Can anyone explain in plain English what the heck is going on with the stock market this week?

they boost it up so people will buy then short sell the next day and cause a panic sell. get out of the stock market!

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Lisa C.

**This space is available.**

"October 19, 2007

America's Forgotten War Against the Central Banks
by Mike Hewitt

The Great Depression

From 1921 to 1929 the Federal Reserve increased the money supply by 62% thus fuelling the period known as the Roaring Twenties. Further fuelling the rise in stock market indices was a new type of loan, known as a margin loan, whereby an investor would only need to put down 10% of the value of a stock with the remaining 90% being loaned from the broker. Like today, these loans could be called in at any time and had to be paid within 24 hours, known as a margin call. This is typically accomplished by the selling of the stock purchased using the loan.

These two factors, loose monetary policy and easy loans resulted in a fivefold increase in the Dow Jones Industrial Average over the latter half of the 1920's.

The mass calling in of these margin loans by the New York banking establishment resulted in the devastating market crashes of October of 1929. "Black Thursday", the initial crash, occurred on October 24. The crash that caused general panic five days later on October 29 was known as "Black Tuesday".

Then, instead of expanding the money supply, the Federal Reserve contracted it, thereby creating the period known as the Great Depression. Congressman Wright Patman in A Primer On Money, reported that the money supply decreased by eight billion dollars from 1929 to 1933, causing 11,630 banks of the total of 26,401 in the United States to go bankrupt. This allowed central bankers to buy up rival banks and whole corporations at a deep discount.

Several very large investment banks are no longer able to shuffle the paper around and dodge the consequences of all the mortgage defaults. As the financial stocks collapse, the whole market drops because of the need for investors to cover their losing positions.

-jcr

I think they call it a stock market "crash" or "correction". The government is debating which of their campaign donors to bail out at tax payer and great grand children of tax payer expense. According to the skinny doctor from TX, it has something to do with the cost of the conflict or "war/wars" being fought with money borrowed from China and the resulting negative impact on the value of the U.S. dollar.

I hope this helps.

what has been predicted

& the person in the 3rd paragraph below explains it better than i ever could.

in response to someone else's comment that rp wants "even more disastrous deregulation which is what caused this mess in the first place and to eradicate the tax system to force the country to borrow its way into the dark ages," another commenter enlightened w/this in response:

"Wrong. Deregulation is not what caused this. It was the government interfering in the markets in the first place that caused this. Artificially low interest rates set by the FED has fueled the mal-investment we are seeing unwind today. If it wasn't for the FED, we wouldn't even have the bubble we're in now. Listen to the people who predicted this."

i think that pretty much sums it all up. it's been a long time coming - all the way back to alan greenspan & the overinflated dotcom stocks & the overinflated housing prices.

you should also watch the peter schiff video - at least i found it educational.
http://www.dailypaul.com/node/62226

knowledge

Therefore investors are confused.

Therefore you cannot make any conclusions based on what happens.

Do not attempt to understand any trends from the short term.

Thanks everyone who responded. I read every single one and it certainly helped to begin to understand the mess we are in.
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"We will never give up. We will never give in." - Dr. Ron Paul

Peter Schiff

Perhaps an over-simplification but in the interest of a simple answer:

Banks and financials (insurers, investment banks) are simply upside down.

If you think homeowners went over their heads with debt, we are now seeing how the pros did it in spectacular fashion.

Lehman for instance was rumored to be leveraged 40 to 1 which would be the equivalent of a homeowner having a $400,000.00 mortgage on a $4,000.00 house. When their creditors called the notes there was no underlying asset to sell and cover the "mortgage".

Al the terms you have been hearing related to the housing mess like "liar loans", "equity strips", "mortgage fraud", "inflated appraisals", etc. can be multiplied by a factor of X (X being a mystery number) and applied to the thieves on Wall Street. Instead of bailing any of these clowns out, they should be out looking for bail money, the theft they perpetrated is astounding. Pensions plans, municipalities etc are all going to get sucked down the tube.

and a lot of questions will become clear...

http://www.youtube.com/watch?v=vVkFb26u9g8

investors have been suspect of the damage caused by the housing bubble since i believe the start of 2007. no one knew exactly how much damage the subprime crisis would cause but people began shorting stocks, particularly since the turn into 2008, like its been going out of style synopsis on what shorting is
Massive shorting has the effect of bringing its value down. The value of all of the major financial institutions have been in a steady decline since 2007 - 2008, until the head of the subprime beast raised its ugly head when these financial institutions began disclosing the bad mortgages (basically mortgages people were defaulting and therefore rendered either worthless or a fraction of its value), and investors began to get a glimpse of the real damage caused to the books of all these large securities firms in the billions. (the actual cause of how it got that bad is more complex, from my understanding there was a lot of selling of these mortgages as high value contracts when in fact they were bad loans and it turned into a tangled, scandalous mess). investor confidence is usually heavily dependent on quarterly earnings statements, and an unprecedented number of billions being written off in losses only assured that more bank stock shorting ensued and rightfully so.

As a company your books might show that you have loaned out billions and those contracts act as a guarantee of that wealth coming back with interest which gives a company value, and all of those loans default and youre forced to reposess and resell the collateral for a fraction of the value the contract was originally worth (and that takes time unfortunately so it might be that cant happen for several months so in the short term this value is worthless) or there is no way to recover that loan at all, your books will show that your company is worth X many billions, but in actuality those loans arent worth anything near what theyre valued at since people cant pay them back. With a bunch of bad loans comes a serious cash crunch which all companies need in some capacity to operate. so it seems that the hammer of dow justice is coming down on these companies so fast that they have no time to scramble cash together or their books are so badly hurt that no sane institution wants to buy their bad loans from them (unless there is some insurance that those loans will be covered by the FED ala bear stearns with JP Morgan, which relieves the purchasing firm free from risk, and leaves the tax payer paying for what should be a privatized loss). As this happens, rumors fly and the stock of these institutions which were valued at 15-20 dollars one day are dropping to about 2-5 dollars a few days later, and from there is pretty much game over.

All these firms are fortune 500 firms, so their tanking greatly reflects on the bigger measuring sticks (dow, s&p, et al), not to mention the back lash/ ripple effect that happens when these giants fail, all of the other banks lending money to those guys or people that depend on them for business also get badly burnt, and the damage kindof shockwaves through the rest of the economy.

so basically this week (and i believe this is what ron warned us about last month in that ominous prediction of his) is that the shit is hitting the fan at the same time. as we see giants fall, it is easier for investors to lose confidence in the whole sector. fears mount and whether they are warranted or not, the loss of confidence in investment are causing other banks that are kindof teetering to sink in value perhaps unfairly so. LEH was rumored to fall well before Bear Stearns even fell, over the past two weeks WaMu, AIG and a few others have been severely hurt on their stock price. (im not sure about the other institutions but WaMu was one of the more predictable failures, it had to sell off about 25% of its stock earlier this year to raise cash)

After some of these companies fall or are bought out, it might take another quarter or two to really see how badly this has hurt other companies/firms closely associated with these giants (not just abroad either, there is international repercussions here), so it wouldnt appear that we are out of the woods yet.

than trying to figure out what the stock market is doing. Brain..hurts. There are many factors involved that don't get talked about on the tube. Maybe even some that are not acknowledged at all.

Lighten up, :). Close your eyes, and say to yourself " I dont know what the %&^%#$%$* is goin on, and thats ok cuz no one does" take a breath, and resume your REAL life.

But, he!!, Im a lame brain...what do I know? Good luck on your posting.