De-Leveraging The Stock Market

Tonight the Senate will have their turn to vote on the “invest In America” bill. Of course it’s a little different then the one that was voted on by Congress Monday. How is it different? I don’t know. The politicians need to vote on this issue, one way or another. With further investigation into this mess caused by over extended credit, I don’t know if it’s really wise to vote for the bill, but I will say that if they vote on it, it would be no one’s fault but our own for letting the country get out of control. It’s about time that this country de-leveraged all that has been extended.
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The world can’t run without credit, but with everyone wanting to live the American dream of wanting their own home and drive nice cars, we lost sight of what’s really important. If you want to have nice things and live in a house that you own, you need to have the money to it. It’s not right that the people who have been responsible in their financial decisions and paid their bills should have to save the companies that took advantage of the system or even help the people who tried to live outside their means.
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In the 1990′s the politicians sold the American people on the idea that it’s possible to get that dream. Then Congress (actually it was the Democrats) refused to put regulations in place to protect the economy from the problems we’re facing now. Add on top the people who didn’t have the financial intelligence to read the paperwork that they were signing nor did they care.
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Now we’re at the point that we need to de-leverage the economy and pull back the reins on how business is done. The stock market is no different. The companies have done the same thing and as investor and traders we need to accept the fact that this will be done with or without the bailout plan. I hope that it won’t hit us as hard as they make it seem or as long that they predict.
We as a country have always come back and become stronger in the past and this won’t be any different.

Tags: corruption, Financials, Government spending, Stock market news, Stock trading

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Congress Isn’t Doing This For Wall Street Or...

The market opened lower today and within the first half an hour it was down 300+ points. The markets are having a rough time while they wait for Congress to take a vote on the revised bill. Unfortunately Congress rather hear their own voice and use the time to look good on TV for the American people. If I hear one more time that they are voting on this bill for the American people and not Wall Street, I think I’m going to poke my own eardrums.
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Who do they think is on Wall Street? The Russians? They need to remember how many people have their retirement accounts and IRA’s in the stock markets. How many American people have over-extended themselves with credit because the government was not doing their job and regulating the industry. It’s a real shame that at 12:00 (about one and a half hours ago) Nancy Pelosi took the floor to speak to the house and spoke for about five minutes and since then it’s been one politician after another just talking about things that each of them know already.
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While this goes on Wall Street is holding steady at the 10,875. level. No matter what happens in Washington, the markets will suffer for some time.
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At this time the vote has started and it’s not going too well. With six minutes left to vote it stands (1:34pm)122 YEA, 111 NAY. Wall Street is started to react by dropping another 50+ points,

1:39pm – 155 YEA, 144 NAY, markets up 50 points

1:45pm the voting is over and so is the bill. The stock market has dropped another 400 points and sits at 10,474. The bonds rate have fallen through the cracks in the floor. I hope that you guys were not in the markets after Friday afternoon.

Tags: Government spending, Stock Market, Stock market news

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Congress and the President Come To An Agreement Fo...

photo by NCinDC1

It looks like the Congressional leaders and the President have come to an agreement to save the financial industry with the $700 billion that the Treasury Department has been asking for. Lawmakers pushed for joint spending controls with the Bush Administration. The Bill will go to the house tomorrow for a vote. President Bush feels that Congress will pass this Bill without any problems, He said in a written statement released today, “Without this rescue plan, the costs to the American economy could be disastrous,”
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It seems thought that others don’t share Bush’s optimism.Capitol Hill leaders are now moving to sell it to colleagues in both parties and acknowledged they were not certain it would pass. “Now we have to get the votes,” said Sen. Harry Reid, D-Nev., the majority leader.
Of course we have Nancy Pelosi, who is always looking for a photo “op” as well as showing that she actually cares about the American people said “This isn’t about a bailout of Wall Street, it’s a buy-in, so that we can turn our economy around.”
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The plan would let Congress hold on to half the money and force the president to jump through some hoops before using it all. The government could get at $250 billion immediately, $100 billion more if the president certified it was necessary, and the last $350 billion with a separate certification — and subject to a congressional resolution of disapproval.
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“This is the bottom line: If we do not do this, the trauma, the chaos and the disruption to everyday Americans’ lives will be overwhelming, and that’s a price we can’t afford to risk paying,” Sen. Judd Gregg, the chief Senate Republican, told The Associated Press. “I do think we’ll be able to pass it, and it will be a bipartisan vote.” Some of the lawmakers feel that it might not pass until possibly Wednesday.
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“This is something that all of us will swallow hard and go forward with,” said Republican John McCain. “The option of doing nothing is simply not an acceptable option.”
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Barack Obama Of course is trying to claim credit for taxpayer safeguards added to the initial proposal from the Bush administration. “I was pushing very hard and involved in shaping those provisions,” he said.
I don’t know how we even need the other politicians in Washington when we have this man who thinks of everything for the American people (yes, I’m only joking). Sort of the way that Obama is a joke of a candidate.
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The best part of the plan is that there will be guidelines to the fact of the “Golden Parachutes”. Executives whose companies benefit from the rescue could not get one, as well as any firm that benefits the most (receiving more than $300 million) would be taxed highly on any compensation for their top execs over $500,000.
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I look forward to see how Wall Street views this tomorrow morning. I don’t see this being anything but a good thing throughout the week. I expect the financial sector to be up at the end of the week.

