I think a good post about Dow theory would be extremely beneficial, rather than speculating on what is driving the markets short term movements

http://en.wikipedia.org/wiki/Dow_Theory

Oh darn!

It's just a light in the tunnel.

There is more TUNNEL at the end of the LIGHT.

...about pitch-blackness is that it can't get any darker.

We need Americans to be optimistic that our economy will turn around. We need our consumers to buy some American made things here and there to get us going. A complete freeze on consumption will seal our fate, as we're begining to see.

It's quite a conundrum. We're damned if we spend and damned if we don't.

I trust that everyone read Freidman today? Because that dude needs a government job. I don't care how rewarding hiswriting is... we need his grey matter in Washington.

Really. When you pull back the curtain, the wizard disappears. Stock markets are many things but rational they are not. The continued contraction of the ISM along with the continued grim news about unemployment/layoffs ought to have some dampening effect, but every bit of "not as awful as it might have been" news is being spun as though it were in fact positive.

If I were looking for analogs to this sort of "thinking", I guess could posit a situation in which the captain of the Titanic comes out and says "Good news! We've hit an iceberg and we were taking on water much faster than we could pump it out, but now we are losing ground at a slower pace." Comforting, eh?

* The same bozos who crashed the economy are still in charge.

* The system is far too complex and opaque, therefore too fragile.

Nassim Taleb on CNBC:

http://paul.kedrosky.com/archives/2009/03/nassim_taleb_an.html

Wow. I have to disagree with you there. I believe that we simply must be grounded in reality. Wishful thinking leads to behaviors on the part of individuals which may leave them much worse off. ("Don't worry about what it costs. Just put it on the credit card. Things are getting better. My job is safe.")

Wishful thinking (which is what false optimism is) also may give rise to actions on the part of the government which leave all of us on the hook, or at least leaves us mere proles on the hook, for sums of money that are hard to comprehend by the mind of the average person. No thanks.

Let's live in reality. Please.

I hear you. I really understand your argument, in fact, I almost made it in my first post.

But if we fully acknowledge the venomous economy created, we doom ourselves to a massive depression.

Look, image can be everything. Market confidence is a real thing. Bottom line, if we don't have confidence in our system (or our ability to fix it), no one in their right mind would buy our treasury bonds (think China). And once that happens, we're completely f*cked. We literally won't be able to run our government on a day to day basis. Medicare immediately freezes. No social security checks. Can't pay any governement employoees. And all of those initiatives Obama wants to start - well, they won't get off the ground. This refers to what I've called a potential massive depression. So, having some confidence in our system (even if you don't), while recognizing that we need changes, is probably our best path.

Get it?

"And once that happens, we're completely f*cked."

I have a slightly different view. I'm of the opinion that after you have driven the car off the cliff and are plunging to Earth at 32ft/s/s, it really doesn't matter much how you "feel" about the situation. You're completely f*cked whether you have confidence in your ability to "fix" the problem or not.

I hope I'm totally wrong, and this is just an example of someone having forgotten to carry a 1, rather than a few million people who robbed the entire planet blind.

there is no other way out...the bill will be hellacious down the road so, why not?

When you're in a car going off a cliff, you're about to die. I'm not about to die and you're not about to die. 300,000,000 Americans aren't about to die. We're going to live. The question is; how can we maximize the quality of life for Americans while refashioning our economy in a sustainable, ecologically responsible, and productive way?

Which takes us back to my point. We need to exude some confidence in ourselves to fix the economy. Our President sure has that outlook. Do you think Barack is a fool for that stance? If you were him, what would you say at the G20?

I hope I'm totally wrong, and this is just an example of someone having forgotten to carry a 1, rather than a few million people who robbed the entire planet blind.

You aren't wrong. The system was gamed by the the overclass. Our elected officials allowed it to happen. Look back at 1999. Repealing the Glass-Steagall Act, in retrospect, is absolutely criminal, nearly treasonous. The overclass lobbied hard so they could make even more money. Our representatives passed it because it satisfied their biggest donors. And, as we all know, our representatives want to get reelected more than they want to do what is right for the people. They value career over integrity - and it's hard to blame them. (on the other side of that coin are the thousands of civil servants which shave tepped down over the years because they morally can't put up with the bullshit they're asked to do... then those people lose power, and guess who is there to pick up the slack?? a lackey yes-man)

I don't think we can fix the economy without fixing campaign finance. But, with the incredible lack of basic economic knowledge that I've heard from many representatives, I'm not sure if I really have confidence in the system. But, I think we should just fake it till we make it.