If the today’s economic story can be related to bible story, it would have to be the one where Moses parted the Red Sea. Back then, Pharaohs soldiers were chasing the Jews towards a dead end represented by the Red Sea. Then, after much hoping and praying, a miracle occurred. The Sea was parted and the Jews passed safely. Then, the soldiers were swallowed up and drowned as the sea closed around them.
Bush is now helping individuals who were moving towards a dead end by aiding financial companies that are closing in on the Bankrupt Sea. In this circumstance, the soldiers that will drown this time are Investors and Hedge Funds that went short on the homebuilders, banks and markets.
The flood that will kill them will be in the form of a short-covering rally initiated by several key economic results as well as the realization that there will be a governmental bailout if necessary.
According to news sources:
The President on Friday is to talk about several initiatives and reforms to help homeowners with risky mortgages keep their homes, a senior administration official said Thursday. Bush also is to discuss efforts to prevent these kinds of problems from arising in the future.
Bush also planned to:
””Urge Congress to pass Federal Housing Administration overhaul legislation that would give the FHA more flexibility in assisting mortgage holders with subprime mortgages.
””Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.
””Call for rigorously enforcing predatory lending laws and strengthening lending practices.
Companies such as Countrywide (CFC), Bank of America (BAC), Toll Brothers (TOL), Beazer Homes (BZH), Bear Stearns (BSC), Lehman (LEH), Goldman Sachs (GSC) and the entire financial sector will surely get a huge lift from this move and short-covering. What stocks will get hurt today? Ummmmm, nothing that we can think of. This is a good move by our government for the most troubled borrowers(unless Bush does something really odd during his speech later today or Bernanke usurps President
Moses Bush with comments that are at less than positive and supportive)
President Bush to speak at 11am and Fed Chief Bernanke to speak at 10am today
Horowitz & Company clients hold positions in some of the stocks mentioned in this article