Rates do not bode
Tuesday, February 24, 2009
The glide down the stock markets this year have ended, is frightening. The rates in November 2008 seemed motivated by an irrational panic, writes Business Week.
The difference with the situation now, four months later, is that the low rates seem inspired by the hard reality. The Standard & Poor index ended yesterday at a level of 742.33 points, its lowest in eleven years. The previous low point, the index on November 20 last year at 752.44 points shortly after the fall of Lehman Brothers and in the midst of a fear that the whole financial system was collapsing.
Then came the same recovery, but it was of short duration. There is a series of causes to be responsible for the current rates, such as the absence of any sign of economic recovery in the second half of 2009 and the profit expectations of companies, which is to be reduced. But the main reason is quite disappointed about the plans which the U.S. government to tackle the economic crisis would go. Investors are waiting for a coherent plan from Washington. Some fear nationalization, while others find that too little government intervention.
Due to the uncertainty investors are waiting, and now worse ecomische all indicators. One of the opponents of nationalization of major banks is William M. Isaac, who writes an opinion contribution in The Wall Street Journal. According to Isaac, the fear of nationalization the most important reason for the turmoil in the financial markets. The first thing Obama should do now is clear that the banks will not take over.
Especially the article is that Isaac describes how he as a regulator in the eighties of the last century - during the so-called debt crisis - was forced to nationalize a bank. The existing shareholders then lost all their money, and the supervisor was sitting with a loss of 1.6 billion dollars.
Source: Be vigilant