9% is the magic number this week.
If you haven’t heard why yet, let me explain. The market saw a 9% jump this week alone, which is phenomenal. This came shortly after the three major events that occurred this week. The first being General Motors saying they will not need another injection by the government. The second being four banks giving back bailout money. The third is because Bernard Maddoff is behind bars.
General Motors not needing money comes as a surprise as they had earlier in the month declared they would be facing challenging times. Car sales have been cut from 18 million to 9 million and have been beating the industry down to near dead. Earlier in the year General Motors did lay off large numbers of employees who were still under the old union contract which was a great move. Union workers took major profit sharing pay during the times General Motors was doing good but kept getting paid despite hard times for the car giant. These cuts along with a reallocation of assets and resources seem to have helped General Motors stay the course in 2010.
Four banks giving back money with many more to follow? That’s right Citi bank, the worlds largest bank gave back bailout money, along with three other banks, who said they are capable of sustaining their own and will not need further injections. Many banks are following their examples and will return money shortly. WHY? Well, its simple banks need capital investors from the private sector to remain afloat and so for those investors to gain confidence, they must be able to demonstrate they can survive and need to move away from the idea of nationalization which seems more and more mass media and was causing fear amongst most investors.
And last but not least, Bernard Maddoff is finally behind bars for the rest of his life and most of his assets were seized, his assets were worth about $823 million, most of which will be used to repay his debt once the investigation is entirely over. This comes at a necessary time to help rebuild confidence in the justice system and its ability to deal with those that cheated the economy and the people.
So what does it all mean? Increased consumer spending for the month of February, making it now two months of increased consumer confidence. It also means that a 9% increase is a great sign, as it is usually what the market gains in a year. It also means that it is the time for Obama’s administration to get the media involved because consumer confidence is the reason we are not getting out of this recession. Everyone is afraid and a little too much at that.
We need everyone to stay positive and live their normal lives, spend normal money, have confidence they will keep their jobs and continue on their normal lives, and as long as we dont and continue to live in fear, we will not get out of this. So stay positive.
Related posts:
