Why Does the Market Keep Tanking?

I was talking with someone the other day who was in favor of the bailout. They are currently trading stocks to try to bring in the income they need each month, so obviously their bias is a stable market. From speaking with them, there appear to be two reasons for the latest market tumbles. First, the credit crunch I mentioned in my previous post. Since businesses can not get the credit they need to buy inventory, they can't sell new inventory which means they can't make payroll. The second issue is that people are pulling money out of their portfolios so the funds are having to sell off their stocks that are winning in order to have the cash to give out. This means that anything that starts rising is quickly sold off, thus bringing the price down. While the first issue can be solved by finding ways to get credit to those that need it and can afford it, the second really shows the weakness of what our economy is based on: popular belief in how a business (or commodity) will do in the next quarter.