Sep 27, 2008

Will There Be A Bail Out?

Negotiations are continuing over the proposed financial market bail out in the US.

This IHT report summarises the current state of play.

We are frankly of two minds on this issue. On one hand we don't want the debt inflated bubble to burst and see a huge shock of 1931 style proportions. So we like the Administration's idea of a gradual or managed de-leveraging. But on the other hand de-leveraging is going to have to happen and times are going to be tough for some years - either way. What will the effects of this large infusion of funds by the US Government be? Who is paying? Ultimately the US taxpayer. What will the impact be on demand and on inflation? This is a really complicated issue and there are no easy answers. It is no wonder that this negotiation is a difficult one.

If there is no resolution by the end of the weekend, expect more fireworks on the stock market Monday, where New Zealand will be thee first maarket in the world to open.