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

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

  • MyStocks

MEMBER'S LOGINX

     
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

Top Indian Drone Companies to Watch Out for in 2022 (Views On News)

Jan 21, 2022

Several companies are adopting drone technology for regular business operations.

Insiders are Buying into these 6 Stocks Aggressively. More Details here... (Views On News)

Jan 19, 2022

While promoter holding is an important parameter, it should not be the sole reason for buying a stock.

These Penny Stocks Started 2022 with a Bang. This is what You Need to Know... (Views On News)

Jan 19, 2022

These penny stocks are up more than 30% already since the beginning of the year.

How to Trade the Stock Market Sell Off... (Views On News)

Jan 24, 2022

We reached out to Brijesh Bhatia, Research Analyst at Equitymaster for his views on the current market sell-off and how investors should play it.

What Next for Sensex? 40,000 or 100,000? (Views On News)

Jan 24, 2022

Will Sensex fall to 40,000? Or will it head higher towards 100,000? Here's what our readers think...

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.

Tata Steel vs SAIL: Which Stock is Better? (Views On News)

Jan 13, 2022

With government initiatives set to boost the steel sector, find out who has a better chance of coming out on top.

Watch Out for these 4 Indian Companies Betting Big on EV Supply Chain (Views On News)

Jan 11, 2022

The upside in supply chain players could be huge but a delay in the transition to EVs, or any policy related hiccups could end the momentum.

These 5 Penny Stocks are Held by Rakesh Jhunjhunwala. Worth a Look? (Views On News)

Jan 18, 2022

Rakesh Jhunjhunwala is holding these penny stocks in his portfolio for several years now.

Tech Mahindra's CTC Acquisition: Too Expensive? (Views On News)

Jan 18, 2022

Tech Mahindra's acquisition of European IT-company fails to excite investors.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jan 24, 2022 (Close)

MARKET STATS