Yes, I admit it. This bailout plan for mortgage giants Fannie Mae(fnm) and Freddie Mac(fre), succeed.
According to Henry Paulson, Us Secretary of the Treasury, This bailout plan is to help bolster a shaky U.S. housing market and renew global investor confidence. Fnm and Fre own or guarantee about 43% of U.S. mortgage debt. The Japanese and other governments are holding all these Freddie and Fannie bonds. It would really hurt the global economy and financial system. (China Government hold more than $1 trillion of Us mortgage bonds). As a result, Japan Government, Australia Government, China Government and all other government of the nation in the world applause and said the plan is absolutely just in the to stabilizing the financial markets.
Well not only governments like the plan but investor and trader as well.
All other major stock market in the world soar except for china stock market(Shanghai and Shenzhen). Nikkei 225 surges 412.23 point or 3.38%. Hang Seng index up 860.99 or 4.32%. Taiwan SE soars 351.41 or 5.57%. Singapore FSSTI surges 122.82 or 4.77% and Australia ASX all ordinaries up 176.80 or 3.57%. Then the European market started and here are their performance: FSTE London surges 205.60 or 3.92%, Dax German up 136.30 or 2.22% and CAC 40 up 143.52 or 3.42%. At the time, Dow is +143.87 or 1.28% and s/p 500 up 10.19 or 0.82%.
Here is my opinion: The actual purposes of the bailout plan is to protect the rich people and keep the rich people rich. Here a trivia question: Who benefit most from this bailout plan? The answer is very simple, the mortgage company, financial institution including investment bank, property development company and their owners. The Owners of these company are super rich and ride in Ferrari and Lamborghini. And the US government use their tax payers' money to make sure their money safe in their pocket. The bailout plan does not help any ordinary citizen of US or any country in the world. So if you are not the owner of those companies, i can assure you that you won't feel any positive impact of this plan. Proof me wrong!
Through out the ages we heard and know United States of America is a free market nation. They use laissez faire theory in their economic and their maintain a very healthy free-market mechanism to run their economic and they are proud of it. They believe the invisible hand(market) will do the job so they are no need for government intervention. They have been publicly criticized China, Cuba and other communist/socialist country.
Well guest what, Us government has been consistently intervene in their economic. This year(2008) alone, there are Bear Stearn(BSC), Indymac Bancorp(IDMC), Nationawide and now FRE and FNM. Should I say US Government has breach its "capitalism" approach on the economy and use "government intervention" to save it's sloppy economy?
Another interesting part is that china government uses minimal intervention in their economy lately and Shanghai SE has been plunged to 2200+ while US as the head of "capitalism" and free market nation uses maximum amount of government intervention in their economy(bsc, fre, fnm, imdc, nationwide......).
So which country is socialist country and which country is capitalist and democratic country?
I have told you to stay away from fnm and fre and i hope you didn't even touch it.
(http://sportandstock.blogspot.com/2008/08/fannie-maefnm-and-freddie-mac-fre-where.html).
So for those of you still believe this bailout plan will work and start buying stocks, well you don't know what you are doing. God bless you!
P/s: for those of you who want to know more about Freddie Mac and Fannie Mae, go to (http://biz.yahoo.com/usnews/080908/08_a_primer_on_fannie_and_freddie_what_the_bailout_means.html)
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