Buckle up, Baby. We're goin' for a ride!

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  1. Polimom,
    Yes, the proposed tax on Freddie & Fannie transactions is a remarkable piece of stupidity from an organization, i.e. Congress, that has shown itself capable of doing extraordinarily stupid things every time it’s in session. The mere possibility of the tax is one of the things that is undermining confidence in Freddie & Fannie.
    As for that publicity seeking gasbag Charlie Schumer, of course it made no difference that a sitting US senator publicly questioned IndyMac’s solvency. Who could possibly think that might contribute to a run on the bank? I can hardly wait for one of California’s senators to publicly question the solvency of say, CitiBank. Schumer should welcome it. After all, there’s nothing like being second guessed by a showboating senator to keep the regulators sharp, right? And since Schumer’s grandstanding had nothing to do with the run on IndyMac, when one of California’s senators returns the favor, it will also have no impact on events.
    Sigh . . . . .

  2. This is indeed a dire situation and the real threat at this point is of course, the “value”, (if there is any) in the dollar. I watched with some degree of surprise as the Euro closed friday at $1.59; the next psychological breakpoint is $1.60. After that, the sky, (or the pit) is the limit. As the Guardian article you referenced noted, the U.S. reputation as a safe haven for capital has been sharply undermined and as that occurs the value of the dollar plummets. Worse, as we pay ever more for oil, we transfer billions a day of U.S. dollars out of the country to foriegn governments who have literally no where to go with the ever increasingly worthless dollars. They hedge by buying oil futures, thus of course, exacerbating the situation. They will probably, if they haven’t already, begin to use those dollars to buy European debt instruments, and I noted last week that German Bonds are now more highly rated than American Treasuries. We may well be approaching the point where the average American household would be well advised to take whatever “emergency” fund they may have in reserve and go to their bank and buy Euro’s with it. The problem with that of course is where are you going to invest them; it seems a bit impractical to stuff them under the mattress. BUT, they may appreciate in value faster than any interest rate you can get on a CD at this point in time and if the Dollar falls completely out of bed, you may need that cash to buy back, say $100.00 to buy a loaf of bread.
    Another consideration is to do what I’ve been doing since last year; you can buy into FXE, an exchange traded fund that invests in the Euro and pays interest to boot. Another interesting move you can make is to invest in mutual funds such as American Capital World Bond Fund, CWBFX. I think there’s a comparable Templeton fund as well.
    I guess my message here is that the gross incompetence, ne, impotence of the U.S. gov’t to deal with these problems has become self evident to the world business and financial community while average Americans seem, (as usual) oblivious to what’s going on around them. You don’t have to let yourself become a victim to be crushed by this collapse; there are financial vehicles available for you to use to “globalize” your finances. Follow the money honey!

  3. Buckle up is right, Poli. Who would’ve guessed that we’d hit an oil crunch? Maybe historians will treat Jimmy Carter better than I thought. The sweater and 20% mortgage rates aside, he was right about our energy needs vis-a-vis supply. The Saudis fooled us into complacency in the 80s. We quickly retreated to SUV heaven.
    It’s not gross incompetence that has paralyzed us. It’s an unwillingness to seriously deal with limits: excessive public and private debt, top heavy social security and medicare programs, excessive post-Cold War defense spending, cheap oil dependency. We’re not about making hard choices- Dem or Rep. (That was the great thing about supply side economics- don’t worry about paying for anything, we’ll grow are way out of it.)
    Complacency and inertia are powerful forces indeed.

  4. Who would’ve guessed that we’d hit an oil crunch?


    Complacency and inertia are powerful forces indeed.

    Very very true. Unfortunately, I don’t know that complacency goes quite far enough in describing the dynamic. The American people (and I include myself and my own household) have grown lazy and spoiled, in some ways. We want “it” fixed — rightnowrightnowrightnow!!! — so we can continue the status quo.
    I’m not sure the general population has wrapped its mind all the way around the inevitable, permanent changes that are coming.

  5. It’s so true- we’re wholly unprepared for the economic realities of the next few decades. And Barack was wrong. We aren’t clinging to guns and Bibles. We’re clinging to cheap gas, SUVs, family vacations, and suburban houses 2+ hrs from work. It’s the American Way, baby. Fasten seatbelts captures it, Poli. We’re headed into no-man’s land.

  6. The “Silver Bullet” mentality that we all harbor is what chaps me about Green energy alternatives. Hell yeah, I want a car that runs on solar power. But inventing such a creature may be a tad more difficult. We’ve become so accustomed to deus ex machina through technology that it’s hard to imagine that carbon-based vehicles may be the only realistic technology for a long, long time.

  7. All the arguments on the energy problem devolve eventually into what you’re describing as the Silver Bullet, it seems. What people are NOT doing, unfortunately, is thinking far enough outside of the box.

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