Protect First, Grow Second
Stocks were up BIG this morning, but spent the entire day going down – and ending down 74 points. Why was it up BIG? The Chinese have announced a $586B stimulus package for their economy. The Chinese are scared to death that it won’t be creating as many jobs in the future as it has in the past – and promised its people a better life style. Oh, Oh!!!! The Chinese will be spending this money on infrastructure projects. Last year Chinese exports grew 20%. Right now the growth is ZERO percent. You can see why the Chinese have reacted.
Bonds and The Dollar went sideways today.
Gold gained a little today, and Oil and gasoline ended slightly up after being slightly up and down. Lot of news on the oil industry front – but the only thing that counts is the oil price.
How is the economy doing today?????? (HINT: It stinks)
There are 10 million people jobless in the US – the most in 25 years. I predict this number will hit 15 million in 2009.
Franklin Bank in Houston and Security Pacific Bank is Los Angeles both were shut down by the FDIC over the weekend – they have gone out of business – but will open under new names today. No one will lose any money – except you (of course.) Franklin is the biggest of the banks with almost $10B in assets – but the bank taking over will not be taking its BAD assets, only the GOOD assets. The FDIC (meaning you and me) will be taking those BAD assets (about $5B), and you can expect a fire sale soon. The founder of Franklin Bank (Lewis Ranjeri) invented the mortgage backed security concept 20 years ago – and ironically it has come back to bite him.
DHL is shutting down all its service centers in the US, and laying off 9500 people. This will decimate the town where their main service center exists in Ohio.
Circuit City has declared for bankruptcy protection, and will lay off 700 more people than previously planned.
How are our taxpayer investments doing to save the economy of the world?????
The Treasury has said it will NOT tell anyone WHO is borrowing the $2 Trillion it has lent out recently – NOR will it tell anyone what security it has taken for those loans. In other words, we the people do not have any “transparency” (promised by both Bernanke and Paulson) of the dealings of our money. In my opinion, this stinks since the amount of trust of the people in the management of our money by Washington is at an all time low.
The AIG Bailout has been restructured, and we are now going to give AIG $150B to save them. This is the third version of the AIG Bailout. Can’t the Treasury get it right the first time, or even the second time?
Why is the market going down??????
The election is over, so I’ll get more political. There is a rumor going around by the Republicans that the wealthier Democrats are selling all their shares so they won’t have to pay the higher tax that President-Elect Obama promised during the campaign. Let’s think about this rumor a minute. Why just Democrats? Are Republicans stupid? No, they would be selling too. So, any run on the market by individuals is bi-partisan. However, their motivation is real – save taxes. Obama has been asked recently if he was going to institute the higher taxes – and he has avoided the question. That’s interesting – why would he avoid the question? I don’t know.
However, there is an overriding consideration that moves this market further down. We are in a BEAR market and the future is glum. The recession is just starting to get its teeth into the economy, and the economic solutions being instituted by the Bush Administration and pushed by the Democratic Congress are just barely working. Perhaps the “barely” translates into a “bear” market.
My opinion is that the government – and I mean either party leading the government – is NOT protecting YOU, and not giving YOU any special treat while they try not to look totally incompetent. Unfortunately, they look totally incompetent. So, that means that YOU must protect yourself by making intelligent decisions. Each of you have your own different assets to protect and grow. Go back to basics, and protect first, and grow second. If you can do both simultaneously, that’s even better.
Here are Yesterday’s numbers:
Dow Jones 30 Industrial – 8871 (down 73 points)
10 Year Treasury Bond – 3.76% (down 0.02%)
Euro – $1.2760
Gold – $747 (up $12)
Oil – $62.41 (up $1.37)
Gasoline – $1.37 (up $0.02)