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Monday, September 22, 2008

Monday Morning Sickness

The market has had some time to digest Paulson's bailout plan, and is puking. It seems that it gives Paulson way too much power, and the $700B price tag is not true. From the text of the proposal sent to Congress:

The Secretarys authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time. (emphasis mine).

That means that Paulson can buy $700B in distressed assets, sell them for pennies on the dollar to Goldman Sachs, and turn around and buy another $700B. The taxpayer eats the loss.

The Dollar is down, oil is up, and PDO, the newest addition to the earnings sheet, is up 30% today. The SPX has bounced off 1225, and may be headed for a restest. Oddly enoughm, the VIX dis dropping, down to 31. There are 2 breakouts on my scan, AVY and DMND. Neither looks terribly promising.

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