Earlier today (see below) I briefly discussed attempts by
central bankers to corral rampant fear over the perceived
deterioration of the global financial system. I also pointed
out that gov't officials here and elsewhere would no doubt
continue tinkering to find ways to curb this fear. So, I come
back in from doing some repair work on my driveway to
see new UK and US curbs on short selling and a hint from
Treas. Sec'y Paulson about a new gov. agency to buy up
the sour real estate and related loans at distressed prices
from banks with the aim of restoring transparency,
stability and, hopefully, vibrancy to the system. If this is
a go, it will rquire congressional approval and could be
very expensive. Stock traders and investors loved the
idea and rallied the market strongly.
I have been around long enough to know that financial
people have been at least as scared as the dark days of
early to mid 1982 when the international debt market
imploded. Even if today was the peak fear day, rest
assured that plenty of folks will remain shaky / quakey
The Fed and Paulson have to go about their business of
shoring up the system but be mindful that they want to
avoid sending players full tilt into inflation hedge plays
that would drive up commodities, re-ignite inflation and
ultimately punish income and profits.
We had a spike low in the stock market today. I have
hardly ever bought those and did not do so today, as I
prefer to see the market stabilize and put in a base, if
even a small one.
Oh, yeah. there's more hard work ahead on the driveway.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!