Another bailout, bigger and better - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Another bailout, bigger and better

Nov 26, 2008

Here comes another bailout, bigger and better
It's pouring money in the US. Even as a little more than half of the money to be utilized towards the TARP (Troubled Assets Relief Program) remains unutilised, the US Fed has unveiled two new plans that it believes will go a long way in increasing the credit availability for homebuyers, consumers and small businesses. It will - hold your breath- purchase as much as US$ 800 bn in debt issued or backed by government sponsored mortgage finance firms as well as the one taken in the form of credit card, car loans and student loans. The latest plan is seen as another attempt to kickstart lending by banks to consumers and small businesses, which was not happening to the extent desired in the previous bail out plans. Many experts were of the opinion that the first bailout package worth US$ 750 bn would prove to be inadequate and now with the government unveiling the latest plan, their stand seems to have been vindicated. Taking into account the latest plan, the total of a staggering US$ 1.6 trillion has now been poured into the troubled US credit markets.

What is the smartest money doing?
Want to know what is one of the smartest money in the world doing? Well, it's buying the Japanese Yen, its buying commodities and it is also buying the Chinese and the Taiwanese stock markets. We are referring to the adventure capitalist, Jim Rogers. After correctly predicting the rally of the US dollar earlier this year, Rogers has now turned negative on the greenback. Sensing that the US authorities are deliberately trying to keep the value of the dollar down to make the country more competitive, Rogers has cautioned that the strategy has never worked in the long term and it probably never will.

The commodity guru is also finding a lot of bargains in the agricultural commodity space, singling out sugar, which he says, is trading 80% below its all time highs. Rogers has also admitted to taking fresh positions in Chinese and Taiwanese stocks, focusing once again on the agricultural space. Thus, with two of the savviest investors in the world returning to equities ( Warren Buffett has also confessed to buying US equities in his personal portfolio), does this signal the bottom for the market? As per their own admissions, these two men are bad timers of the market and hence, calling the current market levels as absolute bottoms would not be a wise thing to do. What is near certain though is the fact that a lot of stocks globally, perhaps the most in recent years, are trading well below their intrinsic values.

Urgent over the essential
Crude prices have come down significantly and State run oil marketing companies have started making a neat profit on the petrol and diesel that they sell daily. But have they recovered fully the losses they incurred while selling the same commodities at subsidized prices, when the crude prices were touching record highs? Unlikely. But this has not stopped the government from considering a downward price revision towards the end of December. Infact, had it not been for the restrictions imposed by the Election Commission in view of the recent assembly elections, the revision would have probably happened by now. While a revision would no doubt help ease inflation further, it will come at the expense of putting pressure on the long-term resources of the country. But with national elections just few months away, that certainly seems a very small price to pay! Once again a classic case of overlooking the essential for the urgent.

Equitymaster requests your view! Post a comment on "Another bailout, bigger and better". Click here!


More Views on News

How Much Money Should an Investor Set Aside for Trading? (Fast Profits Daily)

Sep 21, 2020

In this video, I'll give you a simple equation which you can use to decide how much money you can set aside for trading.

Kotak Standard Multicap Fund: Strategizing Growth with Focused Approach (Outside View)

Sep 21, 2020

PersonalFN's analysis on the features and performance of Kotak Standard Multicap Fund.

Sensex Can Go to 25,000 Before it Goes to 60,000. Are You Prepared? (Profit Hunter)

Sep 21, 2020

Am I expecting a big crack in the Sensex and what next?

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

Sundaram Bluechip Fund: Will Hold the Stable Horses (Outside View)

Sep 18, 2020

PersonalFn briefly outlines the newly launched NFO note HSBC Corporate Bond Fund.

More Views on News

Most Popular

Buffett Style Investing

A detailed peek into how Warren Buffett identifies the value of a stock, his concept of margin of safety and more.

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why am I Recommending Caution? (Fast Profits Daily)

Sep 9, 2020

This is why I have changed my short-term view on the market.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 21, 2020 (Close)