Media Appearance: Kudlow & Company (3/17/08)
Hey, look who's on Kudlow & Co. tonite, from 7:00pm to 7:30pm. Also on the show tonite are Art (92% undervalued SPX) Laffer, Andy Busch and Vince Farrell.
The Fed is acting appropriately to avert an entire financial system meltdown. Whether they will be successful is as of yet, unknown. As we are so fond of saying, there will be costs: Financial, economic, psychological, and prestige wise to this debacle. (More Dollar pressure, Gold & Oil both up) Market action today was positive: Bad news, big gap down, positive close. It is only one day, and it is likely in anticipation of FOMC tomorrow. We continue to look at this as a modest rally.
Here are the talking points I sent in:
1) This was not a “bail out,” at Two Dollars/share, it was an "Orderly Liquidation"
2) JPM looks to have gotten a great deal – the Fed is actually taking on the first $30Billion in risk; Unless BSC’s losses exceed that, it’s a winner for JPM.
3) The Fed took this risk because JPM could not possibly have done the due diligence over the weekend. (GS just took a $3 Billion hit).
4) A bailout for Wall Street may not be very palatable during a recession in a election year. Thus, we should expect a major Housing/Mortgage bailout along any day now. Cost: Very expensive.
5) JPM gets a terrific scapegoat for the next 4 (or 8 or 12) quarters to blame for all of their crappy paper, leveraged risk, and counter-party obligations
6) The impact of the credit crunch is -- disturbingly -- showing up in places you would never expect. Headline: 20% Of Silicon Valley Startups Can’t Get To Their Cash.
7) Lehman's chart looks shockingly like Bear Stearns chart
UPDATE: March 18, 2008 5:18am
Here's last nite's video:
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BR, perhaps you have been missing my quote: "There is no means of avoiding the final collapse of a boom brought about by crdit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
BR, we know that there was no "voluntary abandonment of further credit expansion." Now can you help us with timing?
Will be watching intently. Tell Vince, to quit being the consumate money manager and think 100 year rain.
Posted by: JustinTheSkeptic | Mar 17, 2008 5:49:02 PM
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