Stock Market Up on Government Bailout Plan
This morning, both President Bush and Treasury Secretary Henry Paulson addressed the economic crisis facing the country. In order to calm the markets — and to prove that this Administration will do anything for the stock market — the two talked about a government bailout plan for the financial sector.
As part of the bailout plan, the following actions are being proposed:
- Government to take the bad assets of companies in trouble and buy them.
- Insure money market funds.
- Call a temporary halt to short selling on financial stocks.
Indeed, Secretary Paulson calls this whole thing a “bold approach.”
Stock market goes crazy on the news
As one might expect, the wholesale bailout of the financial sector is injecting “confidence” into the market. Investors are beside themselves with excitement, since this is final proof that the government will stand by Wall Street — no matter how badly or stupidly the involved firms behave.
The long lasting effects, of course, will have to be gauged in the future. Will this bid to prop up the economy work? What happens when “confidence” in the stock market is no longer enough to disguise the underlying fundamentals of an economy based on debt?
Indeed, this is one of my biggest issues: President Bush, in his speech, mentioned how important it is for the credit markets to get moving again so that people can get more loans. This is a big red flag to me, since it was this very thinking — consumerism financed by debt — that got us in this mess to begin with.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
Tags: stock market, stock market news, investing blog, government bailout plan,
economy, investments, President Bush
