"Big Bang" Financial Madness

Diane Francis in the Financial Post has speculation about how crazy the stimulus and bailout mania might get this year with the Obama administration. When I read this it's equal parts anger and panic. (read)

-Washington is going to bail out all homeowners in the United States. The U. S. government will guarantee all residential mortgages involving owner-occupants, including mortgages that are dramatically higher than the value of the underlying property.

-In return for removing mortgage loan credit risk, Washington will require banks to stretch out principal repayments to owner-occupants so that they do not exceed, on a monthly basis, more than 38% of family or owner incomes. When values or incomes go up, presumably, adjustments will be made. This will provide a floor to property values, a form of welfare to the unemployed and another unfreezing of bank credit.

This is a double punch to the stomach. People who got mortgages that they couldn't afford are going to get bailed out? All of them? That means there's no value anymore. There's no such thing as buying and selling if there is no risk. It's outrageous that cautious people who waited while the bubble rose, are going to pay for other people's homes. While they rent. Wow!

Peter Schiff Was Right: Incredible You Tube Compilation

Look at Euro Pacific Capital's Peter Schiff as he gets laughed at, Cassandra-like, when he predicts the coming economic collapse. These highly respected and paid financial pundits look pathetic in hindsight. Talk about "I told you so."

Peter Schiff Was Right 2006 - 2007 (2nd Edition)


Here's the link to You Tube if you're having trouble viewing
http://www.youtube.com/watch?v=2I0QN-FYkpw

Pour Yourself a Tall One

How bad are things these days? The bailouts are working right? The government is taking care of things. Obama is coming in!

Hitchens sends a wake up call.

The national Treasury is an echoing, empty vault; our Russian and Iranian enemies are acting even more wolfishly even as they sense a repudiation if Bush-Cheney; the lines of jobless and evicted are going to lengthen, and I don't think a diet of hope is going to cover it.
....

... many Obama voters appear to believe that the mere charm and aspect of their new president will act as an emollient influence on these unwelcome facts and these hostile forces. I can't make myself perform this act of faith, and I won't put up with any innuendo about my inability to do so.

In other news, there are capitalists and free marketers out there who think the new American paradigm where the government nationalizes the economy, is heading for a big disaster. You knew they would. They are out of fashion now but you can't ignore what they have to say. (A sample.)

What nearly all politicians on both sides of the aisle fail to understand is that the current contraction and credit crunch is necessary to restore order to an economy that is horribly out of balance. Years of misguided fiscal and monetary policy and market-distorting regulations have resulted in reckless borrowing and spending on Main Street, pervasive gambling on Wall Street, and rampant fraud and corruption at every intersection. America’s borrow and spend economy, and the bloated service sector that evolved around it, must be allowed to topple, so that a more sustainable economy grounded in savings and production can rise in its place. Any government efforts to delay the adjustment and spare us the pain will backfire, turning this recession into an inflationary depression.

Hard not to feel that the situation is bleak.