Gas Prices

[nc211]

Hahaha!!! Sorry big guy, you're right! Looking at your post this morning on my 19' wide screen monitor, and having my glasses on, I see you said leanings, not learnings. At home, on my 17 inch monitor w/o my glasses, it looked like learnings. Sorry man, I missed it.

Well, I think the three of us could "yeah, but" for days re: how we got here. I think all three of us have a very good handle on what we're doing, and obviously have very good reasonings and thinkings for it. I respect it, and do enjoy the debating. I think the truth and real answer is somewhere in the blended thinkings. But, I think before we burn ourselves out over it, we switch to what we think will need to be done to fix it.

RX, I think any job right now that pays, is good! And if you enjoy it, all the better! I know SWO enjoys his job, and is quite good at it. I love mine, even though it usually wears me down to a dribbling drooling tub of goo by Friday. I love going on site visits and see the actual product, getting a little mud on my shoes and wearing the hard hat. Commercial real estate is for me. Plus, the pay ain't to shabby either, but to me, that's just a perk.

3 of the biggest 5 investment houses, are now toast. Internal commentary suggests AIG will pull the plug this week. Concerns that BofA is biting off more than they can chew. Wachovia, SunTrust, Guarantee Bank, and of course WaMu have all exited the market for apartment construction loans "usually a safe bet". Public Capital is no where to be seen, as Wall Street has imploded. Private Capital placement is struggling, with several smaller insurance companies and credit unions running out of money. In my landscape, the only players left appear to be Met Life, New York Life, Prudential, and Pacific Life. Of those players, all but one aren't going north of $50m committments. Principal is hidding in the shadows, hoping to avoid the spotlight. But I know they're hurting now, and laying off people in the quietest manner they can. Legg Mason is so heavily loaded down with these investment products called structured investment vehicles "SIV" that were used for residential lending, they too are struggling and their public filings suggest potential trouble as well. Developers are laying off too, even the most prominent players with huge amounts of reserves to ride this out for a few years "if need be". Countrywide, gone. 20th Century, gone. And a lot of other major players, all gone. And of course Fannie and Freddie now under government control. I'd have to say, we're all witnessing history unfold right infront of us. This is the perfect storm, and it just keeps raging. This is just amazingly bad, and sad. But I have confidence, that lessons learned from this will create a new market in the distant future that will be fresh, new, and create opportunities for many many folks far beyond what we've seen over the past few years. I would almost have to say; this is the changing of the guard. I think the kick-off punt for any recovery is squarely on oil. I think we've got to do whatever it takes to get those prices down, so folks aren't so strapped to their local BP station. We're a nation that is being forced to stand still, and we're not known for being good at that. We like to move, run, go go go. I think with oil continuing is decline back to a more normal and reasonable level "currently at about $90 today and falling", folks will start to breath again. Granted, we've got to cycle through this Ike disruption at the moment. I say this, because the most direct impact felt by every American, is at the pump. They see it several times a day when passing a gas station with "$4.09" blinking on the sign. They see it, and immediately rethink where they're going at that moment. What they're going to buy at Home Depot and is it really worth it. Gas plays on the mental balance more then anything, if you ask me. All this stuff going on is horrible. But if gas were $2.09 instead of $4.09, I think some of the paralysis gripping the nation would ease up. I would love to see how much money these failing investment shops had tied into oil during the last options cycle. If my thinking was correct back in June, of investment banks manipulating the oil markets to try and recover their losses from the housing markets, then it would make sense why they're failing so quickly now. My gut keeps saying they were heavily betting on that $200 a barrell prediction.

Right now, we're just pinned. When will that ease up? I don't know. I'd be very interested to see what you guys think as well to when we'll see the signs of recovery starting to show up. But I honestly do think getting through the election is key. Whether it's an Obama platform, or McCain, at least we'll know what we're working with. I've been suggestion for sometime now that the closer we get to the election day, the worse it's going to get. I honestly hope we're finally at the bottom, with 6 weeks to go before election day.

[RX in NC]

I don't believe we've hit bottom yet. That will not happen until after the election. Frankly, Wall Street doesn't much care who wins - it just wants to move on with "WPE" no longer stinking up the White House. Wall Street can and will quickly adjust to either Obama or McCain coming out on top. But the bottom will not occur until the election is settled. It could happen between Thanksgiving and Christmas. But I think it is more likely in 1st Quarter 2009. No, Virginia, there will be no Santa Claus Rally this year. And as a full-time options player rolling my own money on every deal, nobody hates that more than me. I've made a ton of money during Santa Claus rallies in previous years, but it ain't gonna roll that way this year. I hope I'm wrong, and that we're indeed bottoming out this month. But I've learned to trust my charts (as well as my instincts), and both say that the bottom is still months away, well into 2009....

[SW03ES]

I don't think we've hit bottom yet either. I've been saying halfway through Q1 2009...

[nc211]

After the past 48 hours in the global stock market, the $85b government support to AIG, and the fact that for the first time in several decades "if not since the 1930's", the national deficit very well may exceed annual GDP numbers, I'm not sure where the bottom is either. I still think the election will play a big part in getting the ball rolling towards recovery by restoring some sense of calm in the debating of the fate of the country. But, given the fact that so many subprime varaible rate loans were written in 05-06, many on a 3/1 arm with no caps on that first rate adjustment, who knows what's coming when those start hitting. I do know that the daily LIBOR rate more than doubled yesterday, up 3.33% to 6.44%, the largest jump in over 7 years "since 9/11". This is significant for several reasons, but on Main Street America, tons of variable loans are tied to the 30-day LIBOR rate. If it stays up that high, the higher the 30 day average will climb. This has the potential to make several of those variable home equity loan payments skyrocket, along with several credit card bills, and the new wave of 3/1 arms (adjustable rate mortgage) coming into their first rate adjustment. Technically, the bottom may not be felt until the last 3/1 subprime loan hits it's first rate adjustment. I think to stop the bleeding on that front, and prevent further defaults/foreclosures, congress is going to have to put in stops to those arms from adjusting and take the hit on lost interest income, if possible. Or at least put a cap on that initial rate adjustment. But, I don't know how many of those subprimes and alt-a mortgages are out there still. But since the government is essentially taking "ownership" of the companies that hold the most portfolios of them, they can esentially rewrite the rules to them, if they want. Hell, we've already added how many hundreds of billions of dollars to the national score board? They could write a loan modification agreement to those loans that read something like "interest rates used for example purposes only":

"your initial interest rate will convert to a fixed 30-year amortizing structure. At which point, upon any future sale of the home, up to 70% of the sale proceeds above the then outstanding loan balance will be assigned to the lender for compensation, but not to exceed the difference in the interest income of your mortgage interest rate to a fair market rate of 6.5% at the like time of sale to the amortization schedule of the loan."

Basically, if you take two identical standard 30 year mortgages of $200,000, and run one at 4.0% and the other at 6.5%. The monthly payment difference is $309 ($955 & $1,264). Now, say they sell the house in 7 years, the difference between the interest income of the two loans is $34,695. Now, if you assume that $200,000 loan represents 100% of the purchase price of the home, and assign a conservative 3% annual growth rate to it, in 7 years it's worth $245,975 bucks. That's $45,975 bucks of appreciated value to cover the $34,695 difference between the two loans. ASSUMING no amorization of the loan, which we're not. In 7 years, the 4.0% loan balance is $172,119. The 6.5% loan balance is $180,547. Or an ADDITIONAL $27,881 or $19,453 of equity "assuming the $245,975 value of the home".

