Yesterday the Dow plummeted 800 points during the day, recovered somewhat and ended down about 370.
The Dow is now below 10,000 for the first time since 2004.
I guess the bailout plan hasn't exactly solved all the problems in the stock market.
Compounding problems, the credit market remains frozen and seem to be getting worse:
“There is a growing recognition that not only has the credit crunch refused to be contained, it continues to spread,” said Ed Yardeni, an investment strategist. “It’s gone truly global.”
Stock futures are flat this morning and the traders on CNBC are all talking about feeling better about things, so maybe we'll get a calmer day on Wall Street today, but ultimately it looks like the financial crisis has not been solved by last week's bailout plan and the government is going to have to do more bailing out:
WASHINGTON — As pressure built in the credit markets and stocks spiraled lower around the world on Monday, the Federal Reserve was considering a radical new plan to jump-start the engine of the financial system.Got that everybody? The Fed is going to start lending directly to businesses.
Under a proposal being discussed with the Treasury Department, the Fed could buy vast amounts of the unsecured short-term debt that companies rely on to finance their day-to-day activities, according to officials familiar with the discussions. If this were to happen, the central bank would come closer than ever to lending directly to businesses.
While the move would put more taxpayer dollars at risk, it underscores the growing sense of urgency felt by policy makers in a climate where lending has virtually dried up.
And where are they going to get the money from?
They're going to print it.
On top of all the money they have printed to fund the Iraq war, the Afghanistan war, the Bush tax cuts, and the previous bailouts.
Plus they're going to lower interest rates again, perhaps as much as 100 basis points, bringing us right back to the interest rate levels that created the housing bubble problem in the first place.
This means we're going to have a really bad inflation problem in the future.
I guess they're looking at the current credit crunch as the fire that needs to be put out first before dealing with the smoke and water damage of the coming hyperinflation.
But I have the feeling that Bush/Greenspan/Bernanke policies of print and spend are going to make the inflation of the late 70's look good.