Why U.S. govt. not taking action to stablize Market?

Question

Right now, U..S STOCKS are very riskier than Asian market stocks.. U.S blue chips are trading in sigle digit like AA, C, GE, WB AIG etc......

Asian blu chips always stop at certain bottom level... not like AIG, C why??
We know that stock market up down... but we never seen such bailout of blue chip like AIG
why U..S. govt not taking action..to improve economic crisis.. Can they find real problem and take cation???

What you think.. Dow cross 10000 level any time again???????

Answer 1

Because the US has an essentially 'Free Market', based on standard capitalist principles, which is far more effective (for America) than having a government control things.



The unfortunate impact the gyrations of the US market are having on other nations are largely the consequence of those countries governments' trying to "control" their own markets by pegging them to the US dollar.



Markets are not driven by politics or by policy, they are driven by the moods and expectations of the investors.



The Dow will CERTAINLY pass 10,000 again! Unless the world comes to an end!

Answer 2

The stock market is supposed to be a free market where stock owners, stock buyers and stock sellers get equal treatment. If the government starts to interfere too much and create some kind of an advantage for some people in the market at the expense of others. Then those who are put at a disadvantage will leave the market and find some better use for their money.



You can't have a functioning market unless it is fair to all the participants.



But whether the Dow will cross 10,000 again nobody knows. Although the likelihood of this happening a few years from now is good.

Answer 3

The US Gov tried to be the super bail out of everyone, and as I expected, they have thus far failed. The US can take all the money from tax payers and it would not be enough to bail out the stock market which is globally tied. Thus, one would have to bail out the world, and this is a futile task.



The free market is supposed to allow poorly ran companies to fail or restructure if there is still value, and reward successful companies.



Right now the big companies (major banks, insurance, brokerages, etc) who hold most of the money (trillions) are unwinding (liquidating) their excess risk, and trying to raise capital to stay in business. It gets more complicated but I have outlined this in detail several times in my post history. (add me to view posts).



"Asian blu chips always stop at certain bottom."

Really?

Have you ever looked at the Nikkei 225? That index has never even regained 1/2 of their 1989 highs, 19 years ago.



AIG

Was bailed out by the US gov. The USG took a 79% stake in AIG and have floated them with some $165 Billion in loans. The reason for this is that if AIG failed the mass liquidation of $1 trillion on the markets in short order, would be a disaster.



Citibank (C)

The US Gov has helped bail out C by investing $25 Billion in the company with the TARP fund.



Today you can buy the ENTIRE bank and all their assets for $21 Billion.



We don't know what will happen with C from here. If you look at the the Dec options contracts ($5.00 and $2.50 puts), investors are betting the equity plunges with any bailout, merger, etc. I give a 50% chance that Citi does not make it as it is today by this weekend.



If it is still trading Monday with no bailout, or the alike, I figure the stock could be down another 20% or more.



The last 20 minuets and close of today's market swill have a big impact on what happens next.



As for the Dow, will hit 10,000 again? Not anytime soon. We have been looking at the second worst economic drop since the Great Depression. The good news, is those with cash, and good timing, can make a lot of money if they are correct with their trades.



I have been net short for the last 2 years, and have been posting this for almost 2 years. I'm still short, but this view changes sometimes by the minuet given market movements. Just trading the volatility.



Key to watch for the market:

Citibank.



The market is not likely to rally big if Citi ends up in the tank.



There is rumor on Wall Street that Goldman Sachs might get together with Citi.



Right now, everyone is wondering if there is going to be 'Sachs & the Citi' this weekend.



:P

Answer 4

It's supposed to be a free market system. The government did step in to try to stabilize the markets, but the chain reaction of deleveraging had already begun. For the most part, the short restrictions didn't work, but perhaps they slowed down failures leaving more time to negotiate takeovers. The government helped negotiate deals between key financial institutions and took over others.

Apparently Asian markets are more regulated, and most people do blame changes in prior regulation of American financial companies for the mess. There's a saying that with some people "if you give them enough rope, they will hang themselves" and that's how I tend to see things. While the government encouraged giving generous credit, I don't think it intended for the companies to go at it with wild abandon, but that's what happened. However, the government also didn't want to believe the party could ever end, but it did. disclaimer: I didn't vote for these people.

The way I see it, not all change is bad. Under Obama's rule, I expect to see better policies. However, despite what is likely the prevailing wish, I don't think that the situation will resolve itself by revisiting old methods.

10000.. two years if lucky.

Postnote: 'Sachs & the Citi'.. funny Net.. lol...

Answer 5

The Government has been throwing piles of cash at the financial institutions trying to stabilize the markets, to no avail, why because at the end of the day Stocks represent shares in a business, business makes it's money from main street Americans buying stuff, and Main street Americans don't have any money to buy stuff.



The business model of wall street firms' pushing debt on main street slicing and dicing it and reselling, never ever was sustainable. And now that is over.



How many times have you heard some idiot spout the strength of the American economy is our ability to consume. How stupid is that do you really think a third world Ethiopian could not consume just as much if we gave him a credit card and car loan. No the real strength of any economy is it's ability to produce, debt lets you live on borrowed time.



The bulk of our consumer goods are produced overseas and now we have run out of money to buy that junk.

Answer 6

America has an open market system, a democracy - no one wants constant government interference - sure, the Dow will go back over 10,000, not any time soon, but some day - Govt has already done some stuff - rebate checks this past year. for starters - how do you stop a crashing economy when you have over 200 million people in the country - each one doing whatever they individually want - we aren't a society of puppets who can be controlled by a Puppet Master

Answer 7

I don't see why stock prices would be decided by any

government, in the US or elsewhere (by the way, markets

are global, not restricted to domestic players).



Such a move would bring a lot of questions:

* For what purpose? Not even sure it would help the economy!



* Using what valuation criteria? In what should they differ from

those of investors and traders from the whole planet who buy

and sell at the current prices? Why would a government know

better than them and bypass them?



* With what money? From whom? Lenders? Taxpayers?



* What it will do with the stock it buys? When will it sell those

in its portfolio? Is it its job to manage a risky investment

portfolio? When most governments didn't show much

efficiency in managing their own assets and budget. Even

sovereign funds are losing their shirt.



It is up to traders and investors to see if stock are overpriced

or under priced and to act accordingly. That is what the stock

market is made for: to give a price that reflects supply and

demand. A government would just distort that price and the

market itself. Everybody in the planet would get rid of tons

of stocks if that government offers what they see as a high

price and buy tons of them from it - like in a January sale -

if it offers a low price.

.

Answer 8

That's because the USA is based on the free-enterprise and Capitalist system. So anybody and their brother can start up a company. And the system runs under the theory of survival of the fittest. Only the strong survive and weak die off. Those who make bad investments are considered weak. So why should the US gov't intervene and act as a socialist gov't? For example, when you make a mistake, does someone else come in and clean up your problem for you? No. you have to reap what you sow. It's called accountability. If you make a mistake and get into trouble, it's your own fault. Same with the economy, and all these companies making bad decisions.



It all comes down to this: Stupidity is not to be rewarded.