Cutting Through Wall Street's Fear and Loathing for What You Should be Reading

The tsunami of financial coverage this morning is both awesome and overwhelming. What to do with so much reporting? Well, we know you know four things: 1) the economy is still in a terrible spot; 2) Lehman Brothers will go into bankruptcy; 3) Merrill Lynch will get sold to Bank of America; 4) the 800 pound insurance gorilla - A.I.G. needs cash.

That raises the question - what's gonna happen next?

That's why amidst all the stories about angst, fear, loathing, etc. the New York Times' "Banks Fear Next Move by Shorts" is really the one story you need to read today. To help, Why You Care notes we've posted on this topic before explaining: "Regular short sales involve a seller borrowing from a broker the stock he plans to sell - then buying it later at a lesser price, thus making a profit from the difference. Sell high, buy low says a short seller".

Here's why you care: If Wall Street hedge funds decide to make money buy shorting stocks (betting that the financial stocks will continue to go lower before going up), that's simply another way of saying Wall Street doesn't see the bottom of the market yet. If that's the case, then it makes it a whole lot harder for the government to help out. That doesn't bode well for your 401K or home price.

Reading the NY Times article we linked to will help you understand the pressure and context of how the market is working, and at times working angst itself as it seeks stability.