Quote from opt789:
From Bloomberg:
"Former Federal Reserve Chairman Alan Greenspan said he favors spending U.S. government money to bail out mortgage borrowers who risk losing their homes because they can't make payments.... cash bailouts, while creating a larger budget deficit, have the advantage of helping homeowners without distorting property prices or interest-rates on mortgages."
For those of you predicting 1200 on the S&P (at some point in the future), are you sure you are taking into account the intentional propping up of the market by the Administration, the Treasury, and the Fed which will surely continue in the future?
Bernanke specifically chose to lower rates between the last day of trading index options and the settlement on Friday morning in Aug. to make the market gap up even more than would be expected, and he further chose to have someone call CNBC after the markets closed Tuesday to say they were going to do more to add liquidity so the after hours futures markets would be easier to send higher.
I didn't say it, but I am using every lift as a gift to look for good shorts. At the same time I am preparing for more and more government intervention. As someone with a degree in economics this intervention does not in any way sit well with me, but it must be taken into account when trading. My real fear is that the intervention does succeed in artificially sending the market higher. What happens if the government Put option on the market (which everyone will start to count on) doesn't work at some point in the future?
