Is it just me, or should we all apply for a bailout?

Is it just me, or should we all apply for a bailout?

Every time I read, listen, or watch the news, the US government is bailing out someone and giving away more and more money.

When does it stop?

The U.S. Government is convinced it can spend its way out of this mess. This is same mess we spent our way into, so how could we possibly get out of it by spending even more money?  I can't see the logic in that.

Here we are again, giving more and more money to Citi (NYSE_C) and Bank of America (NYSE_BAC). Didn't BAC just buy Merril Lynch and Countrywide ... and now they need even more money just to keep going.

Here's my take: rather than spend all this money (and we're talking trillions of dollars at this point), why not give all the small-businesses in America a serious tax break. Small businesses produce 80% of all the jobs in this country. Small businesses do a far better job and have a vested interest in getting it right. I am not so sure the Government has the same vested interest. Does anyone know for sure what happened to the first 350 billion dollars of the TARP money?

So, if we cut taxes for small business they will have more capital to invest, increase employment numbers and can become competitive again. I would also do away with capital gains. If we cut corporate taxes for small businesses and eliminate the capital gains tax, we could certainly slow down and turn this freight train back to more confident times.

What's also amazing to me is that we have the same players in charge, just in different uniforms. With all this talk about change and the need for experienced people, it may be possible that this is not the answer. Just look at what experienced people have gotten us into in the first place. We need some new ideas from people who have common sense and know that two and two is four.

I would really like to get your views on what you think could be a solution for the US economy. If you want to leave a comment, you're more than welcome to do so. We ask only one thing, that comments are not obscene or threatening to anyone.

Many people have drawn a parallel between the current economy and to the crash of 1929. I have been doing some research and I found that the crash of '29 lasted a little over 34 months. When the stock market reached its high on September 3, 1929, it basically went straight down with some minor rallies, but eventually put in its ultimate low on July 8, of 1932. That was 34 months later. If you think of the recent high in the stock market being on September 9, 2007, and you look at a bear market period of 30 to 34 months then you are looking at an absolute bottom in the stock market some time in 2010 and not 2009.

Trust, confidence, hope for the future: these are all the elements that are needed to drive the stock markets of the world higher. I believe that President-elect, Obama's job is an impossible task. Expectations for this President are way beyond belief. He may (or may not) fall short on promised solutions for all the economic and other challenges we face in the future. Only time will tell.

I think that the stock market is going to remain in a decidedly negative tone and expect that short-term rallies will be met with selling pressure. All of the old ways of valuing stocks through earnings, dividends, sales and so forth can be thrown out of the window for the next year and a half. What we're trading now is simply fear, frustration, and the destruction of value.

Let me know your comments.

Adam Hewison
Co-creator, MarketClub

54 thoughts on “Is it just me, or should we all apply for a bailout?

  1. $1M to every American that averages less than $1M income over the last 5 years.
    Flat tax 15% off the top to everyone above double the poverty line.

    Let poorly run banks and corps go bankrupt. Their worthwhile assets will be bought by better managed companies.

    A whole lot more oversight on the finance, & credit business.

    Term limits for every elected or appointed US office. Congress, Supreme Court ....
    65 mandatory retirement for anyone in gov't. Make room for new minds and blood.

    Every defective dishonestly made mortgage gets revalued based on the current value of the home.
    The holder of the loan pays 25% of their income towards paying the loan.

    Every spec mortgage (flippers and the like), they get stuck or lose the property.
    Too bad. Greed isn't always good.

    Anyone involved in finance and CDS etc, booted out of anything in finance for the rest of their lives.
    Give back 1/2 of the past 10 years of profits. If they don't have it, they get a choice of Debtors prison or infrastructure work crew.

    Jimi "Crosstown Traffic" on every iPod.

  2. Well the markets destruction and the economy collapse are all imminent with more bailouts and bankruptcies. Need of the hour is an audit on where the economies stand with bailuts / without bailouts.

    Thrust to self sustainenance like Agriculture, Industrial Production and bring about a Tax structure where the launderers, Swiss Bank A/c holder needs to spend 20% to 40% on the Government infrastructure or lock them off for public benefit.

