Much is going to be made of the US Govt bailout of the banking system. It could prove to be as large as $1 Trillion, that is 1,000,000,000,000 dollars. To understand how big that is would be to give $335,000 to every man woman and child in this country. If you have a family of four that would be 1 and 1/3 million. Not bad, you could live on that for a while, I would guess.
Before you get too mad, Rupert Murdoch made the point that it wouldn't surprise him if taxpayers don't end up paying a dime! What!? Why?
First, take AIG. The treasury is going to provide 85 Bil in loans. Those funds must be paid back. For that they (US Govt) gets an 80% share of a once $Trillion company. If things settle out, and that is very possible, the US makes out. Do the math.
Overall, the US may actually make money (that would be a first) because they are buying many investments that are poor today but could prove to be substantial in the future. For example, lets say that the US buys 500 Bil in housing, which a number of those houses are in trouble, or worse. They get them at 60% on the purchased dollar. They could conceivably go back to their original prices (most likely will within 2 to 5 years). If they reach 100% they just made a bundle. There of course are costs involved with carrying those properties for the space of 2 to 5 yrs, but they still did well for their investment.
Regardless, the Govt must make it painful enough that we don't go down this road ever again. This still has the potential of falling apart.
Friday, September 19, 2008
Thursday, September 18, 2008
Markets respond big time
With a 400+ jump in the Dow things are looking up for today, anyway. Will it hold? That is anyone's guess.
The leadership of both parties in Congress, Hank Paulson of the Bush Admin, and Ben Bernake of the Fed all convened a meeting tonight to try and put this thing to rest, or at least get it on the right track. Will they succeed? That is anyone's bet. Why are they being so non-partisan? Two reasons, one they know this problem is bigger than one party and there is plenty of blame to go around, so they will do what they can to help stem this crisis. Secondly, and more important to some, they want to get back to their constituencies.
Job one is getting reelected. To be seen doing nothing at this time would bring too much political damage to them.
Country second!!!
The leadership of both parties in Congress, Hank Paulson of the Bush Admin, and Ben Bernake of the Fed all convened a meeting tonight to try and put this thing to rest, or at least get it on the right track. Will they succeed? That is anyone's bet. Why are they being so non-partisan? Two reasons, one they know this problem is bigger than one party and there is plenty of blame to go around, so they will do what they can to help stem this crisis. Secondly, and more important to some, they want to get back to their constituencies.
Job one is getting reelected. To be seen doing nothing at this time would bring too much political damage to them.
Country second!!!
Tuesday, September 16, 2008
Russia on the brink?
Much has been made of the meltdown on Wall Street and I won't comment much on it because there is just more info out there than is needed. However, little noticed in all this is that Russia is in a very difficult position.
The Georgian invasion, the rip off of British Petroleum's business in Russia and the fact that oil prices are diving are causing huge problems for their markets. Their major market tanked over 17% today. It was off at one point at 20%. That would be like a 2000, not the 504 that just happened, point drop on the Dow.
I wonder how much of that is related to the current crisis in markets and the pressure the west has been putting on them. I believe that the former is more significant, however I do not discount the latter. I believe that the West is punishing Russia and there is a warning to Putin: back off or we will crush your economy. Putin is wealthy enough to survive it but his billionaire buddies would be very upset. If much more happens he might need to start watching his back.
Unlike the US, Russia does not have much of an industrial base. Their infrastructure is pathetic and the vast majority of its income is from energy. It wouldn't take much to crush their banking system at the moment and it just may happen.
My guess is that Russia has been told to calm down or else.
UPDATE: Russian markets are slated to open tomorrow. A huge amount of rubles have been offered to soften any blows to its banking industry, but will it be enough? Markets normally don't respond well to being shut down. We will have to see.
New Update: Russian markets make huge comeback and this time they were stopped again. Monday will bring a much anticipated opening.
The Georgian invasion, the rip off of British Petroleum's business in Russia and the fact that oil prices are diving are causing huge problems for their markets. Their major market tanked over 17% today. It was off at one point at 20%. That would be like a 2000, not the 504 that just happened, point drop on the Dow.
I wonder how much of that is related to the current crisis in markets and the pressure the west has been putting on them. I believe that the former is more significant, however I do not discount the latter. I believe that the West is punishing Russia and there is a warning to Putin: back off or we will crush your economy. Putin is wealthy enough to survive it but his billionaire buddies would be very upset. If much more happens he might need to start watching his back.
Unlike the US, Russia does not have much of an industrial base. Their infrastructure is pathetic and the vast majority of its income is from energy. It wouldn't take much to crush their banking system at the moment and it just may happen.
My guess is that Russia has been told to calm down or else.