What does this accomplish? For one, it stops the increasing payments to the borrower "maybe $250-$300 for those on interest only for switching to amortizing", which is causing some of the foreclosures. It also acts as an incentive for the borrower to stay in the home "where else are they going to get such a sweet deal on a place to live?" This will effectively drop the volume of foreclosed homes on the market. It will also act as an incentive for the borrower to not only to stay in the home, but to remain there too, but is sort of a double edged sword. The longer the loan stays active, the greater the difference between the interest incomes realized between the two loans. For example, in 15 years the difference is $57,788. However, the absolute number on the house at 3% a year still exceeds it by an even larger number, with a value of $311,595.

Basically, keep the payment at the level it's at, just amortize it on a 30 year run, and tack on the difference in interest incomes upon the point of sale. If anything, at least the lender isn't dealing with the expenses of trying to market a foreclosed house, and at worse case they will get paid off at the time of sale, and recoup some interest profit in the 70% of net proceeds agreement.

This obviously doesn't address those borrowers who lied on their applications and couldn't afford the house to begin with, or over extended themselves on other things after the home purchase. But, it does address the adjustible rate loans out there that are set to skyrocket in payments.

[nc211]

I've sent this scenario out to my counterparts within the industry. The feedback I'm hearing is "atta' boy, holy cow that makes sense, this could work, i like it, it's better than the alternative, are you kidding me? we missed this?"

I also heard probably the best quote of the day regarding the current presidential players....

"One should've been President 8 years ago, the other should be President 8 years from now". hahaha... now that's rich!

PS: 30-Day LIBOR, which for the past 90+ days has been hoovering around 2.49%, went up to 3%, which is HUGE for a one day adjustment. 30 day LIBOR takes the average of the past 30 days. Yesterday it spiked, but I thought it would just impact the 30 day average by a .01 or .02, not .50. I suggest all of my fellow LOC members on all ponds, that have a variable interest rate on thier credit cards/home equity loans, tighten the belt at the moment. Many of you are facing increased minimal payment amounts coming soon. This week's activity on all markets is going to hurt all of us. Oil will probably head north of $100 again, as capital flees into the safer waters of commodities again. But, this time, speculators will be silenced, unlike in June. Hell, they're all unemployed at the moment. Plus, Congress just passed off shore drilling, even at a limited level.

PPS: RX, i'd be very interested to see what you charts are showing for spiders. Hedges are pretty much out the window at the moment, since credit-default-swaps are toast at the moment "brought down AIG". Russia has suffered two day of such losses, they had to close the boards early.

[RX in NC]

Haven't played with any spiders since we studied a few of them during a 5-week options class I took back in the summer of 2004. If you can provide some specific symbols and names (I presume you're talking SPDR EFT funds, but maybe not), I can attempt to run them through my progressions on Q-Charts and see what turns up, if anything....

[SW03ES]

I can't wait to get you two's opinions on this whole government buy's the bad debt idea lol...

[nc211]

I think it's absolutely the right thing to do, no doubt in my mind. I think it'll restore confidence in the market, I think it'll accelerate the recovery, and I think we're now on the right path. Why they didn't do this before the failures began to show, is beyond me. I mean, imagine how much money would of been saved on not having to bail out Bear Sterns, AIG, etc, if they didn't have those toxic investments on their balance sheets? I think it's a great idea, because it will finally give investors the road map to where the bad stuff lives. Right now, nobody knows whos got what, and how much, which has killed the confidence of investors. Who knows how much Wachovia " for example" has of these toxic products on their books? You get a pool together of nothing but the troubled products, people will know where they are. It's kind of like when a community decides they're going to rezone and redevelop the bad section of a town. You drive out all the bad folks that commit the crimes, so you can replace the structures with nicer, investment grade, stuff. But, the side effect of that, is you then liter the rest of the community with pockets of bad folks here and there. And when a crime happens, you're not sure where to look. But before, when a crime happened, you pretty much knew where to go look, who to talk to, etc.

