Wall Street's UP?!!!

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JbstormburstADV

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Holy shite, the DOW went up 400 points!! I found this on Yahoo, but the original is by AP:

Stocks surge on report of entity for bad debt
By TIM PARADIS, AP Business Writer 31 minutes ago



Wall Street rallied in a stunning late-session turnaround Thursday, shooting higher and hurtling the Dow Jones industrials up 400 points following a report that the federal government may create an entity that will take over banks' bad debt.

A report that Treasury Secretary Henry Paulson is considering the formation of an entity like the Resolution Trust Corp. that was set up during the savings and loan crisis of the late 1980s and early 1990s left investors ebullient. Investors hoped a huge federal intervention could help financial institutions jettison bad mortgage debt and stop the drain on capital that has already taken down companies including Bear Stearns Cos. and Lehman Brothers Holdings Inc.

Worries about financial land mines on companies' books have hobbled the world's financial markets and led to the intense volatility in the markets this week.

"It's going to take a lot of the bad debt off the balance sheets of these companies," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, commenting on the possibilities of an entity akin to the RTC. It could alleviate many of the pressures causing the credit crisis, he said, and open up the credit markets again. But Fullman noted, "the devil's in the details."

"Bear markets are very sensitive to news. And on a scale of 1 to 10, this one is a 13," he said.

The report gave direction to a market that had bolted in and out of positive territory for much of the session as investors shuttled between the safety of Treasury bills and gold and the bargains posed by stocks that have been pounded lower.
According to preliminary calculations, the Dow soared 410.03, or 3.86 percent, to 11,019.69, surging 560 points from its low of the day, 10,459.44.
Broader stock indicators also jumped. The Standard & Poor's 500 index rose 50.01, or 4.32 percent, to 1,206.60, and the Nasdaq composite index advanced 100.25, or 4.78 percent, to 2,199.10.

The report of a broader government bailout proved more reassuring to investors than moves before the opening bell Thursday by the Federal Reserve and other major central banks to inject as much as $180 billion into global money markets. The moves were an attempt to keep the credit crisis from worsening; the Fed added another $55 billion in overnight loans Thursday.

But it was only the prospect of a more comprehensive vehicle to sweep up bad debt that emboldened investors. Congress established the RTC in 1989 to buy $394 billion worth of real estate, mortgages and other assets of hundreds of failed savings-and-loan institutions. The corporation operated for several years disposing of the associations' assets, and then went out of business.

That could help alleviate the grinding gears in the world's credit markets have driven up the cost of borrowing for businesses; banks have become hesitant to make loans even to other banks for fear of what institutions might be hobbled by soured debt. Investors are also contending with fears that more big-name financial companies could falter.
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This is great!! If they make something similar to the RTC, the markets will be up for quite a while, considering it got us out of the situation in the 80s'.
 
And McCain just released an ad claiming that big government is evil.

And the fact they had to use CPR and a defibrillator to save this market tells you something is really wrong here.
 
Big bounces don't mean anything positive; they just prove that we're in a volatile bear market. You rarely see 400 point gains when the market is doing well, but big swings of 600-800 points in a couple of days are fairly common when the market is poor.
 
But, the important thing is that they plan on making an, "entity," very similar to the RTC, which saved us back in the '80s
 
allsystemsaredown said:
Does this mean the dollar is going to increase in value?
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I'd wager quite the oppisite. When the government cushions the market by creating more money, they're actually devaluing the dollar.

The more common something is, the less perceived value that item receives. The same thing applies in this case. Of course, the government would have to pump in huge scales of cash to seriously damage the dollar so hopefully the Feds don't keep doing this.

A one time boost for 'stimulation' is nice, but only if the market received any lasting benefit. What worries me is that the government did this not too long ago. Their money is no good if people aren't stimulating the market either.

Obviously keeping the market artificially afloat is definitely not a long term option, but I hope the feds are smart enough to do something other than market inflating.
 
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Rayne said:
I'd wager quite the oppisite. When the government cushions the market by creating more money, they're actually devaluing the dollar.

The more common something is, the less perceived value that item receives. The same thing applies in this case. Of course, the government would have to pump in huge scales of cash to seriously damage the dollar so hopefully the Feds don't keep doing this.
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So this means we'll be living not unlike post-WWI Germany?
 
why can't the inflation decrease so everything would be cheaper. (what causes financial inflation again?)
 
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