Well, this looks like “The End”.
The USA has accumulated so much debt that the system is about to collapse. Fannie Mae and Freddie Mac will be the straw that breaks the camels back. During the next couple of months foreign investors will lose faith in the dollar, treasuries and GSE (Freddie and Fannie) bonds. Add on top of that the inability of FDIC to cover all the failed banks and the American public are left in a truly deplorable situation.
The citizens, banks and government of the USA are insolvent. No one, will be able to save anyone, because they are all drowning.
If you want to buy anything, do it by the end of September, after that your money will be worthless.
It didn't have to be this way, regulations were in place, and powers granted to control the orgy of bad loans and worthless bonds. Alan Greenspan could have stopped this from occurring. Bush could have stopped this. Many a book will be written about why they didn't. I'm going to assume that the words “greed”, “power” and “arrogance” will be use to describe their actions.
What is really scary, is that I not convinced there is a "right thing" left to do. All options seem like different flavors of suicide.
It is pretty obvious that the foreign investor are going to simply leave in the next couple of months.
It is also obvious that the politicians are not going to go on an austerity program to pay the bills. Nor are they going to abandon their rich banker friends.
I would love to hear a WORKABLE solution that doesn't crash the economy.
Oh sure, there are “solutions”: devaluate the currency, make the bond holders take a haircut, put Freddie and Fannie in a conservatorship . But all those solutions mean the foreign investors who have artificially propped up the economy will leave.
Got Gold?
