In an hour the NYStock Exchange will open, in the wake of a 5% drop in London, Frankfurt, Paris as the sudden vacuum of debt which floated like a mirage of wealth begins to suck in everything in sight.
Bailing out the Bailouts
You know you’re in trouble when you have to bail out the bailouts.
Europe did that twice very late Sunday night.
A week ago, Germany arranged for banks to put up 35 billion euros to bail out Hypo Real Estate. It took only days for them to discover more losses, and to walk away. The newest arrangement is up to 50 billion euros, and includes government money.
So the grand Ponzi scheme of the US economy, engine of the world’s economy, buyer of first and last resort, has run out of gas. The world clunks to a halt. Of course Ponzi schemes don’t work for their always limited duration unless there are people willing to believe that you can get something for nothing, or that you even deserve to get a lot for a lot less. America is full of such souls, which explains Vegas and many other things too. And clearly so is the banking world of Europe and elsewhere, which seeing the multi-leveraged profits of Wall Street thought to bank in on the same items and duly bought up their fair share of mystical money-making debt, when any stupid asshole could see it was all a con:
Where the hell does an economy the GDP of which is 70% consumption have its “wealth”? This is more a description of a cancer than a national economy, and yet our economists and politicians lived with it for decades, and the world went along, happy to feed us all while buying up our debt on the fanciful delusion that they’d get it back plus 20 or 30% interest, while they could see damned well the only thing America makes anymore is weapons, food, and Hollywood fantasies. Not exactly a balanced diet.
And sitting off in his cave, or maybe a nice Saudi hospital, bin Laden’s strategy came true quicker than he might have ever dreamed in his wildest states: the US has gone bellyup, bankrupt. In another few hours we’ll know if Wall Street tanks down 1000 or 2000 or “only” 800. Bet on it to zip down to 5000 or so in the next 6 months.
The elevator is going down…
And what is this likely to mean to you? If you had 401K retirement tucked away, well now you don’t. If you have a job, depending on what kind and where, likely in a while you won’t, especially if its in one of those vaunted “service” realms which the US economy had shifted to, jobs that serve those with, well, lots of money. But if not so many have lots of money, well they don’t need your services anymore.
Etc etc., gloom and doom. California needs a “loan” of 9 billion, NOW, to keep chugging along. Another state, I forget which, likewise needs one. So as Uncle Sam’s printing department cranks out all this unbacked new money, the bucks in your hands will shrink, curiously at the same time the price of everything goes up and up.
If Obama wins, they’re going to hand him a very empty bag. On purpose?
10 am in NYC – DOW down 300+ points and going south….
A few minutes later – 325
And then a few later – 340+
It’s my bed time but my guess is morning will see something close to -1000 for the day. Under 10,000 for sure. Shuffle those papers.