I immensely enjoyed this debate on CNBC yesterday and fully second the opinion of Chris Whalen.
If this bailout bill will be voted, the stock markets will rally for a few days, but eventually liquidity will dry up even more, volatility will stay high and financial assets are going to suffer as the crisis continues to unfold. The bailout plan is unlikely to work and the global economy will take the hit; don't underestimate the force of recession knocking on the door. Personally I can't understand people who think we'll soon have new highs again on EU and US stock exchange; this is out of the question for a very very long time. Equities are still priced high and economically the world is going into a slump. I think the US economy is much weaker than what most think and I believe the trade and current account deficit to continue to contract. And the people counting on foreign reserves of resource-rich countries: these are also likely to dry up. Sovereign wealth funds will focus on supporting their own markets. I truly hope this bailout plan won't make it, although I believe it'll be idle hope.
And I'm not the only one, more than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.
The next emergency measure might be that that Americans are not allowed to buy foreign currency and transfer money overseas, and the one after that could be not permitting Americans to buy gold and so on and so forth… It creates even more uncertainty in the market place when you continually change the rules.