In the 90's, when commercial real estate made the same mistakes residential has made now, it was the savings and loans that went down. Now it's the investment banks. Back then, the reaction in the markets was very similiar to this-a loss of confidence due to the lack of ability to see who has what and how much. So, the RTC was created to buy up all the bad deals and place them into a centralized location. They went through them all, kept the ones that looked ok 5 years out, and sold the ones in deep trouble at discounted levels. What could of been a huge financial burden to the tax payers, ended up only being about 5% of the total. It also was able to recover some of the lost jobs, as new shops started to crop up to take advantage of the RTC deals. It was the avenue out of the storm, and it worked. The decision today, is pretty much the exact same platform, and it too will work. Might take a bit longer "90's took about 18 months", but not much. It might hurt a little more too, but that shall pass as well.

When I was 16 years old, my dad was hired to run the midwestern section of the country for the RTC. I remember reading a letter from the fed advising him and his associates "including family members" to not answer any questions if approached by the media. Luckily, we never were. His involvement with the RTC, rolled into what is now one of the biggest loan servicing companies in the country, Midland Loan Servicing, which has also created one of the dominate investors, PNC Bank. At 16, I didn't really know what was going on, didn't really care. But as I grew up, it was a trip to read about it, and things he did, in my finance text books in college.

I think the fed made the right call on this one. Every investment sector has it's dark day. 8 years ago it was computers. 18 years ago it was commercial real estate. Today, it's residential real estate. In 8 years, who knows, but I'm confident it'll be something.

However, I'm betting a large amount of "brokerage" firms will probably think otherwise. They tend to not like having to deal with government entities. They also know they'll be aced-out of the recovery efforts, as big-money investors will simply not engage them to get to the assets in the government pools. Government players typically don't and won't allow the brokerage fees, and will most likely require "direct" dealings. I feel bad for the brokers, because they're probably going to feel the pinch. But, in the same sense, "brokers" don't necessarily have clean hands in this either. It's been in their interest to close deals to get that fee. Some, aren't exactly properly aligned with the best interests in the deal, but just want that fee income.

[RX in NC]

Yep, unfortunately the government has no choice. And nc211 is correct - the "bad stuff" has to be completely exposed to the light of day so we can all understand what we're dealing with and exactly where it is. But I also believe that when you steal from the public trust to the degree that we're witnessing now ("public trust" - what a contridiction in terms these days), you should be capitally punished. Either send the CEOs/CFOs/COOs to prison for life or execute them, preferably the latter since it will cost us taxpayers far less in the long run. Yes, I'm that cold and unwavering when it comes to this topic. I don't think that nc211 or SW03ES are, but I sure am. I make an honest living on the markets and I don't cheat or steal anyone else's money to do it. So try to understand why I feel the way I do when the ridiculously greedy, dishonest *BLEEP*s out there in Corporate America have been stealing from all of us taxpayers for years now....

[SW03ES]

Its going to be interesting to see how all of this plays out...

I agree with you both that it seems to be the best solution given the situation at hand.

[nc211]

Well, all I know at this exact moment in time, is that after this week's historical activity, all I want to do is stare at a blank wall in complete silence and float the mushy mass between my ears with an ice cold beer (or 6). What a week, Gezz, what a week! I seriously hope next week isn't like the past few. My hairline can't take too much more of this stuff! We've got two deals in negotiations at the moment, worth $225m, that keep getting delayed due to direct market activity. All year long, it's been stuff from left field kiling our deals. In an office of just two, we've probably lost close to $1b of fantastic deals this year, due to strange left-field stuff, mostly market driven. But, thankfully we've kept our powder dry over the years, and have less than .001% exposure to the nasty elements out there, which is nice. But, damn man...this is freakin' insane.

PS: Not to mention oil has gone up $12 bucks since Tuesday, to close above the triple-digit threshold, at $104.58! :chairshot: :chairshot: :chairshot:

That's it...I'm outta' here...there's a beer somewhere in this stinkin' place with my name on it. If not, I'll steal one! Damn Damn Damn!! :chairshot:

[eatingupblacktop]

[nc211]

Oil surged $22.46 to $127.01 a barrel, after reaching as high as $128.55 - a $24 gain - at these levels it will be oil's biggest gain ever in dollar terms.

