3)Thouhts on the market over the past couple of months

These are exciting times, unfortunately or fortunately depending on your point of reference, things are extremely volatile right now. I am however, enjoying the extreme swings that these turbulent times are offering. Having been through the " Tech Wreck ", I feel I have earned an expensive education through the school of " hard knocks or experience " which ever you choose to call it, that has afforded me the patience and understanding this time around that I lacked last time. Things seem different this time. The underlying issues go much, much deeper than the frothy market capitalization's of businesses that hinged their success on a new paradigm shift to electronic commerce that in most circumstances did not produce the desired result. To me, that era could best be generalized by the over abundance of cheap capital chasing the latest and greatest thing that could possibly revolutionize the internet explosion. And we saw how that turned out.

This debacle, on the other hand, seems to have real teeth to it. The underlying issue is a physical asset that was ultimately valued at much, much more than it was ever really worth, fueled by low interest rates, decreased qualifications to obtain financing, and the willingness of the qualifiers to, perhaps, fraudulently overstate the ability of those being financed to satisfy the terms of the financing that they were seeking. Maybe because knowingly, once the closing had taken place the mortgage would be bundled with a thousand others like it and sold to some foreign sovereign wealth fund and the tranches would be priced accordingly depending on how much risk they were willing to take on.

Now enter into the equation the lack of liquidity that was so abundant when you could refinance your latest flip to buy as you say " flooring, cabinetry, new roof, HVAC for the flip to sell or for those who used the flip as a ATM to withdraw funds for other houses, cars, boats, trips, computers, electronics, college tuition, etc.......

And factor in that 2/3 of the economy is comprised of us poor hapless souls that patronize our society's retail outlets that contribute the GDP and GNP, now factor in the exponential decrease in spending power due to the illiquidity of the decrease in refinancing and new loans being awarded by banks who are stretched to the breaking point and the subsequent lack of altitude of earning power of the average American worker.

The ugly numbers that have yet to rear their abysmal heads leaves little confidence in the consumer pulling us out of this one. A total onslaught of the unjustifiably high mortgages is going to have to be combated with a through and vigorous assault by the treasury department to end the torture.

So how does this play out? Your guess is as good as mine, but I do suspect that in the end something will have to be done with the " overstated mortgages ". Some how they will have to be repriced to reflect the true value, and until that is done I feel a cloud of uncertainty will hang over the market, causing indecision, knee jerk starts and stops and general confusion.

Which will offer a plethora of opportunities to the the short term trader.