wpe50.jpg (1913 bytes)     TigerSoft News Service               10/12/2008                 www.tigersoft.com      

                                The Causes of  The Crash of 2008

              How Close Are We To The Bottom?  TigerSoft Predictions

              Nouriel Roubini's Prescient Warnings and His Recommendations Now.

Bush Is A One-Man Wrecking Machine of Retirement Accounts

                wreckingball.jpg (34921 bytes)

by William Schmidt, Ph.D.  
wpe4F.jpg (33251 bytes)  

Tiger Software 
   Helping Investors since 1981
       Make Your Retirement Grow
Peerless Stock Market Timing: 1928-1966         
Track Record of Major Peerless Signals
       Earlier Peerless-DJIA charts       
7 Paths To Making 25+%/Yr. Using TigerSoft 

       Index Options            
FOREX trading        
Investing Longer-Term         
Mutual Funds
       Speculative Stocks     
Swing Trading       
Day Trading        
Stock Options          
Commodity Trading

      Research on Individual Stocks upon Request:   Composite Seasonality Graph
of Any Stock for $125.
Example of historical research NEM - Newmont Mining.   Order Here.


                The Causes of The Crash of 2008

How Close Are We To The Bottom?

                                     Why Should Investors Trust Paulson? 
                                                        He Helped Make This Mess? 
                                                         He Long Denied There Was A Serious Problem.

                                     Nouriel Roubini's Prescient Warnings and His Recommendations Now.

                                     TigerSoft Predictions based on:
                                                         Lowering of Interest Rates, "Partial Nationalization"
                                                         Oversold Market, Bullish Seasonality. Technical Support.
                                                         Soon The National Nightmare of Bush Will Be Over.

by William Schmidt, Ph.D.  
                                    Author of TigerSoft and Peerless Stock Market Timing: 1915-2008  and Nightly Hotline

                          People work and save. And then it's taken away by unrepentant
                   monsters like Bush and Cheney.   Retirement accounts in the US are down
                   $3 trillion dollars since Bush got Congress to give Wall Street bankers
                   $700 Billion for their "toxic" (i.e. mostly worthless) mortgages.  The US
                   government is now building a system where profits are privatized
                   and losses socialized.  This is socialism for the rich.  And the economic
                   fix has not been found.  A world-wide financial collapse and depression
                   must be avoided.   On Friday, Paulson changed his mind and now
                   supports that cash infusion into distressed banks via a partial nationalization.
                   The stress of the financial markets must be murderous for him to agree
                   to this method of restoring confidence.   Can backdoor socialism really
                   be expected to curry favor on Wall Street?  Will Paulson socialism stop
                   the market collapse?

                         wpeF7.jpg (13795 bytes)
                         Treasury Secretary Hank Paulson is looking at buying
                         shares directly in ailing banks and insurance companies.
                         A month ago her resisted the idea of inserting such authority
                         into his arsenal of weapons to stop the decline.  Now he
                         is interpreting the $700bn bailout law as giving him this authority.
                         He is getting desperate.  Even if he does this, banks would
                         still be under no obligation to resume lending.   Paulson is
                         wants the same authority that the British government got
                         this week. 

                        The US has already nationalized three of the biggest financial
                        entities, AIG (insurance) and mortgage giants (Fannie Mae and
                        Freddie Mac).  Will a bank turn to the US Government if it might
                        be nationalized?  Will it choose to publicly admit that it needs
                        a government injection of capital?  That might cause a "run" on
                        that bank.  Or it might make investors relax, knowing that their
                        company will not be seized by the FDIC.  Why should the
                        government not inject capital into, and partially nationalize
                        General Motors or Ford, or any other company that is considered
                        "too big to fail?". 

                        The complications, uncertainties and unknowns are not what
                         the stock market wants?  Once government takes a stake in
                         a company, will it ever be the same?  Will the government
                         need to buy such a large stake that it will control the company?
                         Why would investors want such an investment?  However,
                         might this not have to be the price to safeguard the rest of the
                         capitalist system?  Paulson seems ready to risk these uncertainties
                         to save the entire system. 

