zalo

The Recession Is Already Priced Into Stocks

From my continuous reading of the financial crisis issues i have come to the conclusion that all the problem comes down to the deleveraging process of the financial institutions. It doesn´t matter how much capital you pour into banks, there are sizable sectors that will continue to deleverage. And i refer to hedge funds.

I think that Hedge Funds should be forbidden of selling assets, at least in a desorganized fire sale way. Hedge funds should be put into quarantine and redemptions from hedge funds should be halted.

This will relief the markets from the selling pressure that it is suffering right now.

This Hedge fund freeze should be in the interest of the normal people and for the hedge fund participants also, as their assets will not be sold into a fire sale but into a more organized market.

Certainly Treasury Secretary Paulson could verify this alternative. He, more than anybody understands the hedge fund world. Certainly some banks with exposure to hedge funds could suffer, so those banks should be pumped with the necessary liquidity and capital to avoid their failure.

Best Regards