    More Madoffs will be created and more bailouts will be needed if the STIMULUS goes on and on. Last but least it is the common / poor man who toils hard for his food and shelter and middle class society will continue to work with no gains to lead a happy life.

    Can there be an AUDIT of this MESS / Sub Prime / Banking Scandals and in India SATYAM becoming a company with bloated figures.

    No Bailouts but a G20 or G10 nations debate on what can be done to survive this economic downturn and whats the best solution to PLUG this MADOFFS and BANKRUPTCIES.

  3. Thanks Adam... for your great sharing site!

    Watched ZEITGEIST:ADDENDUM and when relating to our current depressive global economic scenario and the state of the world's current affairs, everything seems to be going well according to the plans of the Committee of 300.

    If you think the Federal Reserves is an American governmental establishment belonging to the American people, you are dead wrong. It's as federal as Federal Express can be. It's private - owned by a group of private family bankers. Google and you shall be enlightened.

    If you comprehend and understand this fact, then many many things will be very clear to you.

    I agree with Pat PAUL (comments on January 17th, 2009 6:42 pm) that elimination of the Federal Reserves is one of the key to a healthier USA and also a better world.

    Late President Lincoln knew and understood the dangers of these private bankers way back and as noted by Mark K (comment on January 18th, 2009 8:14 am), Mr. Lincoln fought these bankers and created his own curency (the Green-Back that is known today) but however, he was later murdered by this group that he opposed simply because he was in their profit's way.

  4. 1. Rid the world of the super greedy. There go all of the politicians, bankers, insurance companies, and everyone else who has been robbing the world and our children of the basic necessities many can no longer afford.

    2. Quit spending trillions over the years on R&D for "alternative" energy, and start generating power with it. I could build a set up for a few thousand dollars that could generate 10kw of electricity during about 8 hours of the day. (if I had the money to spend)

    3. Quit looking toward the big businesses which must rob from the people for the solutions to our problems. Mobile Exxon GM Ford Chrysler etc... all sell us junk, charge a fortune, and do not stand behind their products! Just try to return a car that doesn't work properly and get a refund! Instead, create small businesses which can create products that work, and will not cave in to special interest. Sorry GM, but you've been in the fuel companies pockets, and now they've screwed you! Should have been a little less greedy huh?

    4. Regulate ANY and EVERY industry that that is deemed a necessity such that they have a fixed profit margin and can't rip people off! Insurance cos, phone cos, utility cos and the likes can charge whatever they want, you have to fight them when you need them, and the CEOs are FAT CATS!!!!!

    Want an investment idea? Buy LEAD, it's the only protection you will have when plastic, paper, gold, silver, and everything else are worthless, and it's the only way to take back from the crooks who are taking the food and education from your children.

    5. Restore the constitution to the people and remove the lawyers from power.

  5. Dear Adam,
    I’ve been thinking about this for a while , and these are the suggestions I believe might start a change. First, the United States’ industrial base must be revitalized. We must produce at home and have the technologies in place to support then next generation of innovation. A wider spectrum of citizens who might not have the skills or aptitude for office work, but are competent with their hands, need these kinds of jobs. These jobs will never expand in America if the companies are forced to compete with cheap labor abroad. We will continue to shove money and our best ideas overseas if we don’t address this serious issue. However, American productivity will win out if employers feel they have a chance. Health care costs must be nationalized for many reasons, but the best one is to give American manufacturers and American workers a level playing field and a fuller spectrum of high paying work. NATIONAL HEALTH CARE is a necessary step in returning America’s industrial base and the jobs that go with it.
    Second, if the financial sector is so important to our country, then there is no excuse for the lack of transparency in the banking and financial system. This area needs oversight, with a stronger SEC. While I am sure that there are many honest people in this industry, the truth is, it only takes a few who aren’t to cause a lot of trouble. There may or may not be a need for more regulations, but there will be no confidence in our system if people feel their money will be stolen.
    Third, if there is a stimulus, as I believe there should be, it should not reward those who have shown themselves incapable of prudent restraint, nor should it be a universal dole that will end up on the balance sheets of the oil companies when they increase their prices. I would like to see all home owners with mortgages get refinanced at a lower rate—preferably somewhere from 3.75 to 4.5 %. This move would help those who are in a position to help the country because they have a proven track record.
    A national refinance of existing home mortgages would send a clear message to banks and homeowners. This move would do many things: It would put a bottom on the housing market; Homeowners who lost equity would receive some compensation; The money homeowners save—probably $200 to $400 per month-- could then be used to finance big-ticket items, like a car or renovation. This program could be tailor made to get the biggest bang for the dollar invested, and it wouldn’t require waiting for the banks to start lending—the government would require them to participate.
    The financial jokers leveraged their schemes on the back of the solid American homeowner, and now we are expected to take our lumps for their mistake and malfeasances. There are alternatives. I will be watching the choices the leadership make.
    PS—While I am dreaming, I have one more request—re-regulate the media and keep the internet free.