                         Even if Paulson's partial nationalizations might be able to stem
                         the selling of US equities, and it's not at all clear this approach will
                         work, because banks are still not required to make loans, the
                         financial problems overseas are getting much worse. 


                          Noted NYU economist and economic Cassandra, Nouriel Roubini
                   exactly predicted the present debacle two years ago.  He now says there
                   is the possibility of a global financial meltdown and depression cannot
                   be ruled out.
"There is now the beginning of a generalized run on the banking system
                                      of these economies, a collapse of the shadow banking system, i.e. those
                                     non-banks (broker dealers, non-bank mortgage lenders, SIV and conduits,
                                     hedge funds, money market funds, private equity firms."

                          We have to respect this man.  His predictions were very accurate.
                   In September 2007, he predicted this disaster:  a housing bust, an oil shock,
                   vaporizing consumer confidence and buying power and a crippling
                   world-wide financial collapse.   "We have a subprime financial system,
                   not a subprime mortgage market".  The banks' very highly leveraged loans,
                   he said, are extraordinarily dangerous.  The crisis will inevitably shift to rising
                   corporate defaults, possibly reaching 10%.  Bailouts will be demanded by
                   other industries.  A number of hedge funds will fail.  Margin calls will bring
                   whole stock liquidation.   We will enter  a "vicious circle of losses, capital
                   reduction, credit contraction, forced liquidation and fire sales of assets
                   at below fundamental prices."
                         This will lead to "a cascading and mounting cycle of losses and further
                  credit contraction."  Credit-deprived and illiquid, the stock market
                  will price assets below underlying value.  There will be a global
                  financial meltdown.   It will not produce a Great Depression, but it will
                  be the longest and deepest recession since the 1930s.  Source.
                  And October 10, 2008 interview.    "A vicious circle of de-leveraging, asset
                  collapses, margin calls, cascading falls in asset prices well below falling
                  fundamentals and panic is now underway."  Source.

                        What does this prescient economist want thew US Government to do?
                  Mortgages must be reset so there will not be wholesale foreclosures.
                  A massive public works program is needed.  States and local governments
                  must be given huge sums to rebuild the American infrastructure and provide
                 jobs.   Unemployment benefits must be raised dramatically.
    "It will take a significant change in leadership of economic
                                       policy and very radical, coordinated policy actions among all advanced and
                                       emerging market economies to avoid this economic and financial disaster. "

                      His website posts these recommendations for the government

                    " - another rapid round of policy rate cuts of the order of at least 150 basis
                      points on average globally;

                      - a temporary blanket guarantee of all deposits while a triage between insolvent
                      financial institutions that need to be shut down and distressed but solvent institutions
                      that need to be partially nationalized with injections of public capital is made;

                     - a rapid reduction of the debt burden of insolvent households preceded by a
                      temporary freeze on all foreclosures;

   - massive and unlimited provision of liquidity to solvent financial institutions;
                     - public provision of credit to the solvent parts of the corporate sector to avoid
                      a short-term debt refinancing crisis for solvent but illiquid corporations and small

                      - a massive direct government fiscal stimulus packages that includes public works,
                       infrastructure spending, unemployment benefits, tax rebates to lower income
                       households and provision of grants to strapped and crunched state and local

                      - a rapid resolution of the banking problems via triage, public re-capitalization of
                      financial institutions and reduction of the debt burden of distressed households
                      and borrowers;

                      - an agreement between lender and creditor countries running current account
                      surpluses and borrowing and debtor countries running current account deficits to
                      maintain an orderly financing of deficits and a recycling of the surpluses of creditors
                      to avoid a disorderly adjustment of such imbalances."

