The Financial Crisis is getting deeper and deeper as each day goes by. The downward spiral seems like it will continue for some time now. Even though the “U.S. Bailout” may ease the market in the very near future, it will probably not do much to stop the global meltdown that is occurring.
As we make our expectations about the near future and think about what to say when you see yet another article from some columnist saying that we have reached a bottom, here are some recent events to keep in mind.
First, there has been a flight to safety, as seen by the yield on three month Treasury bills which right now is .45%. This means that investor confidence is with no doubt extremely low.
U.S. Based:
-Bailout of Freedie Mac and Fannie Mae, AIG, Bear Stearns, Wachovia.
-Lehman Brothers goes bankrupt
-Collapse of Washington Mutual
-Rescue of Merrill Lynch
-Goldman Sachs and Morgan Stanley become Bank Holdings (traditional banks)
- Record point drops in the Dow Jones, S&P 500, and the Global Markets
Global:
-UK Treasury announces nationalization of Bradford and Bingley.
-Iceland government takes 75 percent share in Glitnir Bank.
-Huge liquidity operation by multiple Central banks.
-Libor Rate reaches record high high rates.
-Fortis Bank in Belgium collapses.
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This not an complete list of what has happened, but it is enough for us to see that something very big is happening and that a turnaround is probably no where near as people like to speculate.
What about the list of 110+ banks that are considered to be in financial trouble? Are they just going to all turnaround in a heartbeat?
Bailout and dollar infusion into the markets…what does that mean for the dollar?
Well, with all that in mind, be cautious.
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