Today's fall in the Dow. So much for recovering losses!
From the NY Times:
“I believe this is the sound that hedge funds make when they are imploding,” T.J. Marta, a fixed income strategist at RBC Capital Markets, said, characterizing the sell-off in the last hour.
Analysts said the market was continuing to react to the same fundamental factors that drove it lower in the morning, including weakness in the manufacturing sector, the large drop in retail sales and the growing realization that there will be no quick fix to the credit crisis.
Retail sales decreased 1.2 percent last month, nearly double the 0.7 percent drop that had been expected, according to one government report, while an index of New York manufacturing hit a record low in September.
“To some degree, we’ve moved on from the old crisis to the new crisis. The credit crisis has been addressed to some extent, but now there’s the recession, unemployment, and rising manufacturing costs in the pike,” a senior index analyst at Standard & Poor’s, Howard Silverblatt, said.
Nouriel Roubini says to expect a two year recession, 9% unemployment and further drops in home value.
He also keeps saying that while the measures that the Treasury are finally taking after much delay (partial nationalization) are good; but unfreezing credit markets are not enough. I think it was an NPR interview I heard with him yesterday where he stressed the need for a Home Owners Loan Corporation and a Keynesian style fiscal stimulus bill.
Except Republicans (and it seems most Democrats these days) revere Milton Freidman and supply side economics (which, I cannot emphasize enough, just doesn't work) and turned their back on Keynes in 1980.
So go out there and vote for liberal democrats! They are supposedly working on a massive infrastructure spending bill that will serve the purpose proposed by Keynes and Roubini.