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The stock market made an attempt to stabilize at lower levels during the middle of this afternoon but was crushed, with the Dow Jones Industrial Average falling about 180 points in the last hour for a total fall of about 375 points on the day following news that disappointment-in-chief Senator Scott Brown changed his cloture vote on the Democrats' financial regulation bill, giving Harry Reid the 60th vote he needed to bring the measure up for a final vote, most likely in the next couple of days.
The Senate bill will be merged with the House bill to create a Frankenstein package which will make credit more difficult to get and more expensive for small businesses and ordinary consumers alike.
I am not arguing that we don't need financial regulatory reform. We certainly need to rein in Fannie Mae and Freddie Mac, and we need to demolish the effective monopoly granted by the government to ratings agencies Fitch, S&P, and Moody's.
But contrary to Barack Obama’s hyper-partisan rhetoric, this bill will absolutely not “bring security to the folks on main street.”
As I write this, Barack Obama is speaking and stock index futures are falling even more. All of his language is class warfare, anti-capitalist, anti-fossil fuel, anti-bank...and essentially anti-American.
It's no surprise with this government and this sort of regulation that we see a day with every member of the Dow Jones Industrial Average down on the day...and not one of them down less than 2%. Perhaps more dramatically, 497 of the 500 stocks in the S&P 500 were down today and of the three that were up, two were discount retailers which are "defensive" plays in that they tend to to relatively better than other companies when the economy is weak.
Tomorrow is going to be an extremely scary day, particularly with the market now sitting on the 1065 level in the S&P 500 which is the low for the "mini meltdown" on May 6th when the market fell 700 points in 15 minutes and then recovered 600 points in the next 20 minutes. It's an important technical level, as is the psychologically important 10,000 level in the Dow Jones. The only reason I have some hope that the market doesn't get killed is that a rally would surprise a lot of people and the market frequently likes to surprise people. Still, one would have to think the upside is very limited from here over the medium term.