are we rooting for the stock market to collapse?

I am rooting for transparency and reason to return to debt and equity markets.

I am rooting for my portfolio to go up. Which is heavily invested on the short side.

If it hastens the arrival of socialism here, then go down baby!

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just say if the market hits epic lows, alot of businesses close, then the price of oil drops. Then the market with rebound. Is this correct thinking?

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In the long term, I suppose you could say it is correct, but then again, in the long term, we are all dead (to paraphrase Keynes).

From an American economist's point of view (as opposed to that of a market investor), "epic" lows don't help anything. Deflation is a disaster to be avoided at all costs.

As for a less-than-epic drop in U.S. equities, keep in mind that it's probably better for major financial firms like Lehman not to collapse at all. However, if they must fail, it is better for them to fail sooner rather than later, just to get everything over with, with the caveat, of course, that the political situation and market confidence are such that a failure can be handled as efficiently as possible without disrupting the whole market.

This is complicated stuff, and the Fed is working under the assumption that it is better for firms to fail one at a time, rather than to have a calamitous chain reaction set off all at once like falling dominoes.

What paradoxically might be good for the U.S. economy (along the same lines that you are suggesting) would be if foreign stock exchanges and currencies had their bubbles pricked (which is not to say that I necessarily believe that they are overvalued, but if they were, a correction would certainly help oil prices come down). It seems to me, with central bank interest rates so high in the rest of the world (which is not helping us, by the way), that investors are skittish about the U.S. dollar and USD-denominated assets, and are searching for other places to invest. (What's new?)

If other countries were to admit the need for interest rate cuts, and were to admit that their economies might be faltering, relative to the U.S. economy, then we would probably see exactly what you are suggesting: lower oil prices and greater demand for U.S. securities.

P.S. -- But yeah, don't expect this anytime soon. One suspects that bond insurers and GSEs are at the bottom of all this mess, and if that is the case, then we are talking about systemic market perversions that aren't easy to fix. We need to pay the full price and resolve this right fricking now, but it sadly doesn't look like that is going to happen. Apparently, we're going to put a band-aid on it and wait for it to happen all over again 10 or 20 years later. This was a government-designed mess, and the government is keen to see its old designs continued, no matter the cost.

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I am rooting for transparency and reason to return to debt and equity markets.

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That would be great. Would it be too much to ask for transparency in government as well?

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Would it too much to ask for transparency in government as well?

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No. I think agencies like the SEC and FASB should require only voluntary compliance from private corporations, but mandatory compliance from public entities, administrations, bureaus, agencies, etc. Congress has got their missions exactly backwards.