Dave Ramsey suggests a pretty simple three point plan to as an alternative to the $700 B bailout.

If this link does not work just go to daveramsey.com.

It involves insurance on re set mortgages, eliminating capital gains tax, and eliminating mark to market accounitng on tier three sub prime mortgages.  Gee how about we try that between now and the end of the year, sounds a lot cheaper to me.  Of course, Congress is not considering any of these things, particularly repealing the capital gains tax. Nothing would get transactions going faster than that.  Dave says his phone lines are flooded, so does Congrees, so why aren't they reacting to what the voters want?  I am reading that Paulson simply picked the &700 B number out of the air, ie, there is no audit trail that supports the number. 

I am as wary of the govt and the need for an 'iinstant fix' after the Iraq fix as anyone. I wonder if the stock market is recovering because the bill failed or because it might not.

Your take?

My take, with a month to go I suspect that the Dem party staged an atempt at a manufactured crisis, designed to make everyone think there is in fact a panic. Sure enough we had one, but not quite like planned. While there is a lot of finger pointing and spin, I suspect that literally those with races that might be lost are quaking in their Johsnon Murphy loafers.

The voters held another Boston Tea Party and threw the Bailout Plan (speaking of rhetoric, who would support a bailout) in the Harbor, fearing a smilar fate, a lot of pols voted against it.

The job of Speaker of the House is to get legislation passed, no point in calling for a vote and then saying it is a lousy bill and by the way all of you do not have to vote for it, bingo, stock market meltdown, and no bill passes,  okay so it was underway already but, this may change the makeup of the House, not what the Dems had in mind, four weeks to go, lots of fun.

The market closed up a healthy 457 points above the 50% 10750 line, once again the market looked into the abyss and said no.

There have been many calls for a student business organization. Our thoughts are that initially an umbrella organization covering all the majors in business would offer multiple advantages.  First we need a time and place for example, if we bring soneome to campus to speak, we clearly want to make a good impression with lots of attendance.

With that idea in mind, we have an organization meeting scheduled for

thursday, Oct 2 at 4:45 in the Student Center Room on the first floor.  See you there!

As usualTom Sowell cuts through the rhetorical clutter. I would add that Greenspan's way too low interest rates and the Bush policy of build build houses added to the mess.

At any rate, we have, surprise, the foreign exchnges pretty much bouncing back to even after an initial sell off last night, I would have thougth they would be down further.  Perhaps that is a vote for the idea that we need a better bailout bill?

While no one wants to try to 'catch a falling knife ( the danger of buying a market in panic, where is the bottom) this also illustrates an interesting point.  Baron von Rothschild observed that one must buy when there is 'blood in the streets' he meant that literally, revolution brings great values, if of course one picks the winning side…

Are there winners you would like to own in the middle of this panic, SKT, the outlet mall hardly budged yesterday, pipeline stocks are down but above previous lows, the transport ETF IYT has pulled back to support at its 200 day moving average, buy and hold, panic out of positions?  Fun fun and a whole four days of trading to go.

This is why we study accounting and finance, we need to understand the language and statements of companies. We also need to understand the psychology of markets which is why I highlight technical analysis and psychologic studies like Elliott Wave and Socionomics.

Socionomics is the  idea that events are shaped by human emotions. The best laboratory of those emotions on display is the stockmarket, this week is a case in point. At Dow 14,000 pop culture was happy and buying, today the culture is unhappy and selling. 

Words matter, someone on tv just made the point that the word BAILOUT is a negative connotation, cleraly the people are NOT for a bailout.

A bounce back in the markets is expected, though I am buoyed that the foreign markets did not close down last night.  I doubt the low is in quite yet but I expect to see at least a near term low this week.

Irony of the Week While eveyrone recoiled at the idea of a $700 B bailout, more than $1.2 trillion exited our markets just yesterday, way to go Congress….

