US Financial markets distorted by massive US government intervention.

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SouthAmerica

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February 23, 2009

SouthAmerica: I posted this thread on the Economics Forum, but the moderator of the Economics forum moved it to the Politics and Religion Forum - I guess he assumed that this thread had been posted by Nostradamus.

PANIC and the US Dollar
http://www.elitetrader.com/vb/showthread.php?s=&threadid=60201&highlight=S&P+500

The moderator was right in one regard: if the US government were not playing politics and trying to keep the US market from falling much further – they are trying in every way possible to keep the market averages, the banks, major companies such the auto makers from going down and finding the real bottom for the US economy – the US government is trying to keep the system artificially alive.

Without massive US government intervention the US financial markets would be trading at much lower levels – maybe the US stock market averages would be lower by at least another 25 to 30 percent.

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Jimmy Rogers says "... all of this stimulus, bailout, etc will ultimately fail. The market will seek value regardless of Gummint intervention...."

He also says that "... we will WASTE A HUGE AMOUNT OF FINANCIAL RESOURCES trying to hold he market in at an artificially high level... thus extending the time of the pain and doing much harm to us as citizens and the country as a whole...."

Sounds right to me.
 
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February 23, 2009

SouthAmerica: I agree with Jimmy Rogers on that regard.

But I believe the US government has to nationalize immediately the Zombie banks, and the major auto makers - restructure these dinosaurs and privatize them once again after they can create new healthy companies.

I doubt Jimmy Rogers would agree with me on that one.

It would be a major mistake to let the Zombie banks, and the major auto manufactures file for bankruptcy under any chapter of the bankruptcy code.

Nationalization is a better path to follow at this point than bankruptcy for these companies.

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Well, I don't know.

Are we better off nationalizing and pouring $Trillions down a rat hole or letting the toxic banks die and allow other NON STUPID banks pick up the slack... ?

I hear what "they" say, but I don't know which is the "lesser of weevils".
 
'Nationalization is a better path to follow at this point than bankruptcy for these companies.'

Agree with you there SA. Temporary Socalism is just fine if it can stop the whole system and society from blowing up and throwing the whole world into depression and chaos.

Another area US can seek savings is defense. Of the $600B, they should try to cut it down to $300 a year and see $3T of savings over the decade. That alone would cancel out 3 stimulus/bailout packages of $1T each.

Even if US does not add a single M-16 to the current inventory, it can defeat any major power, including Russia and China, hands down and this holds true for the next 10 years easy. Just keep the technology from slipping out the US and falling into the hostile hands.
 
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February 23, 2009

SouthAmerica: At this point of the new Great Depression it would be an economic catastrophe to let a company such as GM to file for bankruptcy.

But also it does not make sense to lend first $ 14 billion dollars and now they want another $ 17 billion dollars to keep going – for a company that has a market cap of about $ 1 billion dollars.

The US government should nationalize GM and Chrysler immediately and stop this waste of taxpayer money. After consolidating the operations of GM and Chrysler and restructuring all their costs to be in line with the competition then the US government could privatize the new auto company that would have a chance of surviving in the 21st century.

Letting the Zombie banks file for bankruptcy also would be a catastrophe for the US economy. The US government should nationalize them immediately before they waste any assets that still available at these institutions. Then the US government regulators should clean their balance sheets and break them into various parts and privatize the new healthy companies.

Under nationalization at least most people get paid down the line and only the shareholders and bondholders lose all their money.

The Bankruptcy option would be a catastrophe for everybody.

Neither choice is good, but nationalization would be a better path at this time.

Letting Lehman Brothers die a sudden death it was a major mistake and I hope the Obama administration realize that and a bankruptcy by GM or Citigroup would be a catastrophe to the US and global financial system.

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Quote from toc:

'Nationalization is a better path to follow at this point than bankruptcy for these companies.'

Agree with you there SA. Temporary Socalism is just fine if it can stop the whole system and society from blowing up and throwing the whole world into depression and chaos.

More...

What if we do the "depression and chaos" thing anyway... AND have wasted our recovery resources trying to artificially prop up toxic things and stupid people?
 
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