Saturday, September 27, 2008

Bailout or no bailout - what's the difference?

Many Americans are being brainwashed into believing that our economic woes can be resolved with the "saving grace" of a $700 Billion taxpayer bailout package - being crafted over the weekend.

Well folks, It just ain't going to happen that way...

This package (if approved) may slow the speed of our debt implosion, but the debt implosion train has already jumped the tracks and can not be stopped. A Massive Recession or Depression is well on its way.

If it's coming anyway (you ask), why not try to slow it down with the bailout?

Well, there are several very harmful side effects of passing this bailout - the most significant being: a falling US Dollar/inflation for every American household.

What do I mean?

Well, if passed, we will still experience the same (albeit slower) consequences of the debt implosion: unemployment figures will rise significantly and the value of our assets (homes, cars, boats, toys and other expensive gadgets) will tumble as people flood the market with these items to (1) get rid of the added household expense and (2)use the proceeds to help put gas in the car/food on the table.

The difference will be: If approved, we will experience a significant increase in the cost of living - simultaneously with debt implosion/falling asset values, etc...

Food, gas, clothing, imports, etc, will all skyrocket in price - significantly increasing the cost of maintaining a household.

Ultimately, this bailout will not be enough money and other bailouts will likely follow (due to this precedent) and the Massive Recession/Depression will turn Hyperinflationary in nature - Sticking it to the average Joe from both ends.

Closing:

I just finished watching the Presidential debates. In a nutshell: I wasn't too impressed with either of them, but one key comment stuck and resonated within my head throughout.

When questioned on the pending bailout package and the economic crisis, John McCain stated" "This is not the beginning of the end, but the end of the beginning - if we come out with a package that will keep these institutions stable."

A keen realization that this package is just a bandaid - to slow the bloodletting, with the understanding that there will be much more bloodloss to come.


Hold on to your hats folks!


Randy

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18 Comments:

At 9/26/2008 10:59 PM, Blogger Ramanand said...

Speaking of holding onto hats, I miss the weekend funnies posts...haven't seen it for the past 2 weeks.
Thanks

 
At 9/26/2008 11:31 PM, Blogger FOFOA said...

Randy, I have long thought that hyperinflation was the worst that we could expect. After a lot of thought, I think that the dollar losing reserve currency status is far worse. It threatens the very utilities we rely on for day to day existence. It is a long trail of thought that leads there, but now I am scared.

 
At 9/26/2008 11:41 PM, Blogger FOFOA said...

This comment has been removed by the author.

 
At 9/27/2008 12:13 AM, Blogger Justin_n_IL said...

Very well put Randy.

I appreciate the community here. This has become a staple for me. Surely there are multiple reasons for this. Topping such reasons would be that I can relate to you and your opinions. Without mentioning their names the same goes for a few others here . Even though I've never been able to see the above mentioned face to face one thing is for certain. Many of the thoughts that consume us are compatible.

In the mental sense this place is truly a stabilizer for me. The number of people who I am friends with possessing the same intellectual compatibility that I am able to see in the flesh are FEW.

Thanks a million Randy.

GOD bless

 
At 9/27/2008 12:22 AM, Blogger FOFOA said...

Jim Sinclair's Mineset website, a gold bastion, is tonight encouraging people to support the Paulson Plan. This is a shocker. I don't agree with this assessment, but it is a sign that we should all be scared. When the Goldbugs are saying that we should embrace government intervention, something is wrong in the world.

Here's the way I see it. We are right at a turning point. The least worst we can hope for is a bad recession and a stock market decline. Next worse is a stock market collapse and a depression. Next worse is hyperinflation. Just look at Zimbabwe today. And the absolute worst is the destruction of the dollar on the world stage.

And I'm afraid that worst case scenario is right where we are headed. We should be restoring confidence in the markets and the dollar by requiring transparency in the biggest financial companies. Instead we are moving forward with glossing over the root of the problem with more money. Money from where? Exactly.

The world sees this. They are already tired of America. And as for all the financial problems right now, we are getting blamed. Foreign Central Banks right now are considering ways of cutting us out of the equation.

For the past 65 years we have had something more valuable than an unlimited supply of gold. We have had the privilege of owning the printing press of the world. Our dollar has been used by every country in the world to buy oil from the Middle East. It has been used by China, Japan, and many others as a way to hold the savings that come with a trade surplus. And because of this, we have been able to print dollars and watch them flow throughout the world in mass quantities. Every printed dollar bringing a little more wealth to America, and with that, a little more dependence on "the system".

If the world revokes our privilege as the worlds "money printer", then we are in big trouble. Because we have become so dependent on our "status" as the world's reserve currency, we will hardly be able to function without it.

As it stands right now, we are not a net producer, we are a net consumer. So without the world's net support, we will start consuming ourselves. Just like in the movie Alive. Imagine a depression where even our utility workers are laid off. And the few that remain can't do the job. Everything will shut down. I can imagine a world where we would go weeks without power, and only the labor of thousands of volunteers would finally get things running again. Imagine the panic and chaos that would surround this picture.

