A Miracle: Bush Parting the Bankrupt Sea

August 31, 2007 9:01 am

If the today’s economic story can be related to bible story, it would have to be the one where Moses parted the Red Sea. Back then, Pharaohs soldiers were chasing the Jews towards a dead end represented by the Red Sea. Then, after much hoping and praying, a miracle occurred. The Sea was parted and the Jews passed safely. Then, the soldiers were swallowed up and drowned as the sea closed around them.

Bush is now helping individuals who were moving towards a dead end by aiding financial companies that are closing in on the Bankrupt Sea. In this circumstance, the soldiers that will drown this time are Investors and Hedge Funds that went short on the homebuilders, banks and markets. Bush Parts the Sea

The flood that will kill them will be in the form of a short-covering rally initiated by several key economic results as well as the realization that there will be a governmental bailout if necessary.

According to news sources:

The President on Friday is to talk about several initiatives and reforms to help homeowners with risky mortgages keep their homes, a senior administration official said Thursday. Bush also is to discuss efforts to prevent these kinds of problems from arising in the future.

Bush also planned to:

—Urge Congress to pass Federal Housing Administration overhaul legislation that would give the FHA more flexibility in assisting mortgage holders with subprime mortgages.

—Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.

—Call for rigorously enforcing predatory lending laws and strengthening lending practices.

Companies such as Countrywide (CFC), Bank of America (BAC), Toll Brothers (TOL), Beazer Homes (BZH), Bear Stearns (BSC), Lehman (LEH), Goldman Sachs (GSC) and the entire financial sector will surely get a huge lift from this move and short-covering. What stocks will get hurt today? Ummmmm, nothing that we can think of. This is a good move by our government for the most troubled borrowers(unless Bush does something really odd during his speech later today or Bernanke usurps President ~~Moses~~ Bush with comments that are at less than positive and supportive)

President Bush to speak at 11am and Fed Chief Bernanke to speak at 10am today

Horowitz & Company clients hold positions in some of the stocks mentioned in this article

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Written by Andrew Horowitz · Category(s) Uncategorized | Tags: Economy • Markets • Politics

2 Responses to “A Miracle: Bush Parting the Bankrupt Sea”

ken Schimpf on August 31st, 2007 6:30 pm

Hey Andrew

Where in Exodus does it tlak about praying to part the sea?

Thank you

Ken Schimpf
Andrew Horowitz on September 1st, 2007 7:36 pm

I have to make a few comment/clarifications. I have been tracking comment around the web about this post. I am unclear what sparked the hysteria, but let’s get a few things straight:

1) The fact is that I am totally against the government bailing out any institution or investor that got hurt by making poor investments that were predicated on greed
2) The comment ” what will get hurt” was directed at stocks that may lose value due to the comment and/or plan by Bush. It was simply looking at the day ahead. If you look at the entire paragraph that preceded this, you will notice that I was making an observation about the stocks that would benefit from this. Nothing more, nothing less.
3) What I understood was that the plan by Bush was to help individuals what are caught up in this mess, get needed credit and mortgages during a time that the credit markets are essentially frozen.
4) Without intervention, individuals will suffer the greatest and that is not a good thing.
5) The companies that were the cause of this problem should be punished severely
6) In my comparison of the bible story, the soldiers today are some of the parties in the group mentioned in #5 above
7) NO ONE wants a bailout of the predatory lenders. What we are in favor is help to the individuals that are in need of help during this credit crisis. Unless of course they are also part of the #5 group.
8 ) The only help that the financial companies should get is in direct relation to their ability to help individuals and businesses.
9) Last point: There are surely many innocents with this, but do not tell me that the millions that used creative borrowing to purchase homes at low rates or those that expanded credit beyond their means are innocent. We all had a part in this and we are all going to pay the price.