Scary chart here guys:

For the math-challenged, for the last four weeks the losses have been 48, 50, 37 and 48 points, respectively, or an average of 45.75 points per week.

The President is about half way through his first 100 days.  Assuming this rate of decline continues for the next 50 days, or approximately seven weeks, we would see another 320 points come off the index, placing us well within the "three handle", or 3xx, on the SPX.

We're off to a nice start on putting in another 40+ point loss this week, having lost nearly 10 of those points already, and the market is several hours from opening!

The culprit today is The Bezzle over in Europe, which is bleeding over here - and "bleed" is the correct word for it.

How anyone can avoid recognition, now more than 18 months into this mess, that enabling "The Bezzle" to continue will not work and will simply lead to more losses over time is beyond me.

We have our evidence here, we have the evidence in Asia, and we have the evidence from Europe, where balance sheets are even more opaque than they are in the United States.

AIG is alleged to have effectively blackmailed The Fed and Treasury, according to Bloomberg:

“What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means,’’ said the presentation by New York- based AIG. “Insurance is the oxygen of the free enterprise system. Without the promise of protection against life’s adversities, the fundamentals of capitalism are undermined.’’

Note that nobody is mentioning that the firm allegedly wrote $2.7 trillion dollars of CDS against less than $100 billion in capital!  Nowhere is it mentioned that this "rogue unit" of the company managed to mortgage the entire capital base of the firm more than twice without any regulatory or enforcement action being brought either on the firm itself or the buyers of those swaps (who ARE regulated entities.)  WHERE ARE THE INDICTMENTS?

The game-playing in the Credit Default Swap space continues; it is now cheaper to insure Vietnam against default than Berkshire Hathaway!  Does anyone believe that?  I certainly don't.  Nor do I believe that GE has a 25% risk of default this year, yet this is what their CDS pricing says.

Confidence is gone Mr. President; the assumption in the market is now that everyone is a liar, everyone is a thief, everyone is embezzling and everyone is bankrupt.

This, of course, is not true, but there is no way for us to know who is and who is not, because your administration has continued the bankrupt and corrupt policies of George Bush with regards to matters financial!

Simply put, you must act now.  If the SPX really does have a "3" handle in the next six to seven weeks your goal of "saving or creating four million jobs" will be immaterial, as half of the S&P 500 will collapse, we will have 20 million more Americans thrown out of work, unemployment will exceed 20% and we will have a Depression worse than the 1930s.  The Government does not have the borrowing capacity to backstop this event - ergo, you must insure it does not happen if you wish to avoid this catastrophe.

Simply put all of the following must happen right here, right now, today:

• The CDS casino must be closed today.  The AIG revelations are an outrage - we are sending tens of billions of dollars into AIG to prop up US and foreign banks as a consequence of these swaps?  This can be stopped with the stroke of a pen and must happen now.  Let the ISDA and bankers scream - suspend all CDS contracts until they are on an exchange with a central counterparty and margin has been established and proved.  Those for which margin can't be established or proved are void as fraudulent upon issue; the money never existed to pay them off.  This charade called CDS must end.
• You must pledge to send the FBI after everyone involved in the embezzlement during the previous ten and more years, whether they be borrowers, lenders, bankers or otherwise.  Liars on mortgage applications, liars in marketing these securities, liars all around - all must be prosecuted.
• We must separate investment and commercial banking services.  Banking is a utility function and it must be safe.  We had it right with Glass-Steagall.  Make it a priority to reinstate that law and force the breakup of the monsters that have led us to this cliff.  If an investment bank wants to play "hedge fund" or "proprietary trading", fine - but if they blow up they must not be allowed to sink our economy and banking system.
• The Fed must be directed to open their kimono and disclose everything they are doing, daily, including what they're taking in, from whom, how it is being valued and how it is being "haircut" or margined.  Equity investments made by The Fed are clearly unlawful under The Federal Reserve Act and must be immediately disgorged.  If The Fed doesn't like living within the law, then Treasury must go around them and issue Treasury Notes itself; their franchise exists at our pleasure, not the other way around.
• The ongoing charade in our housing market must end.  The FHA's rate of "first payment defaults" has tripled in the last year.  Safe mortgages require a significant down payment - at least 10% and more commonly 20% - which means no seller-funded down payment assistance and the end of the 3% FHA down payment.  Keep the VA program for our service people but the rest must be scrapped.  FHA insured mortgages are a good thing but we must drive the fraudsters out of the mortgage system and prosecute them - we're not doing it, and it is dramatically exacerbating this crisis.
• Insist that every firm that is traded on a public exchange in The United States produce a consolidated balance sheet and financials without exception - no off-balance sheet games and no BS or tricks.  ALL "assets" must be disclosed along with their pricing models.  Any firm that refuses is delisted immediately.

Bloomberg is already making analogies to The Depression:

As in the Great Depression, world trade is collapsing, wealth is evaporating and the banking system is broken. Deflation is a growing threat as companies slash production, pay and prices. And leaders worldwide are having difficulty making headway in halting the self-perpetuating decline.

The underlying problem is confidence Mr. President, and that is something you can fix right here, right now, today.

Lock up the fraudsters, shut down the bad mortgage lending programs, close the CDS casino until it is placed under regulation and force the firms traded in this nation to produce truthful and complete financial statements.

Pledge to reinstate Glass-Steagall.

In short, remove The Bezzle and you restore confidence, breaking the back of this downward spiral.

If you don't do it soon - within days - the market will do it for you, as it has been for the last eighteen months, and we will all be calling you President Hoover.

With a "5" as the first digit on the SPX, which will happen this week at the present rate of change, it is likely too late.

With a "3" as the first digit of the SPX it is with certainty.