2008 Economic Crisis

Stocks up despite falling revenues – can we say market volatility?

Continental, AMR soar with falling oil prices – MarketWatch

This makes no sense.  Continental was leading the pack on declining revenues, helping to cause a market-wide drop just a week ago, perhaps less (will look up those links in a bit).  Now, just because oil prices are dropping, the hope for increased profits (or…maybe just decreased losses?) has everyone feeling good about airlines again. 

Perhaps the least examined aspect of this entire crisis is the psychological effect.  Massive volatility like this and the impact market-wide points towards the lack of confidence, the over-emphasis on even small points of positive activity, etc. 

Toxic Assets – finally doing something about it

Geithner Unveils Revised Bank Plan – BusinessWeek

Paul Krugman, the economist, wrote a while ago about how one of the factors in any stimulus plan was that government spending alone would not be enough.  The government had to get “toxic assets” (bad mortgages, etc) off of bank balance sheets so that those credit institutions could start lending again.  This is a pretty critical aspect.  Even if it’s just psychological, our lenders are not lending, and our economy is based on 1) consumption and 2) borrowing (because, in general, we never have as much money as we’d like to spend).  The machine just starts to break down at that point.

Jon Stewart, in assessing all the tax problems Obama’s appointments have had, commented that Geithner got through because he’s the only one that can save our economy.  Good first step, IMO.

Oh, btw – key point is that there is going to be a test to see whether banks can really lend or not.  I like requirements for giving out up to $1 trillion.