FirstAlert[tm] 9/30: Keep Cryin', Wolf

Sep 30, 2008 (financialwire.net via COMTEX) -- XRTX | Quote | Chart | News | PowerRating -- September 30, 2008 (FinancialWire) (By Philip Holmes) Henry Paulson's outrageous $700 Band-Aid for Wall Street went into the dustbin on Monday. Deservedly so. The world economy is in turmoil, worse so as a result of the bailout's defeat. But a true solution is needed, not a short-term tonic for jittery nerves. Investors knew that the bailout was a monstrosity. They sent the Dow down 200 points on the expectation that it would pass. When it didn't, there was a panic that sent it down further, to close at 10,365.45. The total loss on the Dow was 777.68 points, or 6.98%. The S&P 500 was down 106.85 points (8.81%). This was all to be expected. By doing the Chicken Little Dance, Paulson was engaging the U.S. Congress in his high-stakes poker game: either pass this or you'll see how crazy things can really get. Congress almost bought it, but luckily for future generations of U.S. taxpayers there were a few brave souls left in Washington. What we need now is a true fix, and that will not be easily achieved. We have to start by looking at the root problem: the trillions of dollars of loans that will never be paid off. Mortgages, car loans, credit cards, all of it the result of a grotesquely irresponsible credit-giving orgy that has left the U.S. with a negative savings rate and record numbers of foreclosures. It will all get worse in the months ahead. Congress must add up these numbers and prepare for what is to come. No solution should be based on the bad paper already on the books. The full magnitude of the mess we've made must be faced, and that number should be the basis of any discussion regarding policy fixes. What we'll find is that no reasonable amount of bailout debt, loaded to the $10 trillion already on the books, will fix the banks. Moreover, no U.S.-based solution will be sufficient, either. Up until now the Europeans have had an attitude of "it's your problem, you fix it." Perhaps this week's bailout of Fortis by the Benelux governments and the nationalization of Britain's Bradford and Biggley are starting to change this attitude. What will surely change European minds will be the avalanche of fallout from the continent's home-grown mortgage messes. They make California's look like a day at the beach: housing bubbles in the U.K., Spain, Ireland, the Netherlands and several Eastern European countries are set to blow. Strangely, Germany, the European country with the biggest banking problem, had almost no local bubble activity in real estate. German banks did, however, get heavily involved in investing in other countries' bubbles. At any rate, the contagion of bad debt is now sweeping Europe, making this a global problem in need of global solutions. Need we mention the mess it will make for Asian economies if a global mess isn't found, and soon? Macau would truly then become the new Las Vegas, with bankrupt condo high-rises and tumbleweeds blowing across cavernous casino floors. China would have its first recession since the Great Opening in 1987, and will soon discover why it's a good idea to have some kind of functioning social safety net. Japan would get back into its 1990s malaise, only without a strong consumer economy in the U.S. to buy up its products. We're all in this together, and we need leaders who can bring fresh energy to the problems at hand. Sadly, there is little evidence that such men and women exist in the U.S. today. The events of the past week show this, most notably the mindless cave-in to Paulson's extortion by the Democrats and the bizarre refusal of either Presidential candidate to engage this issue head on during the debate. Still, there is reason for cheer: Bush's politics of fear finally met some real resistance. Let his era of disastrous rule finally be over. That is something, at least.

The Investrend Earnings Calendar features Landec Corp. (NASDAQ: LNDC), expected at $0.1; Pepsi Bottling Group (NYSE: PBG), expected at $1.04; Xyratex (NASDAQ: XRTX), expected at $0.38. The market will also be watching the Investrend Money Index Most Actives Triarc Co Inc (NYSE: TRY | Quote | Chart | News | PowerRating) up 8.66%.

The Investrend Economics Calendar lists Weekly Chain Store Sales (8:55 a.m.), Chicago PMI for September (9:45 p.m.), Consumer Confidence Index for September (10 a.m.).

The Investrend Events Calendar showcases PennWell Corporation Unconventional Gas International Conference.

