With uncle sam now about to make good on a $700-billion bailout for the financial system, Wall Street on Friday looked like an ungrateful child.
The stock market began to slide soon after the House approved the bailout bill, and most major market indexes finished the day at new multiyear lows. The Dow Jones industrials slumped 157.47 points, or 1.5%, to 10,325.38 -- its lowest since October 2005.
Thank you, taxpayers!
Already, many big investors are focusing on what else the government might have to do to help the financial system and the economy.
Yes, they want more.
Near the top of the wish list: A new round of interest rate cuts by the Federal Reserve, even though the central bank's benchmark short-term rate is a measly 2%.
That may be welcomed by home buyers and people with adjustable-rate mortgages. But as usual, savers will eat it.
Congress was warned by the Bush administration that without the bailout, the financial system could collapse and take the economy with it.
But even with the bailout, the markets are in a world of hurt, and any recovery is going to be slow -- because investors' confidence has been shattered over the last year, and particularly over the last month.
Translation: Your 401(k) statement may not be happy reading for quite a while.
And as taxpayers, we may well be asked to pony up more help for Wall Street, in one form or another.
Understandably, many people still wonder how we got to this point. The simple answer is too much debt, everywhere. Now we're living through a deleveraging process that has unfolded like a series of earthquakes over the last year, each one bigger than the one before.
The disarray in the credit markets began in July 2007, when investors shocked by rising defaults on subprime mortgages began to pull away from risky debt of all kinds.
The Fed then rode in with interest rate cuts, which made people feel better for a few months.
Then in January of this year, loss-ridden mortgage lender Countrywide Financial was forced to sell out to Bank of America Corp.
In March, brokerage Bear Stearns Cos., a Wall Street institution since 1923, collapsed. In July, IndyMac Bank was seized by the government, in the second-biggest bank failure up to that point.
