Talk about an interesting week. I was wrong, Bernanke and the Federal Reserve did have to intervene, although not by dropping rates. They injected 34 billion in 3 day notes into the market to weather the liquidity crisis. The emergency move can't be repeated indefinitely though, and they may have to act even before the next scheduled meeting to drop rates, even by 50 basis points.
So the artificial credit bubble that's been shoring up the consumer economy is bursting, but I'm betting Bernanke can give a reasonably soft landing. If not, you're going to see 1987 (stock crash) or 1998 (financial panic) analogue in this market.
I think Ketchup is doing some day trading on volatility, and now's a good time to get back in, at least for 1-3 weeks. I sold all my stocks last week and this week before the drop, and I'm short selling retail, financial, and discretionary goods because consumer buying power and confidence are going to nosedive in the next 12 months.
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