The stock market still has plenty of downside left even though today there was a dramatic 900 point reversal from the lows.  This was largely a technical bounce off of the previous SP 840 low which was breached briefly.   The market makers took their net short positions from the lows and started converting them rapidly into long positions.  As the market increases, these same market makers will start shorting again and the market decline will resume.  This will continue until there is some visibility that the business climate will improve when investors are willing to buy stocks for the longer term.

Today, there was a monster 500K+ new job loses filed in the latest week, and this portends another monster negative employment report for November (reported on the first Friday in December).   With job loses of this scale, it is hard to imagine a meaningful bottom in the market any time soon.

The most interesting question is how long will it take the market to improve?  Market students will speak of the typical recession scenarios and explain it just won’t be long, like 12 to 18 months.  They won’t mention that it took 22 YEARS for the stock market to make new highs after the 1930s depression and there were numerous legs down just trying to stabilize the market initially.

Meanwhile, the easy money days of the last decades are likely over forever — or at least until a US default.  The US will try and spend its way out of this crisis but this will likely not work because of the NATIONAL DEBT. The NATIONAL DEBT is going up at an alarming rate.  The US government is signing up to back TRILLIONS of dollars in debt for lots of companies.  Detroit want a bailout.  Hedge funds will be decimated.  Massive leverage will be unwound.  Life insurance companies will fail because they over promised and it is unlikely they will have enough money to meet their obligations.  Baby boomers are getting older and will make more and more demands on the social systems.  Universal health care will have to be implemented or watch people die in the streets.  And — TRILLIONS of dollars of derivatives will have to be disposed of.  It will be very painful.

One ripple, and there could be many, will bring the entire system down which could force the US into bankruptcy.  If the US defaults on its debt which is probably inevitable, there are very serious global consequences that involve wars, protectionism, tariffs, and extreme nationalism.

America is doomed.

It is time for the big autos to go belly up.  Congress made a mistake with the $700 BILLION bailout and is about to make another mistake by bailing out the Big Autos: GM, Ford, and Chrysler.  If these companies cannot survive on their own, they let them go under.  The party is over.

Congress could allocate money for new companies with innovative new products; perhaps they could even make uses of the manufacturing space of the auto companies that go under.  In many cases, a $100 MILLION would really help a new company get off the ground and employ lots more people than the old autos which have shown they don’t know how to run a profitable company.

Further, there is plenty of manufacturing done in America by foreign car companies, like Toyota and Honda.

If America continues to reward failed companies with bailout so that they don’t have to be responsible for running the companies into the ground, there is little incentive for companies to made prudent decisions.

Unfortunately, bailing out the autos will likely be a political decision because Michigan voted democratic.

America is doomed.

Don’t believe all the nonsense about the $700 BILLION bailout or even the $1 TRILLION annual deficit.  The truth is that the US government is already on the hook for $5 TRILLION and there is no sign that the cash register is ready for a final total.    Lots of this is being done by Fed Chairman Bernanke — the guy who won’t disclose who the FED has lent $2 TRILLION — and Congress is some kind of pissed about that.

So while Congress is talking about $50 BILLION for the auto industry — a mere pittance — the big boys are dealing out T R I L L I O N S!

America is doomed.

Although not there yet, the US Government is heading for bankruptcy.  This is inevitable because the NATIONAL DEBT and the interest payments on the debt are unsustainable.  As the Treasury Secretary speaks and explains why the government needs to keep handing out money to one failed or nearly failed company after another,  it is apparent the government will continue to keep spending money like a drug addict with an overdrawn checking account.  Most now agree that the TARP was a bad idea — letting Paulson run it made it a horrible idea.  There is very little visibility about what is actually happening with the TARP.  Meanwhile, it was disclosed that the FED has lent out $2 TRILLION and will not disclose the borrowers.

America is doomed.

Today there were revelations that the Treasury changed the tax code, possibly illegally, to give banks an estimated $140 BILLION windfall profits in the midst of a massive financial crisis.  This was the result of former Goldman Sachs CEO, and current Treasury Secretary, Hank Paulson.  Paulson literally sneaked this change in while Congress and the country were debating the the $700 BILLION bailout.  Now that it is out politicians are afraid to declare it illegal, because it will likely spook the markets which will result in another significant decline.  This is a perfect example of SHOCK CAPITALISM (ala Naomi Klein) whereby corruption is laying in wait for a catalyst crisis to hide behind.

GM, Ford, and Chrysler are all calling for their “share” of the bailout money to avert their own bankruptcies.  All of these companies have blatantly disregarded market forces for decades and have built gas guzzling cars.  They now want to be rewarded for gross mismanagement, and they will probably get what they seek.  Congress is afraid to not comply because the auto industry failure(s) will likely ripple through the financial markets.   GM alone has over $60 BILLION in bonds that would be worthless in the event of a bankruptcy.

For the third time in six weeks AIG has requested more bailout money.  What started out as a $85 BILLION bailout is now a $150 BILLION bailout.  This is probably not the end and is likely a precursor to what other companies will demand.  It is pretty clear that the arbitrary $700 BILLION TARP bailout was just the beginning.

Friday the employment figures were announced and another 258,000 people lost jobs in October.  In addition, the government downwardly revised the lost jobs for both August and September.  This is significant because these revised job losses could have had an adverse effect on the Republicans.  It is interesting that they were held until after the election; undoubtedly, for political reasons.

Daily there is evidence of corruption in the American system.  This corruption is so commonplace that it is dismissed.   Politicians are caught all the time for illegal activities and influence corruption but little is done.  Alaska even elected a Senator who was convicted for seven counts of fraud.

America is doomed.