The fed announced it will spend 500 Billion dollars to buy what is basically near worthless pieces of paper starting in January. The Fed selected investment managers BlackRock Inc (BLK.N), Goldman Sachs Asset Management (GS.N), PIMCO, and Wellington Management Co to implement the program. The Bush administration has now jumped the shark. This action is by the Fed, not the Treasury. Henry Paulson at the US Treasury was Goldmans Sachs chief operating officer until 2004 when he resigned to take his current position. Even if nothing shady is going on, GS should have been avoided to remove any issue.
I honestly don't have the energy to rant about how bad and ILLEGAL this is. Read a detailed rant at Market Ticker, All I can say is you better not stay in BONDS, but to slowly convert into resources, such as Oil, and possibly GDX (Gold miners). Gold is also good, but a little riskier in next 12 months, but should pay off amazingly in the next few years.
This administration has done everything in its power to ensure the federal government is bankrupt, and will not have the borrowing power it needs to run basic public services. Ronald Regans dream of starve the beast is finally here. If Obama can run the US Government in the next few years without cutting basic services, I'll be in awe. The TRILLIONS spent in such a short period of time should yield a great stock market rally, but its a paper rally. It's not based on fundamentals, so it cannot last. When it's done, watch out. If you are new to my blog, read this post to try to comprehend the money being spent.
Also announced today some of the 350 Billion (of 700 authorized) TARP money is being spent to support 43 banks by giving them nearly 2 billion dollars.
In some refreshing (and surprising) news, the SEC recommended to congress to NOT suspend fair-value accounting rules. The cynic in me tells me that congress wanted them to advise against it, so when they do suspend it, that the SEC doesn't lose the faith of the world, and can blame congress. We will see if Congress listens and doesn't yet further degrade the world trust.
The government has lent (given) GMAC 5 billion dollars, which will be used to LOWER their standards for selling cars, which means we now have "sub-prime" car loans. Yea, this makes sense.
Lehman brothers has asked for a 6 month extension on bankruptcy proceedings. It seems Lehman's complex financial obligations need more time to figure out.
I will try to make the time to do a year long prediction. I may dig up a previous one I did between me and a friend for historical reference.