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Follow on Google News | Billion Dollar Bail-out Not The Cure-All to Financial System WoesFinancial advisor William Schmick reports billions disappear daily in the form of worthless, toxic paper.
"That was money we planned to retire with and live out our years but instead most of us now face the prospect of working for several more years just to get back to where we were. But it doesn’t stop there," said Schmick, who is Vice President of with Dion Money Management. "A lot of damage has been done to our economy in those two short weeks. The bond markets almost ceased to function, short-term credit rates rose to levels that have prohibited borrowings by corporations worldwide. It was an immense shock to a global economy that was already reeling from dozens of body blows." Schmick states he does not believe that the bail-out is a cure-all. "The markets can move higher but investors will need to see evidence that this plan will work. To me, the plan is simply the end of the beginning and additional measures--such as a Plan B and maybe a Plan C--will be required over time," said Schmick. As Schmick pointed out in his blog "Gonna Be A Long Way Back", the Federal Reserve and other Central banks have eased interest rates and continue to flood the financial system with money. "Only then will we have a chance to combat the huge de-leveraging process that is going on in the U.S. financial system," he said. Schmick points out investors are all asking the same question: what happens now? To get a better idea of what will continue to happen, Schmick recommends in his blog: --Watch the reaction in the credit markets. Will this plan inject confidence in lenders? --Watch the bond markets for an answer. --Look to the LIBOR (the London Interbank Offered Rates of interest) spreads which need to be narrow. These are the rates at which banks are willing to loan other banks unsecured funds in the London wholesale money market. "Think of it as the credit market’s thermometer. The higher that rate rises the worse the patient’s fever. In the past few days the patient (economic activity) has been all but comatose," said Schmick. "Many market observers believe that no matter the result, the stock markets will trend lower. The economy, they argue, has now been pushed over the edge into recession," said Schmick. "The only question remaining is how bad the recession will be." To read more of Schmick's posts, visit http://www.afewdollarsmore.com or contact him for additional financial advice. About William “Bill” Schmick William (Bill) Schmick, a 27-year veteran in the financial services sector, is one of the pioneers in international investing in the United States. He currently manages mutual fund portfolios for Dion Money Management, and has worked as an investment strategist and institutional broker in foreign and emerging market securities for some of the largest investment firms on Wall Street. Schmick also pens the financial blog, A Few Dollars More, an investment and retirement column, “The Independent Investor”and “@theMarket” # # # About A Few Dollars More AFewDollarsMore.com is a financial advisement blog authored by William (Bill) Schmick, a 27-year veteran in the financial services sector and one of the pioneers in international investing in the United States. He currently manages mutual fund portfolios for Dion Money Management, and has worked as an investment strategist and institutional broker in foreign and emerging market securities for some of the largest investment firms on Wall Street. To sign up for alerts on posts to A Few Dollars More, register at http://www.afewdollarsmore.com End
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