                                               The Bush Wrecking Crew

“How did things go so badly? The simple answer: greedy, fat cat investment bankers
                           who used these complicated derivatives no one could understand to leverage themselves,
                           make tons of money at the expense of the typical mortgage holder, and who will never
                           experience any down side from their profligacy.” economist.com, 9-23-2008

                   The DJI has lost 5000 points since June.  The SP-500 has lost
                   24% from October 2nd to October 10th.  Clearly, the Bush machine
                   running the country has failed miserably.  A new President with a
                   a hopeful outlook will go a long way in restoring confidence.  But
                   he will not take office until January 20, 2008.  What will happen until
                   then?  Normally, bear markets grind lower.  The panic now is a very
                   rare "straight-down" affair.  In this respect the DJI decline now is worse
                   than in the 1929 Crash (only 4 consecutive down days, three times)
                   or the 1987 Crash (only 4 consecutive down days ).  The 2008
                   decline has not yet fallen 49% from its high as the DJI did in 1929
                   in three months.  To date, the DJI has fallen 35% from its June high.

                                                     Parallels with Past Declines

                   Friday's decline was the eighth straight day of a DJI decline.  How many days
                   can the DJI decline in a row without some kind of daily advance?
                   11 is the most consecutive down DJI days since 1915.   What is the
                   significance of 8 straight down DJI days?   There were 17 earlier  instances.
                   In 11 cases the DJI fell significantly further.  In six cases it did not.
                   On this basis, the odds are that the DJI will go significantly lower,
                   even though it has already fallen 8 straight days.  (All the instances
                   are posted at the bottom of the page.)

                    The DJI topped out in July 2007.   So, we have been in a bear market
                    already for a year and three months already.  It would perhaps be most useful
                    to look at what happened after 8 straight down days in cases where
                    the DJI had already been in a bear market more than a year and
                    not more than two.  Only in 1931 and 1982 did the DJI go down much
                    more.   In 1974, 1978 and 2001 the fact that the DJI fell 8 straight
                    days meant all the sellers were, in effect, flushed out, because thereafter
                    a bull market ensued.   The danger is we are back in 1931, in terms
                    of dealing with the many levels of destructive de-regulation in
                    banking and finance.

  1931 --- 169.70 to 121.70 Down 12% over  2 months..
                                   One year and 6 months into bear market. 

                      1974 --- 601.53 to 584.56 and rallied
                                   One year and 9 months into bear market.

1978 --- 749.32 to 742.52 and rallied.
One year and 3 months into bear market.

1982 --- 832.48 to 776.92  Down 5% over   2 weeks.
                                   One year into bear market.   
                    2001 --- 8285.31 and rallied strongly.
                                   One year and 8 months into bear market.

                              The Bush Administration Has Created This Mess         
                   An ideology that made a fetish of de-regulation bears the biggest
                   part of the blame for the collapse.  Reagan-Bush Republicans
                   sought to return American business to the days before the New Deal.
                   This was true in all areas.  If they had had their way, Social Security
                   would now be wedded to the collapsing stock market. 

                   It was in banking and finance that this "free market" view has
                   proved most dangerous and expensive.  The stock market collapse
                   of 2008 is a direct result of the laissez-faire attitude that
                   has dominated Republican views of the financial system since
                   Reagan.   (Nixon favored government price controls!)   Wall Street
                   and banks were largely given a free hand.  Not only were they not
                   regulated, they were given dangerous new powers.  In 2000,
                   Republican Phil Graham designed the law that took away the wall
                   between commercial banks and investment banks.  This led
                   directly to trillion dollars in toxic mortgages.  Now, too late, we see
                   what happens when big banks are left unregulated and are given
                   every incentive to make imprudent home loans and conceal the
                   risks inherent in the mortgages they happily concealed, bundled
                   and sold to others. 

                    In 2004, as the CEO of Goldman Sachs, Paulson, who is now
                    the Treasury Secretary, successfully sought a freer hand for
                    investment banks to use still more leverage in their own investments.
                    If banks had not used so much leverage, no bailouts would be needed.

                    Bush's SEC approved the five biggest US investment banks
                    for this leverage.  According to a former SEC official who was involved
                    in the rules of the leverage, "The SEC modification in 2004 is the
                    primary reason for all of the losses that have occurred"  at Bear
                    Stearns, Lehman Brothers and Morgan Stanley, and because of
                    them the general market.
  http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/   )

   -SEC Official Blames Agency for Blow-Up of Broker-Dealer

The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.

