RHINEBECK, NY 9 October 2008 -- Once again, Washington has proven that anything it touches is doomed to failure. Unable to win wars, repair levees, fix voting machines or rebuild its Twin Towers, the colossal $700 billion bailout package passed last week by Congress proved to be an instant bust.
As we predicted in our 26 September 2008 Trend Alert® Put the Bailout on the Ballot -- "The bailout plan will only bail out CEOs and preferred stakeholders of failing financial firms while sinking the American people deeper in debt."
With not one major success to their credit and a long history of unmitigated disasters to pin their reputations on, the Wall Street rescue package did nothing to solve the credit crisis as those in Congress who rammed it through had promised.
"Without immediate action ... America could slip into financial panic and a distressing scenario would unfold," said President Bush, urging quick passage of the bill. In a fearsome tone reminiscent of the nation's rush to war with Iraq, Bush warned that quick passage was "essential to the financial security of every American."
"Think about it," said Barack Obama promoting its immediate passage. "If your neighbor's house is burning you're not going to spend a whole lot of time saying well that guy was always irresponsible ... his house could end up affecting your house. And that's the situation we're in right now," he said on the campaign trail while also taking time to arm-twist the congressional Black Caucus to support the bailout plan.
Weighing in with his brand of fear, the self-professed economically uneducated John McCain warned, "... the direct consequences of inaction will be far more damaging to the economic security of American families, and the fault will all be ours."
One after another, the leaders of both houses in both parties pushed for passage of the bailout bill that was pushed on them by the Treasury Czar and the Wall Street Gang. (See DC Heist: Wall Street Gang Hijacks Washington, Trend Alert®, 22 September 2008.)
"Supporting this legislation is the only way to make the best of a crisis and return our country to a path of economic stability, prosperity and growth," championed Democratic majority leader Harry Reid, who had admitted several days earlier that "no one knows what to do."
"This isn't about a bailout of Wall Street, it's a buy-in, so that we can turn our economy around," declared Democratic House leader Pelosi. Her Republican counterpart Boehner urged "every member whose conscience will allow them to support this," giving assurances, as did the others, that the $700 billion taxpayer-funded package would stop financial panic from spreading.
But even before the ink dried on the pork-infused bill that fattened greedy congressmen and lined financial insiders' pockets, the news of its passage sunk the Dow 157 points on the day.
When the overseas markets opened Monday, they reacted to the bailout by registering one of their worst market crashes in decades. And with each passing day, the economic news just kept getting worse, and with each passing day the Federal Reserve just kept throwing good money after bad.
Beyond the $1 trillion subprime problem that's been erroneously targeted as the prime culprit behind the credit crisis are more serious financial catastrophes that are barely reported, mostly overlooked and can't be remedied. The Fed can't print enough money to paper over the $531.2 trillion in derivatives and credit swaps, the trillions in the overbuilt commercial real estate market ready to collapse, the multi-trillions in leveraged buyouts going bust, and other "exotic" financial instruments that have turned toxic.
Trendpost: The Panic of '08 is "On." Yet, the instant the Dow crashed 678 points today, Bloomberg Radio brought on an expert who declared "most of the crash is behind us" and said the market plunge presented "a good buying opportunity." We see things differently. Yesterday's lowering of interest rates and the continual Fed action to flood the markets with money will lead to an era of hyper-inflation, the likes of which no living American has ever seen.
Gold prices shot up some $24 after being down over $20 earlier in the day. We continue to forecast gold $2000. And once again, we urge you to take precautionary measures in view of a worsening global market meltdown.
Founder/Director, The Trends Research Institute
Publisher, The Trends Journal
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