Just in case anyone has not noticed this pattern, I wanted to spell it out clearly.
Congress passes the bailout on Oct 3, 2008. Between Oct 3 and Oct 9, the DOW drops 20% and stays down.
The senate OKs the stimulus on Feb 9, 2009, making it clear that it will pass shortly, which it does on Feb 14. Between Feb 9 and now, the DOW has dropped 21%.
Lesson: government meddling in the economy is the worst thing that can possibly happen.
The next worst drop in the DOW is Nov 18-20, 2008, when congress was discussing bailing out the automakers. The DOW dropped 10%, but congress decided against the bailout and the DOW quickly recovered.
What would happen if we let the insolvent banks fail without government interference?
On Mar 7, 2008, Bear Stearns stock lost 80% of its value, the failed company, and was acquired by JPMorgan. The DOW was down 4% between Feb 29 and Mar 10, and quickly recovered.
Lehman Brothers filed for bankruptcy on Sept 15, 2008. The DOW dropped 7% from Sept 12 to Sept 17, but regained that 7% two days later. I cannot call it an actual recovery, because the bailout was only 2 weeks after that.
Lesson: Business failures, even big ones, are minor blips in the economy.
So the word "mania" in the title is meant in the sense of "dementia", not "craze".
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