Tags: Federal Reserve, Financials, Government spending, Security Exchange Commission, Treasury Dept.

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SEC Chairman Chris Cox Releases Statement

On Friday September 26, 2008 the Chairman of the Security Exchange Commission (SEC) released a statement in regards to to mess in the financial industry. I’m not surprised that no where in the statement does he say that because of his lack of leadership skills and responsibility that he will resign from his position. Instead he puts the blame on Congress and the bill that they passed.
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Why is it that we have the two entities, the SEC and the Federal Reserve, that are to keep an eye on the economy and the way the financial companies do business, not do their job for the last few years? Now that the economy is in dire straits, they want to step up and get something done. Let’s not over look the fact that it’s not themselves that the total burden falls on, no they have to run back to Congress (the entity that they blame in the first place) to rush and get it done. It’s a shame that our own government and it’s administration refuse to take the blame for this mess.
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Chris Cox’ statement is full of what is going to be done now, after the fact of him and his staff have sat back and watched this unfold. It speaks about what changes are recommended to be made to have this Consolidated Supervised Entities (CSE) program work. The same program that was passed by Congress that didn’t work in the first place. In his own words he says that “the program was fundamentally flawed from the beginning”.
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He even goes on to say that there are still other gaps in the regulatory framework. Mr Cox stated “Unfortunately, as I reported to Congress this week, a massive hole remains: the approximately $60 trillion credit default swap (CDS) market, which is regulated by no agency of government.”
Why is it that this is only being reported this week?
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If Mr Cox has been informing our Congress of the situation for the last few years, why hasn’t anything been done until now?
Here is the statement from Chris Cox that was posted on the SEC website for anyone who wants to read it all. I suggest that you take your ulcer pill first before reading.

Tags: Federal Reserve, Government spending, Security Exchange Commission

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Hank Paulson Has No Clue

Henry “hank” Paulson is looking for Congress to give him $700 Billion to buy the bad debt from the trouble financial institutions. Why should they do that? Well he says that the alternative is unimaginable.
The credit market are in shambles and he feels that there’s nothing else that could be done (so he says). The financials are riddled with unsellable bad debt of unknown value and without the government stepping in and but the debt the sector will get worse. Buying the debt Paulson said, and creating a market for it is the only thing that should be done. If nothing is done, small and big business’ won’t get loans. no more auto loans and mortgages will dry up even more. the ripple effect will carry to the rest of the economy.
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It is said that Congress will pass some sort of bailout before the end of the week. Why the end of the week? Because Congress is set to adjourn at that time (which is unnecessary since they just got back from their five week vacation.
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The proposal is being pushed to Congress by the White House this weekend. What is unclear is the proposal itself. It doesn’t answer any questions as to how these assets will be handled. For one, what are the assets going to be priced at, when they are bought now or when they’re sold off later. Paulson doesn’t have a clear cut plan on how this will be handled. He also stated on Meet The Press, “We can’t determine what the cost is today”. He’s fly by the seat of his pants. This man is totally in the dark and trying to tell us (the American people) that this will help the financial sector, but at what cost? In my opinion, at the cost of the taxpayers not the investors or the management of these failed corporations. As it is these CEO’s will still get their bonus’ of millions of dollars and we get caught holding the bag (of crap).
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The bill is said to possibly include some sort of mortgage relief for homeowners, but most likely not include another stimulus package. We will have to see what happens when Congress is faced with authorizing the $700 billion for the Treasury dept. to buy these some-what worthless assets. There has been discussions with foreign countries encouraging them to participate in some way (this is where my head starts spinning). This proposal would also allow Paulson to buy assats for foreign banks.
This country is in grave danger and it’s not from Wall Street, it’s all coming from the government. What I want to know is where was the SEC during the last year while this was all building up. Aren’t they suppose to be watching these institutions?
Chris Cox and Hank Paulson should be fired as well as tarred and feathered for their lack of focus during this period.
From the looks of this issue, it might help the financial sector, but for how long?

