Saved by Secretary Paulson
Wow! What a week! Some folks read books, some watch movies or television, but I enjoy the stock market and the excitement of buying and selling. This last week has been a wild, wild, ride. So what has been so exciting about this past week and why should you care?? First I would suggest that you say a small prayer that the plan Secretary Paulson submits to the Senate Banking Committee tonight is approved immediately and without the politicians trying to add a bunch of "earmarks" to the plan.
As I have been watching the desperate maneuvers of Mr. Paulson and the Fed Chairman try one financial trick after another I was preparing to pull all my money out of the market and out of the bank on Monday. Why? Because I was watching the financial structure of the United States coming apart.
How would this have affected you???
One or two weeks from now you would have gone to the local bank, put in your ATM card, and nothing would have come out. Next week you would have been watching one financial institution after another declaring bankruptcy. Then you would have watched a run on the banks. The big money people were already pulling their funds out of the money markets this week. Billions and billions of dollars. The value of your home would have gone down by 25% in the next year, which wouldn't matter because you couldn't sell it anyway. The not employed would increase from 5% to 20% or 25% and for the first time since the 30's the U.S. would have people going hungry.
Remember the great depression was caused by the stock market and margin sales. This time it was mortgages and short sales. I have been watching the number of naked shorts increase on stock after stock during the week. Some stocks have millions of shares sold short. All short sales were frozen TODAY on thousands of stocks. They will be allowed again in October and I hope they put the original rules back in effect that keep the folks from selling naked shorts and also require that the stock is available to short. All the government folks who were working last weekend will be there this week end. I think they finally got the message that they have to allow the Treasury to set up a program to take all the mortgage packages out of the market. You will hear that this is going to cost the tax payer billions if not trillions . Not true. Because no one knows the value of these packages they couldn't be sold and thus froze the capital market.
I'm sure all the foreclosed properties in California have some value and will eventually go up in value as the properties start to move again. Who knows, the government might even make a profit in the long run. Meanwhile, everyone can get back to work. You will probably have to put some money down to buy property from here on out but that's how it should have been all along. Just the knowledge that a plan is being worked on and will pass has resulted in the stock market bouncing back yesterday and today. The reason everyone has been losing money in their 401K's and retirement funds is the fact that the financial markets have been slowly coming to a halt based on the sub-prime loan packages. The housing markets were not the entire problem but were the trigger to get the dominoes started down the financial road to ruin.
It took President Roosevelt ten years to get us out of the last depression. We were on the way towards number two but fortunately Mr. Paulson had the financial background to see that everything that was tried was not working. I am sure that Congress was terrified when he briefed them yesterday on why he needed to buy the mortgage bundles from all the big banks and investment companies and he needed to do it now.
I listened to McCain and Obama today talk about the problem. I was surprised to hear that McCain tried to pass legislation two years ago that would have at least slowed the process down. As for Obama, it was obvious, he doesn't have a clue. Two of his present financial advisors helped cause the problem and he needs to check with them before he will offer a plan. Obama will be saved this weekend when Sec Paulson's plan is approved and he is given the authority to go ahead. 95% of the U.S. is being spared the agony of seeing what a real depression looks like and the rest of the world almost saw their "sugar daddy" run out of "sugar".
I am Colonel AJ and I approved this message.
As I have been watching the desperate maneuvers of Mr. Paulson and the Fed Chairman try one financial trick after another I was preparing to pull all my money out of the market and out of the bank on Monday. Why? Because I was watching the financial structure of the United States coming apart.
How would this have affected you???
One or two weeks from now you would have gone to the local bank, put in your ATM card, and nothing would have come out. Next week you would have been watching one financial institution after another declaring bankruptcy. Then you would have watched a run on the banks. The big money people were already pulling their funds out of the money markets this week. Billions and billions of dollars. The value of your home would have gone down by 25% in the next year, which wouldn't matter because you couldn't sell it anyway. The not employed would increase from 5% to 20% or 25% and for the first time since the 30's the U.S. would have people going hungry.
Remember the great depression was caused by the stock market and margin sales. This time it was mortgages and short sales. I have been watching the number of naked shorts increase on stock after stock during the week. Some stocks have millions of shares sold short. All short sales were frozen TODAY on thousands of stocks. They will be allowed again in October and I hope they put the original rules back in effect that keep the folks from selling naked shorts and also require that the stock is available to short. All the government folks who were working last weekend will be there this week end. I think they finally got the message that they have to allow the Treasury to set up a program to take all the mortgage packages out of the market. You will hear that this is going to cost the tax payer billions if not trillions . Not true. Because no one knows the value of these packages they couldn't be sold and thus froze the capital market.
I'm sure all the foreclosed properties in California have some value and will eventually go up in value as the properties start to move again. Who knows, the government might even make a profit in the long run. Meanwhile, everyone can get back to work. You will probably have to put some money down to buy property from here on out but that's how it should have been all along. Just the knowledge that a plan is being worked on and will pass has resulted in the stock market bouncing back yesterday and today. The reason everyone has been losing money in their 401K's and retirement funds is the fact that the financial markets have been slowly coming to a halt based on the sub-prime loan packages. The housing markets were not the entire problem but were the trigger to get the dominoes started down the financial road to ruin.
It took President Roosevelt ten years to get us out of the last depression. We were on the way towards number two but fortunately Mr. Paulson had the financial background to see that everything that was tried was not working. I am sure that Congress was terrified when he briefed them yesterday on why he needed to buy the mortgage bundles from all the big banks and investment companies and he needed to do it now.
I listened to McCain and Obama today talk about the problem. I was surprised to hear that McCain tried to pass legislation two years ago that would have at least slowed the process down. As for Obama, it was obvious, he doesn't have a clue. Two of his present financial advisors helped cause the problem and he needs to check with them before he will offer a plan. Obama will be saved this weekend when Sec Paulson's plan is approved and he is given the authority to go ahead. 95% of the U.S. is being spared the agony of seeing what a real depression looks like and the rest of the world almost saw their "sugar daddy" run out of "sugar".
I am Colonel AJ and I approved this message.
Insightful post. The comparison of today's economy to that of the just-pre-Great Depression is scary. As are BOTH of the Pres. Candidates this year (my opinion). I like your blog, saw your first time visit and comment on Free Spirit and followed you over here. I'll stop back from time to time for sure.
ReplyDeleteMarvin
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