I found this by chance on CNN. It’s just plain scary to me. What do you think? Adam Troubled ASSET RELIEF PROGRAM Financial rescue plan aimed at restoring liquidity to the financial markets Program Committed Invested Description American International Group * See complete AIG bailout below $70 billion $69.8 billion $40 billion in preferred shares were converted to so-called non-cumulative shares that more closely resemble common stock. Treasury later offered another $30 billion in preferred shares for up to 5 years, in return for a 10% dividend. AIG: Where your money is going Asset Guarantee Program Citigroup Bank of America $12.5 billion $5 billion $7.5 billion $5 billion $5 billion $0 Funds set aside to backstop potential losses to government from Citigroup and Bank of America loans. Auto Supplier Support Program GM Supplier Receivables Chrysler Receivables $5 billion $3.5 billion $1.5 billion $5 billion $3.5 billion $1.5 billion Program to help stabilize ...

Notes from the Investment Underground

April 14, 2009

Palermo Viejo, Buenos Aires, Argentina

Richard Russell: Why this is a bear market correction… That latest outbreak of investor credulity… 25 biggest earnings-per-share movers and shakers heading into earnings season… Banks to be allowed to screw up indefinitely… The great “too big to fail” fraud… Bailouts costing $42,105 for each U.S. citizen… Bush-Obama tag team piles on debt at the rate of $60,000 a second… Bob Higgs on C-SPAN… China wises up… And more!

*** This Richard Russell quote is a must-read for investors thinking about buying back into stocks. Russell, now in his 50th year of publishing the excellent Dow Theory Letter, believes we are now witnessing a bear market correction.

The essence of Dow Theory has to do with VALUES. At the March low the price/earnings ratio for the Dow was 25.79 and the dividend ...

The U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) both fell in October. Those declines – combined with sharp downward spirals in worldwide stock and commodity prices – have caused many analysts, and even central bankers, to worry that we are on the brink of deflation.

Such concerns may be warranted in the short-term. But in the long run, deflation won’t be the challenge we face.

Thanks to an overly aggressive central bank, and more than $1.5 trillion in U.S. Treasury Department bailout programs – as well as other factors related to the ongoing global financial crisis – inflation will be the problem that ultimately bedevils us.

As long as oil and commodity prices drop, the PPI and CPI indices, which include oil and commodity prices, also will fall. Such a decline, however, does not constitute deflation; it is simply a one-time price adjustment. This is particularly true if most

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The U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) both fell in October. Those declines – combined with sharp downward spirals in worldwide stock and commodity prices – have caused many analysts, and even central bankers, to worry that we are on the brink of deflation. Such concerns may be warranted in the short-term. But in the long run, deflation won’t be the challenge we face. Thanks to an overly aggressive central bank, and more than $1.5 trillion in U.S. Treasury Department bailout programs – as well as other factors related to the ongoing global financial crisis – inflation will be the problem that ultimately bedevils us. As long as oil and commodity prices drop, the PPI and CPI indices, which include oil and commodity prices, also will fall. Such a decline, however, does not constitute deflation; it is simply a one-time ...

The incoming Obama administration is expected to launch a stimulus package that could reach up to $1 trillion. Martin Hutchinson says this is a popular - yet high-risk - strategy. In so far as the plan increases the budget deficit and national debt, while crowding out private-sector investment, the long-term damage to the economy could outweigh the stimulus benefits.

This from Money Morning:

The British government this week unveiled a stimulus plan that will boost that country’s budget deficit to $181 billion (118 billion pounds), the equivalent of 8.0% of gross domestic product (GDP). U.S. President-elect Barack Obama’s stimulus plan, when combined with the recession, may raise the U.S. federal deficit to $1.2 trillion, or 8.0% of U.S. GDP.

This raises the question: If it’s so easy to stimulate an economy, why don’t we do it all the time? Don’t such large deficits cause problems?

The 4-1-1 on Stimulus Packages

There

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Whipsawed by increasing market volatility, third-quarter results for blue chip ETFs in similar style categories thrown all over the map.

 

As investors prepare for a final three-month push to raise dour 2008 returns, third-quarter trends point to lower markets at least in the near-term.

But much hinges on a $700 billion bailout package for some of the world's biggest banks and financial services firms. And even if that passes both chambers of Congress, economists aren't expecting the ongoing global credit crisis to end right away.

The performance of the most liquid blue chip stocks in the U.S. under such choppy waters is likely to undergo increased scrutiny. Perhaps the most transparent way to monitor the large-cap universe as a group is through exchange-traded funds.

Below is a Q3 review by IndexUniverse of that category by investment style using Morningstar Inc. data.

Large Value

Ticker

Q3 (%)

IVE

-4.86

IWD

-6.15

VTV

-6.31

PRF

-6.38

DLN

-2.50

After a rough

...