Tuesday, December 09, 2008

Stocks Rally Again, except for the Tribune Co.

Stocks move higher once again, not only in the States but Globally. I am certainly not complaining, but I am finding it hard to come up with reasons why. President Obama has pledged to boost the economy by starting a public works program like no other. His goal is to put together a spending package bigger then anyone since the 1950's. This I think is good. If people are working they are spending money and paying taxes. The other reason being given is the Auto sector "Bail-out" or "Loan" depending on who you are talking to. I am of two minds here, one says we need a bail-out as letting the car companies fail could send the economy off the deep end (if we have not already done that). The other is let them file chapter 11 and sort their problems out from the ground up. This too, could send a crushing blow throught the economy, but which is worse?

My fear is where does this all end? The Tribune company today filed for bankruptcy protection. This because the companies cashflow will not allow it to cover the $512 million debt payment due in June. This all because ad revenues have come off very very hard. There is also no hope that these revenues will come back...EVER. The Tribune Co is also saddled with tremendous debt because Samuel Zellled an all debt backed deal to take the Tribune private. This to the tune of $12 billion.

Mr Zell sent a memo to the employees of Tribune, I found it on IDIOT INC.

CLICK HERE to read it (well worth the time).

So although I think that the Auto Bail-out is warrented, where does this all stop? Who is next in line for a handout?

As for the currency markets, I have been laying low. Liquidity is poor and I perfer not to trade during "whippy" markets if I can help it.

Good Luck and Good Currency Trading

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1 Comments:

OpenID thelonelytrader said...

I think another component to this is how competitive American industry can be across the markets. Increasingly, technologies and skills are becoming available to economies with much cheaper labor pools. I wonder what kind of rollback we can expect in our wages in order for us to become competitive again. From automobile manufacturing, to textiles, to high tech...

I think American labor is in for a nasty shock in the next ten years. I think a bailout/loan will prolong the issue, but it certainly won't resolve it. There are structural changes taking place that will force unpleasant chnages on us.

10:21 PM  

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