The rally reached a fevered pitch as the session neared its close, partly due to the fact that Monday is the last day of trading in the October oil futures contract, which typically results in volatile trading.

As of Tuesday, the front-month contract will be November. That contract showed prices up $6.44 to $109.19 a barrel.

"The biggest news is that people are looking at the $700 billion plan as supportive of demand, supportive of the economy," said Peter Beutel. "Everything we are looking at right now says demand has a chance to come back if the economy starts to strengthen."

Oil prices had been trending lower on worries that demand was faltering but those concerns seem to be abating, according to one analyst.

"The fear has waned as far as the demand destruction" in the wake of the bailout news, said Neal Dingmann, senior energy analyst at Dahlman Rose. "The bailout has really stabilized this market."

The government plan "has put in some support levels in there," at least temporarily, said Dingmann. If the economy has a chance to recover, then the oil market hopes demand for energy would recover as well.

Aside from the dollar's weaking strength, thanks to the $700billion new greenbacks being printed. Who in the hell here thinks just because of this new bailout "or should I say the most recent", it's a great time to go rent an RV and drive around the country aimlessly? Demand recovery, within a couple of days of the bad-mortgage bailout? What in the hell are these people smoking? I know, I for one, won't be driving the 4runner on my 40 mile commute instead of the economical Mazda 3, just because the Fed has decided to buy $700b of bad mortgages.

I hope, I seriously with all honesty hope, pray, cross my fingers, that everyone in this country decides to show these pencil-necked analysts wrong, and we continue to conserve. What a bunch of damned crooked thieves! If I were president, I'd ship some of these analyst to Camp XRay for an evening of being "probed" by a cattle stick.

"Hey guys, we really hosed the american home owner with our ultra cool bogus structures, and the government bailed us out. Let's do it with oil now too. Ralph, you say demand is going to go up, and I'll follow in a day or so with a story about SUV's back in demand to support it. This will be great. We'll totally lie, cheat, and steal from dumbass Joe American, and they can't do anything about it. When it gets too bad, we'll just take the money and run and the government will just print more money to fix it".

We can do something about it! Don't do ANYTHING beyond what you've been doing over the past several weeks! Discredit these guys!!!

[eatingupblacktop]

[SOMEONE ELSE'S GOT MY NAME]

It no longer matters who wins the election...our actions of the past 7 years will dominate any and all policies of any sitting president for the next decade. We've been punched, bruised, accused, blaimed, and used. But...we ain't been hung-out-to-dry. No sir. We're about to enter a period of INCREADIBLE growth! You watch....we're about to be "the" party guest.

Growth (so that debt can be paid off / paid down eventually, by the next generation) IS necessary. But growth only comes from cheep energy. If you believe the earth's center is a creamy nouget-filled ball of fuel, then I guess continued growth is possible. But otherwise ? . . . .

[nc211]

Goldman Sachs is far from being alone in its trials and tribulations with the potential to go under. Lehman Brothers could fall through the cracks just as easily. Even ol' warhorse Merrill Lynch isn't assured of getting through this with only a few broken bones and a heavily-bruised ego....

Closer to home, Wachovia won't go belly-up but how the mighty have fallen. 'Course, it's not really Wachovia anymore - it's First Union. If the real Wachovia folks had been left in charge after the merger, Wachovia would be far better off today. Ken Thompson got exactly what he deserved a couple of months ago....

Serves 'em all right as far as I'm concerned....

