Big

“The market believes that the crisis is over,” said William Rhodes, the chief investment strategist of Rhodes Analytics, a market research firm. “Whatever problems emerged last quarter are last quarter’s problems. They’re over, that’s it, they’re done. So let’s move onto the next thing.”

http://www.nytimes.com/2007/10/01/bu...hp&oref=slogin

hardcore

If you read futher it states that the market will spin good or bad news to make things look positive. Nothing has changed except that the bulls are once again blindly charging ahead. Soon to be followed by another correction as the herd stumbles around in confusion again followed by them charging blindly ahead. This is not a stable market nor should it be as the underlying problems have not gone away simply by the the massive infusions of government cash.The dollars downward sprial is testament that the rest of the world does not believe that happy days are here again in the good old US of A.

http://online.barrons.com/article/SB..._magazine_main

http://www.reuters.com/article/wtMos...35099520071001

RYou

The big banks that underwrote the loans for those smaller mortgage companies are taking the write offs for the sinking loans. They are even writing off loans that are potentially underwater even though they have not sunk. The market is finally adjusting because it has a better idea of just how bad the loan situation is.

Inflation is on hold, so you will see The Fed drop the prime later this month.

As always, the market lives and breathes for today. It flows and ebbs with what's happening today because what they foresee into the future may only be a mirage. Second there is just a whole lot of investment cash out there from institutions as well as 401Ks buoying a rising market. Sure the market is unstable. When is it ever stable when a single government report can drive a 1000 point change in the DOW over a 5 day span.

As unsound as the housing market may be for a seller you can see The Fed can functionally impact the effect on investing.

matclone

Saw an interesting guy on Moyer's this last week. John Bogle, who obviously believes in capitalism, was talking about all the money managers (e.g., hedge fund managers) who take but do not add anything of value to the enterprise (corporation and its stockholders). He talked about them taking short term profits to the detriment of long-term value (I guess that's an old theme).

Anyway, his critique reminded me of the sub-prime lenders and all their backing capital and their practices.

Here's Bogle's book. I haven't read it so can't endorse it.

Amazon.com: The Battle for the Soul of Capitalism: John C....
Amazon.com: The Battle for the Soul of Capitalism: John C....