Capitulation?

This year has been historic in many ways, but the most important issue seems to be our economic state. Only since 1931 have we seen drops in asset values from Equities to Mortgage related securities all at the same time. Last Thursday seemed to mark an important day as many well known investors finally threw their hands in the air and believed this was truly the end of capitalism as we know it. We have had many jump starts over the last few months but Thursday's volume surge and large drop seemed to mark an important psychological point. Even Friday many were skeptical that we had seen a bottom as fundamentals diverged from market prices to very wide margins. By the end of the day we had recovered and saw a major bounce in the market averages. Corporate America seems to be doing better than most believe although Americans seem to be feeling very depressed. This feeling is very different than what most felt in the 1990's and what I would call bipolar. I have argued for years that Real Estate was very overvalued but I was not aware that we had leveraged ourselves to levels that were unheard of and our Regulators were supposed to be monitoring. Our Government was well aware of this as I recall Alan Greenspan speaking volumes about how great our Hedge Fund industry was and that liquidity was the most important aspect provided to our markets by many crooked billionaires. A consistent framework is very important so you can trust what you are reading, whether it be ratings from S&P or our own FDIC speaking about how our banking system is in great shape (that is from an interview on Kudlow & Company with Sheila Blair of the FDIC in February of this year). It sickens me that we have lost the trust of our people just because of lack of oversight as the world spins into a chaotic economic frenzy. We have seen similar times before but this time, it is my belief that many should be sent to prison for a very long time (I guess Enron taught us nothing). What has been a relief is the American people taking back their own country through an election to change the very problems that have plagued this Nation for more the 35 years. No longer will we be lead to believe that all is well. Businesses are stocks and should be treated as if we are owners, not passive investors with no say in how things are run. If that was the case, we should ban all Public Pension Funds from owning stocks and other risky investments. It is time to take back our future and it looked to me that the free markets did exactly that. I say this only because it is the crooked billionaires who seem to have really lost as their Hedge Funds have blown up, their tax loopholes will be closed and a better society will emerge. With time we will repair the damage done to our economy and the stock market will once again rebound to higher levels. This time, we cannot forget why we are in this position and I hope that people will begin to believe that this is the greatest country in the world with the best principals. It is this thought that makes me believe we have seen the worst in the stock market and better times ahead. That is why I believe we saw real Capitulation last week for the first time in my life.