While you should read the entire thing, let me give you a few of the money shots:
Still, everyone wants Obama to succeed. His mother and grandmother, looking down from heaven. His relatives in Kenya. His party. His country. The entire world. Even we hardened cynics here at The Daily Reckoning wish him well.
But we weren’t born yesterdayAnd neither was the stock market. The man who got the warmest welcome ever from the press and the public got the rudest brush off from Wall Street. It was the worst sell-off for an Inauguration Day in history. The Dow fell 332 points.
That fall equated to 4.something percent (I don’t remember the exact figure.) Yesterday, it got back 3.something percent, and today it gave up 1.28%. The Dow is still off it’s low for the week, but as Scarlett O’Hara said, “Tomorrow…is another day!”
U.S. banks are “effectively insolvent,” says Nouriel Roubini. He figures losses in the United States might rise to $3.6 trillion – most of it in banks and broker-dealers. Which leaves the sector a little short. The banking system in the United States only has $1.4 trillion in capital.
Ahem. Got Gold?“Creeping nationalization,” is how Bloomberg describes the process. In Britain, the Royal Bank of Scotland will serve as a ‘guinea pig.’ It’s lost 3/4 of its share value in the last two days. The government will keep it alive…but it will become a ‘zombie’ – more dead than alive…more ward of the state than independent financial institution.
I can see it…shambling bankers, Armani suits in disarray…shuffling toward Washington…beating and clawing at the doors of the Capital Building, the Federal Reserve, the Treasury…croaking “Bailouts…more Bailouts!” We all know that to kill a zombie, you must destroy the head. That will work on the zombie bankers, but how the heck to you kill a zombie bank?
Like I said, this one is worth reading. Don’t miss the letter fromGregory J. Knox, the president of Knox Machinery in Franklin, Ohio. His prescrition for the auto industry will shock the automakers, but it makes perfect sense to this Austrian.