OK...back to the negatives.
The shorts and more importantly the sellers have wrestled control of the market once again. There are multiple sell programs involving the banks sitting on trading desks. Its better to be on the sell/short side at this moment.
This could be a real ugly close today as Geithner's plan really isn't a plan. Its really a reiteration of the existing TARP program, which is a major waste of tax payer money.
Geithner's plan to use private money is going to fail because who in their right minds would buy these rotten MBS securities? Surely not the same hedge funds who have been buying CDS Protection, then subsequently shorting the bank stocks??? Are you kidding me? Why would they do this?
Also, the type of money needed to bailout BOFA, Citigroup, Wells Fargo, etc is such a number that most private equity/hedge funds would not be able to afford it. So the only option is to:
1- NATIONALIZATION
2-TAX PAYER FUNDED BAILOUT
With again NATIONALIZATION being the only answer. That is what is forcing the action today.
Most institutions have come to the understanding that some sort of action other then a tax payer equity partnership has to happen. To bad that type of action will most likely kill the equity shareholder.
I don't understand after all we have been through, this is the best the Treasury can do? WEAK!
Also- there is no mention of an actual Housing Rescue Plan, they have postponed this till a few weeks from today. Possibly because they wanted to gauge the markets reaction to this particular Bailout Plan. Well - We all know the markets reaction. I think the market tests the lows at around 7500 or so on the Dow.
I am actually interested in the Housing component of his plan, from what I am hearing there are some forward thinking aspects embedded into it. If this housing plan reduces mortgage costs and rates, creates a stable secondary market for MBS, and some how lets home owners sleep in their homes, we may see an intermediate bottom in the averages.
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