CHESSNOID

All the US stock market indexes opened lower based on all the financial news that came out. Bank of America confirmed they do want to buy out Countrywide Financial for only $4 billion dollars after loaning them $2 billion last November. If this was a true merger in a healthy economy, those stocks would usually go up in price. I have a feeling this takeover is a behind the scenes government sponsored transaction. It is weird to have the biggest mortgage lender have its value plummet, loaned $2 billion 2 months ago (which is only worth $600 million now), then bought out for just $4 billion in a span of less than 3 months.

Now we have another bank Washington Mutual being considered taken over by JP Morgan Chase. I know all the bank stocks are considered cheap from yesteryears’ prices but they are still not a good value. What is weird is that the companies doing the taking over have all posted recent losses, and now want to spend more money on companies falling into possible bankruptcy due to its high exposure to bad real estate mortgage loans. This is all just an observation, where some things don’t make sense or seem clear to me. There doesn’t seem to be any scrutiny from the government about monopolies either. I don’t think it is necessarily bad if the government is doing this to help avoid further loss in consumer confidence, but I don’t think they should be transparent about it. Actions like this I think would help investors gain more confidence in the market. I guess governments jumping in private companies business wouldn’t look very capitalistic.

This is where the stock markets are right now. I don’t know if it will close up or down by the end of the day, but I would expect nervous investors to sell off rather than buy at the end of today because I think most investors won’t want to think about their holdings through out the weekend and be surprised with some more crazy news like yesterday and today.