Sigh... We're screwed

Well, here it is in a nutshell...

The economy is at a turning point. We've already headed 700 Billion dollars down the wrong road and the reality is that (unfortunately) I think we're headed even farther down the same road. It's scary as hell when the Fed can print it's own money and basically buy out private companies for pennies on the dollar with that "printed" money (really it's just a couple dozen keystrokes on a computer at this point), but it's Armageddon for the economy when we try to make something that has no value into an asset. Major investment firms and banks were caught with their pants down around their ankles and now we're seriously considering giving them the ability to clean house and scrub records so they can continue to make more money.

Is it in our best interests for us to borrow money from the Fed (the one that owns the printing presses) to bail out our banking system? We're basically giving our tax dollars directly to the private banks now whether you own a home or not. The debt we now owe to the Fed will be coming out of our paychecks in one form or another from this day forward. I for one don't like the idea of working and paying taxes to make the funny money they are currently printing for free turn into an asset for them.

Home mortgages are not the biggest issue here. The IOU's from the government are. The dollars that you and I carry in our wallets are about to become a lot less valuable. Unfortunately it's all about killing time and placating people so that those that already have plenty of money will have much much more... If the stock market rebounds, it will be just long enough for the backroom deals to happen and make things much worse. The number of CEOs that resigned in 2007 & 2008 and cashed out their stock options and severance packages is astounding to me. The take for these CEO's appears to be between 15-50 million dollars each. That money came from your invenstments.

Now we're talking about 700 billion more in bail outs to "stabilize the economy". The reality is that you can't borrow more money to solve a massive debt problem. It seems that basic concept is completely lost at this point. They're going to say that the american people will get this money back as the problem clears up and business returns to normal and that the bad debt will sometime down the road magically turn into profit. That is EXACTLY what got us into this mess in the first place - banks sold bad debt to investors as good debt. Debt is debt - it's not the same as profit because it doesn't exist as an asset yet... The profit doesn't arrive until the debt is fully paid - and then we're just back at zero, yet we bought and sold debt as if it were an asset already. Worse than that, the debt was created with printed money in the first place - the banks didn't have the money that they loaned out - they didn't even have a small percentage of the money they loaned out - they borrowed it through debt and called it an asset. So, we all finally realized that there is absolutely no real asset backing up all of this debt and we're seeing the results...

Why would anyone believe that buying up all of this bad debt with even more printed money would make the debt less toxic? How is printing more money backed by debt going to solve the debt problem? We don't have 700 billion dollars to bail out the financial institutions. We have to borrow that money from somewhere (or borrow against something of value). China, India and the other world investors are not all that keen on what is going on right now. We're printing money like there is no tomorrow (for the war, for the economy, etc.) and that money is not backed by anything, so it's just devaluing the already weakening dollar. Remember when the Canadian dollar PASSED the US Dollar in value? That was a crystal clear mile marker over a year ago that we were headed in the wrong direction.

When the value of the dollar goes down it is EXACTLY the same as someone reaching into your bank account, 401K, investment portfolio, wallet, cash box or coffee can (anywhere your dollars are) and removing a portion of your wealth. Your savings that you earned and paid taxes on is slowly being taken away from you a few pennies on the dollar at a time - to the tune of nearly 9% per year for the past 7 years. It's only because the rest of the world economy is also being watered down with funny money in the same fasion that we don't see the true speed with which our dollars are shrinking over time.

Wow, what can I say

Another $700,000,000,000.00 bail out. Have we reached a trillion dollars yet bailing out the banking and investment industry?

Is there any reason that of the roughly 300,000,000 people in this country we couldn't find anyone that had some education, wisdom, courage and moral values to act as president? Why are we stuck with this two party bullshit system - and the right is acting like the left and the left is acting like the right... What a mess.

Here we are in the worst financial disaster since great depression and the puppeteers are still pulling all of the strings. Where does this trillion dollars go once it gets borrowed? Who's going to oversee the spending of it? Who's going to figure out where every thousand of that money has been spent? It's an impossible task given months of planning and oversight, yet we're going to make that decision over a weekend...

We're just seeing the very tip of the iceberg I'd bet...

There are too many perfect storms out there now to think that we'll cruise right along without making huge sacrifices... I suggest all of us start paying attention to daily needs and make sure that they are covered before the infrastructure collapses too far. It's a very slow train wreck. It's hard not to get bored with it and stop paying attention, but it's critical that we all look at where we are and not expect that things will remain the same. What will you do if your paycheck starts bouncing while at the same time inflation is rising at an exponential rate? There is a lot of evidence that things will get a lot worse than that. Quite a few of us have been following the collapse of the economy since before the housing boom. I was skeptical it was as bad as reported back then - I am not the conspiracy theory type of person - I prefer tangible evidence. Unfortunately, we can only see the physical evidence long after the crime it seems. The housing bubble was the only thing that saved us from a recession after 9/11, and there were big problems before that event set the ball rolling. Get on the internet and read what the experts report on their blogs - it is quite different from the excerpts and minute by minute reporting by the media. They all act like it's a big surprise. All of this could have been dealt with nearly a decade ago if we had some good leadership and the people of this country were willing to work hard again and make some sacrifices. Unfortunately, we live in a time where people think that money invested in the stock market is the same as money invested in real things. Small businesses can't get off the ground because the banks control all of the money - your money - your investments! The economy and world situation is deteriorating all around us. If you want to invest, invest in something you believe in. Invest in people, businesses and community projects you support or see doing good locally. Trust me you will need all of the local support you can get and it can't hurt to help out your local economy. Act locally. If you don't have money to invest, volunteer your time to help out. Build lasting relationships with your community now and you'll have the support you need later. This is just the beginning.

