Monstrous Risk, Little Room for Failure

We've Been Here Before, Haven't We Learned Our Lesson?

What is this I'm hearing?  Aggressive rate cuts?  Oh sure, they are coming... no doubt about it.  The futures markets are pointing towards it, too. Ben Bernanke is on record saying 'the Fed will provide ample liquidity and do whatever it takes support the economy'.  Pretty much a slam dunk in my book. 

But is this the answer?  How far have we come with this nonsense in a year's time?  For heaven's sake, rates have been cut 3.25% in about a year now, yet that has not been the answer.  Shouldn't that have been enough?  Currently at 2% fed funds, it seems we are likely to see those 1% rates again that got us into this mess in the first place (remember, subprime?). 

Maybe Ron Paul was right after all;  too much power to the Fed is a dangerous thing.  Bernanke is more set on trying to shore up confidence than to solve the real problems... for which the answer is still floating out there.  Meanwhile funds continue to flow into the system at an enormous rate.   

TARP is Not a Cover, It Reveals

The new plan to buy mortgages by the government from banks is called TARP.  It might as well be called CRAP or even LATE.  On the hook are the taxpayers once again, as the buyers of last resort.  Secretary Paulson talks of a 'good investment' by the American people.  Since when did he have control over our investments?  Did you ask him to invest your tax dollars on your behalf?  He tells us we could make a profit on this deal, and that sounds nice.  However this is a clear bailout plan...as some will inevitably be rewarded (even more) for punishing behavior. 

It's Still About the Economy, and It's Not Good

Bad news on the horizon, and it's only just getting started.  The economy could very well be in a recession, a potentially powerful pullback that has global effects.  Unemployment is creeping higher, job creation is shallow, manufacturing is slowing, global demand for commodities and services is weak and the consumer is tapped out.  On top of that, the housing market and credit are still a mess.  Until some improvement appears the stock market will be under severe pressure.  Global markets are tied together in a way that if the US sneezes everyone else catches a cold.  For reference, the last recession was a shallow one, only lasting one cycle... this one could be extended into 2009.  Earnings are about to come out for 3rd quarter, and they likely to be the worst in the history of mankind.

Monstrous Risk, Little Room For Failure

As seen this past week or so, the market is making it known that any bailout plan is not the silver bullet.  Since being announced on Sept 19, the Dow Industrials have lost up to 2000 points, or nearly 16%.  That is nearly a crash, the one legislators were trying to avoid.  They took their time getting it done, too... risking bigger losses and showing themselves as selfish, foolish and narrow-minded in the process.  In their hurry-up offense the bill was passed.  Mr and Mrs. Middle America, who will have their voices heard in about a month (election day), are completely disgusted, worn out and fed up with Washington.  No surprise, either... but if this plan does not work, or if their is a call for more funds...there will be hell to pay. 

Disclosure: None

Comments

[scholar:]

the other day i went into the home depot and they couldnt help me fast enough before i was lucky to even find help the grocery stores are packed on saturday nite instead of going out to dinner the local dodge dealer refused to give me my 1000 dollar deposit back on the new hemi challenger and nobody was there but me i hope this is a ahort term thing i do not want to go thru a depression we all need to help each other the govt cant save us

2008 Oct 07 09:30 AM

[Jason Rines...:]

Restaruants other then .99 cent burger joints are all facing major pain as are the automakers. No Scholar, the government can't save us. First, We the People will learn the difference between those who care and have a clue economically like a Ron Paul, vs the clueless John McCain and the outright corrupt socialist of Barrack Obama. America will learn this through incredible short and mid-term pain. Then America will have a voter revolution and the corrupt will go.

2008 Oct 07 10:45 AM

[daytrader:]

to scholar

you sound like a decent guy.you know who heads up chrysler?right.that scum bag nardelli;yes the one who took a $211 million buyout from home depot after making millions there,general electric&god knows who.the son of a bitch wouldn't even give a hard working person such as yourself a hard earned rebate after you spent tens of thousands of dollars to make this creep a billionaire.

THAT'S THE PROBLEM!!!

ceo's are making way too much money&the average joe is being paid peanuts.they could fix,but they will not.yep.

THEY SUCK!!!BIG TIME!!!

2008 Oct 07 11:02 AM

[PainfullyAware:]

Maybe Ron Paul Is Right? He Is Definitely Right !!!

The man is logical and not driven by emotion as many others are. Without Root Cause And Corrective Action Ability His Patients Would Not Survive.

Education is the only weapon against ignorance.

Question your paradigm and what others "Feed" you. All but your own experience is filtered through others.

To Assume Benevolence Is Foolish.

When You Can Create Money Out Of Thin Air You Can Buy Governments.

2008 Oct 07 01:49 PM