Here is an article ACEDEFI, a site launched by Marc Touati, which explains quite convincingly, that in the early evening I wrote in another post:
http://www.acdefi.com/index.php? pid = 535
ACDEF - October 17, 2008
Americans and Paulson 700 billion figure are really small players ... Indeed, while the banking crisis only to relate to the United States and in any case of Europe, the European Union, with a GDP roughly equivalent to the U.S. (around 15 000 billion) , announced a plan to rescue banks from about 1 500 billion. In
all EU countries, this plan will take the double form of a guarantee of interbank lending and a possible recapitalization of banks' capital. In other words, European banks will now be able to do their job in a comfortable car on a highway anchored clear and straight, with a speed limit of 60 km / h and with a dozen airbags
... In these conditions, it is clear that there will be no bankruptcy of large and medium banks in Europe and, hence, the prevailing liquidity in the interbank market for over a year has more reason to be . And this, while a warranty roughly equivalent exists in America.
In this context, following the drastic fall in stock prices in recent weeks, it is clear that international actions are becoming increasingly attractive. Last Friday, more than half of the CAC 40 companies showed a market capitalization lower than their own funds. This shows how the "sales" became exuberant.
Admittedly, the recession will go ahead in Europe. Nevertheless, given the lower interest rates, past and future, the decline of the euro, declining oil prices and raw materials not to mention the massive rescue plan banks, growth should gradually restart euro landers from the summer of 2009. However, since the stock markets generally expect six to nine months out of recession, a gradual recovery in global stock exchanges including both sides of the Atlantic is likely in late 2008.
course, life will not be smooth sailing and surprises punctuate even the fellows coming months. However, after the crisis of trust born of the bankruptcy of Lehman Brothers, a breeze of optimism should now revive the markets.
As for banks, we can only advise them not to use the state guarantee. Not only because it pays off but because it imposes a duty to inspect the operation of signatory banks. In fact, these safeguards must simply be capable of restoring confidence. For the rest, the end of 2008 and 2009 will certainly be very rich in mergers and acquisitions and restructuring the international financial and banking landscape.
More generally, we have a duty to recall that today's stock market valuations have nothing to do with economic reality.
This disconnection occurs in two ways. On the one hand, comparing the market capitalization and equity firms listed. On the other hand, through the Fed model that calculates the level of profit per share is currently anticipated by the market for 2008.
In summary, half of the CAC 40 companies have a market capitalization lower than their own funds and the Fed model indicates that current stock prices anticipate a decline in EPS of at least 50%.
Without making value judgments, so there is two major "HICS.
Also, without being a genius either, it is inevitable that, given such valuations, investors who currently have cash or have strong fundamentals can already do their shopping balances and enjoy unbeatable. Now these investors are not necessarily European or American. Clearly, the wealth of tomorrow are today. Watch out for surprises ...
Marc Touati
