I've been working hard for days to get folks to understand this. At lot of people get a glazed look in their eyes when you mention derivatives because of the complicated nature of them.
This bailout plan - no matter what the size - is not going to free up liquidity in the market. The market institutions are not stupid and they don't trust anyone else's balance sheet. Therefore, they will continue to "hoard" their money.
It's a good thing that the commercial banks did this last week. Normally, commercial banks keep a total of around $2 billion on reserve each day to meet the nation's banking withdrawal's. Last Wednesday, there were $114.5 billion of withdrawals that took place.
The Dow is going to go hog-wild for a few days to a week. Then it will turn down. I'm forecasting (my opinion) that it will hit 8,600 and possibly get to 7,000.
And you know what? If you take the DJ from where it was in about 1995, and project a historical growth rate forward from then till now (ignoring the increases of the funny-money asset bubble era) you get to right about -
8,000.
I’ve bailed on my 401K mutual funds that were in the money and I was going to ride out the storm on those under water (thankfully not too bad). Some that I held were international and bond funds. Are you fleeing to cash? We can take this off line...