NOVEMBER 20, 2008 (Dow 7552, down 445) - The Second Great Dpression is on the table. The government can't let the large financial institutioins fail; must make sure the annuities and life insurance are there for beneficiaries; stabilize housing prices through tax credits for buying new homes; use TARP money to buy toxic mortgage securities from the banks; must back Fannie and Freddie bonds with an explicit guarantee to lower mortgage interest rates; modify existing mortgages so they are affordable; set up tax credits for hiring people to stabilize unemployment; provide debtor in possession (DIP) financing for the auto companies and guarantee their warranties; start a trillion dollar infrastructure program to put people to work and push the European Central Bank (ECB) and the Bank of China (BOC) to lower rates to 2.00% to reignite growth in their economies. THese actions may remove systemic risk and cause some of the money on the sidelines to buy riskier assets. Still like the quality high yielders (see recent recommendations). The SEC chairman is in the pocket of the short sellers.
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