Market Commentary 12/18/2008

Markets ended the day with an accelerated decline into the close as the S&P downgraded GE ratings to negative based on earnings concern. Oil also fell to close at $36.80 which most likely caused a bit of friction which slowed the Dow's decline into the close. The fall in oil was the cause for a sell off in most oil companies. Exxon and Chevron took the brunt off the sell off. Prices in commodity stocks also took a big hit mainly the coal producers.


These are a few remarks from Alan Greenspan
stating that the financial markets are going to rebound in the next 6 - 12 months. This from the man who set the monetary policy that enabled the this financial crisis. Just recently Alan was quoted before Congress as saying he did not see the magnitude of the crisis coming because he thought the firms involved had enough sense to look out for their own best interest. Ha. He goes on to say that a stabilization, which he sees, in housing prices will allow the MBS held on the books of the financial firms involved to become more transparent and allow a realistic valuation to be placed on them. Wow! All that from the man who did not see the magnitude of trouble in giving someone with no money ( and in some cases a job ) the ability to borrow hundreds of thousands to purchase Real Estate with no apparent cognizant ability to understand the terms of the mortgages much less the ability to make the payments required to service the mortgage.

Anyway, nothing much has changed. No floor on the housing market until the Fed takes the MBS off the books and allows those consumers in bad mortgages to renegotiate the terms to something that makes fiscal sense to those paying the bills. Dangling a carrot in front of the consumers face will only prolong the problem. Adequate financial measures are required to keep these people in the houses making the payments. Until this is done the Fed and the Treasury are shooting from the hip hoping to hit a moving target.

While Greenspan is obviously a smart man, the maestro may have well already seen his most intellectual days.