The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.

Making matters worse, according to Mr. Pickard, who helped write the original rule in 1975 as director of the SEC's trading and markets division, is a move by the SEC this month to further erode the restraints on surviving broker-dealers by withdrawing requirements that they maintain a certain level of rating from the ratings agencies.

"They constructed a mechanism that simply didn't work," Mr. Pickard said. "The proof is in the pudding — three of the five broker-dealers have blown up."

The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets' market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.

The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.

In 2004, the European Union passed a rule allowing the SEC's European counterpart to manage the risk both of broker dealers and their investment banking holding companies. In response, the SEC instituted a similar, voluntary program for broker dealers with capital of at least $5 billion, enabling the agency to oversee both the broker dealers and the holding companies.

This alternative approach, which all five broker-dealers that qualified — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley — voluntarily joined, altered the way the SEC measured their capital. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios, sometimes, as in the case of Merrill Lynch, to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.     
  http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/   )

                     The Very Wealthy Love An Ideology That Glorifies Selfishness,

                    The de-regulation ideology served as the justification for what
                    made very good politics.  The big campaign contributors to Bush's
                    party sealed the deal.   Bribes did not have to be extorted.  They
                    made Wall Street a billion for every million in campaign contributions.

                         wpeCE3.jpg (10430 bytes)          wpeCE4.jpg (27417 bytes)
                   In so many fields, Bush has exhausted America financially.  He and his
                   cronies deliberately misled the country in the run up to the $3 trillion blunder,
                   the war in Iraq.  It was such a profitable war for Halliburton, how could
                   we expect Cheney not to falsify the intelligence Congress was given?
                   The Iraq war has proved hugely profitable to Bush's biggest campaign
                   contributors, from Blackwater, to Halliburton to Northrop and Boeing,
                   among war contractors.   In the area of energy, the Bush people did
                   all they could to permit speculation to run rampant in the energy market,
                   again so that their campaign contributors would be rewarded, at the
                   expense of the rest of America.   So, besides the housing bubble
                   breaking, so too are the military expenditure bubble and the energy
                   bubble.   Down go the stocks in these fields, too. 

                   The result is a 1929-like Crash that crushes the spirit and savings
                   of millions who have worked and saved for year.   The market
                   looks like it did repeatedly between 1929 and 1933.  It will be years
                   before housing prices stabilize or the US can balance its budget.
                   For a year, the Bush people denied the economy was on the verge
                   of a dramatic decline.  Not any more.

                                                       The Bush Panic

                         Recently, Bush and Treasury Secretary Paulson (from Goldman
                   Sachs) got up and scared people, so that their cronies could get
                   a trillion dollar hand-out.  It worked.    They claimed the economy                      
                   would "collapse" if Congress failed to give bankers the money
                   they were extorting.  Congressional Democrats and Obama had no
                   spine to resist, for fear of being branded "unpatriotic".  They knew
                   if they went along with the bailout, they would still win the 2008
                   Presidential Election.  

                         The Fear Tactics worked all too well.  their bearish consequences
                   for the stock market have been dramatic.  The DJI is down more
                   than 3000 points in three weeks,  more than 27%.  Half the stocks
                  on the NYSE are now making 12-month lows.  This week saw the
                  biggest losses in stock market history.   Today, as I write this, 
                  bank stocks are up and the DJIA is down 500, and below 8000.

                        Incredibly, Bush's SEC Chairman ended the 70-year ban on
                   short selling on down-ticks two weeks before the market top in July
                   2007.    He was under pressure form the very hedge funds that
                   have killed the stock market.  He quickly yielded to them, despite
                   the experience of vicious "bear raids" between 1929 and 1933.
                   In 1933, the FDR Administration banned these abusive short-selling
                   tactics.   Bush permitted them again.  And they have driven the market
                   down relentlessly.  These anti-regulation Taliban, crony-favoring
                   monsters have wiped out trillions from the retirement accounts of
                   a hundred million people in the US.  There is still no outrage.  The
                   corporate American media shares the blame.   Stubbornly in denial,
                   Bush's SEC chairman Cox still, despite the nearly 50% decline,
                   permits and defends the illegal practice of short selling without
                   borrowing stock.  These men are monsters.  They deserve no
                   confidence.   It should also be noted that the SEC waived leverage
                   restrictions on investment banks in 2004.  This led directly to the
                   boom and then bust.  This they did to help Bush's re-election chances.


