Stop the fussing, approve a plan!
Posted by themarketanalyst on September 29, 2008
As I predicted on September 25th, the stock markets found its way towards a new bottom. The decline will more than likely continue as the U.S. rescue plan was disgracefully not approved! The Dow Jones lost 777 points (-6.98%) while both the Nasdaq and the S&P lost approximately 9% each today! What is also scary is that it closed at the intraday low, so tomorrow could be frightening, with a bearish gap even being possible. Politics reared its ugly head in not approving this plan. The worst thing about not approving the plan is the message that it sends: LACK OF CONFIDENCE!
It is sad to see the politicians bicker over the finer details of the plan. The bottom line is that politicians and not economists were defining the rescue plan; this was an expression of no confidence in the officials that were selected to control and oversee the nation’s economy: Bernanke and Paulson. The work of the Federal Reserve and the Treasury was clearly undermined and that is a terrible signal to send the market. What the market needs most is confidence in a market that will find solutions and build a framework in order to recover. Our monetary authorities were not listened to and that is a very big deal.
Like I’ve said before, the market will not stabilize and recover until it starts trading on economics and fundamentals again.
