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Two weeks ago I predicted a market reversal for last week, "led down by the financials." Turns out I was a week early, this week the market really declined, led down by financials. I expect this too shall pass, and we'll get back on track for new, um, "highs." Below is the S&P since my prediction in blue, the financial index in red.

S&P 500 v. XLF October 12 2009 to October 30 2009

America's GDP grew in the third quarter, the first time its economy has expanded in more than a year. Home resales jumped by 9.4% in September from August, the biggest rise in 26 years, as first-time buyers rushed to take advantage of a tax credit that is about to expire.

Mattel has released a new line which includes Sugar Daddy Ken (really, I'm not clever enough to make this stuff up) and Palm Beach Barbie, who, to my eyes, is a cougar (for those behind on the latest slang, that's an older woman who hunts younger men). I must say, I wouldn't be caught dead in the green paisley jacket, and the two Barbies just look scary to me.

Remember CDSs, the Credit Default Swaps? Those are the insurance policies that pay off if a bond loses value. It was CDSs written against mortgage backed bonds that brought down Lehman and AIG and started all this. Now, some new information is just being made public. In the months leading up to the bailout of AIG, the chief financial officer for AIG's financial products unit worked day and night and through the weekends to work out a deal with the banks that had purchased $61 billion of credit default swaps from AIG. AIG was trying to get the banks to accept as little as 40 cents on the dollar to retire the swaps. Typically, a counter-party to a firm rapidly running out of cash might expect somewhere between 50 to 70 cents on the dollar to close out the obligations. Citigroup agreed last year to accept about 60 cents on the dollar from New York-based bond insurer Ambac Financial Group Inc. to retire protection on a $1.4 billion CDO.

The New York Fed’s decision to pay the banks in full cost AIG -- and thus American taxpayers -- at least $13 billion extra. The biggest winners here include Goldman Sachs, which got $14 billion, as well as Societe Generale and Deutsche Bank. That's the same Goldman Sachs that's scheduled to pay out $23 billion in bonuses this year, and likes to say "We never needed a bailout."

Geithner, he of the $14B payout to Goldman Sachs, said in prepared testimony for the U.S. House of Representatives Financial Services Committee that the Fed should keep its ability to act as an emergency lender of last resort, but only to solvent firms in times of severe stress in financial markets -- with Treasury consent. "Any firm that puts itself in a position where it cannot survive without special assistance from the government must faces the consequences of failure," Geithner said. "The proposed resolution authority would not authorize the government to provide open-bank assistance to any failing firm."

And now Tim Geithner wants to shovel another $2.8 billion into GMAC. What is the US taxpayer getting in exchange for all these GMAC bailouts? More stock.

Congress has decided to extend housing tax credits. First time buyers will continue to enjoy $8,000 credits from the government while buyers who have lived in their house for five years will also be able to receive a $6,500 credit if they buy a new house.

There's a new government program - SafeLink. If you're on welfare or living in section 8 housing or receive food stamps or medicaid, you can have a free cell phone with free airtime, about 60 minutes per month. It's frequently claimed that section 8 housing is filled with illegals. But don't worry, to get the free phone you also have to check a couple boxes on the web site asserting that you're not claimed on anyone else's tax return as a dependant, and that you don't get lifeline phone service as a land line. These phones send and receive text messages, which makes me wonder if this fact will be used to "remind" the users to get out and vote, vote for the democrat of their choice, but vote. The same phone from the same carrier - Tracfone - costs $20 and air time is 10¢ per minute. The Safelink phone can be recharged with Tracfone cards. My kids have a similar plan with Virgin Mobile, it costs me $5 per kid per month.

The public's view of Obama is critical to his clout: It affects his ability to persuade reluctant moderates to sign on to revamping the health care system and to persuade liberals unhappy with some of its compromises to stay on board. It will help determine how much public support he can command for his decision on whether to deploy more U.S. troops to Afghanistan. His standing also will be one important factor on whether Democrats suffer big losses in next year's congressional elections, including in a hotly contested rematch here.