  6. There's a very simple solution. Cut back the government by 1/3, to the size it was in the early 90's, and abolish the income tax. Sound far fetched? Imagine how fast the economy would turn around if everyone (EVERYONE) kept the 1/3 from their paycheck now being sent to Washington. Spending would increase overnight and government, from which most problems originate, would be reduced. Friends, until we recognize that Washington and it's current 2 party 'deficit spending system' is the PROBLEM, and in no way offers 'solutions', we will be doomed. Ron Paul is the only man in Washington who understands what's truly needed. All others are either ignorant to the fiat printing press problem, to drunk with power to care, or some sick combination of the two.

  7. whats the population of Americans . Is it 300 million .
    Instead of providing billions of dollars to the banks , the Fed should give a million each to its citizens . The economy will easily get a boost , when everyone starts spending . Its not gonna cost a lot . It will be a lot less than billions of billions they are giving to the banks .

  8. Decent, honest people are not eligible for a bailout, Adam, so forget it.
    Bankers, politicians, regulators are symbiotically related and all are parasitic to the public. Competence and integrity are not in their CV's.
    In 1929 currencies were gold-based, immune from politician counterfeiting, people's savings safe. Today it's fiat currencies, politician counterfeiting rife, savings ravaged.
    The next low in the DJ30 should complete 1/3 (usually the smallest third) of the secular correction that started 10/07, so several years to go yet.
    Perpetual economic/population growth is not possible and if humans too stupid/mean to adjust behaviour, events will act, often brutally, to correct it.
    Globalization is a complicating evil.

  9. Watch I.O.U.S.A. We have to stop spending on credit, both as a nation and individually. We have to start saving again. After WWII, the U.S. gov't. sold Treasury bonds to U.S. citizens to pay down the debt. NOw, instead of U.S. bonds being bought by U.S. citizens, they have been bought by China and other nations, some of whom are slowing down their purchase of bonds in favor of hard assets. We've given away the store.
    I heard a suggestion of offering "Green bonds" as an investment product that would help finance this country's investment in renewable energy. An interesting thought, and better than selling off our utility companies to foreign investors.
    Definitely stop bailouts without the U.S. government getting a similar return to that Warren Buffett expects on his GE/Goldman Sachs investments.

  10. good luck everyone and thank you for great stuff to read, and refer back to, including adams, words of wisdom...i hope that as this obamanation jihad takes place, we can all make our funds last a bit longer, if not multiply in large amounts
    many thanks

  11. Appears like Mr. Obama bought the election. The legislature handed out almost 350 billion prior to the election.

    10 largest banks/brokerages received most of 350 billion. Now they will not tell what they done with that money. Bankers/brokerages have said it is to complicated to understand. Wander if that money made its way into the 30 wealthiest peoples private accounts?

    Mr. Obama opted out of "Campaign Contribution" law after the primaries. I now understand why. The 10 largest banks financed his campaign, and maybe foreigners. Since the banks are the largest known contributors to his campaign, wonder if he promised them a trillion dollars if he got elected? Certainly will pay his campaign debts off.

