The 12,000 Blues

On October 9, 2007, the DJIA peaked at 14,280. Last Friday, the Dow-Jones Industrial Average dropped below 12,000 points, like twice before this year—on January 22 and March 10. Those prior times it quickly rebounded amid talk of bailouts for investment banks, lowering federal funds rates, and increasing TAFs. Today, talk seems more muted lately on bailouts of any kind for anybody. I haven't heard anything about further expansion of TAFs, and last time Bernanke spoke on the Federal Funds Rate it sounded like they were going to hold due to inflation, particularly of oil prices. We hear some recent yammering by Henry Paulson about expanding the Fed's role in our economy, but it is vague, and there hasn't been much else said.

The DJIA rebounded before, despite a generally recessionary economy, due to further access to easy credit, with consequent devaluation of the dollar. We'll have to see what cards will be played this round, but I wonder how much is left to keep stock prices afloat.