Bail out plan is dead.

Morning I wrote the plan for the bail out is bad . But not doing this “bailout ” is worse. News media today runs news programs based on polls rather than facts. Some polls have indicated that not more than 30% support this , i wonder how are trained and educated economic specialists. I guess if the country is ready to live with 10% unemployment and complete collapse of the financial markets and credit markets, may be then fine. I hope it does not come to the situation where one cannot draw money out of ATM’s.

Like in the movies, “Hang on buddies , it is going to be a rough ride”.

 

Bailout is D.O.A. Better deal must be sought.

Well, all are talking will the bail out work? One of the main reasons for the markets to work is the confidence in the lenders and consumers. But if the confidence is not instilled in the lenders , primarily the banks, how is the problem solved?

If the lenders don’t trust each other to lend and borrow money how will they conduct business. This point has not been addressed at all. May be the free market will kick into the effect, but will take time.

The other problem is that how does one evaluate the price of the assests they are going to purchase? This is being left entirely to the treasury which i don’t trust at all. This is a blank cheque to carry out fraud.

The markets will rise after a bailout , but I think is just creating a temporary and inflation will rise fast.
One could just throw 100 or 1000 billion but the markets could still collapse. With the extra regulations proposed by the congress it can not scare the investors more.
I think the bail out will be a small failure now instead of a meltdown.

 

A New World Economic Order

With the slump in the US financial markets, people around the world are talking about the decline in the US financial power. Are they correct? Will are new form of world economic order rise? I guess the answer to both questions cannot be answered with any definitiveness. But a lot of people will agree to the this “world financial market will not look like it did before the housing and credit bubble burst”.

Bear strens was the first to go followed by Fannei Mae,Freddie Mac , then Bail out of AIG, Lehman Brothers collapsed, Merrlyl Lynch bought over and others hanging by the thread as of now. Now the question has come down to ,”will the federal govt bail out work ?”.A majority of the economists say some kind of bail-out is needed but are raising doubts on some of the specifics.

Nicholas Sarkozy called for a regulated market at the UN assembly .Both the US presidential candidates taking populist tones while talking about the current crisis. But will all doubts be erased in the investors mind. Will the increasingly attractive investments in china, India and Russia for short term profits be their 1st choice. The biggest worry that should grip the investors worry is not just the loss of capital in the current market, but also time it will take time for the confidence to return. Many will hope many other outlets in the emerging markets not open to reduce the investment oppurtunities in the US. One should expect in the coming days the Chinese to actively purse how to gain a upper hand in the crisis by purchasing assets around the world.
Will the regulated markets in the future as promised by either of the coming administration work ? I guess time will only tell , because I am sure another bubble will emerge to burst in our faces.

One thing is sure irrespective of the campaign rhetoric by both the candidates , both will have to change their taxation and financial policies as , no person spends the same way when he or she is with or without money in the wallet. One will have to wait and see how the new financial world takes shape , but will increasing be difficult for US and Europe.

I will continue to write more one this……