                      1. Bullish Seasonaility Will Soon Start

                   The decline we are seeing could certainly be the beginning of a
                   1930-1932 like bear market and Depression.  But it is more likely part
                   of the selling climax which will soon end, for a while, the bear market that
                   started in July 2007.
  Octobers (and often Novembers) are offen
                   bear market killers.  Bottoms are made in these months.  Seasonality
                   turns very bullish in Novermber.  
The chart below only is based on data
                   back to 1990.  
Ned Davis Research found that $1,000 invested in the
                   S&P 500 index from November 1st to April 30th every year from 1950
                   to 2006 – the ‘winter season' – and  held cash in their account for the
                   remainder of each year the account would be worth $38,700, before taxes.  
                  But if the investor had invested the $1,000 in the S&P 500 index from
                  May 1st  to October 31 st  and held cash in their account for the remainder
                  of each year the account  would be worth $916, a loss!

                   to May.   DJIAseasonal.GIF (10393 bytes)

                   2.    Beyond this we see the considerable technical support in the range
                   of 7200-8000
by looking at the three tests of that range in 2002-2003.
                   This is the level that ended the 2001-2003 bear market.

203.BMP (1039026 bytes)

                   3.   This week the Fed cut interest the discount rate by 1/2%, in a move
                   that was matched by and concerted with a number of major countries.
                   Rate cuts are bullish.  Eventually, they end bear markets.  That has been
                   experience since World War II.   Look at the my study of this.

                  4.   Partisans will celebrate the removal finally of the worst President
                  in American history.  The markets have rallied  from Octobers lows in
                  a Presidential Election Year in 17 of 18 cases where they had been falling.

                                 Year      Bottom  DJI    Top      DJI                  End of the Year  
                               ---------   -------------------------------------------------------------------------------
                              1916 -  10/13 98.90    11/21   110.20
1920 -  10/14 85.20    11/3      85. 00              12/20  68.50
1924 -  10/15 110.10  11/19  110.23              12/31 120.50
                              1928 -  10/3   237.80  11/28  295.60
                              1932 -  10/10  58.50   11/11  68.00                 12/30   60.30
                              1936 -  10/26 172.30  11/17  184.90               12/31 179.90
                              1940 -  10/15 131.50   11/7   137.80               12/31 131.10
                              1944 -  10/26 145.80   12/11  151.60              12/31 151.90
1948 -   October was rallying, Novermber declined.
1952 -  10/22 263.10   12/2    283.80               12/31 291.90
1956 -   October was rallying, Novermber declined.
1960 -  10/25 566.00   11/10   612.                   12/30 615.90 
1964 -  10/15 968.40   11/18   612.                   891.70   874.10      
1968 -   October was r allying,  Peak on 12/3 and bear market began.
1972 -  10/16 921.66   11/24                             1025.91          
1976 -  10/14 935.92   12/23    985.62
                              1980 -  10/30 917.75    11/20 1000.17
                              1984 -  10/18 1177.23  11/6 1244.15              12/31   1211.57  
1988 -   October was rallying, 
                              1992 -  10/8 3276.03  11/2   3262.12  12/31   3300.38
1996 -   October was rallying,  Bull market.
                              2000 -  10/18 9975.82  11/8   10907.06  12/29   10786.85
                              2004 -  10/25 9749.99  11/18 10572.55  12/29   10783.00

                       ----------------------------------------- 1960 DJIA Chart ----------------------------------------------------
                       Peak had been  in January 1960 at 690. Bottom was not until October 1960 at 570.

     wpe12E.jpg (41833 bytes)

                   6.    7400 Is The Biggest Decline I Can Forsee

                   If the 1929 crash is instructive and if we were to match that terrible
                   period, then the free-fal now will still mercifully end soon and there
                   will be a powerful stock market  recovery.   