    The people that got wealthier/richer from the creation of current financial crisis are now going to get even richer from the bailout.

  12. If I were a "Rich Man" or a "Wall Street Banker" and I saw my family's future in danger, What would I do to save them? If your answer is not "I would do anything in my power to save my family" then you are not being honest.
    If "Politicians" have access to all of the country's wealth, then I would "Buy" as many Politicans as needed to secure my family's future.
    If by legally stealing a country's "wealth" (BAILOUT OF THE FAMILIES THAT OWN THE BANKS),I could preserve my own family's wealth, then I would steal as much as I could as quckly as I could and move to someplace safe from the "mobs of angry people" I had stolen from.
    I wonder where a lot of "Rich Families" are moving to this year?
    If I were a "Politician" and I saw the "Economic Collapse" coming, would I join the "Rich Man" and his family? The answer has to be, YES! The "Politician" and the "Rich Man" have almost always taken better care of themselves and their families than of the people the who do the manual labor for them.
    Do not feel cheated by the "Politician" and the "Rich Man", for "YOU" may have helped them get to where they are today.
    Survival of the fittest is the way animals and people choose winners and losers in this world.
    If you are a loser, you are waiting to be bailed out.
    If you are a winner, you are taking the loser's money.
    Become a winner and take the "poor man's" money.

  13. I believe the destruction of wealth and assets will continue until their is a huge public outcry that the government act responsibly - i.e. stop bailing everyone out and clean up our balance sheets - public, corporate and also personal. I see that time being quite a ways off. I agree with Adam, every attempted rally until then will be met with renewed selling by those holding stocks get the message that stocks are not a safe place to be until we get our house in order.

  14. Cut down spending ...households and government...

    The US economy that way will take time to recover but will recover over time for sure..

    cut down defense exp.abroad ,put that money in education and health system in your own country...common sense...isn't it ?

  15. Hey jim rac 350 billion divided by 200 mil is $1750 a piece, but I'll take it just the same.

    Pass the Fair Tax everybody pays according to how much they buy including corporations.

    Stop doing business with BOA and Citi. Vote with your pocketbook. I closed all my accounts at BOA and moved my mortgage from Citi.

    The avergae Joe needs to wake up before we can ever take back our government. The bailout money is your money. Why don't more people understand that?

  16. What value does the dollar really have if the government can wave its electronic magic wand and create trillions and trillions of dollars whenever it chooses?

    But if manufacturing trillions is not a problem, then why not just pay off the national debt?

    And by the way, why is there a national debt? I thought that a most basic right of any country is to create its own currency . . . so why are we paying interest on money that we have "borrowed"? From whom, exactly did we borrow it, and to whom are we paying the interest on this "loan"?

  17. Dear Adam
    in an age of crazy, I prefer to take it to a bit of extreme crazy, as we already seem to be there already,in my about if, all small businesses were given a two year period of paying 0 tax, for a full 24 months. The bailout money is given directly across the board, to adults in the entire economy, where it will create real stimulus, not go to offshore accounts, or foreign markets. The dollar gets repegged with a commodity such as gold or oil, backing it, immediately, and the politicians are to never abandon this backing. now the kicker, much like in a third world country, cause thats where this circus is headed, ALL PRESENT DEBTS ARE FORGIVEN, and being the currency now has to have commodity backing, the current issues, shouldnt happen again, in the future....right?
    i know this seems crazy, but its been the craziest few months of their late night, closed door meetings, and corruption, down seems to be up and up seems to be down??? good fortunes and a prosperous and healthy 09 to all

  18. The stock market high in 2007 can be considered to be essentially a double top, i.e., from the peak in 2000, we have seen the first wave down, the second wave up to a double top, and now the major market indexes are in the midst of a third wave downward (which short term could be either up or down). When the third major wave completes, there is likely to be another rally before a fifth wave down. After that, there may be another sixth wave upward and a seventh downward. It is possible, that we will never see another major market "bull market" in the truest sense in our lifetimes, but we will see some of the up waves appear to be bull markets because some may be fairly long lasting as was the second wave between '02 and '07. Governmental leaders rarely take a common sense approach because they usually have other agendas besides truly meeting the needs of their constituents. The consequences of their policies and human rulers inherent lack of wisdom means that the "Greatest Depression" is upon us. This bear market with some major rallies in between is likely to last until Armageddon, that is until it is undeniable that human governments of all types, including democracies, have failed and divine intervention brings an end to them all and God's heavenly government, his kingdom, takes over rulership of the earth.

