Another weekend, another bailout, another market reaction:
How many Sunday press releases is it going to take to save the financial system from ruin? If you’re are keeping score at home, this is now the sixth Sunday night/Monday morning press release
in 14 months aimed at saving the financial system. Consider the recent history of these weekend rescues:
• August 2007, when the credit crunch was officially recognized by the Fed, when they cut the discount rate.
• December 2007, with the announcement of the TAF and other credit facilities;
• January 2008 Soc Gen panic, and a 75 bps emergency cut;
• March 2008 with the Bear Stearns bailout.
• July 2008 the first Fannie/Freddie rescue attempt
• September 2008 the actual Bailout of Fannie/Freddie
Five observations/questions/takeaways from the past of weekend rescues history:
1. A strong rally lasts for a while, but it eventually fades and makes a new lower low;
2. Each "rescue rally" has been shorter in duration and weaker in intensity than the immediately prior one;
3. Friday’s close becomes your new line in the sand; If and when that is breached, look out below.
4. The pre-Asian open news pattern reveals the Asset price focus is a large part of these issues; It also speaks to our overseas creditors/Overlords;
5. What form of free markets have we evolved into? It is not Capitalism, it is not Socialism, it is not intelligent regulation. WTF is this?!?
Lastly, who wants to bet me that this will be the very last bailout? Any takers? Any?