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Global stock markets have been whitewashed over the past month, Dow Jones fell to its lowest level in 6 years this week, and gold has charged to a record high $1,007 as investors seek to preserve capital.
Granted that Obama’s administration has been hard at work - a $787 billion economic stimulus was signed into law Tuesday and a $75 billion foreclosure prevention plan was unveiled to aid distressed homeowners and revive the housing market. However, there is little confidence that these measures will be effective.
It didn’t help the fragile investment community that Treasury Secretary Tim Geithner’s much anticipated bank bailout plan fell flat on its face due to its lack of details. So far, notable “contributions” from Geithner has been to test Obama’s damage control ability with his tax evasion and currency manipulation remarks about China.
Geithner has another mammoth task on his platter sitting on the committee to reform the automakers. The endless black hole coming from General Motors and Chrysler is troubling. Both companies had the audacity to ask for $21.6 billion in addition to the $17.4 billion in government assistance already doled out.
But we are getting ahead of ourselves. Let’s just focus on the details of the bad bank concept. While waiting anxiously for Geithner’s grand financial plan, calls for nationalization of banks has gained such a strong following that it is virtually guaranteed (despite Obama’s insistence to the contrary) that shareholders will be wiped out while bondholders are eventually paid pennies on the dollar.
Then, we have Allen Stanford’s $8 billion Ponzi scheme which rubbed salt into the wounds of rattled investors. Clearly, devious elements in financial institutions have not been fully weeded out. When you see a rat in the kitchen, surely, there will be many others lurking.
Who else has been running Ponzi schemes, good old Madoff has shown that it is perfectly possible to keep investors happy with no investments for 13 years, except robbing Peter to pay Paul. And if this financial crisis has not erupted, I believe his investors may just enjoy another uninterrupted 13 years of solid returns.
The numbers for other major economies are not inspiring either, and I meant it as an understatement. Japan’s economy contracted at its quickest pace in 35 years and G7 finance ministers warned the global slump will drag on through 2009. Europe’s services and manufacturing also shrank at record pace while Eastern Europe, once among the world’s fastest growing region, is staring at a severe economic shakeout.
Not surprisingly, gold is the flavor of the month - it is the best asset class besides cash. Its run-up from $771 last month to breach a major resistance at $930 and then closing over $1000 this week is clear evidence that many investors are turning into gold bugs. Read more...[caption id="attachment_1863" align="alignright" width="192" caption="Photo by RogueSun Media"][/caption]
Global stock markets have been whitewashed over the past month, Dow Jones fell to its lowest level in 6 years this week, and gold has charged to a record high $1,007 as investors seek to preserve capital.
Granted that Obama’s administration has been hard at work - a $787 billion economic stimulus was signed into law Tuesday and a $75 billion foreclosure prevention plan was unveiled to aid distressed homeowners and revive the housing market. However, there is little confidence that these measures will be effective.
It didn’t help the fragile investment community that Treasury Secretary Tim Geithner’s much anticipated bank bailout plan fell flat on its face due to its lack of details. So far, notable “contributions” from Geithner has been to test Obama’s damage control ability with his tax evasion and currency manipulation remarks about China.
Geithner has another mammoth task on his platter sitting on the committee to reform the automakers. The endless black hole coming from General Motors and Chrysler is troubling. Both companies had the audacity to ask for $21.6 billion in addition to the $17.4 billion in government assistance already doled out.
But we are getting ahead of ourselves. Let’s just focus on the details of the bad bank concept. While waiting anxiously for Geithner’s grand financial plan, calls for nationalization of banks has gained such a strong following that it is virtually guaranteed (despite Obama’s insistence to the contrary) that shareholders will be wiped out while bondholders are eventually paid pennies on the dollar.
Then, we have Allen Stanford’s $8 billion Ponzi scheme which rubbed salt into the wounds of rattled investors. Clearly, devious elements in financial institutions have not been fully weeded out. When you see a rat in the kitchen, surely, there will be many others lurking.
Who else has been running Ponzi schemes, good old Madoff has shown that it is perfectly possible to keep investors happy with no investments for 13 years, except robbing Peter to pay Paul. And if this financial crisis has not erupted, I believe his investors may just enjoy another uninterrupted 13 years of solid returns.
The numbers for other major economies are not inspiring either, and I meant it as an understatement. Japan’s economy contracted at its quickest pace in 35 years and G7 finance ministers warned the global slump will drag on through 2009. Europe’s services and manufacturing also shrank at record pace while Eastern Europe, once among the world’s fastest growing region, is staring at a severe economic shakeout.
Not surprisingly, gold is the flavor of the month - it is the best asset class besides cash. Its run-up from $771 last month to breach a major resistance at $930 and then closing over $1000 this week is clear evidence that many investors are turning into gold bugs. Read more...
[/caption]
Global stock markets have been whitewashed over the past month, Dow Jones fell to its lowest level in 6 years this week, and gold has charged to a record high $1,007 as investors seek to preserve capital.
Granted that Obama’s administration has been hard at work - a $787 billion economic stimulus was signed into law Tuesday and a $75 billion foreclosure prevention plan was unveiled to aid distressed homeowners and revive the housing market. However, there is little confidence that these measures will be effective.
It didn’t help the fragile investment community that Treasury Secretary Tim Geithner’s much anticipated bank bailout plan fell flat on its face due to its lack of details. So far, notable “contributions” from Geithner has been to test Obama’s damage control ability with his tax evasion and currency manipulation remarks about China.
Geithner has another mammoth task on his platter sitting on the committee to reform the automakers. The endless black hole coming from General Motors and Chrysler is troubling. Both companies had the audacity to ask for $21.6 billion in addition to the $17.4 billion in government assistance already doled out.
But we are getting ahead of ourselves. Let’s just focus on the details of the bad bank concept. While waiting anxiously for Geithner’s grand financial plan, calls for nationalization of banks has gained such a strong following that it is virtually guaranteed (despite Obama’s insistence to the contrary) that shareholders will be wiped out while bondholders are eventually paid pennies on the dollar.
Then, we have Allen Stanford’s $8 billion Ponzi scheme which rubbed salt into the wounds of rattled investors. Clearly, devious elements in financial institutions have not been fully weeded out. When you see a rat in the kitchen, surely, there will be many others lurking.
Who else has been running Ponzi schemes, good old Madoff has shown that it is perfectly possible to keep investors happy with no investments for 13 years, except robbing Peter to pay Paul. And if this financial crisis has not erupted, I believe his investors may just enjoy another uninterrupted 13 years of solid returns.
The numbers for other major economies are not inspiring either, and I meant it as an understatement. Japan’s economy contracted at its quickest pace in 35 years and G7 finance ministers warned the global slump will drag on through 2009. Europe’s services and manufacturing also shrank at record pace while Eastern Europe, once among the world’s fastest growing region, is staring at a severe economic shakeout.
Not surprisingly, gold is the flavor of the month - it is the best asset class besides cash. Its run-up from $771 last month to breach a major resistance at $930 and then closing over $1000 this week is clear evidence that many investors are turning into gold bugs. Read more...
