The person to whom you are referring is Nouriel Roubini, from NYU, whose nickname is “Dr. Doom.” Standard & Poor today commented that “It increasingly appears that market conditions could overtake credit fundamentals,” referring to market participants driving down stock prices, exacerbating damage despite adequacy in credit fundamentals - the action which I refer to as ‘panic’ by those who don’t know any better, and ‘irresponsible’ by those who do.

Hi Patty, I have indeed heard that phrase. The lack of belief (called lack of ‘transparency’ in finance) is, in my opinion, the reason that BofA bought Merrill Lynch in the 20’s after having offered $94 last year. People just don’t know what those mortgage backed securities are worth. How many are bad loans? How many need to written down? Written off? You’re so right, Patty, about government guaranteeing businesses. Lehman was rightly allowed to fail. Your points are well made.

And that technique is neither believable or effective, when given more than a cursory look.

Mr. Kitty is in love with Lauren Bacall and I am in love with Dame Edna.

Hi Liz, To couple your comments with those giving a synopsis of Charlie Rose’s show featuring Lawrence Summers, Josh Rosner (Graham Fisher & Co.), Nouriel Roubini (NYU), Andrew Ross Sorkin (NY Times) and Charles Gasparino (CNBC), the common theme is leverage (or in this case deleveraging) and transparency. As with your example of LTCM, the monetization of mortgages has had extraordinary and far reaching effects that make Dr. Summers’ analogy with Japan’s crisis in the ‘90’s and his prediction of the demise of FNMA and FHLMAC more relevant than ever. Yet, his colleague, Robert Rubin, supported a highly leveraged Citibank model. With the amount of leverage in all sectors of the economy, I am now concerned about the effect resulting severely limited credit will have on the now fairly certain economic recession.

Hello Rush dear, I guess there’s no keeping you on your naughty chair. How very thoughtful for you to be concerned about the “little guy.” I do believe NPR may be right about that. The last two corrections did produce unemployment levels of 7.4%, and lower skilled workers were out of work longer and were likely to be reemployed at lower wages. Listening to NPR? Why, I’m beginning to look at you in a whole new light.

It appears that investment bankers have presented the Fed with a plan that may result in sufficient liquidity to ward off the necessity of bankruptcy. Plan details should be available by the end of the day.

Hi QAE, Don’t have a financial blog, although I’m an intermittant guest on Mary Buffett’s. I am in favor of free trade, and with former Fed chief Paul Volker’s opinion with respect to solving the problem of disparity in income. “The best way of doing that is to remove what is essentially protectionism for those skilled workers in the United States who are helped by keeping out their competition,” and former Fed chief Alan Greenspan’s opinion that the U.S. education system is `’critical’ to help ‘cutting-edge technologies’ replace older industries that will be phased out over time.

Hi Q A E, It’s a fluid situation where the possibility of a Fed “bridge loan” is being discussed, in addition to lending facilities from private and public companies.

Hi CO, My thoughts are with you. Nothing is more frustrating that rewarding incompetence.

The stock market has stabilized in positive territory, Goldman Sachs is profitable, and the Wall St. Journal article noted above reads, “Others contend the two investment banks are well-positioned … Both banks are expected to report positive earnings, despite estimated write-downs of $1 billion to $2 billion each.” Standard & Poor today commented that “It increasingly appears that market conditions could overtake credit fundamentals,” referring to market participants driving down stock prices, exacerbating damage despite adequacy in credit fundamentals.

Hi Frannie, Neither party has much to be proud of on the economic front. As you pointed out, there’s the President - then there’s Congress. Many forget that President Clinton’s best economic years were after “The Contract With America” pushed him much closer to the center.

Mugsy, that’s the funniest thing I’ve read in forever.

Hi Frannie, I sure do remember ‘87. The one good thing was about that day was the traders - usually screaming at the top of their lungs - were very quiet. Your reform and regulation question is the best one I’ve seen asked about this whole situation. In investment banking, I think that brokers should be better trained, and paid on an asset basis rather than commissions per transaction, and that securities analysts should be in different subsidiaries than broker/dealers. Rating agencies need to have their feet held to the fire - those AAA rated ARS were a joke, and I don’t know it for a fact, but I think the rating agencies were too cozy with the securities issuers. They should never be paid by the companies they’re rating. In commercial banking and thrifts, it’s probably a good idea to go back to the old 20% down, 30 year mortgage with housing expenses being no more than 30% of gross income in order to make the loan available for resale to FNMA/FHLMAC. Verification of income, tax returns, etc., should also be mandates for such a resale. Insurance? That’s a big one, and one I feel needs a major overhaul. I never let my clients buy a long term care policy without seeing a lawyer. There’s so much wrong with that system. Maybe they could pull poor old Eliot Spitzer out of retirement and give him the job. I don’t know. Time-wise, I think right now would be good. I just hope they don’t over regulate. It’s so predictable - first lax regulations, then too much. What do you think?

Unemployment rates in the last two recessions reached 7.4%. We are at 6.1% now, and the odds for entering recession have now increased significantly. This is bad news, but we are within historic norms for economic downturns. I agree with Mayor Bloomberg’s assessment that “the world is not coming to an end.”