There are thousands of pieces of information that we look at every week. We’re not all accountants or economists, so when we read government documents and don’t understand them, we have to consult with those who do. Still, we have to try and figure out how it all fits together. We have to do our best to look past the mis-information that’s out there, too. Verifying news items isn’t easy and I’m finding that it isn’t a bad thing to wait before I repeat (or act on) information. Today, it was reported by two different sources that, according to filings, Bill Ackman (the infamous “shorter” and critic of Ambac and MBIA) had taken a stake in the bond insurers. That would be quite a turnaround for him and both stocks’ share prices responded. However, less than 30 minutes later, the news was corrected to reveal that Ackman had in fact bought more puts. Big difference! Rumors and manipulations happen in the market. No surprise there. But, understand that with all of the upheaval we are experiencing, rumors will increase. All of the rumor spreading isn’t intentional. The pace at which the financial crisis has unfolded is mind-numbing. News events are being fired at us at an alarming rate. We’ve gone from “sub-prime is contained” to “Project Lifeline” in record time.
I’ve listened to company conference calls and government hearings. I’ve read thousands of pages of information relating to mortgages and financial instruments. Then, I watch mainstream news shows to see what’s being said to the general public. I’m here to tell you things are not adding up.
One day we’re told that everything is going to be OK, the next day the sky is falling. The whip-sawing of the markets is just showing how much confusion and fear is in the financial community right now. Everyone says we need transparency, but I think that’s the last thing some people really want. There are banks/brokers/mortgage lenders/other businesses out there in some real financial trouble and they (and the government) want time to figure out how to keep things from blowing up in their faces. Some businesses won’t make it. I think the truth is that nobody really knows how this is going to play out, or what will be the final consequences. Many have admitted as much.
As bad as all of this sounds, I need to say this: The business of America has not shut down. American’s are going to work, paying bills, raising children, buying clothes, eating out, going to movies and falling in love. The world hasn’t stopped spinning. The stock market isn’t going away, either. That doesn’t mean that things won’t get difficult down the road, so we have to take care of ourselves the best we can.
There are those who say this is the worst financial disaster ever. It may end up feeling that way, but I’m sure the people who lived through past financial crises felt the same way. Global financial problems are nothing new, either. “Globalization” isn’t something that just started a couple of decades ago, so let’s keep things in perspective! Our regular readers know that I will not ignore facts and can still be an optimist I will not just sit around bemoaning the awful state we’re in, but will find the opportunities within the chaos. Chuck and I are unhappy with the “spin” from the government officials, but we’ll keep searching for the truth. Facing reality makes us better prepared to take advantage of upcoming opportunity.
Edited for clarity 2/15/08
