700 Billion Doesn't Buy You Much

Yes, the market as represented by Paulson and Bernanke wanted 700 billion to thaw out the frozen credit market. They did get it albeit a few days and a couple of failed institutions like WaMu and Wachovia later. So, why did the market actually go down further?

It would be presumptuous of me to give you an answer as there are hundreds of explanations out there and I would have to pick one. The problem is that the stock market is an illusion, a show based on all of those factors. Here is a list of reasons;

• 700 billion isn't enough, lack of funding is not the problem,
• bad banks will fail no matter how much money you throw at it,
• a bigger problem may be lurking out in Europe where there is no concerted bail out fund,
• stock market has less to do with failing banks and more with the upcoming slow down in the global economy,
• even the developing world like China, India and Russia is slowing down which means there will be less income for the companies like GE, Caterpillar, Deere, JNJ and so on,
• US unemployment is rising and
• there is a good chance Obama will be the president and he would raise taxes making it difficult for the stocks to rise.

I think it is all of the above. I only wish I had known this yesterday or day before but then I wish I had the winning numbers for the $35 million lottery ticket as well.