SubscribeEmperor Paulson: Bankmaster with absolute power
September 22, 2008 12:15 pm
Reckless, gluttonous, disgusting and shocking are only a few of the words that have been used this weekend to describe the amazing bailout of the financial sector. A “mere” $700 billion dollars is the latest figure being bantered about as the sum which will initially be used to liquify the sector. Unfortunately, it does not end there. Ponder this number again for a moment: $700,000,000,000.00.
Anyway you look at it, it is an enormous sum of money and the problem is that you and I will ultimately be responsible for the repayment. Of course this is on top of an already stretched deficit that will very soon balloon to at least $11.3 trillion if the bailout package is passed into law.
Read the rest of my article on MSN TopStocks HERE
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5 Responses to “Emperor Paulson: Bankmaster with absolute power”
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Problem is, there’s no way to _not_ play the game at this point, which sucks when the other side is making up rules as they go along. Jumping out of the market entirely just means you’re left with cash – which, at the moment, seems like just as bad as 100% gold is in terms of risk.
The question is whether we’re about to enter a deflationary or inflationary period, and to what extreme it’s going to go. For a good few weeks, the odds seemed to be deflation (and I think your buddy Mish still thinks so) due to the insane losses being taken by financials, but the US seems to be astonishingly determined to print their way out of this mess, which is clearly inflationary. My own personal theory is that the Fed and Treasury panicked about a deflationary episode (rightly so?), and promptly decided that the gloves were off with regards to currency devaluation. Typical Keynesians.
And, of course, as well-off Americans who have good incomes, reasonable savings, and little-to-no unsecured debt, we’re going to be getting shafted either way. Lovely. Let’s say I had 5-10k of non-emergency-fund cash savings that I’d like to keep intact – what would your suggestion be?
I think Andy Swan puts it accurately:
“Now, excuse me for being cynical, but I doubt that it’ll come out to $700 billion on the nose.
In fact, if it comes in at $704,456,254,465.00…. people will say “ya…700 billion, that’s right”
But, what if instead it comes in at $704,956,254,465.00?
You guessed it….people will still say “ya….700 billion, that’s right”….
But 5 slick guys will each be sitting on $100 million that you didn’t even notice was missing.
The problem with $700 billion is that $500 million is just a rounding error.
This goes to the heart of my many objections to looking at the Federal Government to solve people’s problems. The numbers are just too big, too tempting and too complex to yield any type of efficiencies.”
I say I am taking my ball and going home, but today I have 160 trade orders in my que. I am looking for someone to panic. An oddity is that even when I am bidding between the bid and ask using option spreads, there are no takers. This suggests to me, the professionals who have to trade (market makers) are being exceptionally cautious.
The market is not functioning properly due to World Wide Government sanctions against short selling. The government is NOT allowing the market to speak out against their solutions. I believe this to be more concerning than the suggested bailout itself.
jon
It is a modern day fina-drama that will cost us all dearly
A
“And, of course, as well-off Americans who have good incomes, reasonable savings, and little-to-no unsecured debt, we’re going to be getting shafted either way. Lovely. Let’s say I had 5-10k of non-emergency-fund cash savings that I’d like to keep intact – what would your suggestion be?”
nada
a
A,
The link to the MSN article is broken. Should be:
http://blogs.moneycentral.msn.com/topstocks/archive/2008/09/22/hank-paulson-savior-or-bully.aspx
Keep up the good work!
S