Steve Hoy called this morning from South Carolina wondering what I thought about the market. Steve has a good bit of his investments in margin accounts and he is always getting calls from his broker. This morning he felt like he was backed into a corner with his Washington Mutual holding. He sold 500 shares at $9 a share while I was on the phone with him. If he didn’t, he feared he would lose it all. And of course as soon as he confirmed the sale he said, “I probably just sold at the bottom”. I don’t understand the strategy of margin accounts and I am the last person to ask for financial advice but it was good to hear his voice.
Steve is worried that the credit crisis will force people to put more on their charge cards and then eventually default on their credit card bills which will collapse the already weakened financial institutions. Steve said he had no confidence in Bush and he laid out his own plan to bail out the market. It was something like lowering the interest rates to 5% and back that with federally insured bonds which would allow people to refinance their homes so their payments were more in line with the value of their home.
Steve was business major at Indiana University when I met him. Maybe he will lay out his plan here in a comment because I have surely mangled the translation.
4 Comments
i can’t fit my entire thought process in this little box, but the government worked so hard fighting inflation(raising the fed rate) , while at the same time growing govt and its debt like there is no tomorrow, that they overcooled the economy, now i’m not sure they can reverse the slide. in the midwest and large parts of the country the problem has been going on for several years.
the 1% of the population that makes 50 % of the income has pulled in their pursestrings and that is putting the rest of us in a bind. it is all a house of cards, no one has any savings, credit card debt is bound to rise and a run on banks will ruin anybody’s day. what is the plan for the future? any economy based on growth alone has a bad end game on a finite planet with finite resources. what happened to arcosanti? then there is the iraq war. what a waste of our grandkids’ money.
we have more coal in america than any other country. there is already a process for converting it to diesel, there just needs to be some technology developed to clean it up but i don’t see exxon spending any of their billions to do it. we need a manhatten project to get this up and running, but as we all know as long as big oil is running the country this is not likely to happen.
then we may have to import scientists as we have dumbed down our education system and made education almost unaffordable for a lot of the populace. america is becoming a service oriented workforce with the commensurate wages.
one of the founding fathers commented that as soon as the people in a democracy realize they can vote themselves largess from the treasury the end is near. well we are there but it is that 1% who are reaping the rewards. i am just hoping they will let some of it trickle down.
i am prepared to run for the hills if necessary.
Steve — which hills? I’d like to drop by.
PS I recommend you read The Road by Cormac McCarthy – I think that expresses where you are going with all this.
I loved that book. Depressing as it was. Steve can survive in that setting. He can re-create the Whole Earth Shower like he had back in Bloomingulch.
There is a group of people pushing an energy independence program called the Apollo Project (or Apollo something or other- Google it). The goal is complete independence from foreign oil in ten years. The name comes from Kennedy’s Apollo speech where he challenged the country to get a man on the moon in ten years- it took nine. Of course it was really a fake filmed on a sound stage…