Don't Watch the Dow

Don't Watch the Dow

Here’s the number that really captures the financial crisis.

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  • Brandon Fuller writes content for Aplia in California.

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Submitted by Gabriela Y on Thu, 02/12/2009 - 4:58am.

The Stimulus bill

Hopefully, all alternative would be successful on saving our falling economy. The government is working on the economic stimulus package. There's a great deal of suspense over when the payday loan to the economy we're all waiting for is going to be made available. Our economy needs to create jobs and get things moving again is almost passed. It may seem that the economic stimulus package is a long way off, but it is being worked on. This has been the biggest priority for President Obama since day one. Luckily, he got right to work on it.

Submitted by old new lefty on Fri, 10/10/2008 - 1:57pm.

It's not 1929

First of all, statistical indicators about market performance at this stage of the game are absolutely useless. I mean, when you have market behavior that occurs only once out of every 100,000 times statistically, your statistical indicators (and the laws of probability as they govern market behavior) can be pretty much thrown out of the window.

That's why history is important, and that's why technical analysis (which my wife refers to a chicken entrail readings) is the only halfway reliable indicator of what's going on right now.

There are some good historical anodynes for the situation we're in right now. The panic of 1907 and the mini-depression of 1921 are good analogies, as is the dot.com crash of 2000-2003. With the events in the market of the last two weeks, all of these situations look fairly close to the immediate period we're in right now.

The market will fall like a boulder in the middle of the Pacific Ocean until it reaches some magical, mystical number where the big boys decide that things are really, really cheap. And then we'll have a huge bear market bounce.

Dow 7700? Dow 6200? Dow 5800? Dow 4000? You decide.

Submitted by NewestHook on Fri, 10/10/2008 - 12:10pm.

Incorrect about Eurodollars

"Euro" is not "just a bad substitute for global." Euro denotes that a deposit is held outside the US but in American dollars. Thus one of the keys is that eurodollar accounts are not governed by the Fed. The TED Spread is the difference between the three-month T-bill(American) interest rate and three-month LIBOR (London InterBank Offered Rate). Yes, the greater the TED the greater the perceived risk in commercial loans, but your fundamentals are off. Please focus more on research than linking to outside articles.

Submitted by harjp on Fri, 10/10/2008 - 2:06pm.

Not incorrect about Eurodollars

What a silly, snippy little comment, what might appear to be the product a little mind. Mr. Fuller's characterization of the term "eurodollar" is just fine. Perhaps it might be a bit U.S.-centric, equating anything outside the U.S. as "global". In any case, the comment is uninformative.

Good article. Informative, and an excellent primer for those of us still trying to wrap our brains around the mechanics of the credit crunch.

I've read of other references to the TED Spread as a bellwether for this "crisis". I appreciate the Bloomberg link.