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In The World Of The Stock Markets

I’m sure all of us would like to have our world in better condition than it is today. The news in the stock market was what I was expecting and there should be more to come.
The financial sector didn’t continue it’s rally today for many reason that may take until next week to explain it all. What I will say is that the confidence in the stock markets is definitely not back. The DOW closed at 11,015 down just over 372 points.
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Goldman Sachs and Morgan Stanley came up with a nifty concept to avoid the turmoil as much as possible by transforming themselves from investment banks into traditional bank holding companies. By becoming bank holding companies, Morgan Stanley and Goldman will come under the scrutiny of national banking regulators and will be subject to new capital requirements. Too bad that the investors of Goldman Sachs didn’t think of it as a good idea as of right now, but let’s see what happens in the days and weeks ahead.
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The government has found something else to bitch about to each other than actually coming out with some real clear cut plans than just spending $700 billion of our money. I heard on CNBC tonight that that amount of money would pay off all failed mortgages that were held by Fannie Mae (I might have heard wrong, but I’m looking into it). If that’s the case why is the Treasury Dept. asking for so much? Maybe they needed some money for lunch this week, who knows?
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The 10 day suspension of shorting over 800 financial type stocks didn’t go over too well today either. It seems that what’s the sense of buying a stock if you can’t short it so you can hedge your bet. I guess it’s not a good idea to buy into a company for the sole purpose of the value to rise.
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The dollar lost some strength today as oil went on a 15% rally to close at $120.92 at the last trade that I saw tonight. Heating oil also jumped on the expected cold weather season that is on it’s way. Today is the first day of autumn.

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Is It Time To Bailout Of The Stock Market?

With all the talk going around about the condition of the stock market and the government planning to spend $700 billion of the taxpayer’s money to save the financial sector, it may be time to sit on the side lines for a while until the dust settles.
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I don’t know about you, but I’m still not confident in the condition of this economy. The bailout that the Treasury dept. is looking to do is two-fold. One of course is to save the financials from their own greed and stupidity. The second is to bring confidence back to Wall Street. In the media this weekend, it been said that the two day rally has shown that the confidence has returned to a certain point.
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I disagree. This little rally in the latter part of the week was nothing but a rouse from the smart money on Wall Street. I expecting this week to be another week from hell. Right now the Market is sitting at 11,388 points. What is that suppose to mean? Nothing. If you look at the big picture you will see that the trouble of being over-extended hasn’t gone away, it’s only become the governments problem and I’m waiting for the other shoe to fall.
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Don’t get me wrong, I have always been a bull in the stock market and a positive person. I’m only talking like this because there is too much corruption going on in the government as well as Wall Street and I’m not confident about the economy at this point in time. I know that we will get through this nightmare but not over night. It’s going to take about 6-12 months before we see the light at the end of the tunnel. If by some crazy chain of events Obama gets elected, then I do expect this turmoil to go on longer.
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I said in a earlier post that for the time being I’m going to be a spectator in the stock market and sell into any rally. After reading more of this weekend headlines and other news stories as well as researching the stocks that I’m in, I’ve decided to sit on the stocks that I have (there’s only a few at this time), and hold steady for the week.

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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?

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Financial Sector Woes

financial sector
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.

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Treasury Department, Federal Reserve And The SEC

treasury department
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.

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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.

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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?

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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.

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