Gauging Failure to Bail Out Fallout
Monday, October 6th, 2008
By George Leong, B.Comm. for Profit Confidential
Markets continue to maintain a negative bias, as stocks trade at multi-year lows, with 2008 potentially the worst showing since the bear market in 2000. We are awaiting a second vote on a revised $700-billion bailout program that will give the markets some confidence. However, we feel it will do very little for small guys, as it appears more to be helping out failing companies. Yet, in spite of this, it is still needed, as there are grave concerns surrounding the condition of world economies.
If you need evidence, just take a look at some of the comments made over the last few weeks by some major financial pundits.
On Friday, French Prime Minister Francois Fillon said the world was standing on the “edge of the abyss” due to the potential negative impact of a global financial crisis. Economies in Europe are struggling and there are also concerted efforts there to halt a financial meltdown.
Billionaire investor Warren Buffett is also concerned about the condition of the country, and said the U.S. has been hit with an “economic Pearl Harbor.” In an interview on the “The Charlie Rose Show,” Buffett added that the government must react quickly.
Jack Welch, the former head of General Electric Company (NYSE/GE) believes that “one hell of a deep downturn” has been in the works, and that the first quarter of 2009 would probably be “brutal” This was all in a very recent speech to the World Business Forum in New York.
Fed Chairman Ben Bernanke suggested that a recession would be likely without a bailout.
Four views, but all suggesting that things could get nastier. Failure to prop up the financial system will have dire consequences. At the same time, the poor condition of the housing market remains a significant concern, which that could impact credit and financial markets more.
Stay tuned, and maybe by the time you’ve read this, the bailout will have been approved.
Next Post: Looking to the Future…and to ProfitPrevious Post: A Stock Market’s Obituary
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George is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. His trading advice on stocks and options is also found on his daily trading site, Daily Profits. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services.
