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We began the third quarter with most of the major stock markets in bear market posture, off 20% or more and we continued to decline from there. The Dow Jones Industrials dropped another 4.4% while both the S&P 500 and the Nasdaq fell over 9% more. From top to bottom the Dow lost a maximum of 27% while the S&P and Nasdaq toppled 30%.  It was a quarter of ugly new records as the largest bank in US history failed and the largest US insurance company appealed for government help. Every investment bank on Wall Street is now gone. The nation’s first money market fund the Reserve Primary Fund went below a dollar a share or “broke the buck” when Lehman defaulted on a large chunk of debt owned by the fund. The rates banks charge each other on loans reached record highs bringing those markets to a standstill. In fact, it’s hard to find a market that has not been significantly affected by near and complete freezes in credit flows. And broken record or all broken records, by the end of a three-month ordeal Wall Street finds itself begging for help from a less-than-sympathetic US House of Representatives.

As yet another bank fails and the stakes get higher, Congress and the White House continue to argue over the best plan for recovery. These are political institutions with some of the best politicians (best at being political) in the world, so it is difficult if not impossible to remove the political aspects of a public debate of this magnitude. And if you take your news and views from television it may be nearly impossible for you separate your emotions from the situation because these pols are so skilled at arousing the passions of those on their side. But if you can suspend your ire from the events of yesterday for a few moments a better understanding of the ideology behind what is going on might be possible.

Few symbols of America’s culture better explain us as a nation than the home. From the early days when European settlers fled various forms of tyranny to today, the desire to come home to one’s own has motivated us to work harder and perhaps to risk more. As George Bailey‘s father put it in It’s a Wonderful Life when describing their small Building and Loan; “you know, George, I feel that in a small way we are doing something important.  Satisfying a fundamental urge. It's deep in the race for a man to want his own roof and walls and fireplace. And we're helping him get those things in our shabby little office.”

High schools pep their football teams, Space Shuttle Endeavour moves to the launch pad, Democrats and Republicans head to Orlando to tackle though healthcare issues, and all over America folks go about their daily routines, while dire radio and television forecasts for Wall Street’s brokers and huge banks ring in their ears. They are understandably worried and confused. Until just hours ago, government regulators seemed equally confused.

The nineteenth century French writer Alphonse Karr is credited for our title. Perhaps a better way to express the sentiment comes from Ecclesiastes; “what has been done will be done again; there is nothing new under the sun.” As Democrats bask in the afterglow of an Olympian-like celebration of their hero and his landmark speech, and Republicans get ready for their similar week of bashing and promising things sound the same to this writer. If this country was truly interested in alternative energy we would have found a way to harness the wasted, endlessly renewable, gas from political conventions long ago.

The summer of ‘08 has been anything but a typical lazy, quiet break from an otherwise frenetic calendar. Global equity markets dropped like October meteors in July; oil and gasoline prices exploded past record highs as the summer driving vacation season approached; record levels of rainfall in the mid-west sent the mighty Mississippi River pouring over thousands of acres of rich farmland, destroying much of the nation’s bread basket; thousands of Americans have lost or are near losing their homes to foreclosure; China puts its best national face on for the rest of the world as they host the 2008 Summer Olympics – a time for peace and international friendship, and two Russian and Georgian women hug during their medal ceremony as their countrymen kill one another.

The summer of ‘08 has been anything but a typical lazy, quiet break from an otherwise frenetic calendar. Global equity markets dropped like October meteors in July; oil and gasoline prices exploded past record highs as the summer driving vacation season approached; record levels of rainfall in the mid-west sent the mighty Mississippi River pouring over thousands of acres of rich farmland, destroying much of the nation’s bread basket; thousands of Americans have lost or are near losing their homes to foreclosure; China puts its best national face on for the rest of the world as they host the 2008 Summer Olympics – a time for peace and international friendship, and two Russian and Georgian women hug during their medal ceremony as their countrymen kill one another.

Oil is dropping like arock. It stands at $117.42 a barrel in New York, 20% below its record high of $147.27 reached July11th. Copper heads for its biggest weekly drop since March and down 12% since June. The dollar is climbing to a five?month high against the Euro putting further pressure on oil and other commodities. And gold fell to an eight?week low in London on speculation that dollar gains will spur gold sales by investors who bought the metal as a hedge against a sinking dollar.  

Falling oil prices, an improving credit picture, and a few stronger-than-expected corporate earnings put a floor under equity markets that began a free-fall in June. The S&P 500 is down only 1% compared to a decline of 9% in June. The Nasdaq is up 1.5% for July following its 9% decline in June. Global equity markets demonstrated a similar pattern.

On the 14th of this month, the collective global investor decided oil was entirely too expensive. It is down nearly 15% from its peak of $147.27 per barrel. During the same period the Dow Jones Industrial average rallied 2.7%, the small cap Russell 2000 jumped 5.7%, and the tech-laden Nasdaq, 3%. Some better-than-expected news from leading banks added fuel to the rally.