QuoteOriginally posted by: twofishSpeaking of universities. One thing that shocks me is that universities are now facing their biggest financial crisis since the Great Depression as endowments plummet, and I'm a bit shocked at the lack of leadership and vision that is coming out of the academy. MIT is facing a $150 million short fall in revenue over the next three years, and all they can do is create committees to study the problem, and no one is even talking about the fact that the drop in revenue may be permanent.One reason I think that academia is in such sorry state is that anyone with any vision and determination got out of academia.maybe this explains their new financial engineering program costing $70k

Twofish,First, I like your analysis of the situation and I think we agree on many elements. I too, "find interesting that economists often blame people for being people." Economics is the only "science" that when the system fails to behave according to theory, it's the system that is declared irrational, not the theory.As someone with an engineering background, I'm keenly aware that steel structures break at a certain load point regardless of whether we are confident, optimistic, biased, or ignorant of the forces on the structure or the properties of steel. Although I can see the vast difference between physics and economics, there is a certain inexorable undeniably about the numbers if they become bad enough. That is, subjective psychological factors do modulate objective physical-financial outcomes to some degree, but that degree is limited. For example, if someone loses their job and they don't have any savings, then they can't pay the mortgage, car, insurance, or credit card payments, regardless of psychological factors, market euphoria, or government confidence boosting. To me the challenge is in understanding the balance between physical and psychological properties of economies and economic phenomena.Thus, stopping the panic is a good thing, if it's sustainable. Creating giddy euphoria over only losing only one leg is a good thing, if it's sustainable. It's certainly possible that the window dressing of the accounting rule changes and the so-called stress tests will stop the bleeding long enough to allow balance sheets to heal. Yet I remain extremely concerned that the house of cards of housing is still stacked against the economy (to mangle two metaphors). The graphs below (and IMF data on future writedowns) suggests that more real physical damage still awaits:QuoteOriginally posted by: James Quinn on Seeking AlphaI also noticed that since January this year, the Case Shiller Futures Index pricing has pushed the bottom of the housing market crash from May 2010 to late 2010, which is a continuation of the pattern of the ever-retreating recovery.The real question is did the Fed/UST et al halt the panic or did they use up most of their ammunition hitting the pause button on the panic?P.S.: I want to address what you said about future investment/jobs but I need to think more about this important issue.

QuoteOriginally posted by: Traden4AlphaI think this graph gives some support for the "pessimists" view:Unfortunately, we can see that this downturn is already twice as severe as the dotcom crash and about 3X as bad as the 1990 downturn. That suggests that even if we hit bottom this instant (i.e., the next and all future employment reports show ZERO job losses) that we can expect another 15 to 20 months of market declines.I don't get this if this is the bottom then, we go only go up from here. How can one expect another 15 to 20 months of market declines ?

QuoteOriginally posted by: AbhiJQuoteOriginally posted by: Traden4AlphaI think this graph gives some support for the "pessimists" view:Unfortunately, we can see that this downturn is already twice as severe as the dotcom crash and about 3X as bad as the 1990 downturn. That suggests that even if we hit bottom this instant (i.e., the next and all future employment reports show ZERO job losses) that we can expect another 15 to 20 months of market declines.I don't get this if this is the bottom then, we go only go up from here. How can one expect another 15 to 20 months of market declines ?Up is not the only direction from a bottom. There's also sideways. We can stay at the bottom for many quarters or years (U-shaped recovery) while consumers and companies unwind debt rather than support economic growth. Or the recovery could take decades (e.g. Japan's L-shaped recovery after it's real estate bubble), but that seems less likely.

QuoteOriginally posted by: Traden4AlphaThus, stopping the panic is a good thing, if it's sustainable.I think we are in a state of "non-panic" right now. QuoteI also noticed that since January this year, the Case Shiller Futures Index pricing has pushed the bottom of the housing market crash from May 2010 to late 2010, which is a continuation of the pattern of the ever-retreating recovery.Housing prices typically take a long, long time to bottom out, but historically recessions have ended before housing prices have bottomed. Also, the last set of resets haven't really increased default rates. What's happening now is that the mortgages are being reset to low interest rates, and if you can't pay the mortgage with interest rates as low they are, you've probably defaulted already.QuoteThe real question is did the Fed/UST et al halt the panic or did they use up most of their ammunition hitting the pause button on the panic?The panic has been halted. Whether there is a new panic is another issue, but as time passes, people just run out of things to panic about. Also you can have house prices drop, the economy go bad, etc. etc. without panicking. There is a massive mess to clean up, and we may be seeing large writedowns, slow growth, and general bad stuff, but what isn't happening right now is that people are aren't running for the exits.

Traden4Alpha : One quote to summarize what you are saying : Keep pumping untill you get some water.The only problem is we may go into a point of no return where pumping is only decreasing our energy reserves which could have been used to look for water elsewhere.