We rally again.
By Daniel at 13 December, 2009, 9:36 am
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First it was the $1 trillion of Fed liquidity fund early this year that stopped the meltdown together with the M2M suspension or modification. By now, that $1T liquidity is already $2T by some accounts.
Then the $787B stimulus program got approved after Obama’s inauguration.
Now, they are trying to use the failed $700B TARP to help too. Remember, the $350B TARP approved in September caused the meltdown instead of preventing it.
Global investors realized that $350B was too small and too late to be able to prevent an impending catastropic stock markets meltdown back then, So they sold whatever they can after the $350B was approved, They realized that the United States had abrogated it’s responsibility to the rest of the world after it was able to sell tens of trillions worth of real estate MBS’es to rich foreign investors from 2000 to 2006. MBS’es now they called toxic assets as americans started defaulting on their housing loans. They call them “Made in America” toxic products; similar to toxic milk or toy products sold by China to the USA, but a lot more expensive.
Getting back to the rally:
Globally, we have the $600B and $787B stimulus packages by China and US going for the rest of their 2 year programs resptly. Europe and Japan have their fair share too but they are much less sensationalized in the US.
The Fed has $2T liquidity in addition to European and Japanese global liquidity tsunami as previously stated. Europe is trying to recall some of their liquidity tsunami with nary a success. So does the US test recalls that went to nowhere. That liquidity tsunami will keep slushing around the world going from one asset class to another.
Then if the $700B TARP or portions of it can be used for jobs program in the US, that will be an additional help toward improving the economy. Instead of being a failure as it was.
This $1.1 trillion on top of the global trillions and trillions of monitary policies is a welcome sign to shell shocked investors who suffered the 2007 to 2009 stock market meltdown not only in the US but throughout the world.
Money makes the world go round.
- John
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