October 27, 2008

CREDIT MARKETS

The question behind the question for all online stock trading individuals is the condition of the credit markets. Will banks start to lend in a meaningful way, or will they still remains afraid of each other.
This new plan sounds a little better than the other, and it might get some credit activity going. It won’t happen over-night, however.
It’s lookout time for anybody in online stock trading. But those who are active in trading online can at least work with the market. In today’s world, the old “buy and hold” idea is one few can afford anymore. Things look a little more promising with the latest government actions.
With the various governments buying stock in banks, it may make some institutions more readily take a chance.
If that’s the case, and the banks do start to lend to each other, then some business might be able to go in and re-establish their lines of credit or unfreeze the one they have.
This is an uncertain time. Waiting is the hardest part.
And waiting is all we do.
We are waiting for the credit markets to loosen. 
We are waiting for an election to be decided.
We are waiting to see the damage done to business during this latest panic and slowdown.
Finally, we are waiting to see if the consumer has anything left.
The last is the lynchpin. Without an active consumer, or a consumer who is too shell shocked to part with too much cash at once, we will not see a meaningful recovery.
This situation is unlike any other panic and then economic slowdown in history.  At least in the United States. The consumer is buried in debt, inflation on at the household level is high, and taxes on a municipal and local level have increased.
The only bright spot, if it can be called that, is gas decreasing.
And that will only be temporary if demand increases. Then OPEC will restrict output and a nasty cycle starts again.
There is a chance that Joanne Consumer can take any spare cash on hand and pay down debts. This last week has put the fear of Herbert Hoover in many out here.
Now it’s kind of a race. If your small investor sees stocks kind of steady, then they won’t be tempted to sell. If they see a continual slide in the markets, then all bets are off.
Lots of earnings reports are due out soon. That will have a big effect.

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