UPDATE: Russian markets are slated to open tomorrow. A huge amount of rubles have been offered to soften any blows to its banking industry, but will it be enough? Markets normally don't respond well to being shut down. We will have to see.
New Update: Russian markets make huge comeback and this time they were stopped again. Monday will bring a much anticipated opening.
Monday, September 15, 2008
State changes All headed for McCain
Here is a list of all the changes that have happened recently in state by state polls. These must be very encouraging to McCain and discouraging to Obama. Each of these below show a change from what they were to what they now are. For example Minnesota was leaning Obama now it is a toss up. Also numbers on second line show the likely electoral votes if election were today.
Though these are all good for McCain the race is essentially a toss up. There is so much yet to go. His numbers nationally have receeded some just recently.
09/14 Minnesota Leaning Obama »»»Toss Up
Obama 207 - McCain 227 McCain +2.1
09/13 Indiana Toss Up »»» Leaning McCain
Obama 217 - McCain 227 McCain +2.4
09/11 Florida Toss Up »»»Leaning McCain
Obama 217 - McCain 216 McCain +2.5
09/11 North Carolina Leaning McCain »»»Solid McCain
Obama 217 - McCain 216 McCain +2.5
09/11 Georgia Leaning McCain»»»Solid McCain
Obama 217 - McCain 216 McCain +2.5
Though these are all good for McCain the race is essentially a toss up. There is so much yet to go. His numbers nationally have receeded some just recently.
09/14 Minnesota Leaning Obama »»»Toss Up
Obama 207 - McCain 227 McCain +2.1
09/13 Indiana Toss Up »»» Leaning McCain
Obama 217 - McCain 227 McCain +2.4
09/11 Florida Toss Up »»»Leaning McCain
Obama 217 - McCain 216 McCain +2.5
09/11 North Carolina Leaning McCain »»»Solid McCain
Obama 217 - McCain 216 McCain +2.5
09/11 Georgia Leaning McCain»»»Solid McCain
Obama 217 - McCain 216 McCain +2.5
Sunday, September 14, 2008
Race snapshot
1. The congressional races have tightened up significantly. With a generic Dem running against a Repub the numbers were favoring the Dems in double digits weeks ago. They have been tightening but have become much closer after the Rep convention (much in response to the Palin pick). One Gallup poll had the Republicans up by 5%. RCP average is about 3% for Dems. Pelosi and Reed are real nervous (not to mention the Daily Kos and netroots groups). Fear is probably a more accurate term.
2 Obama is on a slide that has not been righted yet. We should be seeing a contraction from the Republican bump of the convention and we are not. Though Obama still leads in the electoral count if you keep the tossup states in there the more significant thing is that McCain now leads by 20 points if you do not count tossup states. He was probably 50 behind a month ago.
3. Sarah Palin is under fire. She must be brought down by the Dems. She is a threat not only to Obama but to the Dems as a whole (Dick Morris argued this point strongly). She is America, the America that the MSM/Hollywood types despise, but the Reagan Dems love. I fully expect to see her pounded like Bork and Justice Thomas. It is going to get merciless. She does have this going for her, she is a successful woman and a very hard target to hit.
4. The parts of polls that really count are the internals. The one that is really hurting Dems is white women. They have greatly moved towards McCain. There are several others. Possibly as significant is that Republicans are far more engaged and frankly excited. Huge shift. Attacks on Palin will most likely energize them far more.
Note: Michael Reagan has many times stated that there would never be another Ronald Reagan
and told Repubs to get over it. He has changed his mind. He said that watching Palin he saw his dad wearing high heels. Amazing, and we are seeing many agree.
2 Obama is on a slide that has not been righted yet. We should be seeing a contraction from the Republican bump of the convention and we are not. Though Obama still leads in the electoral count if you keep the tossup states in there the more significant thing is that McCain now leads by 20 points if you do not count tossup states. He was probably 50 behind a month ago.
3. Sarah Palin is under fire. She must be brought down by the Dems. She is a threat not only to Obama but to the Dems as a whole (Dick Morris argued this point strongly). She is America, the America that the MSM/Hollywood types despise, but the Reagan Dems love. I fully expect to see her pounded like Bork and Justice Thomas. It is going to get merciless. She does have this going for her, she is a successful woman and a very hard target to hit.
4. The parts of polls that really count are the internals. The one that is really hurting Dems is white women. They have greatly moved towards McCain. There are several others. Possibly as significant is that Republicans are far more engaged and frankly excited. Huge shift. Attacks on Palin will most likely energize them far more.
Note: Michael Reagan has many times stated that there would never be another Ronald Reagan
and told Repubs to get over it. He has changed his mind. He said that watching Palin he saw his dad wearing high heels. Amazing, and we are seeing many agree.
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