                          In 1929 the DJI fell 47.9% in its first free-fall, 381.20 to
                  198.70    (9/3/1929 to 11/13/1929).    It then rallied back to 294.10
                  (4/17/1930).    That was a rebound of 48.0%. The percentages were
                  almost the same.   If we take the DJI's high in July 2007 at 14165 as
                  comparable to the 1929 peak, the DJI will find a bottom at 7383.50.
                  Right now,  as I write, the DJI is at 8028, down -550. There will be
                  a big rally soon.   Even if the DJI were to have to fall 47.9% to 7384,
                  the 1929-1930 experience suggests a recovery up to to 10928,
                  almost 3000 points above where we are now.

                  By this reasoning, 8000 has to be very close to a bottom and is
                  now a good buying opportunity, especially if we look out to when
                  there will be a recovery,  as a new President seeks to inspire
                  confidence and not fear. 

                                     Bush Is A One-Man Wrecking Machine

                  However, until January 2009, the crooks and criminals are still
                  in charge of the country.  It would be a mistake to think that they
                  cannot hurt the US and most Americans more.  Look closely at
                  the charts below.  If we measure "oversold" by the how far down
                  the DJI is from the 50-day ma, we see the DJI is not down as
                 much as it was in 1929.   Of course, we hope policy-makers are
                 smarter than Hoover's "experts" were in 1929, when one of them
                 predicted a "permanent plateau of prosperity".   But Bush has
                 an astonishing ability to go from new lows to deeper new lows of
                 cronyism and corruption.  

                 The chart of the 1929 Crash has another worrisome element.
                 When downside volatility becomes as great as it is now, reversal
                 days are less reliable.  Look at how many days when the DJI
                 closed up off the day lows and then still fell much more.  Today's
                 "reversal day" is not enough by itself to safely signify a market
                 If you like these comments, and you think they will help you,
                 subscribe to out Hotline and get our Peerless Stock Market
TigerSoft HotlinePeerless Stock Market Timing.   You will also
                 want to use our TigerSoft program to see how misleading strong
                 openings are in a bear market.  It is much better to trust our
                 Closing Power.  Below is the NASDAQ-100 chart.  The trends
                 of TigerSoft's Closing Power will keep you out of the market when
                 it is unsafe and in when it is safe.

                Buying and holding is a mistake, in my opinion.  The period 
                1929-1943 shows this.  See this chart at bottom of this page.
                The DJI did not surpass its 1929 peak until 1954.  The war and
                inflation years, 1966-1982, saw the DJI repeatedly bounced
                down and up repeatedly between 1000 and as low as 580. 
                Buying and holding in this period was also a mistake.  More effort
                is required.  With our software, you can not just survive.  You can
                thrive.    Go to www.tigersoft.com for more details.

                               NASDAQ-100 BUYS and SELLs using TigerSoft
               wpe115.jpg (71904 bytes)

                            DJIA   1926-1942 - Buying and holding in this period was a losing proposition.
                                       Note 50% recovery after October 1929 crash.
                                        Note the 50% recovery from 1932 to 1937 of what was lost between 1929 and 1932.

                     wpeF7.jpg (13976 bytes)


                        ---------------------------------- DJI - 1966 to 1982 ----------------------------------------------------------------

              Peaks    Jan 1966          Dec 1968                     Jan 1973                Dec 1976                           Apr 1981
                      wpe12C.jpg (20209 bytes)
          Bottoms       Oct 1966                 May 1970                     Dec 1974                Mar 1978       Apr 1980       Aug 1982
                                          ------------------------------ DJI 1929 ----------------------------

                      11929.GIF (9446 bytes)

                                            ------------------------------ DJI 2008 ----------------------------
wpeF7.jpg (55419 bytes)

                       Why It's So Hard To Have Confidence in Wall Street.
                                                Sources - http://www.marketoracle.co.uk/Article6512.html