  19. I agree with pat paul. Get rid of the Federal reserve. As Thomas Jefferson said when central banks get control of a nation it brings ruin to that nation.

  20. I agree with all of your suggestions.I have one question, would lend you $100,000 if the equity in your home is worth only $25,000. That what our government did. Why? One of the CEO of a car company mentioned that no matter how much fuel efficient cars he builds, they are not going to sell, if the consumer lacks confidence. This could be accomplished, by doing the things that you have suggested and putting money into the hands of the people. One way of doing this is by not having any taxes ( except ss and Fica)on the earnings for about 3 to 6 months.

  21. Excelente envío; muy buen concepto...pienso muy parecido las circunstancias financieras globalizadas implican una realidad.
    Mis respetos.

  22. In order to solve the problem we must identify the problem. Not a lot of space for a comment so I'll be extremely brief. The problem is the money supply is under the control of a private cartel. They issue their currency in exchange for interest. Over time this interest (wealth sucked out of the population unfairly) compounds and exponentially more money needs to be created to create money to cover the interest. This creates bubbles and busts where wealth is transferred to these elites.

    The great depression should be renamed the great wealth transfer. As a result of their enormous power and wealth they exert enormous control over the media, education, politics and the courts. How are the people supposed to recognize the problem?

    Another question. Where do banks get the money to lend? They don't have it. Its a slight of hand, its created the moment the client signs the document and he's charged interest on this created money. So on a 200k house they get the principal and the interest which is probably at least that much. And if the client doesn't pay they foreclose. GET IT? Its criminal and 100% true. How can we stand for this scam? Fiat money isn't real. Its an imaginary product. Its created under a pyramid scheme called the fractional reserve system.

    Right now the pyramid is contracting under the weight of enormous debt and leverage. The whole thing is fake. The same amount of wealth, property and resources exist now that existed 6 months ago. Its just our money system is turned upside down. The entire financial system is rigged and controlled. From the price of gold and silver to the stock market to the supply of money. My belief is this crisis, like the great depression was caused on purpose.

    The solution? I'm actually not a big fan of the gold standard. Where and who has the gold? Much of it is in the hands of the banking elite. Based on my research the most effective system is the one used by Lincoln and the early colonists.

    Government/nationally created interest free currency. The current debt should be eliminated/paid off with this currency. Poof. end of debt. The tax burden can be vastly reduced as a result to perhaps a quarter of what it currently is. Banks should be under the control of the government. Interest should be stable and fair. The money supply kept stable and expanded when necessary.

    This is extremely brief. For more information. Please read.
    Web of Debt
    The creature from Jeckyl Island
    on Youtube Moneymasters and money as debt for starters. This should get you started on the path to understanding this issue.

    This crisis is not going to be solved with the current steps. The problem is debt based currency. Exponentially expanding debt got us into this mess. Record borrowing will not solve this problem. Quite the opposite. I am a huge Obama fan and am optomistic especially since his idol is Lincoln. Who fought the bankers and created his own curency. (he was later killed by these interests) How could Obama study history and not come across this vital part of Lincolns history, particularly since it was his greatest economic contribution. But the elite banks were the top contributors to his campaign, his inauguration and he is surrounding himself with foot soldiers that serve these interests from Geithner to Volker. Hard to be optimistic given these facts. Not to mention the massive stimulous.

    What will happen? I'm betting on a collapse of the dollar. So I'm buying silver and gold. (which is a gamble as they are manipulated) I'm praying the path to fascism will be halted and reversed as many civil liberties have already disappeared and the constitution has been debauched. Bad things happen in countries when economies collapse. A study of history suggests civilizations decide to fail. There have been over 20 in history they all collapse and make the same mistakes. The same ones we are currently making.

