Why we might not see the final package today – McCain

Obama leads in the latest polls, since the blame for the financial mess is rightly on the Bush administration. Obama needs to be identified with the bailout program and idealy as a contributing element of the final solution. Therefore, he has first to stop whatever might get ready to be introduced and get the chance to bring himself into the process. The bailout will be a crucial spot for the outcome of the elections.

If, as some Democrat indicated, the plan is not out by the afternoon today, markets will get nervous heading for the WE. Nevertheless it will be done and the hurrah effect will not last long – 1-2 weeks at the most. The execution of the plan will take weeks to months and markets will not be able to rely on the outcome. As Bill Gross put it accurately, the faith to deal with each other (financial institutions) cannot be restored that easily (if at all) and that will keep the credit crunch going. Hence, we will have 2 negative quarters of GDP and technically enter a recession.

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~ by behindthematrix on September 25, 2008.

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