What do voters think about Obama now? 60% predict the country will be better off in three years, the end of Obama's term. A year ago, nearly two-thirds of those surveyed said the economy should be Obama's top priority. Now that's declined to 40%. Attention to health care, the deficit and the wars in Iraq and Afghanistan has grown. A majority of those surveyed now say his administration won't be able to control federal spending or improve the health care system. The biggest decline has been on his pledge to ease the nation's fierce partisanship: A year ago, 54% said he would be able to "heal political divisions"; now only 28% say so. I'd like to meet some of these 28% and hear what they have to say.

Some Netherlands professors ranked every country in the world according to how many "happy years" of life you get in that country. Generally the top scores go to the Scandinavian countries, then N.American and western Europe, with Africa on the bottom.

Rank	Country	Satisfaction with life 0-10	Life expectancy in years	Happy Life Years
1	Costa Rica	8.5	78.5	66.7
2	Iceland	8.2	81.5	66.4
3	Denmark	8.3	77.9	65.0
4	Switzerland	8.0	81.3	65.0
5	Canada	8.0	80.3	64.0
6	Australia	7.7	80.9	62.9
7	Sweden	7.8	80.5	62.8
8	Norway	7.9	79.8	62.4
9	Finland	7.9	78.9	62.3
10	Ireland	7.6	78.4	60.9
11	Luxembourg	7.7	78.4	60.7
12	Netherlands	7.6	79.2	60.6
13	Austria	7.7	79.4	60.1
14	New Zealand	7.5	79.8	59.7
15	Mexico	7.9	75.6	59.5
16	Spain	7.3	80.5	58.8
17	Belgium	7.3	78.8	58.6
18	Panama	7.8	75.1	58.5
19	United States	7.4	77.9	58.0
20	United Arab Emirates	7.3	78.3	57.2
21	Cyprus	7.0	79.0	57.0
22	United Kingdom	7.2	79.0	56.9
23	Andorra	6.8	83.5	56.8
24	Malta	7.1	79.1	56.0
25	Colombia	7.7	72.3	55.8
26	Germany	7.1	79.1	55.2
27	Argentina	7.3	74.8	54.9
28	Singapore	6.7	79.4	54.6
29	Israel	6.9	80.3	54.5
30	Italy	6.7	80.3	54.4
31	Dominican Republic	7.6	71.5	54.3
32	Brazil	7.5	71.7	53.6
33	Slovenia	6.9	77.4	53.3
34	Venezuela	7.2	73.2	53.0
35	France	6.6	80.2	52.8
36	Greece	6.3	78.9	51.5
37	Chile	6.6	78.3	51.4
38	Uruguay	6.8	75.9	51.2
39	Nicaragua	7.1	71.2	51.0
40	Kuwait	6.6	77.3	51.0
41	Japan	6.2	82.3	50.8
42	Qatar	6,8	76.0	50.6
43	Belize	6.6	75.9	50.3
44	Guatemala	7.2	69.7	49.8
45	Czech Republic	6.5	75.9	49.3
46	Hong Kong	6.0	81.9	49.2
47	Paraguay	6.9	71.3	49.0
48	Honduras	7.0	69.4	48.7
49	Trinidad-Tabago	7.0	69.2	48.7
50	Jamaica	6.7	72.2	48.5
51	Malaysia	6.6	73.7	48.3
52	Poland	6.3	75.2	48.1
53	Ecuador	6.4	74.7	48.0
54	El Salvador	6.7	71.3	47.6
55	Taiwan	6.2	76.4	47.4
