Then on the second day, when the skin of our slane Leviathan made tent-cover for God’s righteous men and told back the all blood red light of the sun above battle, Gadriel, Commander of Fallen Legions, summoned me up to the line of the One Great War. Andras the Marquis and his legions at left, all pools of shadow full with the destructive wishes of lesser minded beasts at right, Gadriel called out my name again. And through thunder and rage and all manner of war I went, but then for once and all every thing great made way — a path of flesh and bone to lead me.

Gadriel made no means for me to respond and instead before I had found myself at his feet, began to command me. “You are he who walks in life’s shadow always. You shall go beset aside no human friend and at the head of no legion. For shadow there can be no open conflict. I set you instead, to burn. A mind of fire– to show man a death only as merciful as man has shown you life. Leave no air at waste and watch each piece of them succumb to dark, immortal flame.  When then that only ash remains of man may you return.  Go, in the name of the serpent.”

The Dow Jones Industrial Average closed yesterday with a 7900 handle, 7997.28 to be exact. It marks the first time these levels were closing levels for the index in over 5 years (almost a full 50% down from the peak of a 14,000 handle just recently set a year ago, in October 2007).

Chart technicians are on both sides about what all this means.

I think its important to point out price action on another closely watched index full of widely held stocks, the Dow Jones Transports Index, which made a fresh low during this sell off. This is suggestive that today we will likely see that same action more broadly. Transports led us through the commodities moves on both sides, which have been nearly dead-locked with the market, in a state of stair-stepping deflation.  Trading volume has also wound down dramatically.

These are not indications of re-valuation of the market, nor are these indications of price re-entrenchment.  These are not indications of capitulation.  These are indications that the US equity market is about to change its tone dramatically.

The final destination of this market, after its traded down, washing out perhaps hundreds of thousands of new investors in hundreds of varied positions, is not excitement.  It is not a psychology of buy & hold. And it is most certainly not a market psychology which leads to rebounds. This market will trade into such low volume, continually taking out players, vaporizing capital turned equity, only further removing opportunities for uptrend trading.

In the end, the action will go side ways as the whole market becomes apathetic. And while all historical indication tells us that we have a green light in a Bull market, a red light in a Bear market, a sideways market has only one indicator and it hangs brightly now over the door: the exit light.

The credit markets have pretty much frozen as banks are unwilling to lend to consumers or each other in a deafening reduction of confidence.

Many banks made mortgage loans with impossible terms or to unqualified borrowers. These banks then invested in securities backed by these now failing loans. It is this hidden potential for toxic holdings that reduces bank-to-bank confidence. And even a banks own self-confidence in consumer lending, if the bank itself relies on borrowing.

The reaction from the US government to this problem has been to provide liquidity to reinflate confidence. This has been unsuccessful, largely because, its dependent upon setting a floor on the US mortgage market and/or mortgage-backed securities market despite a natural state of correction in both. Price-fixing will not help lending between banks nor free-markets. Since inter-bank lending is immediately crucial to the economy, I present my own idea for solving this problem with our banking system.

Two important points; first, lending is both in the near-term costly and risky. Second, the current rash of government backstop-lending is no different with few exceptions (since the government controls the rules of the market).  This is the more important power of the government, not its ‘infinite’ supply funds, but its ability to control the rules. 

What if the Federal Reserve in coordination with the FDIC opens a new window.  This window will help banks lend to each other without lending them a thing. For a smartly set (perhaps percentage based) premium to the bank borrowing, the US government would — like a bank certifying a check — hold in escrow the amount of some bank-to-bank loan. Then, on at least these occasions, US banks could ensure transactions with each other through the help of their shared regulators and assistance providers.  Obviously, when and where these banks felt more comfortable, they could go back to working together directly.  The impact of the premium is disincentive to using the window.

This would be self-sustaining through premium collection and would not be harmful to the banking system or US tax-payer. I believe something as simple as this could help form an insurance for slowly winding down the operations of other windows at the Federal Reserve.  The windows could then help to support each other until varying crisis are resolved.

They are certainly all interesting– the reasons behind Google’s release of a new platform for web applications, that is. Its especially interesting the platform is admittedly disguised as browser project, one named for its user interface and explained with comic books — Chrome. Arguably, this is the sort of thing to set off whole shifts in Web development. And, the idea that Chrome runs on a Javascript engine written from scratch, called V8, changes the whole browser game– But before I lose it in technical ramblings, here are some of the reasons I think Google’s chroming the Web…

6) Google has long had interest in further advancing Javascript, as its a core technology for them.  This kind of advancement, further closes the gap created by the Web’s client-server design. It introduces an initial foundation for direct use of Google’s “cloud” more importantly.

5) Google employees must spend a large majority of their time in a browser because work is so closely tied to the Web — cutting out the middle-man will save future time and effort expenses. And Google is all about BIG simplicity.

4) Chrome better enables Google to produce metrics about Web use — in fact, one mandate of the Chrome development team is ensure Chrome will work best on popular sites. So, if you’re the paranoid type, make sure you enable Chrome’s Incognito mode.

3) Google has long been at war with Microsoft; Chrome might split browser market-share, reducing IE’s already straining grip due to Firefox growing popularity. This could help to diminish Microsoft on the Web.

2) Chrome’s innovative and will attract a community; users for its ease and feature rich landscape, developers for its obvious seamless integration with things like Google Gears and Google’s APIs (perhaps for its out-right sane behavior).

and the #1 reason) Why not play the Web from both sides before an effective way is developed to delever your 70+% hold on the Internet advertising market.

UPDATE 3:44PM EST – 

Here she is…  Chrome is fast.  It can’t login to Zimbra. But it obviously works with Wordpress just fine. 

Here is an interesting tidbit of law.  The US Congress would like to make it illegal to spoof Caller ID.

Title: A bill to amend the Communications Act of 1934 to prohibit manipulation of caller identification information.

Sponsor: Sen Nelson, Bill [FL] (introduced 2/28/2007)  Cosponsors (4)

Latest Major Action: 6/27/2007 Senate committee/subcommittee actions. Status: Committee on Commerce, Science, and Transportation. Ordered to be reported with an amendment in the nature of a substitute favorably.

You can find more details here.