Question (I've stopped numbering them)

It was about six months ago when our good friend no_slappz asked me rather pointedly what my market view was. If I recall correctly, the Dow was at about 13,000 or a little higher having come off it's peak of about 14,000. I had already said that I expected the dow to stay in the 12,000 to 14,000 range until the end of the year with high volatility (incidentally, I also predicted the Fed to stay on hold for the rest of the year and about that I was obviously dead wrong).

I told no_slappz that I would hold my market view neutral until the end of the year at which point I would change it to negative. He criticized that this was a reactive view and was not forward looking. I never did figure out what he meant by that.

What we've seen since the beginning of the year has certainly been negative. The sub-prime liabilities that we were assured would be "well contained" have begun to affect nearly every major financial institution. My theory all along has been that one can't have it both ways. On the one hand we were told that the "risk has been spread" so that no one person or institution would get hurt too bad, while on the other hand the problems associated with sub-prime mortgages were "well contained." Well, the former has turned out to be true. Everyone will feel the effects of this problem before it is over.

So here is the question: are we closer to the beginning or the end of the current problems in the credit markets? Have we nearly hit bottom, or is the worse yet to come?

Question #3

Has al-Qaeda in Iraq been "routed" as Sec. of Defense Robert Gates claimed last month, or are they "here to stay."

As a follow on, has "the surge" been successful or does the Iraqi's "failure to make sufficient progress" mean that "the surge" will be remembered only as a lull in violence, much like the early part of 2005?

Question #2

If an independent contractor (say in Iraq) is paid to be an armed escort for a private person or company, and he does not wear a uniform, does he have Geneva convention protections? To put it more simply, couldn't an opposing force consider him an "illegal combatant?"

Hopefully some of my righty friends can clear this up for me.