The Castration of the American Taxpayer Continues
Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”… a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary’s Daily Market Alerts click here or call 888.484.8220 ext. 1.
As I write this Monday morning, DOW futures are up over 250 based on the Fannie Mae
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The market hit a short-term low on Friday not because a bottom is in. Well… one day it will be… but the bottom callers will be on their 20th bottom call at that point. The short-term low came from the fact the market was mauled since the froth gap to the upside last Tuesday. The market will open up hot today but just remember last Tuesday, if the market indeeds wants to go lower, a hot open will not matter. My take is simple: regardless of today’s open, nothing has changed. There continues to be zero leadership and sooooo many stocks have broken badly and there remains still too much complacency. The good news is that the areas I have told you that had a bid… still have a bid… even with last week’s action. This most importantly includes RETAIL and FINANCIALS. As I have said, they had better continue to outperform. Remember, the first thing needed for a market to really turn is a follow through day. In the past few years, most of these froth gaps have been sold… just like last week. As usual, I have no clue how this finishes today but I do know that this news on FNM/FRE will not enable Nokia
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I cannot talk about FNM and FRE without uttering two words: Jim Rogers. Very simply, he saw this debacle coming before anyone else. Many laughed at him… who is laughing now? Kudos, kudos and more kudos to him. It was only because of him that I started looking at the financials of these enterprises and saw exactly what was going on a couple of years back. In my investigation, I noticed these companies as well as many other financial companies, had more footnotes than actual financials. My thoughts and questions on this bailout:
It should now be obvious that the public has been lied to both by these companies as well as the government. All we have been hearing recently was that these companies were well-capitalized and there was no need for intervention. The situation was definitely worse than told.
I applaud Henry Paulson! What did you say Gary? Yup… I believe this ultimately had to be done… and the way it was done is better than nothing. Yes, I am the guy who rails at government involvement, but I am not in control. I would have never let this happen in the first place. but:
The government is taking over a government entity. So… what changes?
FNM and FRE own or guarantee almost $6 trillion in US home loans. So, one could argue that this is a good move by the government. Of course, you and I are screwed as we are going to foot the bill. Since we are going to foot the bill, can we vote on just who is going to run the joint now? This is not how capitalism is supposed to work!
As of this writing, both common and preferred holders are toast with the debt holders being covered by the government. But is the government going to backstop all the small and mid-size banks that were forced into buying all the preferred stuff? They are waaaaaaaaay underwater, with some possibly illiquid because of these investments.
What is left in the bag when (I mean if) General Motors
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Is anyone going to jail? How does Frank Raines get away with a monstrous fraud with no penalties, and a fine he doesn’t have to pay?
I close with a quote by Davy Crockett. HUH? Yup…Davy Crockett… I wish Davy Crockett was still alive. This dude made sense! Obviously, Uncle Al, Uncle Ben and Uncle Hank never read these words. And yes, I freely admit that I saw this on another website.
Davy Crockett’s “Not Yours To Give” Speech In Congress
The power of collecting and disbursing money at pleasure is the most dangerous power that can be entrusted to man, particularly under our system of collecting revenue by tariff (Note: There were no income taxes in the 1800s when this was written, most government revenue came from tariffs), which reaches every man in the country, no matter how poor he may be, and the poorer he is the more he pays in proportion to his means.
If you have the right to give to one, you have the right to give to all; and, as the Constitution neither defines charity nor stipulates the amount, you are at liberty to give to any thing and everything which you may believe, or profess to believe, is a charity, and to any amount you may think proper. You will very easily perceive what a wide door this would open for fraud and corruption and favoritism, on the one hand, and for robbing the people on the other. No, Congress has no right to give charity. Individual members may give as much of their own money as they please, but they have no right to touch a dollar of the public money for that purpose.
– Davy Crockett’s “Not Yours To Give” Speech In Congress
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