You may be right. However, the government is not the only source of
funds nor is the bailout the only money being supplied by the
government. The panic in the public was caused by an advertised
effort to get this huge source of money available so that the
financial companies would not collapse. The original structure of the
plan shows what they had in mind as their first choice, which was to
reduce the loss to the industry. Even the name "bailout" gave away of
their attitude. Now this has been watered down and the fix is not as
attractive. Meanwhile, the government and private companies have
handled the serious crashes of some weak banks. The argument now seems
to be that the bailout will give more confidence so that the run on
the banks would stop, a run that the panic sales pitch created. This
is a different argument from that given initially. Meanwhile, the
experts point out that the underlying problem could be fixed much
easier and with less risk by helping people restructure their
mortgages. This way, the value of the mortgage could be established
and fewer would have to be foreclosed. The financial industry would
then pick up the loss on the mortgages that could not be fixed. This
idea is resisted by the industry because some companies would still
collapse. Meanwhile, the Republicans did not support the bailout
because they say their feelings were hurt by the truth instead of
arguing that the repair structure needs to be changed. No wonder the
government is in such bad shape.
Ed
On Sep 30, 2008, at 9:34 AM, Stephen A. Lawrence wrote:
DJIA is up 232 points from the open, but it was down 750 points on
Friday.
According to the WSJ,
Stocks staged a partial recovery Tuesday as investors hoped a revised
financial rescue plan will emerge.
In other words, the recovery, such as it has been so far, is
apparently
(as far as folks can judge) due to the widespread belief that Bailout
Plan Version II is in the works and is likely to pass some time soon.
Such assessments of the "reasons" for market moves tend to be a bit
speculative, but I see no obvious reason to disbelieve this one.
Edmund Storms wrote:
Well, for those who are still interested, the market is recovering
nicely. However, while the stocks that are most at risk from the
immediate problems are going up, the stocks that are expected to
suffer
from a recession are continuing downward. In other words, the basic
market does not think the system is actually going to crash, but the
recession is going to get worse regardless of what Congress does.
Gold
is waiting to see how much funny money is made by the government. It
appears that once again Bush et al. have panicked and exaggerated the
problem, at least that is what the market seems to believe.
I'm not sure that is a well founded remark.
"The market" may very well believe things are every bit as bad as they
appear to be, if not worse. However, many people also believe a new
bailout is in the works, and they don't want to miss the boat if
things
are fixed up again by Friday.
If the next attempt at a bailout also tanks, *then* we will see what
the
market really thinks of the situation.
The European governments certainly seem to agree that things are very
bad indeed. From Germany to Iceland governments are dumping huge
amounts of capital into the financial system in an effort to avoid
another Great Depression. The U.S. bailout package would *NOT* have
been the biggest in the world on a per-capita basis if it had gone
through -- as of this morning I believe that honor goes to Iceland,
though Germany is right up there too.
A lot of very smart and powerful people are extremely concerned about
this -- it's not just some nonsense cooked up by George Bush, any more
than global warming is all just some nonsense cooked up by Al Gore.
(Though it's true that this mess could very well all be Bush's
fault, in
that he could have avoided it if he had exercised a shred of economic
sense over the past eight years).
Ed