I absolutely agree! Wachovia "walk-all-over-ya'" certainly has some significant cracks right now. My gut says more than is being reported. But doubt they'll go under either. However, I do know they've practically disappeared from the big real estate lending game at the moment. So much "B & C" paper on their books, the required "reserves for loss" rules are locking up their capital. That, matched to the utter disappearance of wall street money for real estate, has them "and several others" pinned down at the moment. Funny enough though, credit unions are doing a-ok. And they can thank the american bankers association for it, as they've blocked the credit union's desire to increase their exposure to the commercial real estate world for several years. Credit Unions have been capped at 12% of their asset base exposure to commercial real estate since the 90's. They've been trying for the past several years to get congress to lift it to 20%, but the ABA has argued "unfair practices", since Credit Unions are non-profits..aka..no tax liability..aka..savings passed along in better rates. In our neighborhood, CFCU is the only one that makes commercial loans in the $10m-$20m window"Legacy in Winston does too, but much smaller $500k". However, interesting to note: State Employees Credit Union is the second largest in the nation! And they don't offer commercial anything, and just serve the population base of NC, yet they're #2 by a large margin. Only Navy Federal is bigger...by a large margin as well.

The pink elephant in the room is Freddie/Fannie... Those two horses are in deep trouble. If they go down, then all bets are off in the economy and we've got huge problems. Mortgage rates will skyrocket, which will slaughter home prices across the entire country. We could go from "recession" to full on "depression" overnight, literally. It's scary man, real scary. I know several uber-players are starting to wiggle into positions to somewhat ease the blow, if it happens.

Well, Fellas, just a little over a month later from this posting....and now Wachovia is on the ropes... This is some absolutely unbelievable sh*t going on. The entire financial landscape has been blown to pieces. I mean, WaMu tanked overnight, the biggest banking failure in US history, and it barely made a ripple in the water today in the stock market. Now, Wachovia and National City are on deck, with share prices falling faster then Drew Barrymore at a ChipN'Dales show.

These past two weeks remind me of the last scene in the movie Fight Club, where they're watching the buildings crumble, one after another.

If Wachovia goes, North Carolina just took it's first real hit from this economy "HQ in Charlotte".

I don't know what to say anymore. I'm simply stunned. Usually failures like this start from the floor "regional banks" to the ceiling. Not this time though... Who here wants to bet that when you go for that new mortgage, you'll need to provide a DNA sample and your report cards from high school on, at least.

[jcrome04]

Pretty ridiculous...

Love that scene in fight Club though :D

[eatingupblacktop]

[dcfish]

$3.37 last night. Going down slowly..................

[JENunnez]

$3.85 this morning.

[SW03ES]

Who here wants to bet that when you go for that new mortgage, you'll need to provide a DNA sample and your report cards from high school on, at least.

Hasn't been the case yet...mortgage money seems available at least for now...

[nc211]

Well, Walk-All-Over-Ya "Wachovia", just Walked-On-Outta'-Here... And so with it, the potential for a few thousand mid-to-high management jobs in Charlotte. Ok boys and girls, that's close enough to my house, we can stop this now! I've had enough. I'm fortunate to be one of the only ones I know of now that still remains in the game, thankfully. The phone is buzzing off the hook though, and the blackberry goes off 24/7 too. Had 9 deals come in via the berry over the weekend alone. That's as many deals in one 24 hour period, than we did all of last year at $450m of production. When this is all over, and money comes back into the market and competitors show up to take some of this off of me, I'm going to find a quiet place on the beach, a case of beer, a fishing pole, and disappear for a few days. You'll get your updates on my wellbeing via the local news of "you gotta' see this drunkard story". I'm not complaining though, I'm feeling quite fortunate to be in the position I'm in. I know lots of folks who are pinned down with no end in sight. Of all of my close ties, I'm the only one with a job and stable horizons in this business. Those who are employed, aren't in the market at all and burning through their "rainy day" reserves, hoping things calm down before the reserves run out.

SWO: I'm not that all suprised to hear you say things are still flowing though. Although it's pretty rough right now, capital will always flow to those capable of handling it. But I don't think main-street has yet felt the direct shot of this. I think that's the whole panic in congress and this huge $700b bill they're talking about. On a side note, we also just pumped over $600b of cash into the global lending systems world wide today as well. I tell you what, we better get a grip on this stuff, and soon, otherwise the dollar will be worthless.

