Random Thoughts About Current Events

From the RampartsJunious Ricardo StantonRandom Thoughts About Current Events“Think about the long-term implications of the statement above, which references a doubling of the already off the charts U.S. debt burden and a mention of America possibly losing our AAA credit rating. While yesterday’s government intervention into the Fannie and Freddie (GSEs) situation may be good for traders and short-term market conditions, it is most definitely bad news for the long-term outlook for the United States and U.S. investors.” A Sad Day for U.S. Taxpayers and Investors by Chris Ciovacco, Ciovacco Capital Management, LLC. | July 14, 2008The corporate media is touting the latest intervention to stave off the imminent collapse of mortgage finance giants Freddie Mac and Fannie Mae. The financial elites worked feverishly over the weekend to prevent a major panic from occurring before global markets opened Monday morning. If it weren’t so potentially disastrous it would be funny listening to all the lies the government, Wall Street and the media tell us about the state of the economy. Remember when Bu$h was telling folks how robust the economy was, meanwhile he was so disconnected from reality, he didn’t know the economy had slowed, home prices were tumbling and gas was at $4 a gallon? Bu$h is so pathetically out of it, no one even pays him any attention or quotes him except the media shills who get paid to do so and the comedians who make their living making fun of him. But now Bu$h is so pathetic, poking fun of him is like picking on the retarded kid in gym class.By now most people should realize the situation isn’t funny and economic conditions aren’t going to get any better any time soon. The latest machinations of the Fed and US government are designed to forestall the inevitable, a systemic economic implosion. The US Treasury and Fed stepped in to lend money and extend a line of credit to Freddie Mac and Fannie Mae. But because the corporate media is merely a propaganda machine doing the bidding of the power elites, the masses are duped, befuddled and bamboozled. The media’s goal is to treat us like mushrooms, keep us in the dark and feed us manure. It’s working because most people have no clue just how precarious the economic situation really is. Have you ever noticed no one asks the 64 thousand dollar question, how can the US government lend anyone, anything (including give us “economic stimulus checks” if they have to borrow two billion dollars each and every day just to keep the lights on? No one on CNBC , the money channels or at the Wall Street Journal dares ask what the implications of the Fed lending Fannie Mae and Freddie Mac money will have on the money supply and the overall health (or lack thereof) of the US dollar? Why, because they are in cahoots with the ruling oligarchy.Keep in mind, The Federal Reserve Bank unlike commercial and investment banks creates money out of thin air. The money the Fed creates to lend to Freddie Mac and Fannie Mae is devaluing the money already in circulation. That means the costs of everything is going to increase even further. The fact is, to save Fannie Mae and Freddie Mac we have to suffer additional inflation. Don’t believe the hype, this is not the ultimate solution. This intervention is a stop gap measure meant to buy additional time and stave of a global panic. Keep in mind Fannie Mae and Freddie mac sell repackaged mortgages to overseas investors. These mortgages are worthless due to rising defaults and declining home values. So of course they have to do something; otherwise the whole economy would implode causing a global depression. “Those two unpalatable options—failure or rescue—led the Treasury on Sunday July 13th to announce several stopgap measures aimed at restoring confidence in the two institutions, although it fell short of fundamentally reshaping them. The measures may buy a bit of time, but they are unlikely to put to rest highly sensitive questions about the future of Fannie and Freddie, leaving a large cloud looming over global financial markets... Mr Paulson’s announcement, made overnight on the steps of the Treasury just before Asian financial markets opened, gave some support to the dollar, which had wobbled last week as the share prices of Fannie and Freddie halved. As Mr Paulson made clear, part of the problem with the two institutions is that their debt is held by investors around the world. That includes many central banks. The fear is that a sudden collapse of either institution might pose a threat to the dollar and the global economy.” The muddle-through approach Jul 14th 2008 From Economist.comThe US dollar is in trouble because the Fed opted to act to save the Wall Street banks that own it (The Federal Reserve is a consortium of privately owned banks that Congress gave permission to set us monetary, credit and interests policies). By keeping interest rates low coupled with the excesses, greed and fraud engendered by the deregulation of the banking industry the Fed is continuing the very actions that help cause the crisis in the first place.This intervention is only a short term solution. All this will do is put off for a little while longer the collapse of one or both of these entities. A serious day of reckoning is coming. The government’s actions will: “saddle taxpayers with even more debt, increase indebtedness and pose a threat to America’s AAA credit rating which will mean higher rates in the long run and lower prices for current holders of U.S. Treasury bonds, higher rates are bad for anyone with a mortgage, credit card debt, a home equity loan, a margin account, etc. higher rates also increase the government’s debt burden via higher interest payments on outstanding debt. This is bad news for the U.S. dollar for all the reasons above.This is bad news for oil prices since a weaker dollar helps drive up all commodity prices.” A Sad Day for U.S. Taxpayers and Investors by Chris Ciovacco, Ciovacco Capital Management, LLC. July 14, 2008 www.financialsense.com/fsu/editorials/ciovacco/2008/0714Nor will the proposed Congressional action really solve the problem. All it will do is ensure the “bail out” burden is placed on the already bent backed taxpayers, the ones most vulnerable to a major economic downturn, the working poor and the middle class while the super rich oligarches who caused the problems get off Scott free. Don’t say you weren’t warned.-30-
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