Fallout

They say a revolution from time to time is a good thing.

We are connected – not just spiritually, but thanks to the global economy – all countries in the world are tied together – what happens to one, happens to all of us. So the lack of Government regulations (as well as Government supervision and and the cowboys of Wall Street have done it in for all of us) – This trend in the past towards a Global economy is halting – there seems to be a reticence to continue along this path, with the recent collapse in free trade talks – which may indicate a World wide retreat from free trade – and in some countries, as it has done before a trend towards isolationism.

I do not think that the USA will be amongst them this time around – as too much of their consumer products and even some of the essential items for day to day life are imported, I have spoken about this in the past.

The lack of liquidity – no matter how good your Balance sheet looks has claimed some other victims as below:-

With the European Union – pontifical statements about union  and we will do things in co-ordination and then almost immediately a bail-out by German for Hypo-Real Estate. This was an essential act considering the critical involvement that Hypo has in the funding of infrastructure construction and repairs throughout Germany. This also

In Belgium and The Netherlands –  The bank Fortis is bailed out – in fact nationalised – then a brokered sale of parts of Fortis to BNP Paribas is who is set to become the biggest bank in the eurozone in terms of size of deposits after agreeing to take over Fortis’s operations in Belgium and Luxembourg for €14.5bn in cash and shares.– The takeover, brokered by the Belgian government, follows the surprise nationalisation of the group’s Dutch businesses, allowing BNP to clinch a deal just a week after its first offer was rejected.  The Belgian government will become BNP’s biggest shareholder with an 11.6 per cent holding, while the state of Luxembourg will own 1.1 per cent.This correction is going to far especially of those excellent stock that are being undervalued by this general fall as if into an abyss.

Stock Markets: In Australia – the graphs are self explanatory

Stock Exchange Last 5 years                           Last 12 months (approx.)

Chart5year      Charty2date

Graphs are of the Australian Stock Exchange indices performance over time and were produced by netquote.com.au Graphs  The Dow Jones Industrial average also hit a new psychological mark on Thursday, falling below 9000 for the first time in 5 years – the Down fluctuated wildly and by the end of business Friday – the Down had fallen another 500 points – closing at 8,451.19 is this the bottom ?  Two notable stocks not to be caught up in the melee was Apple and eBay – who swam against the prevailing market conditions, closing up.

Whilst the falls across the boards are a reflection of the reality – some of these sales are all about emotion – the removal of assets into cash – and the desperate strategy to try and come up with something that works. I know that this is hard – but ladies and gentlemen – those assets for instance in the 1987 crash and recession – took just 2 years to come back to at or close to their pre crash positions.  If you are with a excellent stock – currently for instance the sell downs of BHP, RIO and Fortesque  (and many others) are not being driven by any strategy just again a desperate emotion and the underlying need to cash up.  Soon the market must reach a point where the quality and the price of these shares are just too good to resist and buying will begin again – and the slow crawl back will begin – I cannot see the heights of 12,000 + for the DOW being reached – as too much of that stock price was driven by hype with very little reality.

Of course the the untold story is what this rout is doing to the yields on our Super-annuation funds. What yields I hear you say.

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