Posted By RichC on September 19, 2008
Big changes for the financial markets as the SEC steps in to slow short selling of 799 financial companies and secure Money Market Fund holders on the heels of an injection of loan money from Uncle Sam earlier this week. Predatory short selling is in part to blame for the meltdown in financial sector. In summary, here are the actions so far: “toxic bond debt” is being rescued by the injection of 185 billion in capital from the banks around the world (and loans to AIG by the U.S. governmet), short selling will be limited and the U.S. Government will back Money Market Funds. These announcements has the dollar strengthening and stock market futures on the rise after a last minute gain yesterday.
Jim McTague of Barron’s was interviewed Thursday night about our recent Wall Street woes, and in his view we are going to see additional bank failures since the they are over leveraged. The Presidential candidates will focus on U.S. economic health and what should be done to correct our current condition. In the end, McTague’s conclusion is that the next President will have very few dollars to work with after the U.S. makes commitments to citizens and financial companies. He comments that no matter which candidate or party is in control, that “there is no way we can tax our way out of this problem.” He indicates “that growing our way out is the only real answer,” and therefore he believes that whoever has the best “growth plan” for America in next 4 years will offer the best solution in order to pay not only our new debt, but the trillions in previous debt. Once again, the election looks as if it once again is pegged to the economy.
Senator John McCain proposes the low taxes for all Americans in hopes to stimulate business growth and it has been a criticized by those wanting additional dollars in Washington DC. Senator Barack Obama has advocated lower taxes on middle income Americans, but higher taxes for those wealthier Americans. A piece of news that has gone semi-unreported is that Barack Obama seems to have recently indicated that “if we remain in recession in January and he is the new president, he will not raise taxes.” *