Is today the crest of a dead cat bounce? I’m thinking yes. We’ll see though. I had predicted the decline to 6500 [it hit 6470] and I think it will continue to fluctuate between 6500 and 6800 for a little while before increasing back to the 9300 point level. That is, if AIG doesn’t collapse, but that looks like it will happen more and more. It simply can not keep up with the weight of its interest payments. Of course, I hate the idea of insuring money with money. I understand insuring real property with money. If the house burns down, you have paid into an insurance policy to protect the real property and those who funded the mortgage are securitized that the home will be rebuilt and they regain real property. But insuring money, such as mortgages themselves, not the property attached… or insuring money markets/stocks with money which fluctuate based on perceived value [especially over the last year] you are simply asking for problems.
The DOW, which I hate as a metric but I’m forced to use it since most of the world huddles around it for safety like a lit match during a snow storm, could drop to 4800 and cause a full L-shaped depression, if AIG collapses. I’m still wondering about some rumors that AIG directed a lot of its bail-out money to foreign banks under French control.