The Investrend Money Index is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ 50 Most Actives indicate the direction in which the mass of money is flowing. Last session's trading showed two advancers versus 48 decliners. Advancers were led by Triarc Co Inc (NYSE: TRY | Quote | Chart | News | PowerRating) up 8.66%. Decliners followed Wachovia Cp (NYSE: WB) down 81.60%, Sovereign Bancorp (NYSE: SOV) down 72.16%, Natl City Cp (NYSE: NCC) down 63.34%, Fifth Third Bncp (NASDAQ: FITB) down 43.63%, E*Trade Finl Corp (NASDAQ: ETFC) down 24.64%, Amer Intl Group Inc (NYSE: AIG) down 20.63%, Companhia Vale Ads (NYSE: RIO) down 20.06%, Ml Co Cmn Stk (NYSE: MER) down 19.59%, Apple Inc (NASDAQ: AAPL) down 17.92%, Bk Of America Cp (NYSE: BAC) down 17.57%, Level 3 Comm Inc (NASDAQ: LVLT) down 15.99%, Petroleo Brasileiro (NYSE: PBR) down 15.57%, Morgan Stanley (NYSE: MS) down 15.19%, Jp Morgan Chase Co (NYSE: JPM) down 15.01%, Fannie Mae (NYSE: FNM) down 14.75%, Ishares Tr Ftse Indx (NYSE: FXI) down 14.58%, Nvidia Corp (NASDAQ: NVDA) down 13.60%, Ford Motor Co (NYSE: F) down 13.31%, Qualcomm Inc (NASDAQ: QCOM) down 13.00%, Comcast Cp A (NASDAQ: CMCSA) down 13.00%, Research In Motion (NASDAQ: RIMM) down 12.76%, Gilead Sciences (NASDAQ: GILD) down 12.75%, Motorola Inc (NYSE: MOT) down 12.45%, Citigroup Inc (NYSE: C) down 11.91%, Sun Microsystems Inc (NASDAQ: JAVA) down 11.65%, Ebay Inc (NASDAQ: EBAY) down 11.61%, Marvell Tech Group (NASDAQ: MRVL) down 11.03%, The Directv Group I (NYSE: DTV) down 10.92%, Wells Fargo & Co New (NYSE: WFC) down 10.88%, Yahoo Inc (NASDAQ: YHOO) down 10.78%, Intel Cp (NASDAQ: INTC) down 10.05%, Freddie Mac (NYSE: FRE) down 10.00%, Broadcom Corp Cl A (NASDAQ: BRCM) down 9.91%, E M C Cp (NYSE: EMC) down 9.83%, Dell Inc (NASDAQ: DELL) down 9.35%, Time Warner Inc (NYSE: TWX) down 9.22%, Oracle Corp (NASDAQ: ORCL) down 8.97%, Juniper Networks (NASDAQ: JNPR) down 8.77%, Microsoft Cp (NASDAQ: MSFT) down 8.72%, Cisco Sys Inc (NASDAQ: CSCO) down 8.52%, Gen Electric Co (NYSE: GE) down 8.51%, Applied Materials (NASDAQ: AMAT) down 8.28%, Exxon Mobil Cp (NYSE: XOM) down 8.17%, Powershares Qqq Tr 1 (NASDAQ: QQQQ) down 7.94%, At&T Inc. (NYSE: T) down 7.50%.

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Quote of the Day: "Life is a moderately good play with a badly written third act." Truman Capote

Today is: Independence Day in Botswana, International Translation Day.

Happy Birthday: William Wrigley Jr., Hans Geiger, Buddy Rich, Deborah Kerr, Truman Capote, Elie Wiesel, Angie Dickinson, Johnny Mathis, Marilyn McCoo, Marc Bolan, Barry Williams, Fran Drescher, Marty Stuart, Eric Stoltz, Trey Anastasio, Jenna Elfman, Martina Hingis, Kieran Culkin.

Today in History: Henry IV was proclaimed King of England in 1399. The Magic Flute, the last opera composed by Mozart, premiered at Theater an der Wien in Vienna, Austria, in 1791. Britain's first tram service began in 1860 in Birkenhead, Merseyside. The world's first commercial hydroelectric power plant began operation on the Fox River in Appleton, Wisconsin, in 1882. Babe Ruth, in 1927, became the first baseball player to hit 60 home runs in a season. The World Series, featuring New York Yankees and the Brooklyn Dodgers, was televised for the first time in 1947. Film icon James Dean died in a road accident, at age 24, in 1955.

[FirstAlert" was created by Gayle Essary, founder of Investrend Communications, Inc., parent of Investrend Information (http://www.investrendinformation.com). The opinions expressed in FirstAlert" do not necessarily reflect the opinions of Investrend.]

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