    A happy ending is imporobable but not impossible. It also depends on your definition of happy ending. We have already overshot the earth's carrying capacity in terms of population. We are due to expand in population to over 10 billion. The true carrying capacity in a world without fossil fuels is likely a fifth of this. We will have certainly run out by the end of this century. Hopefully we will have found alternatives by then.

    We are in the midst of the greatest crisis ever to face mankind. The end of the oil age. The only reason this crisis was taken off the center stage unfortunately is because of the record collapse in demand for energy as a result of this economic collapse. We needed extremely high prices to martial a transfer to alternative renewable energy. We've already passed peak production.

    Thanks for reading, I tried to be brief.

  23. I am self employed and have been fighting the good fight to survive for 19 years and I know that if I screw it up,me and my family go belly up, with no bail-out packages from anyone.Why should big business be any different.And don't tell me that they're trying to save jobs,the fat cats that caused this problem are trying to save their opulent lifestyles.

  24. The crux of the problem, it looks to me like, is the "toxic assests" that the banks have on their balance sheets. Unexplainable, unfathomable, packaged, re-packged instruments that paid the fat cats for all these years. Addressing this is the only solution. Paulson backtracked with the first 350 billion, which was meant to buy these very assets at a "mark to market" price. But marking these down to market prices would have exposed the inflated bank books and would have caused chaos on wall street.
    But this has to be addressed. Unless the drain is open and an assesment is made as to how much of garbage clogs the system, no real action can be taken. The only other way out of this mess would be that the market somehow bottoms, the asset prices bounce back and then the banks could reveal their actual asset values without having to write it down. But this would be like waiting for the rain in the Sahara.. it could happen but its a long shot. As long as it dosent happen, things can only get worse.

  25. Hi Adam - I enjoy all the informative comments and assistance from your website. Here in NZ we are watching with interest. It is often said here ,when Wall St sneezes we catch a cold. Certainly is the case at the moment. It always interests me - as a capitalist at heart - how people want to capitalise the profits and socialise the losses. I'm a great believer in the market and if it was left to it's own devices I believe there would be a shortish sharp correction then the economies of the world would slowly gain momentum at their own rate. What we are seeing is locking in the pain for future generations. Merv


    Thanks for your feedback. I should be on the North Island in April visiting my daughter who is in the wine business.

    Like you I believe in the market solving problems, you are right let's just offload the cost and pain to the next generation...that is just not right.


  26. Greetings Adam,
    During last downturn in Asia, One country Malaysia refused the Uncle Sams prescriptions and that of world bank too. And it revived .. and sort of became the catalyst for the revival of South Asian countries.
    Now its USA's turn and they seem to be doing every thing that they always advised others not to do.
    Back to the basics is what is needed. Thrift, economy. saving, spending within current means and as you rightly say HELP THE SECTOR THAT GENUINELY CREATS WEALTH AND EMPLOYMENT-- THE SMALL AND MEDIUM SECTOR..YES JUST GIVE THEM A TAX BREAK AND THEY WILL DELIVER.

  27. I think you're absolutely on track with the small business tax cuts Adam BUT.....the question do you get rid of the current foxes that are guarding the henhouse?

  28. In response to the post which stated that using the remaining $350B in TARP to pay the 200M tax need to do the math again. I calculate this would be $1750 a person. We really do need to fix the government run school system at some point too.

  29. Thank you for all you do in educating us. As for the economy, I agree with the tax cuts for small business and the capital gains cut. I also think that if Washington would have immediately said OK, there will be no capital gains for four years for any investors that will pick up the devaluated paper all these financial institutions need to unload, that there would have been an immediate response. Also suspend income tax for 1 or 2 years for all small business. We will bring this economy back on the back of small business and our entrepreneurial spirit, not massive government spending. Never has worked, never will.