Tags: Federal Reserve, Government spending, Security Exchange Commission, Treasury Dept.

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Financial Sector Woes

photo by Jeff Sandquist
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In the months that have followed after Bear Stearns was rescued from complete failure we see that it’s far from over. Bear Stearns was just the beginning to realization that we have over extended ourselves in the financial industry.
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The government has stepped in to save Bear Stearns, Fannie Mae, Freddie Mac and lastly AIG, but where will it end (other than Lehman Brothers)? This past week the Treasury dept., Federal Reserve and the SEC along with the cooperation of foreign governments have gotten together to see what is to come of the world economy. Unfortunately what needs to be done has not really been addressed.
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That being said lets take a look at the real issue. We as a nation are over extending ourselves with borrowing too much money. never mind the fact that it’s also the problem in the corporate world as well. Leveraging money is the way for business’ to have their money work for them and to go further, but it’s gotten to the point that it seems to be the only thing that they (as well as we) know what to do. The government wanted to stimulate the economy by giving the American people a tax rebate check and to do that they needed to borrow the money from China. In the long run it didn’t work out that because many taxpayers paid off debt or put the money in savings. It’s a shame, they’re going to use the taxpayer’s money to pay back the debt of borrowing money to give to the taxpayers, it’s a paradox.
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There is only so much wealth in the country and the rest of it is leverage of that money. Yes the gevernment can print more, but there’s only so much actual value in this world. The wealth does grow over time, but not as fast as we want it to or as quick as we borrow it.
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There are going to be more bank failures, how many, who knows. What I will say is that this little two day rally that the markets had this past week will be short lived. I will always follow the markets and learn what I can, but I’m going to take profits into any rally and take a break from this roller-coaster ride.

Tags: Federal Reserve, Financials, Government spending, Security Exchange Commission

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Treasury Department, Federal Reserve And The SEC

photo by NCinDC
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The Treasury Department along with the Federal Reserve and the SEC (Security Exchange Commission) have come up with a great idea by using our tax money to solve the financial problems. Secretary Hank Paulson Outlined the basics of the plan, but more will be told in the weeks and months ahead. Which means that the three stooges (Hank Paulson, Chris Cox and Ben Benanke) are just “winging it” and making it up as they go along.
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It’s a real shame that this wasn’t done months ago, even before Bear Stearns took the hit. But as usual the three of them have always been reactive not pro-active. After all the short-selling that’s been going on for the last few months, now Chris Cox (how appropriate) wants to really put the brakes on the short-selling with some regulations. What I thought was stupid is that they’re going to create a agency to look over the regulations that will be put in place. Isn’t that what the SEC, Treasury dept. and the Feds were created for?
This is why the Democrats and their fearless leader (also brain-dead) Obama want to raise taxes. It’s so we can pay for their friend’s new jobs that are created constantly. Speaking of Obama, Isn’t sad to see that in just four years he’s been able to take the second all-time spot for getting money from Freddie and Fannie.
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Our government is not broken, it’s the people that the American people have put in office that are corrupt that are destroying it all. I love this country and have nothing bad to say about the dream and ideas that our fore-fathers had for the new world. Unfortunately over the period of 232 years things change and corrupt people corrupt good intentions.
I like what Senator John McCain said, he said that Chris Cox would be fired if he was President and continued with, that Mr Cox should do the right thing and quit.
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Don’t take this 700+ point rally in the stock market in the last two days as anything but a selling opportunity. I expect this crap to come back down again. I don’t trust the powers-that-be at this time. If you saw what went on in the financial sector before the market opened today and watched as the first thirty minutes went on, you can see that the only ones that are making a killing right now are the big guys. They pumped up the prices before the bell and after the average joe’s jumped in, they started to sell of with the profits and leaving them holding the bag.
I suggest to sell the rallies and wait it out. Good luck and happy trading.

Tags: Federal Reserve, Financials, Government spending, Security Exchange Commission

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Is Goldman Sachs (NYSE: GS) And Morgan Stanley (NY...

