Archive for the ‘securities’ Category

Obama, Socialism, Fear, Lack of Confidence: Tanking Stocks, Skyrocketing Debt, Recovery Doomed This Year

March 7, 2009
This has the feel of a full scale assault on capitalism….

Some investors and pundits blame Obama for the market’s dismal performance. He inherited a mess, but his rhetoric isn’t helping.
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Obama’s Radicalism Is Killing the Stock Market

NYT: After March 6 Economic News, “2009 is Probably a Lost Cause”

Tom Petruno, Market Beat
Los Angeles Times
March 7, 2009
The stock market is supposed to be a bet on the future.

The market’s verdict so far this year: There is no future.

The continuing meltdown in share prices, the worst since the Great Depression, now has become Exhibit A in the political battle between the Obama administration and its harshest critics.

Conservative pundits including Rush Limbaugh and CNBC-TV’s Larry Kudlow assert that the president is waging war against capitalism itself, with his tax-hike proposals, social programs and banker-bashing rhetoric. That has sent disillusioned investors fleeing, they contend.

Well, something has. After diving 38% last year, share prices are down 24% just since Jan. 1, as measured by the Standard & Poor’s index of 500 big-name issues.

Despite a slight uptick on Friday, stocks plummeted 7% this week alone.

An outside view of the New York Stock Exchange on Wall street. ...

The decline from the market’s peak in October 2007 now is 56.3% — the steepest drop since the plunge of 1938 to 1942, when no less than the future of democracy was at stake.

“I think everybody is afraid of Obama,” said Todd Leone, a veteran stock trader at Cowen & Co. in New York. “They’re afraid he’s a socialist.”

Yes, the S-word.

Others say the market is more upset with the administration’s failure to stabilize the ravaged banking system — a Herculean task that Wall Street had hoped would be the first major challenge the White House tackled.

“Every time Obama talks about something like healthcare, the market’s reaction is — ‘No, the banking crisis!’ ” said Jeffrey Schappe, investment chief at BB&T Asset Management in Raleigh, N.C.

Treasury Secretary Timothy F. Geithner still hasn’t provided specifics on his plan to get rotting loans off the balance sheets of major banks, a step seen as crucial to jump-starting new lending.

For his part, the president this week advised investors to look beyond what he called “day-to-day gyrations” in share prices.

He then ventured into territory where few other presidents have gone. Perhaps taking a cue from fellow Democrat Warren E. Buffett, Obama offered an opinion on whether stocks were bargains.

“What you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you’ve got a long-term perspective on it,” he said Tuesday.

He didn’t get the lingo right, assuming he meant to say “price-to-earnings ratios,” a measure of stock prices relative to earnings per share. That flub caused snickering among market pros.

Read the rest:
http://www.latimes.com/business/la-
fi-petruno7-2009mar07,0,869176.column

Related:
 Can Democracy Fail With Obama’s Socialist Help?

George W. Obama?

Related:
 Venezuela’s Chavez Urges Obama, U.S. Down Socialist Path

Obama’s Radicalism Is Killing the Stock Market

NYT: After March 6 Economic News, “2009 is Probably a Lost Cause”

Obama’s First Weeks: Economic Disaster, Socialist Agenda,

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China Losing Taste for Debt From the U.S.

January 8, 2009

China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.

By Keith Bradsher
The New York Times
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The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time.

On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits “for years to come,” even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.’s.

In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.

But now Beijing is seeking to pay for its own $600 billion stimulus — just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.

“All the key drivers of China’s Treasury purchases are disappearing — there’s a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates,” said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland.

Read the rest:
http://www.nytimes.com/2009/01/08/business/w
orldbusiness/08yuan.html?_r=1&hp

Saving Capitalism No Sure Thing If “Cure” Undermines Economy

December 22, 2008

What’s good for General Motors may not ultimately be best for the global economy.

The Bush administration’s $13.4 billion rescue of GM and Chrysler is a fitting finish to a year in which governments around the world expanded their role in the economy and markets after three decades of retreat.

The intervention comes at what may prove to be a steep price. Future investment may be allocated less efficiently as risk-averse politicians make business decisions. Whenever banks decide to lend again, they are likely to find new capital requirements that will curb how freely they can do it. Interest rates may be pushed up by government borrowing to finance trillions of dollars of bailouts.

“We’re seeing a more statist world economy,” says Ken Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard University in Cambridge, Massachusetts. “That’s not good for growth in the longer run.”

It’s not good for stocks either, says Paola Sapienza, associate professor of finance at Northwestern University’s Kellogg School of Management. Slower economic growth means lower profits. Shares might also be hurt by investor uncertainty about the scope and timing of government intervention in the corporate sector.

“If the rules of the game are changing, people are reluctant to invest in the stock market,” Sapienza says.

From Bloomberg
By Simon Kennedy, Matthew Benjamin and Rich Miller

Read the rest:
http://www.bloomberg.com/apps/news?pi
d=washingtonstory&sid=aDjmuEpDoctc