sept. 11, 2001, terrorist attacks when he chose not to mobilize the country or summon his fellow citizens to any wartime economic sacrifice. Bush tried to remake the world on the cheap, and as the bill grew larger, he still refused to ask Americans to pay up. During this past week, that gamble collapsed, leaving the rest of us to sort through the wreckage. 

“To understand this link between today’s financial crisis and Bush’s wider national security decisions, we need to go back to 9/11 itself. From the very outset, the president described the ‘war on terror’ as a vast undertaking of paramount importance. But he simultaneously urged Americans to carry on as if there were no war. ‘Get down to Disney World in Florida,’ he urged just over two weeks after 9/11. ‘Take your families and enjoy life, the way we want it to be enjoyed.’ Bush certainly wanted citizens to support his war – he just wasn’t going to require them actually to do anything. The support he sought was not active but passive. It entailed not popular engagement but popular deference. Bush simply wanted citizens (and Congress) to go along without asking too many questions…. 

“It’s not surprising that people don’t cotton to the idea of spending $700 billion to bail out Wall Street. Nor should they find it acceptable to spend as much as that, or more, to perpetuate a misguided and never-ending global war. But like it or not, the bill collector is pounding on the door. Bush’s parting gift to the nation will be to let others figure out how to settle accounts.” 

–Virginia Republican Congressman Tom Davis, in a Sunday Times Magazine piece by Peter Baker. 

“As for Bush, Davis long ago lost faith. ‘He’s a disappointment,’ Davis said. ‘How else do you say it?’” 

–Finland’s Martti Ahtisaari won the Nobel Peace Prize for his work as United Nations special envoy for talks on the final status of Kosovo; a most deserving recipient. 

–Editorial / Washington Post 

“So much carbon was released around the world from burning fossil fuels in 2007 that it could lead to a sweltering 11-degree Fahrenheit increase in the Earth’s temperature by the end of the century, according to data recently unveiled by the Global Carbon Project. To put it more starkly, the relentless buildup of carbon emissions in the atmosphere is outpacing the worst-case scenario outlined by the Intergovernmental Panel on Climate Change…. 

“(The body of evidence reads) that efforts to address climate change must be stepped up and taken with urgency. They also buttress the persistent call by this page and advocates around the world for the United States to lead this effort.” 

–There is going to be a huge backlash over the coming years against high-priced, underperforming athletes and I can guarantee some ugly incidents at our nation’s ballparks, stadiums and arenas. If I’m Alex Rodriguez, for example, I’m doing all I can to dedicate myself to becoming a clutch player. 

–It can always be worse, sports fans. Inflation in Zimbabwe hit 231,000,000%. [That’s a real figure, but as of Thursday. It’s now higher.] 

–After work Thursday, I stopped by the liquor store to pick up some domestic and I haven\’t seen it so crowded since 9/11. Gary, the owner, and I have been talking about the market the past few weeks and I practically burst out laughing at the sight of all those in line.  He smiled broadly, recognizing nothing needed to be said.  

–I saw a money manager on CNBC offer that we need a bank holiday in this country and I couldn’t agree more. Just shut the markets for a day…a needed time out. The perfect time to do it would have been Monday, Columbus Day, since the banks themselves are already closed. It used to be that shutting the market was looked at as a sign of panic, but in this instance…we already panicked! We could also use some sleep, typed the grouchy editor, as he stares at the clock and sees the big hand on fifteen and the little hand on twelve. 

–I saw the headline “Mammals facing extinction threat” and immediately thought, that’s us! 

–I also had the thought this week that one way to end everyone’s misery is with a black hole….everything would just go whoosh….or is it poof? Very painless. 

But of course this isn’t a possibility, thanks to the fact the Hadron Collider, which some had theorized would create a black hole, is broken. The world can’t do anything right these days, I tell ya. 

Dow Jones -18.2% [8451]
S&P 500 -18.2% [899]
S&P MidCap -16.9%
Russell 2000 -15.7%
Nasdaq -15.3% [1649] 

Note: We have had some problems with the ‘contact us’ link that should be rectified shortly. In the meantime, I can be reached at bfnovak@mindspring.com.  

Additionally, I do finally have my first podcast up, with another to follow by Monday, though admittedly events are transpiring so quickly the material is dated almost as soon as it\’s posted. We will launch the subscription service by week’s end and I will explain it next time.