The bail out

I think I agree with Jim Cramer on this. The only real solution to the financial meltdown we're in right now is for the government to step in and recapitalize the bond and mortgage insurers like MBIA, AMBAC, PMI, ACA Capital, and MGIC and essentially take over their operations. Without that, they are all going to fail within the next few weeks or months, and, after they fail, the house of cards will come tumbling down. [Full disclosure: I own several hundred shares of MBIA.]

Unfortunately, I just don't see the Bush administration (or even the Democrats) doing this, so I'm afraid my outlook is pretty gloomy. I wouldn't be too surprised if we lost another thousand points off the Dow tomorrow. It seems there are still a lot of people on Wall Street living in la la land, thinking the economy is in really good shape. Just think about it, there were all kinds of signals that Merrill and Citigroup were about to take huge writedowns, but the market didn't fall until after they actually took those writedowns -- even though the writedowns that were announced were smaller than those predicted. Today's drop in the overseas markets may put the fear of God in them. But, of course, you never know.