AFSCME 3357-HOF'S BLOG

From the "Always the Negative Waves, Moriarity" file:
Dow plunges below 9,000, GM off 20% on the day, etc.

The stock market continued its plunge as Hank Paulson continued to do his best "We need more power, Cap'n!" Scotty impression. "I've tried buying all the mortgage securities. I've tried taking an equity position in the banks. I've tried shoving a wiener in the warp drive, but it didn't do a bit of good." The Dow is down below 9,000, off 33% for the year. Retire? pshaw.

General Motors stock is down 30% for the day, to $4.86 per share. What's driving the sale of GM stock? It could be that the SEC lifted the short sale ban on GM stock and this is just pent up negative demand. It could be that Standard & Poors put GM on "Credit Watch" status. It could be that word got out that GM is unilaterally putting non-production creditors on 60 day payment terms rather than previous 35 day term. For some creditors, waiting an extra month for Uncle Jimmy to pay his bill will be more than they can take, especially since the commercial paper market has dried up.

Could things get worse for GM's share price? Absolutely. If GM is dropped from the Dow Jones Industrial Index, and some other indexes, the mutual funds that must carry indexed stocks will be under pressure to dump their holdings.

I think Hank Paulson is the wrong person for the job of Treasury Secretary, we need Oddball from Kelly's Heroes. "No more negative waves -- have a little faith, baby."