Europe Now , Asia Next

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norway401's picture
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Joined: 2007-10-16

As we have seen , now the various European Governments are now racing to prop up their respective Financial Institutions. See the reactions on the various Exchanges throughout the globe.
Two days ago , a report from the UK , Banks lining up to ask for Government Backed support ( whether needed or not ) as they had seen other Banks getting Government ( Taxpayers ) money. I suspect we may now see the escalation of Financial Institutions of all sorts seeking ( demanding ) protection from Government.
Another prediction , as this rolls out further see Manufacturers , Service Industries and others seeking financial suppoort and guarantees from Governments.
The question/s I pose is ......" Where is the money to fund the current and possible other government assistance going to found ? " " If consumers default , will they simply be given a free pass? "  " The assets that consumers have defaulted on ie homes , cars etc. , how are they going to dispose of these assets? " I am simply attempting to grasp a direction or solution to what appears to a significant unwinding of years of excess that has finally reared it's ugly head?

walking9's picture
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Joined: 2008-09-30

C'mon, you're overthinking it. How much money would you borrow at 1.5%?  I'll take a couple of million, please.

norway401's picture
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Joined: 2007-10-16

Thanks Walking9. What was I thinking? Yes please , 6 million will do nicely , thank you. I don't want to be greedy.

walking9's picture
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Joined: 2008-09-30

Now, what will you do with the money?

norway401's picture
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Joined: 2007-10-16

  .....Buy Low , Sell High. Or another option buy a Bank.

walking9's picture
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Joined: 2008-09-30

Yeah, I think it's gonna be alright. I'll bet the banks do well, with all of post traumatic stress  flight to insured deposits. Wait - I hear a roaring river of Chinese money flowing into Wal-Mart and  GE and Intel shares at Wall Street.

stokwiz's picture
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Joined: 2004-12-04

There is so much stimulus out there now- low low interest rates, oil down over 30%,(That was the malaise du jour before Lehman and Fannie, now you don't hear anything about this positive development, damn media!) profitable businesses now selling at 2003 levels- This is one of those 5 times in a lifetime gifts!
 
The markets are trading on pure emotion right now, and emotions don't last. Great companies with great histories of increasing earnings and innovation do last. The current market is becoming a self fulfilling prophecy promulgated by the media. Sometimes I wonder if it's fear over an evermore likely Obama presidency (gag me).
 
Stok

norway401's picture
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Joined: 2007-10-16

Stokwiz ....I agree but it is FEAR , straight and simple. I watched a Business Report the other night. The company in the Baltimore area , manufacturer of plane parts ( as I recall ) , business booming and has been profitable. The owner went to his Bank and requested a loan of 175K to purchase more steel for the business. The Bank would only approve his Loan if he /company would place 175K in CD or Term Deposit with the Bank.
Wait a minute here , silly me. This was probably the same Bank that was lending money for Mortgages that were questionable.

walking9's picture
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Joined: 2008-09-30

The other job for banks is to make money, and this is a competitive activity, not successful in a vacuum. Once money starts moving, it is like a race to get out of a burning and crowded movie theatre. Some will die, others will thrive.
 
"... emotions don't last. Great companies with great histories of increasing earnings and innovation do last. The current market is becoming a self fulfilling prophecy promulgated by the media..."
 
Well put, buzzard. Plenty of dying corpses to eat, of course, bears like dead meat, too. Of course it is Obama fear - but I notice a subtle shift even at Fox today, " so, if Obama wins, how long will it take for him to clean up this mess. " We don't care about politics, anyway, we'll just spend all of our money and expense it if the socialist nanny state raises taxes. It's better to spend than to save, anyway, " What happens to a dream deferred does it dry up like a raisin in the sun?" Alright, by all means, invest in your business.
 
Obama's victory could be a big win for all, the sun is shining and the ice is melting and breaking up. We're shifting 5% of client portfolios from bonds to stocks, dial, talk, exchange, exchange.
 

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