The people in the hinterland are having a tough time wrapping their fingers around “Bailouts for Wall Street”! The reality that the Dow could fall to the 8,000 level….is not Space Science. We did it ….about 10 years ago. How bad was our world then? Just to remind you…this was the launch of the Dot Com Explosion! Then came the Dot Com Bust, 911, Short Recession, Sub-Prime Explosions and Hedge and Derivative Fund Nuclear Expansions.
Sustainability….of any market is always difficult. Markets go up and markets go down – right? Not when they are being manipulated artificially! Welcome to the Crude Oil, Natural Gas and Real Estate markets. Banks have been the willing co-conspirators, strongly utilizing the now and ever defunct Investment Bank system as their front men…in order to take a bite out of those big 22 percent annual returns. Those days are now officially on hold…until banks like Washington Mutual……..and others that were deeply involved in these scams get bought up ( WAMU – got picked up today by JP Morgan Chase).
The real issue is DeValuation of the Dollar! World opinion would quickly work its magic…if we said….”America is devaluating the dollar!”. Should the Congress use this Bail Out as an excuse….to devaluate the dollar… who knows where that will land our economy? This is called “Net Effect”……as we keep pumping worthless money into the system…..the value of the currency is bound to fail. Zimbabwe currently gives $3Trillion Z-Bucks to the US dollar. We do not need to domino the world economy into a total collapse!
Real property….needs to have real values established. The simple solution of course is to simply go back to 1998….and “use comps” for everything at that time! The problem of course is the rise of Pensions, Retirement Plans and Public Employee Insurance accounts. It is going to be tough to convince the people involved in these funds that if they take “half” they will be making out like bandits. The great greed of Wall Street has been established to infect anyone with two bucks to rub together. Saying NO to any of these people will be a very difficult task. Saying YES is guaranteed to possibly ruin the American way of life.
There are some pretty good ideas running around out there that do not include Devaluing the American dollar. You need to remember that if in fact we “Net Effect – devalue the American Dollar”…the price of oil may double, the cost of living may double and job growth and wages are then destined to fall like rocks. Not a good outcome…now or in the future! The one good idea that makes better sense…is having the banks borrow their way out of harms way! Make these bankers and Investment vehicles…borrow from the Federal Government…..one on one! They would have to have tough Lender documents….at high interest rates…warrants some say….better yet putting CEO’s personal assets at risk in the process. Without that…..without any true responsibility by these people…..we may be just whistling Dixie!
The “Net Result” will be different than the “Net Effect”. Banks, companies and Investment vehicles will have to bargain, sell, merge or do what is necessary with real effects….of their actions impacting them personally! The thought that we are going to give US Taxpayer monies (some say up to $4 Trillion dollars to World Investment Vehicles…..over half from Foreign Countries…is despicable! If the Fed wants to open up their wallets to Credit Markets…start their own: 1-800-FED CASH!
We cannot sit by and approve or accept that our Congress is going to approve a very bad economic plan……that doesn’t take into account the future of our country!
Ron.
Question. Where are we going to get $700 billion dollars for the bailout? From China or an OPEC nation? Or perhaps we will simply print more greenbacks.
FYI. According to the existing plan only “securitzed” loans will be covered by the pending bailout. Therefore any bank who loaned money and held the paper is on the hook should those loans collapse. Securitzed loans being those “packaged” and sold to investors.
The pension plans need to eat it.
There is a guaranty fund for pensions. And it has a great benefit to the taxpayers too.
It has a max benefit pay out of 65,000 per year. So all those excessive pension given out to get votes and favors will be reduced to the point that the reduced value of the pension assets will make them solvent again.
This is unfortunate, but it should serve as a wake up call to all American investors. If you want to protect your money, you need to diversify and invest at least some of it overseas. These are hard times for American investing firms. I personally use offshore bank accounts and they have helped me with diversification and asset protection. If you want to read more on why offshore investing is smarter, feel free to visit my website.
Best,
Frank Miller
http://www.theoffshorebankaccount.com
Cook, you and I can debate this at length when we are homeless and eating at a soup kitchen. Frank, good luck getting that money out one of these days – do you swim for it or take a boat when they refuse to send it to you electronically?
Larry, let me know when you get the answer. I think the kids are going to need wheelbarrows to carry their lunch money to school soon. Oh maybe this is when we get debit cards implanted subcutaneously with that number on them…what was it again? Let me check my Fundamentalist playbook.
*Cook – hope you are right about those Pensions…that would be great. Whatever happens………let us all pray……\they do no harm!\