Fighting Words?

Man do I hate being called out—especially from one of my associates—so here is my reply:

I believe in capitalism, without a doubt. That being said, I am in favor of at least attempting to ease the tightness in the credit markets as I fully understand the ramification of being unable to borrow, especially in the near term. I do not want to put an apple cart out on the main drag of my home town. We have seen via the RTC that a bailout by the taxpayer can be a good trade over time. It should be and is a last resort. We have no other options other than an immediate seizure of the financial market as we know it.


That being said, I also believe a free market, (a.k.a. survival of the fittest, is the only market). Yes, many more banks are going to go under. It is inevitable. The current crisis will NOT end with a $700 Billion bailout. But it might mitigate it. History has proven to rear it’s ugly head over and over again and this time is no different. Rather than sitting by idly and watching the market crash at least Hank the Tank and Big Ben are trying to do something to mitigate a crisis they did not make but surely are in the middle of trying to resolve.

As an astute friend (who has been bearish for all the right reasons for the past 2 years…) pointed out to me at last evening’s back to school night, the bailout will NOT save us as housing prices will continue to decline in the near and intermediate term. This should be taken as gospel. However, if we can grease the wheels of the economy, enough to permit business transactions, lending and borrowing we will mitigate the depth of the abyss we are about to enter.

Oh and just to add one more cheery thought---After the bailout comes the deep and prolonged recession.
--The Angry Trader