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Financial news I consider important, with my opinion, which is worth as much as you paid for it.
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Thursday, May 14, 2009

Doom and Gloom

The news media and government have been spinning tails of what the future holds. All of them are rosy to "very mild problems". There is no indication at all of the possible problems we will face based upon possible mis-steps being taken today.

A good article on Seeking Alpha lists WORST CASE Scenario, well worth the read. (click) Of course true worst case is Mad-Max, but that to me is off the table, but fun to reference. :) I am not in the camp that the rosy scenario will occur, nor the worst case (yet), but somewhere in the middle, leaning slightly to worse case.

The one thing I do agree is lawlessness and corruption will seep its way into Americana, one of the great assets of America will be gone, trust. We have an example of actions being taken NOW will destroy that trust.

The government is setting precedence that the LAW does not matter when it comes to finance. The damage this will do in world confidence in the US is beyond calculation in terms of investment dollars lost. With the bankruptcy of GM, the government is changing the rules of who gets paid. Read more from Karl by clicking here:

A private watch group, Judicial Watch filed a Freedom of Information Act (FOIA) requested information about a federal bankers meeting on October 16, 2008. After months of stonewalling, a FOIA lawsuit was filed against the Obama Treasury Department on January 27, 2009. Incredibly, on February 4, Treasury responded it had no documents about the historic meeting. It was released today that the Treasury Department coerced major banks to allow the government to take $250 billion equity stakes.

And the government is taking a draconian approach by looking into regulating/dictating corporate compensation. The TRUE answer is to change the structure of the pay-out, it should be linked to not only past performance, but future company health. I have blogged about this before. But the government dictating what is appropriate pay? This is insanity.

As for the economic Rosy outlook? S&P states U.S. banking crisis may last until 2013
FINALLY! Some honesty, this is refreshing that the timeline is father out than "next quarter" for a turn around.

There is plenty to be doom and gloom about. There will be a bottom, the US will rebuild, and in a generation come back swinging. For now, what matters is where to invest, and its not in stock hoping to see DOW 14K in a couple of years.

REMEMBER, Options expiration is Saturday, expect some real game playing to go on. This bull won't die without a fierce fight. I expect government games to make a rocket ride up for the market. Probably something like announcing putting CDS on a regulated exchange, etc.

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