YIKES!

European banks, following the lead of American banks, are swooning and in turn causing a huge drop in the American AND Europen stock markets. Well, we never said globalization was going to be easy! What I am always fascinated by however is the acutely emotional, herd mentality which drives these huge swings in the market. I was always told that the stock market is a long term play, like real estate, and you make good choices to hold. But swo many people refine their portfolio choices on a day to day basis. What can you possibly know on a day to day basis? Now I admit, it appears the investment banks were not such good choices. But then I hope my other investments don’t have debt to equity ratios of 30 to 1. 30 to 1?  Can you imagine running your LIFE like that?

As for the bailout, we need to give it time. There is no point in reacting to it today. It will take weeks before we have any sense of whether the massive purchase by the Fed of bad debt will ease the credit markets and start money flowing through the system again. If it does, I believe we will have turned a corner. But for now what most people will do is watch and wait.