The Summary of the draft proposal to rescue US financial markets envisages Three Phases of a Financial Rescue with Strong Taxpayer Protections
• Reinvest in the troubled financial markets … to stabilize our economy and insulate Main Street from Wall Street
• Reimburse the taxpayer … through ownership of shares and appreciation in the value of purchased assets
• Reform business-as-usual on Wall Street … strong Congressional oversight and no golden parachutes
For more on the proposal, go here.
After this news, one may expect a big rally in Asian stock markets this morning. After an initial rally, most of the markets are in negative territory. What's wrong? Is this a case of "buying-on-rumors and selling-on-news"? Are investors disappointed with some of the safeguards to be imposed to protect taxpayers such as:
• Cuts the payment of $700 billion in half and conditions future payments on Congressional review
• Gives taxpayers an ownership stake and profit-making opportunities with participating companies
We will have to wait & see how the markets digest this news in the days and weeks ahead. My feelings is that the rescue package will help stabilize the financial markets & put a floor on the stock markets.