94 Democrats joined Republicans in defeating the 'bailout bill.' We have detailed the many problems in the  economy here the last few months.  Now the perfect storm of investment and commercial bank failures, election rhetoric, natural catastrophes are bringing a financial storm.

What worries me most is the possibility of a credit meltdown. Already banks are reluctant to loan to one another, something that routinely happens every day. What if a major corporation or government could not meet its payroll?  Panic would quickly ensue, there would be runs on banks, people coud not or would not pay bills fearing a loss of even more liquidity.

It is imperative that some confidence be restored. Last minute partisan remarks by Nancy Pelosi coupledwith a massive rejection of the plan by folks calling Congress tanked the plan.

This was the biggest one day drop ever in the stock market. All of this is foreshadowing a liquidity crisis. Interesting times indeed.

I have published numerous articles concerning the financial train wreck of the Dallas Independent School District.  ONe month into the new school year the Superintendent Hinojosa is recommending laying off 1209  employees including 675 teachers. Seems ther is a $84 M budget shortfall. Such finanical mismanagment has been a hallmark of his administration.  Last year a credit card scandal involving millions of dollars of wrongful charges went virtually unchecked and unpunished. Now this.

Accounitng is all about proper reporting and internal control procedures. Auditing is a process to make sure such controls are in place and functioning properly. When they do not, this is the sort of thing that happens.

The entire bunch should resign, the Board and the Supt, I suspect the state will step in to at least show the rest of the State that there is some line in the sand that cannot be crossed.

Meanwhile read about the trainwreck in Detroit.

OR read about the worst school district in the nation spending $17,000 per student or as the article is entitled, Gimme an F! 

  Paul Newman passed from our midst this weekend, a true class act. Newman as married to Joan Woodward, they had several children, he starred in major league movies, and gave over $150 M away through his charities, a life well lived indeed.

Students are aware I am a film buff, check out Cat on  a Hot Tin Roof, Cool Hand Luke, Butch Cassidy, The Sting, The Hustler (the original with Jackie Gleason and George Scott in black and white no less, not the Tom Cruise sequel), or Hud.   Newman was also a life long car enthusiast and successful racer.

Here is the best explanation of how the meeting Thursday blew up.

Even our intermed text plainly states that accounting pronouncements are a matter of politics. Here is a look at that process.  Ben Franklin said that it was best if the public did not see the sausage maker nor the politician at work, true words…..

BSC sold to Morgan

Merrill sold to B ank of America

Lehman

CITI about to be Wachovia

Wamu sold to Chase

Countrywide sole to B of A

Goldman gets $5 B from Buffett

So exactly who among Paulson's buddies is it that needs all this money?

Where were Dodd and Frank on the financed and Banking committees, recipients of

donations from FNM and FRE as are Barack and McCain

What does Bush and the SEC do all day long anyway, hmm, I just heard Karl Rove say Bush had a bill to prevent all this, first I heard of it!

I understand only 7% of the public supports the bailout

Again, who is being bailed out, looks like the repair work is underway to me…

To his credit, Jim Rogers announced on the Cavuto he had shorted FNM four years ago and that the entire company would eventually blow up, once again, Rogers was right on target, you will note I have recommended several of his books to the class

Both campaigns have been promoting the idea that each of them has a better change in mind. Well we have not had to wait for the election for change.

The West End of Galveston is gone, period. Ditto for property all the way to Ohio.

Merrill, Bear Stearns, Lehman, gone, Morgan and Goldman are now commercial not investment banks.

Home slaes dropped further to a 17 year low.

The President promises a financial collapse if the biggest federal program in history is not immediately enacted.

Having fun yet?  The author of the Black Swan argues that improbable events occur with well more frequency than one might think. For centuries it was believed that there was no such thing as a Black Swan, literally. Then one was discovered.

The events of recent times mirror the radical change that is usually associated with revolution or war.

Indeed we have a war between the political parties.

Anyone reading the Black Swan for a book review?