Friday, January 9, 2009

Fundamental Commentary for 2008

By Joshua E. Stone

The Set-Up: Fannie Mae/ Freddie Mac. Let’s Start with this last year…it was in the first days of July and oil was spiking through the roof on the way to 150 trading at about 147 a barrel when President Bush saved the summer and lifted the offshore ban on domestic oil drilling. Congress was out to recess, and apparently not concerned with the fact most of us were going under water financially because of this oil crisis.
Skip forward to Lehman Brothers collapse, no one expected this, and it caused a total panic and lack of confidence in the entire financial system. We know the rest of the story: We are left holding the bag, with wiped out accounts from soaring gas prices and freefalling 401k`s. The Government starts the largest series of bailouts and takeovers ever seen. The Democrats win with a historic majority on the back of the first African American ever to run for and win the Presidency of the USA, a star struck media, and cleverly engineered economic crises from the smoke filled lobbies of Freddie Mac and Fannie May. Senator Barney Frank had been working with these crooks for years by this time. Senators Dodd and Obama happen to be the first and second largest recipients of money from the two lobbies over a period of time before 2008. However, all this historic momentum was not enough to keep the Republicans from holding on to the Filibuster in the Senate. The S&P was down over 40% for the year by the time it was over on December 31st 2008. It was the biggest decline in the S&P since the Great Depression.
The result of all this in the near term is the recession and trillions in spending. So much money will be flooding into the system by the first six months of this year; most analyst agree it will get the economy in recovery mode by the end of 2009 and 2010 will see housing start to recover. So it is clear that inflation will be a major concern again because of all this. That said all the indicators at the moment say the market is not worried about inflation right now. Neither is the Fed, as demonstrated by the language and actions coming from them.
The result for the long term is something most analysts agree is a lot more uncertain. Everything I understand goes along the lines of currency revaluation and re-pegging, or even new countries being created and others passing into history.

The Crisis: Debt. It is widely accepted wisdom that the US Dollar has depreciated 95% since it was taken off the gold standard. The 1960`s were the last time you could actually see a return on your money from going into debt. So where does that leave the economic “stimulus” politicians have promised? Have we already forgotten the children again? They will be faced with the same crisis, only unimaginably larger if that is even possible. And don’t point at China; they are saving us right now by actually having confidence in the US Government. That’s more than can be said for a lot of Her constituents.

The Patsy: De-regulation. This is rather simple. The war cry these days is that Reagan deregulation caused the economic crises. This is a bald face lie to promote corrupt political agendas. The problem has been the politicians do not properly oversee and enforce the existing regulation.

The Problem: Transparency. Conventional wisdom from economic experts is that the lack of transparency in the financial system has brought about a total lack of confidence from investors.
Until this problem is solved we will continue to see the crisis escalate over time, till it becomes too large even for the tax payer to fix. The incoming Administration has not addressed this to the satisfaction of many investors. In fact one of many ways they are carrying all this on is the way they have just lowered the credit requirements to buy a car…enter the sub-prime auto crisis. One of many Ponzi schemes we are yet to feel the pain from when they self destruct like the financial industry did in 2008.Not to mention the bonanza of Ponzi schemes: The Social Security System. It all adds up to what may be close to 100 Trillion dollars. The press is the main culprit behind this malaise and tolerance of ignorance and un-vetted fashionable trends. They are too powerful not to be held accountable for failing to completely report all the facts about these cons politicians are pulling on the voters and the tax payers` children. Meanwhile back at the ranch this year and next unemployment is expected to rise to possible double digits. My personal opinion is that unemployment could reach 12% before all is said and done, and stay high for some time; another “jobless” recovery?

The Agenda: Global Control. In a speech at Harvard last November, Harvard physicist John Holden, President-elect Obama's choice to be his science adviser as director of the White House Office of Science and Technology, presented a "top 10" list of warming solutions. Topping the list was "limiting population," as if man was a plague upon the earth.
Do I really need to make any comments on this? It seems quite self explanatory to me. I think the agenda is summed up at Stone Mountain Monument in Georgia USA.
I guess we all know shattering the economy is one of the key steps to controlling the people as well as helping to “limit population”.

The Solution: Re-regulation. I know it’s a dirty word in investment circles, but we all know more is coming now. To pile on more regulation is not the answer as the corrupt politicians tell us. The answer is to make regulation simpler and give it some teeth.

The Threat: Loss of Sovereignty. If something is not done to fix these fallacies, then the USA will really be owned by some banks, and not just on paper like it is now. Everyone will be paying off the debt to foreign governments for the rest of their lives. I think we know what this is called: slavery/colonialism. I am not talking about the slavery pampered people say they are in now because of a job working for the “man”. I mean real slavery, the kind you have no choice about whatsoever.

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