Is America awake? Is the whole world awake? Are we all standing at attention watching our collective net worth plummet?
Has anyone realized that the corporate socialism is not fixing anything? We’ve been using these liquidity bail outs since last August of 2007, and all it has done is added more volatility to the markets downward slide.
When you pop a balloon, can you fix it? The simple answer is no. But the Fed would have us believe we can somehow mend the pieces and reinflate some kind of Frankenballoon monster in its wake.
This is nonsense. We have gone off the great cliff that markets tumble off of when the boom cycle busts. This time it was real estate and the bottom for house prices is not even close to here. That means the markets won’t stop selling until house prices level out. Why? There just aren’t any buyers. There’s no confidence. Sure we may have a snapback rally, but we lost 10,000 on the Dow, we’re close to losing 1000 on the S&P, the VIX (the fear index) is at all time highs. Does that mean today was the capitulation everyone was watching and waiting for? If it is, it’s only a short term bounce to another lower high.
America you needed to wake up when Ron Paul screamed from the mountain tops about inflation, but you did not. You needed to wake up when the subprime mess started and realize it was from your own excess, but you did not. Now there is very little opportunity left. You have but one chance to realize the err of your ways. You have to pay off your debts, start living within your means and stop letting someone else worry about your financial future.
It’s time to learn about the monetary system, macroeconomics and how to deal with this new global market landscape. You don’t have long to do it, either.
We have to all start appreciating just how good we had it to understand how bad it can get. California needs $7B just to be able to continue paying its government workers. That’s right, government workers– even emergency service workers, could face the daunting possibility of a bouncing check. Other states are following suit with their own inability to raise short term capital.
The Treasury is poised to take over 90% of American’s mortgages, and even debt from other countries. That would put them in the position to have to enforce foreclosures and manage foreclosed properties. Can you even imagine how the enforcement and management would be undertaken? Are we talking about the Secret Service or ATF kicking Americans out of their homes? Are they going to mow the lawns and keep the places clean, too? This whole plan is completely absurd. You need not look further than under its gold-plated surface to see just how bad it is.
And now as we approach a national debt that is larger than our GDP, we must start to realize that America itself has become leveraged. As we increase the bail outs, continue our military incursions and open up more socialist programs, the debt will skyrocket. Eventually inflation will kill the dollar. Right now, though, deflationary forces are very strong. That is to say, because money is debt, and debt is being destroyed on an unprecedented scale, there is some destruction of currency, leaving less supply and increasing prices for the remaining US currency (which is mostly credit).
The US Congress is now out of session until next year and we will very unlikely see any more stimulus or bailouts from them until the next president is decided. This is going to be an incredibly rough patch over the Christmas season for retailers. Some say the worst in three decades. We are predicting that consumers are going to be very frugal in the face of both their home values and retirements receding, job availability contracting and the economy slowing.
The path of least resistance for all major global equity indexes remains downward. Bonds still are seeing a tremendous flight to quality as traders price in likely Fed cuts of up to 75bp to 1.25. The Yen is seeing massive strength as risk aversion is increasing. Gold is up as well, but other European pairs are weaker against the greenback today.
Be very careful trading!