Last night I woke up from a dream where I was paying $10 a gallon for gasoline. I remember vividly watching the total on the gas pump reach $180 before it clicked off indicating that my gas tank was now full. I walked inside the gas station and added a pack of gum to my bill for $9 and also picked up a 20 oz. bottle of water for an additional $7. My grand total for the gas stop $196. Without a wince at the price I pulled out of my wallet a single $500 green American bill with Ronald Reagans face on the front. As I collected my change my eyes focused on the calender on the wall behind the cashier. The date was August 5th 2010.

I’m not worried about Iraq, I’m not worried about Obama becoming president, I’m worried about the dollar. What’s America going to look like when theres an additional $700 billion pumped into our financial system?

Inflation is the silent killer of a currency’s value and history shows that the common people are unaware of inflations dangers until it is to late.

I wonder if the American people will turn on the white house once they realize that the largest bailout of all time is not large enough and that the only thing it accomplished was filling our pockets and bank accounts with worthless dollars.

“It will cost more to solve this problem today than it did two weeks ago,” said Buffett, referring to when Treasury Secretary Henry Paulson’s first proposed that Congress help rescue Wall Street after Lehman Brothers went bankrupt, Merrill Lynch was sold to Bank of America, and American International Group had to be rescued.

“If we don’t get it solved next week,” added Buffett, “I may go back to delivering papers.”

Buffett: $700 billion price tag may be to low.

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– Justin of Vizionkc

While it does seem unlikely I still think that a small rally will take place tomorrow Tuesday September 30th. I don’t think it will last all day I just don’t think that everything is going to fall apart by tomorrow evening. As I wrote a few days ago I’m still not confident at this point that the market is going to make it to the election. Many people online agree and it seems that news sources outside the US see an economic collapse as imminent. Even if the bailout would have passed I doubt it would have done anything to change the course of events we currently find ourselves upon.

If the stock market does crash I imagine that the ATM’s would be turned off immediately. Stores and gas station would be packed with panicked shoppers trying to get supplies. Food, water, and gasoline would quickly become short on supply. Surely the government is aware of the difficulties facing us and according to a few articles I’ve found online some troops are being brought back to the US to prepare for civil unrest.

Might be a good idea to keep a few hundred dollars in small bills in your house. Maybe grab some cases of water. Things are happening quickly and I’m afraid the majority of people will once again be taken by surprise.

Article on Bailout Rejection and Dow Jones Point Drop.

Article on Troops Preparing for Civil Unrest in the United States.

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– Justin of Vizionkc

Smooth Buffet….Very Smooth.  I’m willing to bet that Warren Buffet knows something about Goldman Sachs that we don’t.  My guess is that Goldman will be considered to large to fail.  Pretty smart investment if you know that the government is going to bail these guys out.  I mean for crying out loud Henry Paulson used to be at Goldman.  He’s not going to let his ex-company fail.  Smooth Buffet….Very Smooth.

“Under the agreement, Goldman will sell $5 billion of preferred stock to Buffett’s company, Berkshire Hathaway, (BRKB) giving it 10% of total shareholders’ equity. Separately, Goldman expects to raise at least $2.5 billion by selling stock in a public offering.”

You Can Read The Whole Article Here.

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– Justin of Vizionkc

As was predicted the government has once again decided to throw money at a festering soar in our economy. Between this and the ban on short selling this is really starting to sound an awful lot like socialism. The glaring problem with this plan is that the government is anticipating making money off of these toxic loans they plan on purchasing. Wrong! If these loans were income producing the banks would keep them for themselves. The only reason they have to sell these loans to the government is because they are so toxic that nobody else wants them. These loans that the government is buying with our money will never be paid back. The assets these loans are attached to cannot even be sold on the market for the value of the debt.

The government is effectively rewarding these companies for being fiscally irresponsible and setting them up to do it again. In other words they are giving these companies cash and the companies are giving the government the same loans that caused them to need a bail out. How does thats solve anything?

This bill will be passed. When it does we will own the toxic loans which caused this problem. Are we really this stupid? No. Well maybe yes. If you consider heroin addicts stupid. Because thats what we are. We are credit addicts. We need that credit. We crave that credit. These bail outs are effectively us shooting up. Eventually this will end. We will have to go through with drawl. And it will be the worse kind of with drawl. Forced.

“The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained Saturday by The Associated Press.”

You Can Read The Whole Article Here.

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– Justin of Vizionkc

I imagine that the transition to socialism is slow and unrecognizable. I imagine that the transition while unexpected is often misunderstood by those supporting the change. Just to make things clear here is Websters Definition of Socialism.

And in case you lost track of the bailouts heres a running list.

1. Bern Sterns

2. Fannie Mae

3. Freddie Mac

4. AIG

Who do I think is next?

1. Auto Industry?

2. Boeing?

3. Goldman Sachs?

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– Justin of Vizionkc

Well to be honest I did not see this coming. Its getting scary out there. I still think that the market will hold until after the election but after the election is done with and Obama is in office. The Market will Crash. I mean Crash. Not sure how to explain that better. Take this quote for instance from Don on Active Rain.

“People are now comparing current events to the last depression so what does the 1929 stock market chart say will happen now. The 1929 chart says that the stock market will NOW crash…We have just read that there is great concern Goldman Sachs may go under caused by a proliferation of failing banks. Henery Paulson, the current Secretary Of The Treasury came from Goldman Sachs.”

On the plus side if you have the money I would recommend buying up rental property. Maybe even apartment complexes. People will not be able to get financed to buy a house soon. Maybe some people in the higher up markets 200k+ but I’m not even sure about them. Vacancies are going to fall through the floor. Its going to get tough to find a place to rent . If you own those properties you will be making steady cash flow each month. That will be a major plus since unemployment will go through the ceiling.

“The Federal Reserve said Tuesday night it would lend up to $85 billion to flailing insurance giant American International Group, saying the move was necessary to protect the financial system.”

You Can Read the whole article here.

You Can Read Don’s blog here.

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– Justin of Vizionkc

A quote from this awesome article about our financial system.

” The best analogy I can give is a person (the system) having a massive heart attack, a heart attack resulting from years of abuse of the victim’s own body. He is rushed to the hospital where the doctors (the Fed) work feverishly to save his life. They are successful and the patient lives. The doctors then sit the patient down and explain that while they saved his life, without major lifestyle changes the patient will have another heart attack and die. He must immediately stop smoking, eliminate fatty foods and exercise daily. The patient refuses.”

Read the whole article here

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– Justin of Vizionkc