Monday, February 23, 2009

The Spark That Lights The Fuse

Watch for either Goldman Sachs or J P Morgan (or both) to announce that they plan to raise or have raised the capital to pay off the TARP money taken last October (under duress). J P Morgan's dividend cut, announced after the close today, frees up $ 5 billion annually that can help them move toward that goal. Both GS and JPM are profitable and likely don't need TARP money. Paying off TARP money will show that the private market can make it without the government and that will spark a major stock market rally.

Unfortunately, no government plan can produce a rally because government plans always remind us that private capital is running the other way. Government needs to take a holiday. If the President and the Congress would quit trying to help, good things could happen. Otherwise, expect more of the same for stocks.