Markets are up, expecting our money

Sharon and I guessed right on last night’s P.I.D. Radio — as soon as investors heard about the Obama administration’s plan to bail out the financial services industry, stocks would jump:

U.S. stock futures rallied early Monday, as investors expressed optimism about the Obama administration’s plan to seek the help of private investors as it attempts to rid banks of possibly as much as $1 trillion in bad assets.

At 5:16 a.m. ET, Dow, S&P 500 and Nasdaq 100 futures were sharply higher. Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

Well, no wonder! As the New York Times’ Paul Krugman points out, the plan amounts to paying investors to gamble with our money. Heads they win, tails we lose. Why wouldn’t investors express optimism over that?

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