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Nightmare On Main Street U.S.A.

September 22, 2008
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Here we are facing the worse financial crises in my lifetime, and I don’t know how it will get any better. The “Bailout” that is being propose is only a Band-Aid. In fact 28% of the country feels it is a good idea, and yet they are going to go through with it. The magnitude of this crisis according to reports was shown on the faces of those leaving the meeting. The reports say, that they looked lost, almost dumb founded after finding out how bad it really is.

We will soon come to find out, the phrase we have come to trust will mean nothing. That phrase would be, “FDIC insured.” From people I have talked to have told me that the FDIC is also struggling to get a grasp on this also.

Today the market opened down, but would have been worse if not for Japan buying 20% of Morgan Stanly, which easy minds for awhile. The Japanese bank Mitsubishi UFJ Financial Group said they plan to buy 10 to 20 percent of Morgan Stanly common stock.

Source

The Mitsubishi investment, estimated to be as large as $8.5 billion, is the latest in a series of positive developments for Morgan Stanley, the second largest broker-dealer, after its stock price was sliced in half by anxious investors, worried if it could survive the worsening financial crisis.

If this was not bad enough; the dollar has fallen to the Yen, and the Euro, as investors await the word on the 700 billion rescue plan. (If you set down and look at the money being tossed around trying to save these companies, you will see that this is going cost the tax payers closer to 2 trillion when all is said and done.)

What is the solution to the crises? I don’t know, but it is becoming obvious that the world has lost confidence in the US financial market. When a state sponsored Chinese paper is calling for a world currency that is far from US backed. The Chinese said that what the US has done is unleashed financial “weapons of mass destruction” on the world economy in the form of sub prime debts and related financial derivatives.

Source

The official People’s Daily warned on Wednesday that a “financial tsunami” was approaching, which recalled the Great Depression in the US in 1929. “As the contemporary economy has been integrated globally, American consumption and currency exchange rates will directly influence countries dependent on the US as the main export destination for economic growth and employment”. The Chinese Communist Party organ complained that the US had unleashed financial “weapons of mass destruction” on the world economy in the form of sub-prime debts and related financial derivatives.

Are we headed for another Great Depression? I can’t really say, but remember when this all started to fall we were told, the economy is just in a little slump, and that the recession was all in our mind. And where we are now?

What we need to do until this turns one way or the other is: save what we can, stop impulse buying, and don’t run up anymore debt. If you have debt let it ride. What I mean is if you have hundreds of thousands of dollars in the bank, and only have say one thousand dollars in debt, pay it off. However, if it is the other way around let it ride and take care of yourself and family first. We need to prepare for the worse, and all that it may bring with It.

ABA

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2 Comments leave one →
  1. trickyguy permalink
    September 22, 2008 6:08 pm

    What we should do is demand leadership. I want to hear real ideas from the candidates, not a bunch of finger pointing.

    I don’t agree with the Bush Bail Out, but I am afraid it’s pretty much what we need to do now that we gone this far without doing anything.

    The Chinese are half right and half wrong. If all that had happened was a bunch of US institutions offering mortages to folks who were not creditworthy, then we would be fully to blame.

    But that’s not what happened. Yep, US firms wrote that “bad paper”. But major institutions worldwide bought that paper knowingly. They were just as in pursuit of the almighty buck (or Euro, or Yen, or whatever) as Americans.

    Demand that our candidates tell us what they would do differently. Throwing money at the problem is like a bandaid — it doesn’t address how you got cut.

    Like

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