                         “Golden parachutes are here to stay” “…those hoping for an end to golden parachutes - the large pay packages that top executives get when they leave a company - may end up disappointed.” "We're not abrogating contracts," said a Treasury official who briefed reporters Sunday.” “Another Treasury official said that even future golden parachutes could be paid…” CNNMoney.com, 9-28-2008

                        “Golden parachute for Washington Mutual CEO” “ Washington Mutual's new CEO Alan Fishman -- who had been on the job a measly 17 days -- was paid nearly $20 million in the last month .” “That includes a $7.5 million bonus when he was hired Sept. 8. And it includes a mind-blowing $11.6 million cash severance now that the company has gone under. That's on top of his base salary -- a cool $1 million a year. Plus, he was eligible for annual bonuses worth up to 365 percent of his base pay.” “ All this while the company was posting billions in losses. (Yesterday, it became the biggest bank failure in U.S. history…) “ Read over all that again -- and explain to me why something doesn't need to be done about CEO compensation .” dallasmorningviewsblog.dallasnews.com, 9-26-2008

                          “Despite steep declines in the performance and stock price of the three companies, Mr. Mozilo (CEO of Countrywide Financial) , Mr. O'Neal (Merill Lynch CEO), and Mr. Prince (Citicorp CEO) were rewarded generously.” “… Mr. Mozilo (Countrywide CEO) received over $120 million in compensation…” “Also Mr. Mozilo (Countrywide CEO) received over the past 5 years a total of $391.88 mil.” “…Mr. O'Neal (Merrill Lynch CEO) departed with…$161 million…” “…Mr. Prince (Citicorp CEO) was awarded a $10 million bonus, $28 million in unvested stock and options, and $1.5 million…upon his departure from Citigroup.” oversight.house.gov 2008 & forbes.com 

                             Who Is to Blame?


                            History of the DJI when there were
                       8 consecutive down-days.

                   History is instructive. 
                         8 days 
1917  ---  71.40 to 65.90.  Down 30% already over 6 months.
                                                                                  Six months into a bear market.
                                       1926 --- 144.40 (153)  to 135.20
Down 12% over  month..
                                        1932 --- 62.00 to 41.20 
Down 30% over  month.
Two years and 6 months into bear market.

                                        1956 --- 492.70 to 468.80 
Down 5% over  month..
                                        1966 --- 897.77 to 744.32
   Down 11% over  3 months..
                                                                                   Three months into bear market.
                                        1967 --- 849.57 and rallied.  11/1 
Down 10% over  6 weeks.
1977 --- 926.11 to 802.67  Down 8% over  6 weeks.
                                                                                   Three months into bear market.
                                        1981 --- 949.40 to 824.01 
Down 8% over  10 weeks.
                                                                                    Three months into bear market.
                                         1982 --- 832.48 to 776.92
  Down 5% over  2 weeks.
                                                                                      One year into bear market. 
                                         1989 --- 2374.45 and rallied strongly. Did not drop below 21 dma
                                         2001 --- 8285.31 and rallied strongly.

                                                                                     One year and 8 months into bear market.
                                         2008 ---                                                  Down down 28% in 2 months.
                                                                                     One year and 4 months into bear market.
                         9 days   1931 --- 169.70 to 121.70
Down 12% over  2 months..
                                                                                    One year and 6 months into bear market.
1978 --- 749.32 to 742.52 and rallied.
One year and 3 months into bear market.

                        10 days
                        11 days   1960 ---  616.60 (641.50) to 566.00 12% down over 7 months.
                                                                                    7 months into bear market.
                                         1963 --- 695.90 to 687.70 and rallied.
  Down 7% over  2 months..
                                                                                    Not below 200-day ma
1971 --- 852.37 to 797.97  Down 12% over  6 months..
                                                                                   6 months into bear market.
                                         1974 --- 601.53 to 584.56 and rallied
                                                                                   One year and 9 months into bear market.