More troubled financial times ahead

The central banks decided to pump another 180 BILLION dollars into the system. One again printing money like there is no tomorrow - a move that they have resorted to several times in the past 7 years. The first entity to trade those new dollars gets the benefit, but as the dollars move farther and farther down the line they water down the economy and cause inflation. Printing more IOUs so that people can trade them as if they are worth something will not resolve the problem in the long term. The insiders at the central banks know that their being called on their big bluff and are doing their best to flood the market while they make back room deals to cover their own assets. Now is not the time to listen to the investment firms. They are in the business of making money and they certainly don't want everyone coming to their senses at the same time and pulling the plug on Wall Street.

Bail outs are good?

Our corrupt system of banks, insurers and other banking "services" don't produce anything at all. As far as I can tell the banking system is only good at producing more debt for the future. I realize that all the bailouts are going to do is put off the inevitable crash for just a bit longer, but it really pisses me off that these businesses are being bailed out when new laws were passed making it harder for individuals to declare bankruptcy. Let's make all of these failing companies jump through the same hoops that individuals have to with the new bankruptcy laws. Make these companies work out a payment plan with everyone that they owe money to for the next 3 years and attend debt counseling - before they even qualify for bankruptcy. Then let them keep 1 car worth less than $2,500.00, some clothes and less than $200 in any bank accounts. Then kick them to the curb and ruin their credit for 8+ years making it impossible for them to just switch company names and resume business. That would make me feel a bit better about my dollar slowly buying less and less - if at least I knew that these multi-billion dollar corporate heads would have the same crappy IOU's from the government that I do... In fact - that might be your answer - strip them of everything but dollars - no other assets allowed. Then perhaps they'd be more likely to protect the value of the dollar instead of pushing credit (AKA debt) as the new money.

Not one product is produced in this country by banks, mortgage lenders or insurance companies. Their job (as far as I can tell) is to sing a siren song of wealth, opportunity and security to the middle class while slowly eroding the value of the dollar and shifting funds to the most wealthy 5%. Whoever got the biggest payrolls and made the decision to print more money to fund the housing boom should be paying the ultimate price right now. Unfortunately, the golden parachutes have already been deployed and the only news will be about how the economy (AKA the rest of the working class) will pay the price for them. Watch as your savings, retirements & property values get sucked in by the perfect economic black hole. If you are on the upper end of the income spectrum, you might be able to weather the coming crisis for a decade or more, but for the rest of us - even those of us that saw this coming years ago - we'll be making hard decisions and learning to *do without* more and more frequently until this corrupt system of banks and insurance companies finally get stuck with their own worthless paper.

The good news. The bailouts can't outlast the greed. Sometime down the road someone will cry out "the emperor has no clothes" and a house will just be a house on a piece of dirt and have a fixed value again. Currently a house is a "home" that continues to increase in value despite the fact that it's actually depreciating every year. A home sitting on a piece of land is a fixed asset that once built and left alone depreciates over time just like an automobile does. Yes, you can argue that the land increases in value, but the home does not. Somewhere, somehow someone convinced the middle class that "homes" are the cornerstone of "making it". Some even argue that they are the best investment most people will make in their lifetime. In the past that may have been true - back when homes were equal to 2 years wages. Today, it's all total bullshit - and if you feel the hairs on the back of your neck starting to stand up with that statement - just shows you how deeply ingrained in our own belief systems that meme has become.
When a government already in debt bails out a company to the tune of 85 BILLION dollars, the value of the dollar (the one that you get paid in) goes down. Just call your dollar an IOU from the government - and your IOUs are no longer tied to anything tangible - in fact they're tied to the increased value of everyone's houses - which is made up entirely of more borrowed money...

Some day someone will notice that wages are losing ground with expenses at a rate of over 9% per year since 2001. Not kidding. If it hadn't been for the housing bubble, the war(s) and other great reasons for the US to print huge amounts of money and artificially inflate GDP, we'd get a nice clear picture of the problem. Unfortunately, you have to look at things like the price of gold and other mediums of exchange that have common value around the globe. If the price per ounce of gold is a good indicator of what your dollar is really worth. In 2001 $1.00 worth of gold is now worth $3.25 (not including the record setting pace that gold has jumped in the past 24 hours - that is world wide BTW, not just US - hang on to your hats...). That means that your $1.00 in 2001 is now worth about $0.31 on the world market compared to just 7 years ago. Many more banks, savings and loans and related financial insurance companies are going to go down or will be bailed out in the near future - both of those options mean that our dollars are going to be worth a lot less, so be prepared to work a lot harder for less... It's about time... Someone has to get stuck with the check - I just wish it was the ones who ate all the food and not those of us that did the cooking for them.