Boy, am I glad I did whatever I had to do to make sure I was never late on any payment I've ever had. Good credit scores right now, and in the foreseeable future, will be worth it's weight in gold.

EDIT: Stocks are down over 700+ points....welcome to page 2008 in the history books. Should be one hell of a cheery chapter to read.

[SW03ES]

I can't believe they didn't pass the bailout...

My phone is ringing off the hook too with people wondering what this means for the real estate market and I have no idea what to tell them, nor does anyone else.

[nc211]

The real estate market is pretty much on ice for the moment. One insulating shinning point to this though in regards to the market values, is that this swing is so violent, so over-the-top big, that it's almost too fast to really hit the market. When it's a slow and gradual down turn, values have the ability to digest it and correct accordingly. When it's all at once, like it's been during these past three weeks, the value market can't keep up, and simply goes "possum". It freezes, which just might be exactly what saves it. But, the market's got to come back realively quickly too, before the valuation market can have time to digest things.

SWO: In terms of financing options for your potential clients, if you hear they're having trouble finding a lender with money to lend, I'd survey the area for credit unions. Now a days, there are loop holes for anyone to walk in and join a credit union. They don't have to have the connections via family members, or employers. Joe Schmoe can join any ole' time he wants. Credit Unions have been forced to be more cautious with their lending over the past several years "thanks to the American Bankers Assocation". They're now reaping those benefits, and are starting to be seen as the dark horse of the market.

National City Bank is next to go, my prediction... Share prices are sub $1.30's. I hid out in the markets immediately following 9/11 with National City, doing residential loans while the commercial markets could figure out and recover from the hit. At that time, rates were on backside slide, so it was all refi's. It was great, it was easy, it was profitable. Took calls on my cell phone while I was 3 miles out in the ocean fishing with buddies. Those days are long gone now!

[RX in NC]

I spent all day yesterday playing put options, essentially taking advantage of the most volatile market I've ever witnessed since beginning my stock options program right at five years ago. I was fortunate enough to experience a record-breaking day for me, netting just over $89,000 in four total option plays. The shortest I was in one play was about 26 minutes. The longest I was in one play was about 5 hours. I could have run that last play over into this morning but chose not to since I strongly believe that after yesterday's fiasco, the markets have to recover at least somewhat today. Since I was playing puts (meaning that I was betting on the price of the stock to go down for those of you who do not know how options work), I knew I had to close out that last option before 4:30 pm even though my charts suggested that I could ride it a bit longer into today....

All that being said, you don't know how badly I feel when I must play put options this way in order to make money off the current terrible market conditions. Yes, there's a lot of money to be made for those who know how to do it, but the long-term future of our economy hangs in the balance. My $89,000 day yesterday pales in comparison to what is happening to my IRAs, 401Ks, and other retirement investments. Hardworking fathers and mothers who have been struggling to put food on the table, clothes on their kids, and gas in their tanks will be losing their jobs in droves within the coming weeks and months. Countless small businesses will close, some that have grown their way through several generations. Many of the constantly-struggling small farmers who keep America fed through good times and bad will finally have to give up the ghost due to the credit market drying up completely. It's a sad state of economic affairs, the worst I've seen since my college days in the early 70s....

The current financial crisis (along with the Iraq War fiasco and Americans' disgust with the Bush administration in general) virtually sets the presidency on a silver platter for Obama's taking. It is absolutely his to lose now. As previously pointed out in this thread, a Democratic president along with a Democratic Congress will automatically allow for a faster economic recovery in 2009 that may very well require all of 2010 as well. I'm not an Obama supporter, but he's a far better option than McCain (especially from an economic perspective)....

We're in deep, deep trouble for the rest of 2008. Let's hope that our esteemed representatives in D.C. will finally pull their collective heads out of their asses and get a painful-but-acceptable package passed this week....