Well, the first kind appears to be dramatic improvements in the stock market of over 900 points gain in the DJIA and proportionate gains elsewhere in light of concerted efforts of major nations to pour money to shore up their beleaguered financial sectors, after a number of high level meetings over the weekend, including in Washington. Maybe this will be what the doctor ordered and we’ve seen the “market bottom”… and maybe we haven’t.
It does strike one that the current financial crisis is far more serious than the simple short-term liquidity problems that have caused the collapse or forced merger or conversion to commercial bank of every major investment bank and serious trouble for a number of the largest commercial banks (and the collapse of Iceland’s financial system… so far.) For one thing, many of the most toxic of the toxic loans, including sub-prime mortgages and not-so-sub-prime mortgages will see massive balloon payments soon due or dramatic increases in interest rates as”teaser” beginning rates expire, which will probably lead to a different level of defaults, unless steps are taken to alleviate this. And amidst the mortgage woes, no one is talking about, say, auto loans, other consumer loans, or business loans, all of which banks can turn into self-fulfilling failures with pull-backs of credit (hence the government interventions right now). And we’re going into a recession anyway, with increased unemployment and reduced economic output, just as a matter of the business cycle, as it is.
Don’t know. One certainly hopes that things will stabilize, at least long enough for the next Administration to get a handle on them and take long term corrective measures. But events may move faster than that. Who knows? These insane 8, 9, 10% daily swings are more consistent with markets in so-called emergent economies, rather than the most heretofore staid and venerable markets in the world… here’s hoping for the best. For all our sakes.
In other “recovery” news, I am recovering from yesterday’s Bank of America Chicago Marathon (and the trip back). Chicago proved once again that “the windy city” may be accurate rhetorically, but not climatically, as conditions were often in the 80’s, often unshaded, and involved very little wind, head or tail; I collapsed in at just over 5:41 for marathon number 21, number 3 this year, and state number 11, even after a slower than usual 2:29 first half. It seems that every time I run a marathon anywhere, it seems to be unseasonably warm. Given my propensity to personally demonstrate the existence of global warming, that’ll probably be it for me… until NYC in three weeks.
Plenty of Obama signs and supporters out (against zero for McCain; no point in contesting Illinois for him, I suppose), though not as many as you’d think in Obama’s hometown; I suspect that I am the only member of his college class to have run his hometown’s marathon in this (his?) year, though with over 30,000 finishers… who knows?
For me, tomorrow will probably involve a little soreness, and I’ll feel much better by Wednesday. For the rest of the financial sector and the economy writ large? Stick around…
And this just in: Paul Krugman wins the Nobel Prize in economics… wow.