Rothschild: “Give me control of a nation’s money and I care not who makes the laws”
October 2nd, 2008 | Investing, News & UpdatesWith the recent financial mess I couldn’t help but think about how true this quote is. Here we are on the brink of financial armageddon and we’re held hostage by the finance industry of this country. As a result, congress has to passed a 700 billion dollar bailout plan to get the credit markets rolling again.
Anyway I’m not into long blog posts so here are some random thoughts on this on going ‘crisis’.
1) Does Congress need to pass this bailout plan? Yes, the alternative is probably much worse.
2) Safe banks to put money in or too big too fail? HSBC, JPMorgan Chase, Wells Fargo, Bank of America, Citibank
3) The fact we’re in a recession is now a reality for Americans.
4) We’re halfway through the bear market if you assume the financial sector bottomed out in July this year. (So one more year?)
5) Will we get an election rally into November? Or Will earnings sink the market?
October 4th, 2008 at 10:51 pm
I personally think the 700B bailout was a disgrace. But what do I know? And we probably needed some version of that. But god… That bill was so filled with lard that I’m amazed that it walked off the Senate floor.
Your money is safe with the FDIC, so I wouldn’t worry about that. In fact, putting it in a big, not too secure bank like Citi may be a bad idea. If Citi goes into a liquidity event, you might be stuck for weeks until the FDIC can straighten things out. I’d probably rather put my money in a small bank. If they go under you can get your money back in a day or less.
As far as the markets go… I think we are probably in for a multi-year period in which asset values are trending down. Ideally, what should happen is that we purge the system by “resetting” asset values downwards dramatically. But this cannot happen because we are so levered that it would bankrupt half of our financial institutions. So what the government is settling for is a slow bleed. Give the system a chance to readjust and “earn” our way out of the hole. Unfortunately, this also means a long period of stagnation… Ala Japan 1991. But hopefully not as bad.
October 15th, 2008 at 5:00 am
Prosper has just shut down lending - going into the ’secondary’ market.
Looks like the end of P2P lending?
December 21st, 2008 at 4:03 pm
wells fargo financial…
I am happy that I found your post here. I was looking for something useful like this….