TheInstitutional's Blog : How much bad?

In the last few days I had to reconsider the situation and my analysis.

After being very negative on the market for about one year and profit from the downturn, in the last few days I became bullish on front of the governments interventions to save the financial system.

I have to tell you that on my opinion although the U.S. Government has really done what is needed (together with other major countries) this is not enough to recover.

First, financial market are not going to be the same as before, we are seeing a partial nazionalization of all major financial institutions in the U.S.A. and the UK together with some other european countries. The investment banking model is dead!

Second, governments had to step in to save industrials company as well from being collapsing on credit crunch.

Third, the impact on real economies will be really severe with a deep longlasting recession worldwide, drammatic increase in unemployment, drop in consumers.

We are in the climax of the financial crisis and this has been so severe that the loss of wealth and confidence will migrate very badly from Wall Street to Main Street for the years to come.

For few days I hoped the system was able to stabilize and to restart with stocks at shock prices, now I have to reconsider.

Volatility will remain high for some more weeks with big swings but probably we will then have a steady decline to new lows far away from the levels seen last week, together with the capitalist realizing it is (at least for now) Game Over!

We are going to experiment a new era of Socialist semi Free Market ( don't know how this can work!) I blame the Governments for not being able to avoid this but unfortunately at this point they have done the only thing to avoid going back to stone age...