Conveniently announced after market close on a Friday, frankly I’m surprised they didn’t do it last Friday with a 3 day weekend to help mute the response, the U.S. Government is going to take over Fannie Mae and Freddie Mac in a bailout that will cost taxpayers tens of billions of dollars and effectively wipe out common shareholders.
But it’s Ok, everything is fine, or so they’d like you to believe. The U.S. Dollar is up, gold, silver, oil and anything that resembles a commodity or commodity common stock is getting chewed up and spit out.
I was in the brokerage business briefly in the 1980′s, right around the time of the big crash of ’87. My thought was that it was a fairly slimy business to be in, so I got out. But to see the names that were so larger than life – Bear Stearns, Lehman Brothers, Merrill Lynch – go down the toilet today is really hard to fathom.
In fact, the only firm that seems to consistently come out smelling like a rose is Goldman Sachs, that shining Wall Street example that some have accused of being joined at the hip with the U.S. Treasury and Federal Reserve. Maybe it’s who you know after all.
But don’t buy gold or silver, don’t buy precious metals stocks, and stay away from oil, gas and uranium while you are at it. The government and media seem consigned to agree to sell you the story that only the U.S. Dollar need be bought and with those dollars you can safely buy the Dow, S&P, bonds or whatever else some Wall Street firm trying to shore up its balance sheet wants to sell you.
I admit, for the last few weeks they have put on quite a convincing show. They even have Jon Nadler and Dennis Gartman signed on to the program it seems.
Shoot, one would expect China is heading back into the 14th century, experiment over and failed, everybody in China will return to their farm. At least if you believe what you hear.
But I suspect that won’t be the case. For one, Asians and Indians (dot, not feather) seem to be much more open to the idea of long hours and hard work than your average American. And I say that with confidence knowing that over 50% of Americans are net recipients of funds vis a vis Uncle Sam’s Treasury.
Yes, Korea definitely has an issue going on again as does Thailand. But I don’t think they are going to wait for a U.S. economic miracle before they decide to create their own.
Unemployment just turned in a nasty 6.1% number yesterday. I am here to tell you that my impression of the labor pool here in the Midwest is nothing to be particularly proud of.
Our radio stations blare commercials boasting jobs for trained CNC (computer numerically controlled machines) operators with starting wages of $15 per hour. Folks, $15 per hour is less than the untrained factory worker received in the early 1980′s (when those jobs still existed) and let’s not even go there with regard to the benefits package comparison.
You should see the demoralized, unenthusiastic applicants who slog up to the counter and apply for jobs with the companies I do work for. It is NOT a pretty site.
Bottom line is that I don’t believe the talking heads on the tube or our beloved Government. And NO, I don’t believe there is HOPE in the name of Barack Hussein Obama. Things are not getting better soon here and NO the rest of the world is NOT going to wait for us to fix it (Europe might, though).
Successful investing (not trading) relies on identifying long term trends, buying right, then sitting tight. VERY hard to do in times like this, I know.