This is exactly why I DON'T support "the plan". It is destroying the dollar just talking about it. We need to clean up this mess, starting with the big Wall Street banks. We need to hold them accountable. If we FORCE transparency, then the market will be able to price in the winners and dump the losers. That is the direction we need to take.

So buy gold, oppose the bail out, and hope for the best.

 
At 9/27/2008 12:27 AM, Anonymous PDM said...

Anyone up for buying land in the US southwest and creating an eco-village?

 
At 9/27/2008 12:31 AM, Blogger Justin_n_IL said...

How about the Midwest? South central Illinois.

Wink

 
At 9/27/2008 1:00 AM, Blogger FOFOA said...

German leader warns U.S. superpower era is over

"WASHINGTON, Sept. 26 (UPI) -- German Finance Minister Peer Steinbrueck has proclaimed the Writing on the Wall for the United States: America's days as an economic superpower are over, he said Thursday.

Steinbrueck said the United States will "lose its financial superpower status" as a result of the current financial crisis. He said it was now inevitable that the major industrial powers would move into a multipolar financial world with better capitalized Asian and European banking centers rivaling the United States...
"

This talk is measured in it's severity because this situation is still developing. But read the whole article:

"Indeed, it looks increasingly likely that the dollar will not even remain the leading reserve currency. For several years, Arab nations, led by Saudi Arabia, that were alarmed by the financial measures included in the Patriot Act have quietly been transferring hundreds of billions of dollars into euros."

These are the thoughts of the policy makers around the world right now as they watch our Congress on the news.

 
At 9/27/2008 6:42 AM, Blogger MogwaiHunter said...

Randy,

I for one, want to slow the collapse. I need time to prepare for the collapse and if it happens now, I am certainly going to die.

So, I say slow it and slow it as much as possible and yes I realize that will destroy the dollar. The dollar is already destroyed. I say GO BAILOUT! I would be for a BLANK CHECK and screw any limit on it! 700 Billion... naw... lets make it 1,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000.

Maybe, just maybe, enough people will awake during the time we have left to actually change this world. Worst case, we all get a little more time to prepare.

 
At 9/27/2008 8:08 AM, Blogger Randy said...

Here's a link to last week's funnies - for those who may have missed them:
Weekend Funnies - 20 Sept


FoFoa - I absolutely would have to agree... Losing reserve status in a relatively short period of time would lead to a nightmare scenario.

Justin - thank you for 1)the kind thoughts and 2)daily contributions you make to this blog. I feel much the same way. Very few that I interact with on a daily basis understand the predicament we're in (nor do they want to).

It's very calming to communicate with others who share the same understanding - My psychological fix if you will.

I only wish I had more time to devote to this thing.

FoFoa - saw that article earlier in the week - scary indeed. Only question is: When will talk/rhetoric turn to action?

MogwaiHunter,

Understand your point, but would have to disagree - as stated above, loss of reserve currency status would force the end of the US as we know it.

Dollar: Faltering foundation of US Economic Strength

Thanks to all for posting up

Randy

 
At 9/27/2008 3:29 PM, Blogger FOFOA said...

Monty Guild at jsmineset.com now backs the bailout. Glenn Beck now backs the bailout. Who is getting to these people? Are they simply "seeing the light"? Are they realizing that friends and family have 401K's and are scared? I don't know. But no one has gotten to Karl Denninger yet. He still says "Stop the Bailout! Save America!" (New video)

 
At 9/27/2008 3:43 PM, Anonymous Dave said...

I love Karl's passion! It's troubling that some people are capitulating - I'm not! This bailout will at best delay the inevitable paying of the piper, and make the ultimate payment much more taxing.

Dave

 
At 9/28/2008 8:54 PM, Anonymous PDM said...

Justin,

I love the dry heat of the SW. I'd prefer to be in the 4 corners region near the Hopi Nation (if they'll have me).

- PDM

 
At 12/11/2009 1:04 PM, Anonymous Irene Cakes said...

The bailout has already proven to be "productive" and useful to some extent, although the market is obviously much more unstable that what the administration admits. Somewhere within the thin line of bailout and no bailout lies the mistake - political will?!

 
At 3/08/2010 4:57 PM, Anonymous Tonsil Stones said...

I would say the POLITICAL WILL is there, the real question is, on what it is directed and to HOW is is being translated into.

 
At 3/13/2010 2:14 PM, Anonymous watch new moon online said...

Thanks for the links!

 
At 1/11/2013 12:35 PM, Anonymous QUALITY STOCKS UNDER 4 DOLLARS said...

The difference is someone else is paying for someone elses mistakes.

 
At 3/27/2014 10:30 PM, Anonymous PENNY STOCK INVESTMENTS said...

Unusual

 

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