  30. If its so obvious that the govt. is screwing up(again), why do they keep doing this? Because they are not interested in fixing the problems, they are just buying votes. They can always be counted on to do what appeals to the most voters. If you have managed your finances responsibly, stayed out of debt, paid off your credit cards every month, and bought a house you could afford, you get nothing. Because you are in the minority. The wrong doers will be the ones getting the bailout. They will have debts forgiven, bankruptcies forgiven, mortgages written down,etc., all because they were irresponsible. Then we wonder why they keep making the same mistakes. The govt will always pay them to keep making these mistakes, and they will keep reelecting those that are so "understanding to their plight" in life. After all, it cant be their mistake, right?

  31. Anything has to be better than the last administration. I'm still trying to find something positive that was done in the last 8 years.
    Something needs to be done that will put people back to work so that Americans have confidence again and are willing to start spending.
    Why not bring manufacturing back to the USA? That creates thousands of jobs.

  32. I feel it is probably time for term limits. We have way to may career politicians that do not do things for the good of the public. Our Constitution provided for elected officials to go to Washington to pass laws, and then return home to live under the laws they passed, and that is no longer the case. LET'S limit their time in Washington!!!

  33. 1. Eliminate status of "person" for corporations

    2. Limit terms of supreme court justices

    3. Eliminate the Federal Reserve

    4. Eliminate status of money as free speech

    5. Establish a gold backed currency

  34. I agree with Tom Morrison's Jan. 17th commemnt, in part, 'noise' is always one of our greatest challenges. I know that a newspaper with just news can't survive, but for the media to continually scream, 'the sky is falling', does not help promote the mental attitude needed to start recovery. If you have been around the market very long, you understand that there is a percentage of confidence that is required to generate movement...down or up. I, personally, would like to see media look for the positive aspects & shine a light on them, to help change mindset. I don't live in the dark, so I know, boottom line, is is all about earnings, but having confidence in the future is a start toward recovery. I appreciate Trader's Blog & always enjoy a new one showing up. Ken

  35. The math is wrong in jim rac's letter. Each tax paying person would receive $1750 not far from the sum of the tax refunds already received and those envisioned by Obama. If the people sign the note they ought to get the money and see if the people will use it more wisely and effectively than the banks and brokerage houses.

  36. to me the people who caused this and those that allowed it are not seeking rightful decisions. they know well. that for there to be a new world order the middle class must be wiped out which is what they are doing. there is a dead rat and a caged cat somewhere. this can only be solved with the right leader not controlled by the establishment. the whole world has been infected by an attempt to establish a world government. the whole system is an economic dictatorship already well established and completely unopposed. even the devil would be welcome to stop these power crazed maniacs

  37. If the Federal Reserve had handled rates differently we would not have this problem. Why would we believe they will be able fix what they created? At this point, the vicious cycle has begun. As long as deleveraging is happening in banks and individual households the economy will continue to contract. "Repairing balance sheets" will result in contraction, easing credit in expansion. If you accept the premise that balance sheets need to be repaired before credit becomes more available, then it will be a slow process and we can look forward to a continuing decline. Small business is a great place to start improvement because the money is used productively, not hoarded to extract income from the interest rate spread.
    (If the banks had watched Marketclub Whiteboard Videos and had stoplosses on their leveraged Tier 3 assets maybe we would not have to spend billions to buy them. I'm just saying.)

    Thanks for your feedback. The banks completely took their eyes off the ball when it came to risk.


  38. There is a price to be paid for business mistakes... the TARP is just delaying the payout. When the price has to be paid later, it would not surprise me if we will remember that saying "the first loss is the best loss."



  39. It seems as if these bailouts are the equivalent of giving an alcoholic another drink to get him to stop. Plus we have the eventual inflation when all the newly minted money begins chasing goods.

  40. jim rac is almost right and the Title of this Blog
    should not be laughed at. Several million households have credit card debts beyond their
    ability to pay. The government is in the process
    of rewarding bad decision making so why not wipe
    out all cc debts and just start over ??
    O R
    Have the stimulus package pay every wage earners'
    Soc. Sec. & Medicaire taxes for a year. SS&M is
    a black hole anyway so it would not matter.

