Got To Have Confidence!

Confidence?

It's just past the Ides of October and some would refer to the economic climate as a bit of uneasiness. You need to have confidence someone said. Everyone is waiting for the move up. But wait a minute! If EVERYONE is waiting for the move then who will do the buying? Even precious metals aren't attracting attention- Why? Because no one knows where those prices are going either, and you can't pay the bills with bullion especially if the price has hit the skids due to lower inflation.

Fixed income is in a funk and money market rates are heading lower as well. The fed is thinking about lowering rates even more but the moneylenders in the temple are afraid to let the money out no matter what the rates! Paulson says we can't make them loan money out. The rest of the world will be reluctant to buy greenbacks if they will be devalued due to lowering interest rates.

The Germans are reluctant to participate in the financial banking bailout debacle as it will cost them since they have had the foresight to control the economics better than anywhere except China. The Chinese aren't worried about a little slowdown as they know full well that at the end of the day they will be in the catbird seat. Since the Chinese have been paying exorbitant rates for all commodities like oil, iron ore, tin, copper, aluminum and coal the dramatic drop in commodities is great news to our Eastern brethren. Also since the Chinese hold almost all of the US Treasury debt a tightening up of the US$ means that their holdings of US bonds are worth a lot more. To bad we can't find a way to put the blame them for something!

The leveraging out of US dollars was not in the best interest of a lot of folks, except of course the really FAT CATS at Countrywide, Washington Mutual, Lehman Brothers, Merrill Lynch, AIG, and whoever else has their hand out at our expense. The caving in of home values across the country and endless foreclosures have made the vast majority of those that received sub-prime mortgages the real unfortunates.

Buffett warned years ago about this developing charade as did Bill Gross of Pimco. Kevin Phillips virtually predicted the debacle in his two great books AMERICAN THEOCRACY and BAD MONEY. Too bad we didn't listen to them when we had the chance. I wonder who's going to pay the tax bill for all of the federal largess? I mean, $700 billion is a lot of money to some people.