Monday, July 14, 2008

United States: Too Big to Fail?

We are a nation of inattentive spendthrifts, overseen by morons, liars and crooks, all driven by greed, envy and fear.

There is little doubt that today's action to salvage what little credibility is left of Fannie Mae and Freddie Mac, spelled out in some detail by Treasury Secretary Henry Paulson, are nothing more than parlor games designed to dupe the masses into the false belief that our nation's financial condition is not imperiled.

We're screwed, we're heavily in debt and our future prospects are about as bright as a high school dropout's chances of getting hired to an executive position.

Both Freddie and Fannie were fractionally lower on the day.

The simple formula is that both entities, which package and resell mortgages as bonds to investors, will now be able to borrow at the Federal Reserve's discount window at the low, low rate of 2.25%.

Isn't that lovely? Shouldn't we all simply spend at will, run up debts larger than we can repay and then allow the federal government (in other words, taxpayers) to bail us out? Is this the new path to the American dream?

Dow 11,055.19 -45.35; NASDAQ 2,212.87 -26.21; S&P 500 1,228.30 -11.19; NYSE Composite 8,287.76 -59.48

As for the markets themselves, investors were hardly amused. Stocks took their usual path to a lower close: higher at the open, then much lower, with the usual post-3:00 pm short-covering bounce back to break even, before ending down a bit.

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This sluggish behavior in the markets will persist until the manipulating brokerages and government interlopers feel they have squandered more than enough paper money than they can reasonably afford, and then stocks will really sink, like back to 1998 levels, or lower.

The plain truth is that, as a nation, we have gone from being the world's greatest creditor - replete with industrial, financial and military might - to being the world's largest debtor. Sadly, all we have left in the might department is the military, and we use that to bully and bludgeon lesser nations for their resources.

We are a deteriorating nation, and it is happening much faster than anyone ever assumed it would.

On the day, declining issues outpaced advancers by a wide margin, 4623-1769. There were 1053 new lows to just 77 new highs. Volume was on a scale of 4-1, favoring the down side.

Oil was up 12 cents to finish at $145.78, while the metals made a strong showing. Gold gained $13.10 to $973.70 and silver added 43 cents to $19.25. Both are approaching recent highs.

Buying stocks now, as it has been most of the last 12 months, is a fool's game. If you're not out of the market completely, the only place to be is on the short side.

NYSE Volume 1,419,180,000
NASDAQ Volume 2,037,816,000

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