Higher Volume on Wall Street - Turning Point in the Market?
Since this morning Wall Street has been a huge rollercoaster. President Bush appearing on TV announced, that there is everything needed to help economy, but it takes time.
The NASDAQ finished with a modest gain, while the Dow Jones industrials lost 128 points. The Dow fell 600 points in the first 15 minutes of trading, than it recovered and finished in negative 100 territory.
Over the past week market has posted huge looses, but today there was an unusual high volume of stocks traded. Close to 2 billion of shares were traded in what seems like a turning point in our economy.
There were many negative news and it led every-day investors to panic, once they saw they portfolio shrink. That is where most investors panic and fear-type selling occurs.
Washington, however, is prepared to do everything they can to stop this rollercoaster as soon as possible. Currently, Treasury Secretary Paulson is prepared to take extraordinary steps. With main power of auction system that is weeks away, Paulson is expediting plans to inject direct capital into banks. This would be the first time that banks would be nationalized at some point. The Emergency Economic Stabilization Act of 2008 gives Paulson almost unlimited power to intervene.
Fear on Wall Street was spreading quickly until President Bush's speech warned on how "anxiety can feed anxiety" and implored Americans to remain confident. Many investors have been looking for international leadership. Democratic nominee Barack Obama said the crises need coordinating international action and Republican John McCain argued his experience made him the candidate who can lead Americans through a time of economic problems.
It is estimated that credit crises could reach $1.4 trillion, or about double what banks have written down so far in looses. Many every-day investors have seen their portfolio shrink. Even retirement plans have been downgraded or whipped out.
The US Treasury's plan to inject cash directly into banks may be more effective in battling the credit freeze. Better, that is, if the Treasury moves quickly.
Congress approved a $700 billion financial rescue plan, allowing the Treasury to buy up bad mortgage debt from troubled banks. If Congress buys all the bad assets that bank have, it would force banks to have write-downs as banks would first pay off their debts. This would stick taxpayers with $700 billion bill.
Putting cash directly to banks and creating government owned banks would allow the government to earn interest income and hopefully make a profit when banks recover. This would be win-win for the taxpayers.
Of course Treasury can end up doing both. Treasury needs to decide quickly which financial institutions will be saved, can't be saved, and which are too big to fail.
There is still no there's no guarantee that banks will start lending again, especially if there are prospects of liquidation. Government needs to make a stick rules when injecting funds into banks. New capital can be used only for new loans. Not to pay off any debts. With this Government needs to determine which banks would be beneficial to economy, which ones would create more jobs, which ones would make the large amounts of loans so everyone can prosper.
The NASDAQ finished with a modest gain, while the Dow Jones industrials lost 128 points. The Dow fell 600 points in the first 15 minutes of trading, than it recovered and finished in negative 100 territory.
Over the past week market has posted huge looses, but today there was an unusual high volume of stocks traded. Close to 2 billion of shares were traded in what seems like a turning point in our economy.
There were many negative news and it led every-day investors to panic, once they saw they portfolio shrink. That is where most investors panic and fear-type selling occurs.
Washington, however, is prepared to do everything they can to stop this rollercoaster as soon as possible. Currently, Treasury Secretary Paulson is prepared to take extraordinary steps. With main power of auction system that is weeks away, Paulson is expediting plans to inject direct capital into banks. This would be the first time that banks would be nationalized at some point. The Emergency Economic Stabilization Act of 2008 gives Paulson almost unlimited power to intervene.
Fear on Wall Street was spreading quickly until President Bush's speech warned on how "anxiety can feed anxiety" and implored Americans to remain confident. Many investors have been looking for international leadership. Democratic nominee Barack Obama said the crises need coordinating international action and Republican John McCain argued his experience made him the candidate who can lead Americans through a time of economic problems.
It is estimated that credit crises could reach $1.4 trillion, or about double what banks have written down so far in looses. Many every-day investors have seen their portfolio shrink. Even retirement plans have been downgraded or whipped out.
The US Treasury's plan to inject cash directly into banks may be more effective in battling the credit freeze. Better, that is, if the Treasury moves quickly.
Congress approved a $700 billion financial rescue plan, allowing the Treasury to buy up bad mortgage debt from troubled banks. If Congress buys all the bad assets that bank have, it would force banks to have write-downs as banks would first pay off their debts. This would stick taxpayers with $700 billion bill.
Putting cash directly to banks and creating government owned banks would allow the government to earn interest income and hopefully make a profit when banks recover. This would be win-win for the taxpayers.
Of course Treasury can end up doing both. Treasury needs to decide quickly which financial institutions will be saved, can't be saved, and which are too big to fail.
There is still no there's no guarantee that banks will start lending again, especially if there are prospects of liquidation. Government needs to make a stick rules when injecting funds into banks. New capital can be used only for new loans. Not to pay off any debts. With this Government needs to determine which banks would be beneficial to economy, which ones would create more jobs, which ones would make the large amounts of loans so everyone can prosper.
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