Market rout all set

It is amazing every time market wants to find bottom, something strange happens.



Here are some instances:

• Last Aug, when the Credit Markets went haywire (I think it is Aug 16.......) Heli-Ben cut rates.




• Then the day after MLK day, when the markets around the world sold-off and the US markets was ready to sell-off then HeliBen, interfered again, this time cutting rates by about 75 bp.




• Then on Feb 22, when the markets was about to breach the 1320 level on S&P, someone plants a story about Ambac through Charles Gasparino.
  

I am not sure whether there is a PPT (Plunge Protection Team) or not, but it looks all but certain, their are many motivated folks, who want to make sure that market does not a find a bottom.

It looks to me. the more this kind of nonsense, goes the more the market, rout is all set. The lasttime, when their was a recession, Greenspan, tried to cut rates again and again but to no avail. Something like that will happen.

Also, the weakest part of the US Economy right now is , Consumer. No amount of AAA tramp-stamping can fix that problem. Since the consumer is weak and their are many clear indications that their is a growing attitude change towards unrestrained spending are more problems that will effect spending.

All the GDP growth, if you can call that has been caused availability of cheap credit, especially Mortagage Equity Withdrawal (MEW). With House prices falling and MEWs going down with it, their is no way consumer will be spending on non-descretionary items any time soon.

At the consumer level as the balance-sheet repair takes prominence, the recession only end up taking more time.

Coming back to Ambac, bail-out, the parties which are doing this are mostly Banks which have most to lose. Given the dubious ratings agencies, whose business plan seem tp be tramp-stamp, shit as AAA, will not trusted by anyone. Toddo, writing in Minyanville.com commented, Banks bailing out Ambac amounts to taking money from left pocket and putting into right pocket. And I have to say I totally agree with him.

Assuming their is indeed a bail-out plan for Ambac, come Monday following issues will still be with us

1. Housing still has lot of issues
2. Consumer spending not coming back.
3. Commerical Real Estate issues still with us
4. Securitization business still completely broken.