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A Fictional Scenario of the Future: The Final Bailout


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#1 Steve Netwriter

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Posted 17 November 2008 - 11:33 PM

First, a repeat of a post from here:
http://www.greenener.......ost&p=68532

Open Letter to
Dominique Strauss-Kahn, Managing Director of The International Monetary Fund (IMF) :

Unavoidable Financial Collapses and Backfiring Government Actions
Martin D. Weiss, Ph.D., Chairman, Sound Dollar Committee
Oct 13, 2008



http://www.marketora...rticle6772.html

QUOTE
I am president of Weiss Research, Inc., an independent research corporation, and Chairman of the Sound Dollar Committee, a nonprofit, nonpartisan organization founded by my father in 1959.

The Sound Dollar Committee was instrumental in helping President Dwight D. Eisenhower achieve one of the only truly balanced budgets of the past half century. And in keeping with that tradition, we continue to promote fiscal responsibility, sound business practices, and prudent investing.


QUOTE
1. Government interventions are backfiring.
Since the credit crisis burst onto the global scene approximately 14 months ago, each new government countermeasure seems to have backfired.

2. Government actions are too little, too late to stem the debt crisis.
we detail why the U.S. debt crisis alone was far larger than previously believed.

3. Government actions are too much, too soon for the debt markets.
In its Fiscal Year 2009 Mid-Session Review, Budget of the U.S. Government, the Office of Management and Budget (OMB) projected the 2009 U.S. federal deficit will rise to $482 billion....
Since then, the expenditures and liabilities announced or proposed by the U.S. government have easily exceeded $1 trillion.

4. Government bailouts could endanger government credit and credibility.
The credit market contagion has spread in phases: ....
Governments could be the next victims.

5. Government actions could aggravate, or even cause, the systemic meltdown they are seeking to prevent.
Instead of a harsh, but ultimately manageable, collapse of the weakest institutions, they could be leading us toward the systemic meltdown you warned about this weekend.

6. Governments are squandering scarce capital that will be needed for a true recovery after any collapse.
I have four recommendations, as follows:

First, cut back the bailout and rescue efforts.

Second, protect the credit and credibility of sovereign government debts.

Third, preserve public resources for (a) emergency assistance to those that are rendered ill or destitute during a secular economic decline, and (cool.gif carefully planned economic stimulus after a secular decline.

Fourth, foster an environment of public trust by guiding consumers to research that can help them better distinguish between low- and high-risk banks, insurance companies, and other financial institutions.

I know it will be very difficult. I realize millions of people must make great sacrifices. But with the right guidance and leadership, I am sure we'll be ready to step up to the challenge.

Sincerely,

Martin D. Weiss, Ph.D.

Fiat: What starts becoming worth less eventually becomes worthless.

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#2 Steve Netwriter

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Posted 17 November 2008 - 11:36 PM

Thanks to DrewinVegas for alerting me to this.


A Fictional Scenario of the Future: The Final Bailout
by Martin D. Weiss, Ph.D. 11-17-08
http://www.moneyandm...l-bailout-28046

QUOTE
We have come to a major crossroads in the history of our nation, a time when you must understand all the relevant events in far greater depth, and see the likely future with far greater clarity.

Indeed, I feel this need is so critical and urgent, I am providing you this morning with the most elaborate gala issue in the history of Money and Markets.

Letís begin by assuming that, despite all the government bailouts, many of Americaís largest corporations still go bankrupt, U.S. unemployment continues to surge, and a new, larger wave of home foreclosures sweeps the nation.

How will our leaders respond?

I have no pretense of knowing the answers. Nor can anyone forecast what individuals in power will decide under the stress of pending doom. But following up on a similar fictional scenario that I drew for you many months ago, hereís what I see ahead Ö



QUOTE
Fed Chairman: Yes. About the tsunami; about the once-in-a-century crisis we were facing. Well, let me tell you what Iím hearing now ó from some of my staff and from other hushed voices. What Iím hearing is that, with the events that have unfolded since then, this is not a 100-year storm for the American economy; itís a millennial rite of passage for all mankind.

Treasury Secretary: Millennial?

Fed Chairman: I didnít say I agree with that. I merely said thatís whatís being said.

Treasury Secretary: I accept the 100-year storm concept. But letís not get carried away by the public mood of gloom. Yes, I know debt liquidation and price deflation continue to be at the heart of our economic challenges and remain our most significant downside risk. I know real estate prices are down as much as 50% in some sectors and stock market barometers are down nearly 70% from their former peaks. And I know all about the tsunami of home foreclosures.

But letís also give people hope, damn it! Letís not do like some people ó I wonít mention names ó who talk about the housing market as a ďbottomless pitĒ Ö or the automotive industry as a ďblack holeĒ Ö or Wall Street like ďground zero of a neutron bomb.Ē Letís not talk about a run on bank deposits or insurance policy loans. And for Godís sake, letís not name names of banks on the verge of insolvency!


Fed Chairman: None of those statements were mine. But from everything I can see, they may not be that far from the truth.


laugh.gif laugh.gif laugh.gif

Fiat: What starts becoming worth less eventually becomes worthless.

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#3 Steve Netwriter

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Posted 18 November 2008 - 12:28 AM

I've just read that through in detail. There are some manically funny bits. It ends very seriously, and IMO reflects very well the real issues.
I strongly suggest you read it in full.

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