The governments of the world ought to just buy futures. If the issues are bailouts, it would be cheaper for the government to bid up the futures -- it doesn't take much capital because of the ridiculous margin rules that allow very little money to move them up very big. Then it should urge those who need capital, which is just about every bank and life insurer, to take advantage of the lift. That would be easier than giving big checks to each one of them, which is what it seems to want to do.
What's amazing about this period is that the prudent banks raised capital in the open market, and the less prudent banks didn't take advantage of that window where they could sell because of the short ban.
Of course I'm thinking of
here, but there are a host of others that did nothing either.
Don't snicker at the futures buys. They work, as buyers can't resist the up-futures scenario, seize on the idea that this is the bottom, and rally around the market.
If the government were to buy futures it would allow the beleaguered hedge funds to dump stock, too. What a simple plan!
So simple that I bet people believe on a day like today that it is happening!
: Doug Kass has an important point about
selling into the futures. I get that, considering that we are down some 1,900 straight
points, but remember the fundamentals are
buys a ton of stock back north of $100, ouch! A reminder of the fatuous nature of simply saying "my stock is cheap," and also a recognition that a buyback might actually make sense here, or that the money could have made it so we have a really good dividend.
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