Finding a Solution

Yesterday I spent part of the day watching a video on a conspiracy theory. First, I am not big on conspiracy theories. My belief in people is maybe far to tolerate. There was a time when I was more skeptical, but over the years it seems I have mellowed and view most as wild fantasy.
In light of the current crisis, I am being more open to the possibility that all is not on the up and up. I read a Blog this morning by someone advocating revolution. Yes, I know my Blogs have mentioned extremist groups in my backyard, but to my knowledge they have not put message on the street.
An item which has been swept under the rug by the recent financial crisis is immigration. The last time I saw anything on it Citizens of the U.S. were against the proposed policies by more than 2-1. Immigration was to become a focus in the ’08 election, then was pushed out of the limelight by a financial meltdown. Do you find that odd?
Both candidates are for liberalizing immigration policy and granting amnesty to illegals. As citizens we had no viable solution before us. And now it’s been pushed aside. That worries me.
In case you missed last night’s market open in Asia, and the conversations regarding the status of the U.S., it was not good. An executive of the Bank of China said the U.S. with the bailout will have committed $1.8 trillion, which will not be enough. Several guests on Bloomberg News and CNBC Asia said the bailout will do little to solve the problem.
Today, the Federal Reserve just pumped money into the global system in an effort to loosen up money. One person yesterday, said that over $4 trillion has gone out of the capital markets. Do you see $700 billion making a dent? Nor do I?
This morning an analyst said the next bubble is Prime and Jumbo Prime mortgage packages which are highly over valued. With the decline of real estate in some markets as much as 50%, some those loans are now going into default. The value of those loans are being carried on bank books at 100% when in some cases they are worth 70% less.
Last night’s bad news was capped by a Moody’s executive stating the next problem will be CDS’s (Credit Default Swaps). Remember that is what brought down AIG. While AIG may be under the U.S. umbrella, there are trillions of dollars in CDS’s spread across the world. Remember too, these are tied to U.S. mortages, but CDS’s affect the world.
Today CDS holders are being charged as much as 35% to sustain coverage of the risk. Not sure many can find an additional 10% since Friday to continue the CDS coverage. My opinion was a bailout was to aid in the CDS market. Apparently not, they are just trying to cover the sub-prime, non-creditworthy market.
A complete meltdown is a possibility. A recession is all but on us and it will be an L-bottom rather than the typical V-bottom. This means things bottom and continue to languish for a period before a long slow ascent back to health. Printing more money is not the solution. Easing credit drives down the value of the dollar, which in turn, drives up inflation resulting in higher prices for everything in our lives.
Before you call the funeral home, take some stock in what I have said. Get liquid, stock up on cash, food, water, and reduce overhead as much as possible. Make friends with people who live in areas where self sufficiency is a way of life. And it might not hurt to offer up a prayer for some good leadership to do the right thing.
When things get at their worst out country has always rallied. The core values which built this country are alive in areas such as mine and Sarah Palin’s. There are those who understand the core values of hard word and responsibility. In time of crisis we must look to them for leadership, not rescue.