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Strategies & Market Trends : Value Investing
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To: Don Earl who wrote (32208)9/29/2008 11:10:41 PM
From: Spekulatius  Read Replies (3) of 78671
 
The system needs to be purged. Until that happens, no recovery is possible. It's going to be bad either way. How long it stays bad will depend on saving those that can be saved vs. throwing good money after bad in trying to support the carriers of the disease .

It is getting purged a we speak. MER,WB,WM,LEH, BSC are gone and many others are going to follow. I was thinking in similar terms but the 2nd week this m onth changed my opinion. During that week, both he money market and the commercial paper market almost melted down. Both are connected - the CP is the main source of short term credit for business, mostly those with higher credit rating. If this happens all bet's are off. If large business can't get liquidity smaller business credit inevitable will freeze and then we have an economic meltdown. Paulson prevented that from happening by guaranteeing money market funds. Is this fair compared to banks that have to pay FDIC insurance? No it is not, but the alternative to being somewhat unfair is that the whole financial system comes down and we will have the worst recession since 1980/82.

Now with the failed bill we are worse of as if it never had been introduced, since now we have a credibility problem. What if Paulson throws and/or thinks go into an impasse until after the election?
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