Government Event Risk Continues to Hover
In the economic and investing environment that we are in where the gov’t is so involved with every aspect, particularly in our banking and auto industries, unforeseen event risk hovers everyday over typical fundamental analysis and makes predicting the market week to week very difficult.
Asian stocks ex China got hammered and Europe is lower too after Geithner yesterday said “some banks are going to need some large amounts of assistance.”
Also some are citing the GM, Chrysler news as a reason but a bankruptcy restructuring of both is needed not only to improve their cost structure but to purge them of debt which this whole country desperately needs. If prepack bankruptcy is their ultimate destination, the private sector would have handled that 6 months ago and all the gov’t has done is push forward the inevitable, aka Japan’s lost decade.
Don’t expect any substance out of the G20 this week. Payrolls on Friday will highlight the week.
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March 30th, 2009 at 9:28 am
Probably not your intent, BR, but this caught my eye:
“. . . purge them of debt which this whole country desperately needs.”
Maybe they can merge the banks, auto makers, home builders, retailers, CRE developers and the average US citizen into one gigantic conglomerate for the sole purpose of declaring bankruptcy on conception/incorporation.
March 30th, 2009 at 9:28 am
PB Said
In the economic and investing environment that we are in where the gov’t is so involved with every aspect, particularly in our banking and auto industries, unforeseen event risk hovers everyday over typical fundamental analysis and makes predicting the market week to week very difficult.
comment:
—————–
How ironic. If free market ideologues of all motivations didn’t create a rule free environment that motivated our current troubles, the government wouldn’t be bothering anybody at this time. I guess those same idiots still want a rule free environment so they can finish the job and kill off what they only managed to horribly sicken to date.
March 30th, 2009 at 9:28 am
> unforeseen event risk hovers everyday over typical fundamental analysis and makes predicting the market week to week very difficult.
You’ve hit the nail on the head, Peter! It’s not even that the fundamental situation keeps on changing, it’s that the response has been manic depressive. Save Bear, save WAMU, save FNM/FRE, save AIG, let Lehman die… Keep C and BAC alive and let the CEOs stay, force out Wagoner at GM. I believe that, unless the facts strongly change (which, imho, they have not, since the econ. situation has been consistently crappy), we’d be in a more stable situation if the government made a boolean decision, either
1) Saved everyone
2) Let everyone fight for themselves
I seen no overarching strategy from either the Bush or Obama administrations, merely tactical responses with no consistency. Treatment of an injury for treatment’s sake doesn’t work… We’re performing heart surgery on a patient with a brain aneurysm.
HCF
March 30th, 2009 at 9:55 am
As BR says we are continuing to kick the can down the road.
The pendulum is not swinging, it’s lurching.
The gov is caught up in it’s own spin unable to see past its posturing and soothing ointments to see the scab underneath.
Still there. Not going anywhere.
Lose the ointment and salve. Open it up to fresh air. Give it a chance to heal.
Oh well.
March 30th, 2009 at 10:25 am
Autos are a lagging indicator, not a leading indicator. The last thing people are going to do when this economy turns around is go out and buy a new SUV.
As for Wagoner, who cares? CEOs do not produce value, workers do. The only reason CEOs exist is because somebody has to sign the check for the electric bill every month.
March 30th, 2009 at 10:31 am
“As BR says we are continuing to kick the can down the road. ”
To be clear, Barry didnt write this. Peter Boockvar did.
“If free market ideologues of all motivations didn’t create a rule free environment that motivated our current troubles, the government wouldn’t be bothering anybody at this time.”
While Im more inclined to agree with you with respect to financial institutions, the fact remains that the “Free market” in the sense that you invoke it had nothing to do with GM and in fact, those same free market ideologues are calling for letting GM fail so we can move on.
March 30th, 2009 at 10:32 am
Apparently all you Gloom and Doomers aren’t aware of the super secret plan to extricate us all from this little bump in the road.
http://news.yahoo.com/s/ap/tobacco_tax
Even this esteemed news organization left out the ‘Rescue plan’.
The ‘Plan is to increase the tax on loose tobacco by %2,159.
From $1.0969 per lb. to $24.78.
ah, government at work.
March 30th, 2009 at 10:38 am
from Paul Kedrosky:
“apparently if you want to f**k up and keep your job you need to do it in a place where your errors nearly take down global capitalism. You know, like a bank or something. If you’re merely running an auto company you should keep your resume up-to-date.”
pretty much says it all
March 30th, 2009 at 10:39 am
SanFran,
It’s no secret that the free market fundamentalists were calling for GM to go bankrupt because they wanted to break the workers. Now it looks like the President might actually call on management and the debt holders to make sacrifices too. Perish the thought! It’s the end of capitalism!!!! ;-)
March 30th, 2009 at 10:40 am
B, but, but, I thought O was beholden to the unions? There goes that that right wing argument.
Maybe this is a sign and a salvo to Wall Street that their little bailout party won’t go on forever either. Maybe? I hope?
March 30th, 2009 at 10:52 am
Mann,
What’s the ratio of executive compensation vs the average worker’s salary? Isn’t it like a CEO gets $300 for every $1 a worker gets by now?
Maybe this is the same principle: Fire 1 CEO, the Dow drops 300 points. Fire 10,000 workers, the Dow soars 300 points.
March 30th, 2009 at 10:52 am
mannwich
Maybe this is a sign and a salvo to Wall Street that their little bailout party won’t go on forever either.
Maybe..
http://www.nytimes.com/2009/03/30/us/30walkaway.html?_r=1&ref=business
Headline=
Banks Starting to Walk Away on Foreclosures
Reality for ex homeowner
BOHICA
For the acronym challenged
Bend Over Here It Comes Again
March 30th, 2009 at 11:00 am
@franklin411: Indeed. What a bizarro world we are in these days, but we were due for a selloff on taking profits, and I think the market is just reacting to reality again that nothing’s really changed for the better. I just thought it was happen after tomorrow but it looks like some are getting head start on getting out. It just needed an impetus to sell off and take profits, and the GM was it. If it wasn’t GM, it would have been some other news to get the market to sell off. There are many chapters (many of them uglier and more bizarre than this, no doubt) to be played out here. Strap yourself in for the ride.
March 30th, 2009 at 2:44 pm
“Don’t expect any substance out of the G20 this week. ”
Don’t expect any substance from the G20 period. However, the meeting between Obama and Hu will be a highlight.
Hu and W built a real rapport in the end and did establish the Strategic Economic Dialogue which does have some tangible results from time to time including market access, etc. I’m interested to see how the Obama / Hu face off goes.
March 30th, 2009 at 4:35 pm
BOHICA.. Sounds like some Florida condoplex..
Playa Bohica, a TOLL BROTHERS (R) community.
March 30th, 2009 at 11:41 pm
BOHICA
I really, really like that. Set to a Latin beat it could be Ricky Martin’s next smash hit.
March 31st, 2009 at 8:34 pm
test