AIG Again
Stocks moved all over the place today – ending up 70 points – more or less the same as moving sideways.
Bonds were stable also. Short treasury bonds are very stable. Longer term bonds are now “in question” given the governments commitment to long term spending, bailouts, and other forms of printing money.
Oil, gasoline and the Dollar are all a little higher today.
Gold was the big mover – up $35/ounce. Gold is now a “buy” – no longer a “buy with both hands” as it is now over $800.
In the news today…..
Remember AIG – that insurance company that was “bailed out” by the Treasury? And do you remember that they had to have TWO infusions of cash. Well, guess what? It now needs another $10B. I smell a pattern here – do you? The pattern doesn’t feel very good. It says that if you bail someone out once, you are committed to continue bailing them out forever. Is that going to happen with the auto industry?
Wholesalers reduced their inventory by 1.1%. Doesn’t sound like a big number, but it is. Wholesales sit between manufacturers and retailers – so this gives you a decent indication of what is happening to the economy in terms of contraction.
Here are Today’s numbers:
Dow Jones 30 Industrial – 8761 (up 70 points)
10 Year Treasury Bond – 2.68% (up 0.02%)
Euro – $1.3018
Gold – $809 (up $35)
Oil – $43.52 (up $1.45)
Gasoline – $0.97 (up $0.03)
Tom
Can you talk about how the government may want to be injecting this money (ie AIG, auto industry, banks etc) in order to keep us from going into a serious deflationary period, thus this money NEEDS to be poured in, and explain why – if it is so.
Thanks,
christine
Christine,
Great point. You are speaking the unspeakable – that is why no where in the press is anyone talking about the government purposely pouring money into the economy, and not really caring where it goes.
A deflationary spiral could easily happen in the US, and would make the Great Depression look like it is still here.
Deflation is a reduction in the money supply, and that’s what’s happening all throughout the economy as the stock market and various banks fail. Money is going to money heaven. The FED and Treasury are pushing money into the economy as fast it can to stop the bleeding.
Any how will this all end? It will end with an inflation – probably the worst inflation that the US has EVER seen. But when? Well, the inflation could start in 2009, or could be delayed (by an ever downward deflationary spiral) to 2010 or ever 2011.
Tom