I'm not sure if the title of this article is terribly clever or horrendously terrible.
I'm going to go with horrendously terrible.
Anyway, the government now owns 79.9% of both Fannie Mae and Freddie Mac via preferred stock. Basically, if you own common shares....over the last year your share value went from somewhere around being worth 20 gallons of gas($80ish) to...ummm...does a sub-nano penny stock listing exist?
On the positive side - the stock market is going to rally on Monday. Asian markets opening on Sunday night are rallying a colossal three and a half percent. I expect that the European markets will rally as well on Monday morning. I think there is some short term risk to the dollar - but likely it will be incredibly short term - think a week or two. Oil will likely stabilize between 105-110 over the same time period. By buying out Fannie Mae and Freddie Mac the government did technically increase liquidity and devalue the US dollar. However, because this is in a much more defined arena - and not a more broad action like a rate cut - we shouldn't see too much negative pressure on the dollar or upward price pressure on oil.
I suppose there are some people that might critize this move as far too interventionist. While I agree with them on prinicple...I disagree with such critics on reasonability of such policy. The american economy is not a business like the corner deli or even an international conglomerate like General Electric. The focus of the economy and those who regulate it is a basic quality of live for everyone (well, let's hope that's their goal). Businesses don't have the same aims. So running a business and regulating the economy shouldn't be dealt with using the same principles and methods. Letting a company go under because they couldn't understand what their customers wanted is acceptable (Think American Automakers).
But punishing future Americans for the poor decisions of today is irresponsible.
Americans have been punished enough. The point has been proven. I don't think people are going to forget this travesty that easily. It wasn't only a consumer slowdown like in 2001. It was high food and gas prices, inability to obtain student loans, 6.1% unemployment, declining home values, and unbelievable inflation. Punishing the American public for a huge cascade which was amplified by a few banking institutions refusing to do due dillegence is unfair and unnecessary.
Like I said a long time ago - the credit crisis is a consumer problem, and the take over of Fannie Mae and Freddie Mac, will ensure the bedrock of consumer strength - home equity- is preserved.
-Mansij Hans, E.I.T.
Member, Intigril Capital Management
Anyway, the government now owns 79.9% of both Fannie Mae and Freddie Mac via preferred stock. Basically, if you own common shares....over the last year your share value went from somewhere around being worth 20 gallons of gas($80ish) to...ummm...does a sub-nano penny stock listing exist?
On the positive side - the stock market is going to rally on Monday. Asian markets opening on Sunday night are rallying a colossal three and a half percent. I expect that the European markets will rally as well on Monday morning. I think there is some short term risk to the dollar - but likely it will be incredibly short term - think a week or two. Oil will likely stabilize between 105-110 over the same time period. By buying out Fannie Mae and Freddie Mac the government did technically increase liquidity and devalue the US dollar. However, because this is in a much more defined arena - and not a more broad action like a rate cut - we shouldn't see too much negative pressure on the dollar or upward price pressure on oil.
I suppose there are some people that might critize this move as far too interventionist. While I agree with them on prinicple...I disagree with such critics on reasonability of such policy. The american economy is not a business like the corner deli or even an international conglomerate like General Electric. The focus of the economy and those who regulate it is a basic quality of live for everyone (well, let's hope that's their goal). Businesses don't have the same aims. So running a business and regulating the economy shouldn't be dealt with using the same principles and methods. Letting a company go under because they couldn't understand what their customers wanted is acceptable (Think American Automakers).
But punishing future Americans for the poor decisions of today is irresponsible.
Americans have been punished enough. The point has been proven. I don't think people are going to forget this travesty that easily. It wasn't only a consumer slowdown like in 2001. It was high food and gas prices, inability to obtain student loans, 6.1% unemployment, declining home values, and unbelievable inflation. Punishing the American public for a huge cascade which was amplified by a few banking institutions refusing to do due dillegence is unfair and unnecessary.
Like I said a long time ago - the credit crisis is a consumer problem, and the take over of Fannie Mae and Freddie Mac, will ensure the bedrock of consumer strength - home equity- is preserved.
-Mansij Hans, E.I.T.
Member, Intigril Capital Management
Posts
No comments:
Post a Comment