                    1.   In 1917 - during the Bolshevik revolution in Russia - the DJI fell 8 straight
                         days, closing at 71.40 on 11/1/1917. After a one-day rally, it declined to
                         68.60, whereupon it rallied to 74.20, only to decline again until it reached
                         65.90 on 12/19/1917 and rallied until 10/18/1918 the next year, where it
                         closed at 89.20.

                   2.    On 3/3/1926 the DJI fell 8 straight days.   It closed at 144.40.  A
                   A week later, the DJI peaked at 153.  It then fell swiftly to a low of
                   135.20 on 3/30/1926.  The DJI then rose to a peak of 166.10
                    on 8/9/1926.

                  3.    On 4/7/1931 the DJI fell 9 straight days.  It closed at
167.00.  After
                  a single day up, it went down steadily, reaching a temporary low of
                  121.70 on 6/2/1931.  After a rally to 154 on 6/26/1931, the bear market
                  resumed.   The DJI was at 169.70 on the 8th straight down day.

                  4.    On
4/11/1932 the DJI fell 8 straight days.   It closed at 62.00.  After
                  a single day up, it went down steadily, reaching a low of
41.20 on 7/8/1932. 

                  5.    On
5/16/1956 the DJI fell 8 straight days.   It closed at 492.70.  After
                  a single day up, it went down steadily, reaching a low of
468.80 on 5/28/1956. 
                  It then rebounded to 520 in July, only to fall down to a low of 466.10
                  on 11/28/1956.

                  6,    On
7/25/1960 the DJI fell 11 straight days.   It closed at 601.70.  It then
                  rallied to 641.50 on 8/24/1960, only to fall down to a low of 566.00
                  on 10/25/1960.  After 8 days down the DJI stood at 616.60.

       UP      7.     On
7/23/1963 the DJI fell 11 straight days.   It closed at 687.70.   
                  From there it rallied to 760.50 on 10/29/1963.  It then fell as
                   low as 711.50 on JFK's assassination.  The DJI was at 695.90
                   after 8 straight down days.

                  8.      On
5/5/1966 the DJI fell 8 straight days.  It closed at 899.77.   It rallied
                  slightly for a day and then resumed its decline, reaching 744.32 on

        UP      9.     On
11/8/1967 the DJI fell 8 straight days.  It closed at 849.57.   
                  From there it rallied to
943.08 on 9/25/1968.  It then fell as
                   low as 825.13 on 3/21/1968.
                   10.    On
10/27/1971 the DJI fell 11 straight days.   It closed at 836.38.   It rallied
                   slightly and then resumed its decline, reaching
797.97 on 11/23/1971. 
                   The DJI was at 852.37 after 8 straight days down.

         UP     11.    On
10/4/1974 the DJI fell 11 straight days.   It closed at 584.56.
                 This was the bear market bottom, although there needed to be another
                   test of the lows and this took place on 12/26/1974 with DJI at 577.60..   
                  The DJI was at 601.53 after 8 straight days down.

                  12.     On
3/28/1977 the DJI fell 8 straight days.  It closed at 926.11.   It rallied
                   slightly and then resumed its decline, reaching
802.67 on 11/3/1977.  

          UP    13.  On
2/21/1978 the DJI fell 9 straight days.  It closed at 749.05.
                 This was almost the bear market bottom. The final low was at 742.72
                   on 3/6/1978.
The DJI was at 749.32  after 8 straight days down.

                   14.   On
7/6/1981 the DJI fell 8 straight days.  It closed at 949.30.   It rallied
                   slightly and then resumed its decline, reaching
824.01 on 9/25/1981.

                   15.    On
5/20/1982 the DJI fell 8 straight days.  It closed at 832.48.   It rallied
                   slightly and then resumed its decline, reaching
776.92 on 8/12/1982,
                   after which a bull market began.

          UP    16.    On
5/10/1989 the DJI fell 8 straight days.   It closed at 2374.45.
                 This was minor correction. This was the low.   It then rose and
                   reached 2791.41 on 10/9/1989. 

         UP     17.   On 9/29/2001 the DJI fell 8 straight days.   It closed at 8235.81.

Hit Counter