The Shell Game

Enough happened Friday that new history has been made, and perhaps The Great Depression 2 was averted, or worsened.

I'll let you read and listen to the babble from TV and news. You're being inundated.

But these are facts:

*This was a classic socialism move. This bail out, 1 trillion (2 Iraq Wars) is a TAX the American citizens will pay. We will. Our children will. And the debt will be so monstrous that truly no economist could predict how this will truly affect our economy.

Of course, the market took it with complete and euphoric abandon, as our money market funds were now guaranteed by the Government and historic bank failure worldwide was averted.

And most Americans won't even know it, simply hearing of the "big things" and having no understanding of it.

While financial stocks and the broader markets appear to be recovering, much of the gains are a result of short covering, particularly in the financials. Bloomberg reports that short interest in financial stocks increased this year to 36 percent of all shares sold short in the S&P 500. The true underlying strength of the rally will not be clear until all the shorts are covered.
Until the details of the Treasury plan are released, and there is bi-partisan support for it, the market recovery is at risk. Republicans may balk at a $1 trillion bail out and Democrats will not support a plan that rewards Wall Street for its excesses but leaves Main Street struggling and with an added burden on taxpayers. With only a week before Congress adjourns, there is little time to agree on the biggest Government expenditure ever contemplated.
The bailout will almost certainly depress the dollar further adding to inflationary pressure on imports and may do little to improve the economic fundamentals, so while we may see a short term bounce, the underlying trend may still be downwards.

Calls have the upside. Reality may soon set in, as the world begins to see what this will cost, and that none of it is real. Please read that again. None of the money we are discussing and reading about is real. It is paper, on paper, and in spreadsheets and financials. It is the "moving electronically" of "nothing". We have created the value to the instrument.

And our instrument, the USD, now has no value. It is pure debt.

This is the fault of: 1. American and our GREED 2. ALL of Washington, Democrat and Republican 3. Supply Side Economic thinking, led by Greenspan and leading with Reagan Administration, and moving from there through each Presidency, and finally fueling the mass arson under Bush, as we "warred" and "debted" and allowed GREED to lead.

You are at fault if you are not a true student of "truth" which is NOT what you read.

And most important, this shell game has not been approved or finalized.