The IMF (International Monetary Fund), The World Bank and The Fed…currently run by
Ben Bernanke and US Treasury Secretary Hank Paulson all have one thing in common: They are really scared! The IMF; that bankrolls every Second and Third World nation in the world…..is calling for a Sub-Prime write down of $945 Billion to say hello! They are pretty sure it is going to get alot worse before it gets alot better!
It’s “The economy stupid!”; that is!!!
They call it the worse banking and financial crisis since 1930! Maybe worse! OK,
what are they positive about? NOTHING…right now! Maybe, after the elections in
the United States….Maybe, after Europe sees how bad their part is going to be…
Maybe, after England and Spain shake free of their freefall in Real Estate values…
Maybe, after a while….”they will look again!”
So how did this great embarrassment get started? It kinda starts like this: Buy old
credit card debt for 2 cents on the dollar. Sell those accounts until the price hits
nears 85 cents on the original dollar. Show the financial wizards at places like
Bear Stearns and Merrill Lynch how to leverage that Bad Debt as well as adding way
over inflated Asset property values..by say 200%..then go bankrupt! After eight years of selling and reselling bad debts they forgot where it all came from.
They called “it” or “them”; Derivatives, Hedge Funds,Structured Investment Vehicles, Grand Asset Obligation Bonds and about 20 more non de plumes….all meaning: “Bull!” These people were so busy collecting brokerage fees and moving the products….that they couldn’t believe that (OH SHOCK!) they had a “Margin Call”! What’s that you ask? That is when the money you have backing these paper positions are 10% of what you need. It means that you might have to quadruple you cash position to sustain the phony rise in the markets. Bear Sterns learned the lesson quickly! Lehman Bros. of course….wanted to save the big guys…and after their initial $2 dollar a share offering…they booted it to $10 bucks a share … so the old CEO of Bear Sterns could come up with $61 million dollars cash for his BS stock after he sold out his position! What is really ridiculous is that way back in early January….a Chinese outfit wanted to buy Bear Sterns for $100 dollars a share….but was turned down by the same Bear Sterns CEO and Board of Directors. Some old investors in Bear Sterns now are going after the Lehman Bros. and the old Bear CEO to recapture some of their evaporated cash. As the say in Yugoslavia: “Goodby and Good Luck!”
Greed….may thusly cause the fall of most of the world’s great banks. The Fed can’t
even print the $45 Trillion dollars it may need to get flush with the world. The old
70’s photo of the kitty holding on to bar….”Hang in there!” may be the call of the
day. People point to the Stock Market…claiming all is calm. People point to the
Real Estate Markets and say….hey: “12 to 15% deflation…isn’t so bad!”…Claiming
that all will be well soon! “No Alice; Santa Claus is alive…..but he may not have
all those goodies on his sleigh this year!” Pensions, Health Care plans, the Bond
and Muni markets are “iffy”…but being tauted. The truth is: Cash is king! So,
you may want to stuff some cash into your mattress or in an extra pillow case! With
the tremendous rise in inflation for energy, food and gasoline….well, you just may
need it.
Father used to remark: “The wages of sin!” every time things weren’t going so
well. Mom used to add: “You should have planned better! Put a little money away
every week…so pretty soon…you could have alot!”
Watch the job market….the fall of jobs….the continuing fall of Real Estate
values…..the shortages in the Public Sector and reduction of services. Watch the
Pension funds, Healthcare providers and Government programs. Watch the Fed…..
and don’t allow crazy ideas when in fact we need a calm hand on the tiller! How bad
is it going to get? So bad…that even CALPERS now wants to open up their Piggy Bank to any investor willing to put up a few bucks! The legislation is already drawn
and quartered!
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