Wednesday, August 13, 2008

Second Stimulus Package? Yeah, Right.

clipped from blogs.wsj.com
binocs
Calling the more than $40 billion banks are using to buy back auction-rate securities a “second stimulus package” is more than wishful thinking, it’s just wrong.

Over the last week, traders have stipulated that the money UBS, Citigroup, Merrill and Morgan Stanley will put back into their clients hands thanks to pressure from regulators will go right into the stock market. While this money may have previously just been used to further prop up the price of crude, or move into overseas investments, recent weakness in both those markets highlights that the U.S. may be a safer destination.

But don’t bet on it.

These folks have been burned already. Once burned, twice shy,” said Barry James, chief executive of James Investment Research.

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