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Stock Ideas Investors Daily Edge Like It Or Not, Here They Come 
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NanoCap Gems Newsletter January 29th, 2008. Volme 11 NATIONAL NEWS! We issued a Featured Gem Profile on Warp 9, WNYN, last month, and Warp 9 then issued a press release on the coverage on January 15th. Major news outlets, such as Yahoo!, AOL Media, and a host of others, then picked it up! |
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| Wednesday, 15 October 2008 | ||||||||
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Over the last few weeks, the majority of the feedback emails I received were about the bailout. I expressed that I felt the bailout was necessary in order for the credit markets to be freed up and for the economy to start working properly again. The majority of respondents didn’t agree with my take (approximately 75 percent disagreed with me). Judging by the tone of .the emails from those opposing my view, with the government now investing directly in the banks, we have a lot of unhappy readers. Here is an excerpt from the email I received from Art: Your line of thinking is one of two fundamental reasons we're in the mess we're in, which will only get worse. Borrowing today in hopes of a return in the future is nothing more than gambling with somebody else's chips that they borrowed from somebody else, and those chips are not backed by anything of real value. And I reckon you think that since the fiat money, fractional reserve monetary/banking system has survived since 1914 it'll continue to & sooner or later, things will get back to "normal". But a Ponzi scheme is mathematically doomed to failure & our system is nothing more than a very complicated Ponzi scheme. When your foundation is flawed, anything you build on it will automatically be flawed & the foundation of our economy (& now the world's) is built on shifting sands. You cannot continue to create money out of thin air indefinitely & the same "too big to fail" mentality that failed financial institutions had applies to the Gov't. too. No it's not too big to fail & as stated so succinctly in Proverbs, pride goes before destruction and a haughty spirit before a fall. Statements from the White House, the Congress, the Treasury & the Fed are nothing more than "puffery". - Art doom & gloom division Well Art, I don’t disagree that our system is flawed. But I suppose your answer would be to just change the whole foundation and to change it now. No transition back to a gold backed currency, just an abrupt end to the current system. That won’t cause a worldwide depression or anything. Gold would triple in value, but so would every other commodity including food. Worldwide inflation would jump to record levels.
I agree the system needs to be fixed, that is painfully obvious. At the same time, the gloom and doom that you are warning about would come about more abruptly if you completely change the system and do it immediately. The unfortunate thing is that our government doesn’t react until it is too late. Instead of trying to change things before a crisis comes about, they wait until the crisis is in full effect before feeling the need to act. And most of them are now acting in their own best interest and not the taxpayer’s best interest. They want to get re-elected, so they weigh their votes based on which direction will piss off the fewest people. Whether we like it or not, the bailout passed and now we have to deal with it. And now the Fed is playing Let’s Make A Deal with the banks. Hank Paulson is playing the role of Monty Hall as he makes the banks agree to accept government money. You read that right, the government forced banks to participate in this deal. Apparently some of the bigger banks did not want to participate, but the Fed forced them to participate so there wasn’t a stigma attached to those banks that needed to participate. How’s that for a free market? Investor behavior was irrational last week with all the selling. It is starting this week with the same irrationality only now it is to the upside. Last week may have created a temporary bottom in this market, but the financial debacle is far from over and the economy is far from being in the clear. As the market attempts to climb higher, there are going to be numerous levels of resistance it has to cut through… moving averages, various old support levels and so forth. As I said in yesterday’s IDE article, the time is right to wade back into the market, but it is not the time to dive in headfirst. Agree with me or disagree with me, it doesn’t matter. I don’t care whether you are a Democrat or a Republican, the bailout passed and the government is using the current fear to make unprecedented moves. The key for us as investors is to figure out how the market is going to react in the future. Good luck and good trading, Rick P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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