What in the world went on yesterday? It doesn’t look like it’s getting any better in the finance sector. As a matter of fact, it looks like it’s going to get much worse. Goldman Sachs closed Wednesday at $107.89, which is a price I thought that I would never see again. They are the leader in the industry, but obviously they can’t escape the credit crisis even with the decent earnings report that came out this week. As for Morgan Stanley, what happened yesterday was just a continuation of the trouble that stock has seen throughout this year. Morgan Stanley closed Wednesday at $21.75, which is 50% down from where they were in May of this year.
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This is in part of the fact that the Feds stepped in to save AIG and many investors are dumping any stocks now that may seem vulnerable. Both companies rely on the confidence of other financial institutions staying open for business. No one is trusting that any financial company will be able to survive this turmoil.
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Of course others believe that there are other factors involved. It’s being reported that John Mack, the CEO of Morgan Stanley has sent an internal memo to the firm’s staff blaming short sellers for the drop in the stock price.
“You should know that the management committee and I are taking every step possible to stop this irresponsible action in the market,” Mack wrote. “We have talked to Secretary [Hank] Paulson and the Treasury. We have talked to Chairman [Christopher] Cox and the SEC. We also are communicating aggressively with our long-term shareholders, our counterparties and our clients. I would encourage all of you to communicate with your clients as well — and make sure they know about our strong performance and strong capital position.”
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What is Paulson and Cox going to do about this issue that they didn’t have the chance to do months ago. They had the chance to pull in the reigns on short selling and decided to look the other way. I believe that the letters will fall on deaf ears.

Tags: Earnings report, Federal Reserve, Financials, Government spending, Investments, Security Exchange Commission

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American International Group, Inc. (AIG)

Here we go again. It seems that the government can’t make up it mind, yes I know that AIG is the Insurance leader and if it failed it would be very bad for everyone in this country, but when is the government going to stop flip-flopping on their decisions on who they’ll save and who they won’t.
the Central Bank stated in a statement that was posted on their website on Tuesday, “The [Federal Reserve] Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance”.
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I mean how much worse can it get? The market dropped Monday 504 points after it decided to not throw Lehman a life line and yesterday they take a 80% stake in AIG and the market goes up 141 point. How much more instability do they want to see that there is no confidence in the American economy? I don’t know about you, but I expect another plunge in the Dow as well as the NASDAQ that again I’m going to sit on the sideline. As for my IRA account, I won’t be needing that for another 15 years or so and since it’s a nice nest egg, I’m going to just leave it where it is for now.
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Our fearless leader in the Treasury department said on Monday, “What is going on right now in New York has got nothing to do with any bridge loan from the government,” Then what the hell is going on there Paulie?
The $85 billion loan that came from the Federal Reserve is aimed at keeping AIG out of bankruptcy and to stop the acceleration of the world credit crisis. Why is it that the taxpayers of the United States of America have to save the world economy? The last time I check, half of them have a problem with us and the other half don’t care about us either way.
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I’m very frustrated from all this B.S. in our government right now. there is way to much government spending and no one is minding the store. The inmates are running the asylum and there not a damn thing we can do about it.
Then again if Obama wants to show that he’s for change, then maybe he can give the government that excess $70 million dollars that he received last month in donations to show that he really wants to help the country and that he’s not in it for himself.
Just to let you know… I’m not holding my breath.
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P.S. while I’m thinking about it, Why did Fannie Mae and Freddie Mac give $125,000 to Obama (the second highest Senator) over the last three years. What is a government sponsored mortgage lender doing giving money to a politician?

Tags: Federal Reserve, Financials, Government spending, Security Exchange Commission

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Where Are The Investigations?

After yesterday’s 504.48 drop in the Dow one needs to ask where are the government investigations into this mess. Why is it that Fannie Mae, Freddie Mac and Bear Stearns were saved while Lehman Brothers and AIG face bankruptcy? I doubt very much that it will ever happen because of who is most likely involved in this debauchery. None of these companies should have been saved, it’s not the government’s job to bail out financial institutions or any other type of business’ that trade on the stock market.
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For those who are not aware the U.S. Treasury Secretary Henry “Hank” Paulson is the former CEO of Goldman Sachs. You can click on the link if you’re interested in reading his biography on Wikipedia Ironically it’s also the only firm that doesn’t seem to be having any dire issues of going down the tubes. He was also given a compensation package that can be considered absurd. On top of that, the Daily Telegraph was quoted in July 2008 saying “Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country over 70 times.”
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As for Chris Cox the Chairman of the Security Exchange Commission, Where was he when this crap started over a year ago? How come it’s gone on this far? I don’t know everything, but I would like to know more about this issue. Some people made a ton of money today when most of us lost big time, my self included. We might never find out who really benefited from it all.
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What I found interesting was the fact that these two guys were put in power by George Bush in 2005 and 2006 at the height of the housing market, which is also right before the crap hit the fan (go figure).
If you guys have any insight or comments to this post, please do so. I’m sure there’s someone out there that knows more about this than me.

Tags: Federal Reserve, Financials, Government spending, Security Exchange Commission

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