Thursday, August 6, 2009

Comment from "Ticker Street" who has a nice blog, check it out...

C has been rising like a turd. The media says it is "rebalancing". Do they mean that C buys its own shares to pump up the market? In the last 2 days, 25% of the NYSE volume is from C and BAC. WTH! Why don't they make them public sector banks? Do we need these stupid private banks? There are many countries in which public sector banks are outperforming private sector with solid fundamentals.

steveo postulates:

I would guess that C gets some real cheap money from the Fed ( or whatever combination of liquidity provider and/or Government Sachs), jacks up their share price, since everyone knows the market won't go down unless financials do, and I bet some government pension funds buy the C shares at the higher prices to keep the rally going.

Gasoline (a.k.a. liquid bananas, but that's a whole different story) started this fire, and the only tool they think can work is to keep throwing more gasoline at the fire. "We have too much invested in saving this economy to stop now". It won't end well.

But here is the key, of the trillions printed there is 10 times more out there are loans (credit). In the next financial panic, this contraction of credit, i.e. the ability to buy things and spend money will be massive related to the printed money increase. I guess the government will then start lending money directly because "we got so much invested already, this has go to work". But people will default no matter what the interest rate is.

You know how many people I am hearing just this week saying, I am not spending anything no matter how good your financing is, even with 0 interest, I want to see what happens in the economy or the market. This is in my own business. You can have a solar system pay for itself in a year, and they get free money for a year, but they still don't want it. Welcome to the future.

You know how many people I heard in the last 2 weeks tell me...I am not sure I can stay in this house so I don't want to invest anymore even if its a good payback or a net positive increase in equity, I don't care, i am $50,000 underwater on my mortgage, and I just ain't going to spend anymore regardless of how the numbers look. OK, welcome to now.

Business strategy: try to sell to rich people, until they also are infected by the collective psychological malaise. Then move to some ag country and buy farmland whilst their economy tanks and global shipping of food becomes non-existent (depressing farmland prices). OK, if this strategy works for you send a nice donation, and if it doesn't, sorry, it was free.

No comments:

Post a Comment

Insightful and Useful Comment!