Things have surely turned dark quickly. It was just three months ago that the concept of a “put” to the government was somewhat in question as I discussed in September.
With three consecutive rate cuts not sufficing to convince the market that the put is strong enough (the market fell 250 points in less than 2 hours yesterday after the 25bps cut was announced), the central banks decided to pump some liquidity directly into the economy as discussed in the following article:
Banks act on meltdown fear
The Bank of England joined four other big central banks around the world yesterday in emergency action designed to prevent the worsening credit crunch derailing the world economy.
These moves coupled with the response to the government’s recent bailout attempt in the subprime market have only done more to stoke the fears that the worst is only yet to come: Bush’s Subprime Mortgage Freeze Stymies Bond Market
I wish that I could say that my sentiments were improving or that somehow these bail out attempts seem to have hope of preventing the onslaught of massive defaults that we are beginning to see emerge, but at this point, the spiral only seems to darken, and even continued attempts at bail out seem doomed.