56	Saudi Arabia	6.5	72.2	47.0
57	South Korea	6.1	77.9	46.9
58	Thailand	6.6	69.6	45.8
59	China	6.4	72.5	45.5
60	Croatia	6.0	75.3	45.2
61	Vietnam	6.1	73.7	45.0
62	Portugal	5.7	77.7	44.6
63	Peru	6.3	70.7	44.0
64	Indonesia	6.1	69.7	43.8
65	Syria	5,9	70.0	43.4
66	Tunisia	5.9	73.5	43.3
67	Slovakia	5.8	74.2	43.3
68	Philippines	5.5	71.0	42.8
69	Guyana	6.5	65.2	42.6
70	Estonia	5.9	71.2	42.5
71	Jordan	6.2	71.9	42.5
72	Bolivia	6.5	64.7	42.1
73	Lithuania	5.5	72.5	41.8
74	Turkey	5.8	71.4	41.4
75	Iran	5.8	70.2	40.9
76	Hungary	5.5	72.9	40.8
77	Serbia	5.6	72.4	40.5
78	Kazakhstan	6.1	65.9	40.4
79	Uzbekistan	6.0	66.8	40.4
80	Egypt	5.7	70.7	40.0
81	Romania	5.7	71.9	40.0
82	Bosnia	5.8	74.5	39.5
83	Laos	6.2	63.2	39.4
84	Latvia	5.3	72.0	39.1
85	Kosovo	5.4	72.1	38.9
86	Belarus	5.7	68.7	38.8
87	Algeria	5.4	71.7	38.7
88	Montenegro	5.2	74.5	38.7
89	Morocco	5.3	70.4	37.8
90	Mongolia	5.7	65.9	37.3
91	Russia	5.6	65.0	36.3
92	Kyrgezigstan	5.5	65.6	36.3
39	Sri Lanka	5.1	71.6	36.2
94	Armenia	5.0	71.7	36.1
95	Palestina	5.0	72.9	36.1
96	Azerbaijan	5.3	67.1	35.4
97	Albania	4.6	76.2	35.3
98	India	5.5	63.7	35.1
99	Bulgaria	4.4	72.7	34.1
100	Macedonia	4.7	73.8	33.8
101	Tajikistan	5.1	66.3	33.8
102	Lebanon	4.7	71.5	33.7
103	Ukraine	5.0	67.7	33.7
104	Nepal	5.3	62.6	33.3
105	Bangladesh	5.3	63.1	33.3
106	Moldova	4.9	68.4	33.2
107	Pakistan	5.4	64.6	32.5
108	Mauritania	5.0	63.2	31.3
109	Iraq	4.7	66.5	31.1
110	Ghana	5.2	59.1	30.9
111	Djibouti	5.7	53.9	30.5
112	Georgia	4.3	70.7	30.1
113	South Africa	6.0	50.8	29.6
114	Yemen	4.8	61.5	29.4
115	Sudan	5.0	57.4	28.6
116	Cambodia	4.9	58.0	28.5
117	Senegal	4.5	62.3	27.9
118	Chad	5.4	50.4	27.0
119	Namibia	5.2	51.6	26.8
120	Nigeria	5.7	46.5	26.3
121	Mali	4.7	53.1	25.0
122	Guinea	4.5	54.8	24.7
123	Uganda	4.5	49.7	23.9
124	Haiti	3.9	59.5	23.3
125	Botswana	4.7	48.1	22.6
126	Burkina Faso	4.4	51.4	22.4
127	Malawi	4.8	46.3	22.1
128	Ethiopia	4.2	51.8	21.8
129	Madagascar	3.7	58.4	21.8
130	Liberia	4.3	51.0	21.8
131	Ivory Coast	4.5	47.5	21.1
132	Niger	3.8	55.8	20.9
133	Central African Rep	4.6	43.7	20.2
134	Congo (Kinshasa)	4.4	45.8	20.2
135	Zambia	5.0	40.5	20.1
136	Cameroon	3.9	49.8	19.6
137	Rwanda	4.3	45.2	19.5
138	Congo (Brazzaville)	3.7	52.3	19.4
139	Kenya	3.4	52.1	19.1
140	Afghanistan	4.1	45.9	19.0
141	Angola	4.3	41.7	17.8
142	Benin	3.0	55.4	16.7
143	Mozambique	3.8	42.8	16.4
144	Togo	2.6	57.8	15.1
145	Sierra Leone	3.6	41.8	15.0
146	Tanzania	2.6	51.0	14.4
147	Burundi	2.9	48.5	14.3
148	Zimbabwe	2.8	40.9	12.5

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