Monday, February 23, 2009

Comment: Should Obama mind the stock market

The Dow Jones sunk to its lowest point since 1997 shedding 250 points today. So should President Barack Obama react in someway to the recent market slides?

In my view, no, for the following reasons:

1. A lot of the daily fluctuation in the markets comes from day and swing traders. You cannot base your policy on the whims of these folk whose actions do not necessarily reflect any economic reality.

2. Obama needs to let the market bottom out. Trying to prop up the market is an impossible black hole operation. Only one word needs to be said to explain why the market has not reached bottomed out yet -- derivatives. The White House should let the markets work out things naturally without trying to play to the market.

President Obama told the nation's governors who were attending his first formal White House dinner, that all governors, despite party affiliation, need to work with Washington to help repair the economy.

Stress test could lead to some bank nationalization
MarketWatch - 51 minutes ago
By Ronald D. Orol, MarketWatch WASHINGTON (MarketWatch) -- As part of the latest efforts by regulators to stem the financial crisis, US regulators are preparing another round of capital injections to financial institutions that fail to pass a new ...
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