I cant help to think about part 3 in the movie when we are looking at todays economy. To anyone who has not seen this movie yet. I strongly advise that you watch it.
Here is a link.
How the hell did we get into this mess and what the hell is going to happen?
Well word is out Treasury secretary Henry Paulson has said the first batch of money to be released from the 700 Billion bail out, will go towards major financial institutions. Although at first glance this may seem like an ideal situation we need to really question the governments involvement in free markets. Facing what seems to be the onslaught of a disastrous recession banks and financial institutions have been more reluctant to lend money between each other for fear one or the other may go the way of the dinosaurs. As an investor the thought of having the government diluting share price is not exactly ideal. Under the current Troubled Asset Relief Program (TARP) banks are not forced to sell any stock to the government. In order for the banks to sell bad mortgages debt back to the government, grants the right to the government to purchase some amount of stock.
Bill Seidman, former chairman of the Federal Deposit Insurance Corp has been quoted as saying “The only reason they’re putting money in those banks and the banks are accepting is that the banks will go broke without it. They’re not taking this because they love the government. They’re taking it because the regulator is saying, ‘You don’t have enough capital. If you don’t get more capital, we’re going to close you down”.
Government regulations has forced banks and financial institutions to write down the value of investments back by mortgages. By doing so assets held are now based on falling house prices, not necessarily condusive of what the assets are really worth. Looks like the relief fund and Paulson’s plan is only going to make the select few happy.
Unless you have been living under a rock for the past month we are all aware of the economic situation in America. The credit crisis mixed with a failing economy has now become the worlds problem. No one seems to have the answer to what will help us get from ground zero to breakthrough. My question is….facing such an economic downturn is the media helping? Every day we turn on our televisions or listen to the radio on our dismal commute to no mans land and listen to the same thing. We all know we are in for some rough times. The media claims that its only doing its job by reporting on what is happening but how much good does this actually do us. It only seems to reinstall fear into every investors mind that the financial markets as we know it are coming to an end.
We are all sick about hearing what we already know. Its time for the media to give us the right answers. Start reporting or investigating into the answers that are going to help investors get back into the market place not scare them away. The media needs to investigate who is at fault for what has happend and what actions will be taken against those parties or individuals. Start reporting on how the markets could be if investors were not to panic. How many average investors buy or sell just because they saw something on CNBC??
With congress voting NO on the 700 Billion dollar relief hard times are coming. All indicators look to be pointing towards a recession. Many of us who are employed grinding away at a regular 9-5 maybe walking towards a living hell until the economy decides to correct itself. The question we need to ask ourselves now is How bad will it get? I sit around every night watching the days events recapped on CNN. Trying to make some sense of what is going on. Things seem to be more and more confusing. Interviews being done with panels of supposed experts from financial institutions tell us not to worry and have confidence in the markets but when you are taking 20-40 percent hits, even the people who look at the glass half full start to be a little pessimistic.
The reality is no one has any idea how bad the situation will get. The titanic has just hit the iceberg and we are all into drown. How is it possible that this all stems from bad mortgages? Banks and other financial institutions had a fiduciary duty to make sure that they money was not to be lent to people that did not and should not have qualified. Instead there were corrupt CEO’s and high ranking management that looked to make fat bonuses and risk the finiancial safety of everyone. Now with economy being flushed down the crapper there might be a chance that these same people are entitled to their bonus checks??? Are you kidding me?!?! I hope the FBI and SEC find out who all parties are that were responsible for this and PROSECUTE them to the FULL EXTENT OF THE LAW! If beloved Martha Stewart can do time for trading 250,000 dollars worth of stock, I cant wait to see what happens for the billions of dollars lost. Gordon Gecko from the movie Wallstreet once said “two things that are sure in life…death and taxes”. With the way the market looks I would not be surprised to see an increase in either one.
Ok so by now everyone has heard the news about Lehman Brothers and AIG. The questions is how bad are things going to get? In a country where debt is unavoidable all signs are pointing towards things getting worst. Looks like AIG has received a life line from the government but will this be enough to bring order back to what looks to be the worst stock market we have ever seen. With most of our retirement money tied up in these types of companies things sure don’t look pretty.
Most analysts, financial planners and stock brokers always tell people “don’t worry this is a correction” or things like “the market will bounce back”. Yeah right! Try telling this to your clients that were planning on retiring this year or in the next 3 years. I truly want to know what their clients will say when hearing that.
I am by no means a Economics PHD nor am I some financial guru, but I can tell you this if things keep going the way they are going and The US cant borrow a dollar or lower interest rates to induce more spending….things are only going to get worst.
