World markets continue to give great opportunities to all the folks who would rather pay up for stocks when the DJIA is at 11,000 than at 7000. Global stocks have entered a frenzy of negativity revolving around the notion that values are now suffering because current bailout plans are supposedly not specific enough for investors to understand and, as as result, it is explained, market participants are having trouble determining value.
Now there is no doubt the process of explaining how the bailout components connect is a bit daunting, but believe me the boys at Goldman, JPM, and Morgan know the particulars. The problem is not that assets are not cheap enough, the problem is they are not cheap enough to steal. In addition, there is this glaring light shining on the terms and conditions, which may not be transparecny in its truest form, but is a lot more light than the Wall Street folks care to have illuminating their deals.
The Fed and Treasury for whatever they have done can be blamed for not being aggressive enough with handling market making as opposed to deal making. Telling the market what you want to happen is not like making it happen. Intervention carries a lot more clout than terms governing deposits. Since each day of trading represents a battle to determine value, market action influences participants immediate strategies. Winning the hearts and minds of investors, traders, or whatever you what to call the collective, can best be done with direct market intervention. Indexes represent the mother of values and is a place where the Treasury and Fed should draw a line in the sand. It would be a lot cheaper to stick a market up a Bear's ass than to continually fiddle with adjustments for the benefit of bank balance sheets. Let the resulting arb between markets create a fail safe where few would dare to cross.
