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US government bailout – is this the start of the recovery?

by Scott Bicheno on 19 September 2008, 22:33

Tags: US Treasury

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HEXUS.sharewatch

A look, for the third time this week, at the HEXUS.sharewatch list reveals tech stocks are already benefitting from this move. This list compares prices at close of play today with yesterday morning, when they were reeling from the Lehman/Merrill Lynch/AIG/HBOS dramas.

Many of the biggest losers of the last week or so, such as AMD, Apple and NVIDIA, are posting the biggest gains. However, the relatively modest recoveries posted by tech giants like Dell, Intel and Microsoft show that if we are at the start of a recovery, there's still a way to go yet.

Company Listing Share price 8/9/08 Share price 15/9/08 Share price 18/9/08 Share price 19/9/08 2-day change Market cap (bn)
AMD AMD 5.96 5.62 4.90 5.42 10.6% 3.29
Apple AAPL 160.18 148.94 127.83 140.91 10.2% 124.83
Avnet AVT 27.42 26.05 24.99 27.28 9.2% 4.10
Dell DELL 20.41 19.04 16.19 16.63 2.7% 32.57
Google GOOG 444.25 437.66 414.49 449.15 8.4% 141.23
HP HPQ 44.96 46.97 45.75 48.26 5.5% 118.19
IBM IBM 114.33 118.97 111.47 118.85 6.6% 161.02
Ingram Micro IM 17.82 18.05 16.68 17.37 4.1% 2.88
Intel INTC 20.61 20.16 18.55 19.23 3.7% 108.11
Microsoft MSFT 25.65 27.62 24.57 25.16 2.4% 229.72
Nvidia NVDA 11.67 10.19 10.00 11.41 14.1% 6.35
Tech Data TECD 32.97 31.40 28.68 30.70 7.0% 1.55
Yahoo YHOO 18.08 19.08 18.82 19.89 5.7% 27.56
Dow .DJI 11220.96 11421.99 10609.66 11388.44 7.3% N/A
FTSE 100 .FTSE 5440.20 5416.70 4985.00 5311.30 6.5% N/A
NASDAQ .IXIC 2255.88 2261.27 2098.85 2273.90 8.3% N/A

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HEXUS Forums :: 16 Comments

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Posted by tensim - Sat 20 Sep 2008 13:13
Personally, I find this absolutely ridiculous… these institutions have been posting record profits for god knows how long based purely (it seems) on fudged numbers and ‘virtual’ money. Now, when the reality arrives and this funny money becomes real and hits their balance sheets properly, the taxpayer has to come along and bail them out… whatever the pain, these companies should be subject to the consequences of their actions, end of story.

It's this knowledge that should keep traders honest, but because they know (or at least believe) that their company will be bailed out when the going gets tough, they've taken unacceptable risks in the pursuit of a profit… Turning the markets into a glorified Casino indeed.

I'm sure this is a simplistic view based purely on the old fashioned belief of accepting the consequences of your actions, I'm sure a MBA educated multi-million pound earning Banker or Economist would be able to tell me why I'm wrong, but it's all $%#&&* BULLS**T I say… yes, I am angry!
Posted by Rave - Sat 20 Sep 2008 20:09
Too right Tensim- if I were an American taxpayer I would be about to emigrate, because I wouldn't want to spend the next 20 years paying through the nose for other people's stupid mistakes.

Oh, and I don't believe for a minute that this is the start of the recovery- it's more likely to be the start of the really serious pain IMO. Once people realise how much money will have to be printed to finance this, the dollar will go into freefall.
Posted by SiM - Sat 20 Sep 2008 20:11
Why didn't they do this earlier?!?!?

At the end of the day it is the American taxpayers who are defaulting on their mortgages anyway - that is why most of these mortgage backed securities are “toxic”
Posted by manwithnoname - Sat 20 Sep 2008 20:28
Wonder if it would have been worth it if the US government had imposed a ‘Don’t mess with the economy' tax on the US public a good few years ago, the money paid directly as bonus to the city bankers/investors on the strict understanding that they don't do any to mess with the economy.
Posted by tensim - Sat 20 Sep 2008 21:55
It isn't just the US bailing Big Business out… it's all the Central Banks around the world… UK, Australia, Japan… you name it, all the Feds are pumping TAXPAYERS money into the ‘financial’ system to try and keep it running… I suspect it might be a wasted exercise, because all it means is that the short sighted, profit focused Bankers will use this money to try and make some more profit.. which they will, until it all goes pear shaped again… and then there won't be anyone to bail it out… Watch out for China, India, the Arab States… they're waiting with bated breath to pounce and buy EVERYTHING at a firesale rate… start learning Mandarin Comrades, or maybe Hindi…

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