No matter what you think a party represents, one must ask themselves which presidential candidate would be best suited to carry the United States out of the dilemma we now face. If you breakdown the dire issues within the global economies that have shown themselves like a scene from a doomsday movie, it comes down to one very fundamental issue; who can reestablish confidence? It's so important to understand that government interventions, nationalizations, liquidity injections, and bailouts are all being done to increase confidence. Increasing confidence in the banks leads to lending, which increases confidence in businesses to do more business, which in turn increases the confidence of investors to push more money into these businesses, which then allow these businesses to hire more people who end up feeling confident enough to by products. Rinse and repeat and you now have economies humming along with a healthy amount of confidence. This was the one point that Paulson and Bernanke totally nailed when presenting the bailout package to Congress. Confidence is crushed because there is no faith in the system, and there are no government regulations or controls in place to give investors within the credit markets any confidence that things are going to be any different after the bailout. Not to mention that other countries around the world who so graciously invest in the United States need to have confidence that the U.S. Government is in control of its own markets.
So, follow and indulge me on a line of thinking. If confidence is important and, like school children, the financial world needs to know who is in charge to gain some confidence, wouldn't a little bit of government regulation be a good thing at this time? Wall Street analysts are running around yelling that Obama would be detrimental to the markets because he would enact more regulation. Wouldn't instilling some regulation tell everyone, "Yes, we know where this whole thing went wrong and we are putting measures in place to assure it doesn't happen again?" Not only are the financial institutions, its investors, and the markets as a whole trying to figure out HOW they are going to function after they have clean balance sheets from the bailout, but also WHO is going to tell them what the rules of engagement are. This needs to come from the government and a strong government at that. A word of caution on this one though; I used the word "little" when describing the amount of regulation, because it is important to get it just right or risk causing further damage by taking it too far . Also, any increase in capital gains tax would be a mistake in my opinion. However, I think investors could argue that it's better to have a healthy economy and market that you can profit from compared to what we are experiencing now. Needless to say, capital gains become a moot point when you are losing money on your investments. I think a lot of my republican colleagues are going through mental civil war on this one, but I assure you they are not alone. I am strongly against any type of regulation that interferes with the smooth natural flow of commerce, but I have to pause because the recent lesson is a game changer. The market is like a running animal right now and begging for a clear definition of its boundaries. Who is better suited to create those boundaries? McCain or Obama? At this point, it is one guess after another.
Keep this in mind. If you want to have a healthy bull market, you need to keep the bull around. The only way to do that is to start building fences. Let's just hope whoever builds the fence gets the size just right.
Copyright: Dominic Mazzone, Regent Global Funds 2008
This article was written by Dominic Mazzone, Managing Partner and Fund Manager of Regent Global Funds.
This article and other like it can be viewed at http://www.investingsymposium.com which is part of the Regent Global Funds Network.
Regent Global Funds, http://www.rgfunds.com, is an alternative investment fund that offers its participating investors and asset backed investment through asset based lending.
The Fund Managers of Regent Global Funds have an expertise in commercial real estate lending and have created a successful alternative investment vehicle that is diversified through this structure.
They separate themselves from other fund mangers by personally investing their own money side-by-side with their investors in the fund, creating an absolute structure of accountability. Dominic Mazzone has written about the need for this type of accountability in an article titled "Fund Managers Need to be Accessible and Personally Invested."
This article was written by Dominic Mazzone, Managing Partner and Fund Manager of Regent Global Funds.
This article and other like it can be viewed at http://www.investingsymposium.com which is part of the Regent Global Funds Network.
Regent Global Funds, http://www.rgfunds.com, is an alternative investment fund that offers its participating investors and asset backed investment through asset based lending.
The Fund Managers of Regent Global Funds have an expertise in commercial real estate lending and have created a successful alternative investment vehicle that is diversified through this structure.
They separate themselves from other fund mangers by personally investing their own money side-by-side with their investors in the fund, creating an absolute structure of accountability. Dominic Mazzone has written about the need for this type of accountability in an article titled "Fund Managers Need to be Accessible and Personally Invested."
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