Investors appreciate middle class bailouts
The bailout of the banking industry produced a few up and down days of volatility. Half of the trading populace was satisfied with the bailouts while other times traders weren’t quite with it, selling quickly when the initial $700 Billion TARP program was produced.
Now the investing class has to digest a new bailout to the middle class and the entire American populace. It has become apparent that the automotive bailout will go through with ease as many democrats and republicans across the isle are seeing the need to prop up the middle class and their take home wages. The automotive bailout is being pushed to save millions of union jobs in both the assembly of cars and trucks and also to save the businesses that supply the needed parts to the assembly lines.
Next we have Obama’s newest stimulus package aimed at targeting aging infrastructure such as roads, bridges and other public projects that will employ millions of Americans (up to 2.5 Million from Obama’s own plan) and put an end to growing unemployment. The economic benefit is nil at best as anywhere from $500 Billion to $1 Trillion is planned for this new millenium New Deal which will have to be borrowed or printed but will add 2.5 million jobs to payroll.
It looks like investors are favoring stimulus packages that attack the root of problem. We don’t have a lack of credit as per current Treasury Yields, and banks have plenty of money from TARP and others, but the middle class has to make more money if its going to spend more money. To spend money, the middle class needs employment and a solid economy to maintain their employed status. Many people agree, spending money on the American people is a much better investment than American banking operations.
The first quarter of 2009 will set the standard for the rest of the year. As 2008 comes to a close its important to look at what typically happens in first quarter business operations; spending slows as the holidays are over and consumers start taking a hardline look at their bank accounts. A first quarter stimulus package from the new administration could boost the stock market, give American’s jobs and stimulate the economy in the short term.
For 2009 we should expect a resurgence in commodity prices, a rebounding stock market and general financial wellbeing as the money flow begins to make its way back into the economy. For the next few weeks I’ll be touching on many topics that may be the hot sector of 2009. Each year has a booming industry, getting in to it will make you plenty of money.
