Blame Them All
Stocks soared today, ending up 413 points. Everyone is thinking that the bad news is over. Don’t count on it.
Bonds, the Dollar and Gold went sideways today.
Oil and gasoline perked up a little, and are reacting to a threat of reduced oil production by OPEC.
In the news today….
Is the bad news over?? Here is my list of problem banks – Citigroup, Bank of America and JP Morgan. The government will be pouring a whole lot more money into these institutions over the next 2 years as their bad loans must be written down. So, what’s happening to all those profits the banks are making? All those profits are being placed into a reserve account to be able to write off those bad loans that are coming down the pike. That’s also why banks have stopped making dividend payments – all that is going into reserves too. The government may be saying that they need to put money into the banks to get them to make loans – in reality all the money that the government is placing in these banks is going into the bank’s reserves – that’s the name of the game. The future losses are being called “ugly surprises.”
Who caused this mess???
Finger pointing is so much fun. How did the US get into this mess? Well there is so much for people to point at. It becomes very political, so I’ll give both sides of the story – and both sides are valid.
Democrats are saying that the Republicans liberalized the ability of Wall St to make loans without much or any oversight. This is absolutely true. Senator Gramm – a long time ago – sponsored and got passed some that terrible legislature. So, this set up Wall St to become greedy beyond their most fond dreams.
Republicans are pointing to the Democrats (Barney Frank, Chris Dodd) as protecting Fannie Mae and Freddie Mac, and encouraging those institutions to make very BAD loans. After all, shouldn’t everyone be able to own their own home? That was the party line. President Clinton and his Secretary of Treasury, and President Bush and two of his Secretaries of Treasury made very loud noises that these practices were very dangerous and could bring down the 2 institutions. The Congressional Democrats ignored those warnings and protected Fannie/Freddie. Also, Fannie/Freddie gave a bundle of money to Congressmen and Senators. Also, ACORN was pushing very hard at the Fannie/Freddie door to allow these bad loans.
So, who’s to blame? EVERYONE. That is the truth in the matter. Our representatives failed us, and the taxpayer will pay. Secretary Paulson keeps saying that there’s a reasonable chance that these equity purchases will ‘make money’ for the Treasury. Don’t hold your breath. The bottom hasn’t been seen yet, regarding the losses of the banks.
Here are Yesterday’s numbers:
Dow Jones 30 Industrial – 9265 (up 413 points)
10 Year Treasury Bond – 3.89% (down 0.05%)
Euro – $1.3342
Gold – $790 (up $2)
Oil – $74.25 (up $2.40)
Gasoline – $1.72 (up $0.05)
Interesting post. I just got off work and was looking for some cool info to read about. Trying to learn something new today. I think I just did. lol
Thanks for the interesting read.
Kenney
P.S. Blame them all…great post title. Love it.