    Speaking of taxes-- I propose to raise the stan
    dard deduction to $20K per mouth. 2 parents, 3 kids would pay tax on income that is
    A B O V E $80,000!! Students and anyone making
    less than $10/Hour pay NO taxes.
    Stick around and see what happens next. A roller coaster is fun to ride

  41. If this observer were setting policy, he would, as Adam suggests, get rid of the capital gains tax. That alone would provide a huge boost to the stock market.Next, because recapitalization of the banks is a need, I would offer legislation that said that, if every taxpayer-personal or corporate- can show a savings rate of ten per cent of net earnings,then each will be rewarded with a ten per cent flat tax rate.(It may also become necessary to eliminate all deductions.) I believe that this will eliminate the need to print the tens of trillions of what will inevitably become inflationary dollars.It could also help put the brakes on the dollar's long slide downward. Too,with a tax rate this low, I believe this could also help attract foreign capital, which is always helpful.Finally, I would have Barney Frank and Christopher Dodd arrested. For what they have done to this economy is criminal.

  42. Well, it is obvious that we have an "ism" is just weather it is communism or nationalism.

    Thanks for the Saturday post Adam!

  43. Adam,
    Great website!
    What you are saying makes way too much sense. I am from Canada and I know that whatever affects the United States eventually affects us as well!
    Isn't it strange and co-incedental, that I have just watched a video by Lindsey Williams. He explains how the 13 richest families in the world (The New World Order)are secretely implementing their 30 year agenda unbeknownst to the average citizen. Is it any coincedence that all of Americas' 'Bail Out' money is going to the banks controlled by these families?
    A very concerned individual!

  44. Since the free trade agreements, the U.S. balance of trade deficit has averaged about 80 Billion dollars per month: that is one Trillion dollars per yr. Any country or family that continues to out-spend income is going off the cliff.

    Correct that-----Correct the economy!!

  45. adam

    well said, quite true -->

    "All of the old ways of valuing stocks through earnings, dividends, sales and so forth can be thrown out of the window for the next year and a half. What we’re trading now is simply fear, frustration, and the destruction of value"

    value investing seems become difficult
    during this period.

  46. I am in agreement with what is being said here, we need to think what this wil do to the future of our grandchildren. They will be faced with the trillions of dollars of debt that the libs and there leader, Obama will leave them. It i an outrage!
    But if certain policies can be implemented such as the fair tax, cut capital gain taxes, etc. we could turn this blood-sucking beast around.
    Have a pleasant day.

  47. Someone jokingly said that a six month reprieve from all takes on earnings would set the economy on fire. I think that makes more sense than dishing out trillions to the moguls that made this mess.

  48. The government needs to get their hands out of everything and let the chips fall where they may. Then we the people can pick our own pyle of mess up and fix it as it was met to be by the founding fathers. Government needs to quit jumping in and saying, it's ok little darling. We will fix you as it is teaching our country we do not have to be responsible for our actions. This is the dumbing down of our country as they have already done with our children in the schools.

  49. Take the balance of 350 bill in TARP funds and give it to the apprx 200 million tax payers who pay taxes, thats 175k for each person, they would then spend it either paying off mtgs and re capiatlizing banks buying cars and respending in general which could kick start the economy

  50. Hi Adam,
    I really enjoy your Blogs & videos.
    Do you think w all the huge bailouts and ever rising deficits that funding all of this debt w our Treasuries will become a major concern? After all 10y treasuries yielding only 2.3% is not very attractive. I feel that the yield will have to rise, driving the price down, in order to attract buyers. There is an ETF 'TBT', that would benefit 2x, the decrease in price, should this happen. Your comments on this play would be appreciated.

  51. Adam, you have a great website. I learn something from you every day.


    Thanks for your positive comments on our web site. We have a great team here that makes it all happen.


  52. Putting aside everything but the profit incentive, it seems to me that the situation permits profit, whether TARP succeeds or fails, whether President Obama proves godlike or mortal, and whether the recession/depression last 20 months or 34 months. Down brings profits to some as does up.
    I think what I am trying to say is simply that this site - Market Club - has but one purpose, to assist its members to wealth. All else is noise.

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