Just My Rant

Unless you have been living under a rock the last week you have seen the ’shocker’ deal that was cooked up over the weekend to GIVE Bear Sterns to JP Morgan for a song. Just to add insult to injury the damned FED helped JP steal this company right out from under the stockholders noses. I’m sorry but when a company gets sold ‘over the weekend’ in a closed door secret meeting you just have to ask what the HELL is going on! Has the Bernanke and the FED thrown all caution out the window and announced they have joined the corporate raiders using OUR money? I’m sorry but if this isn’t a WTF moment I don’t know what is.

So this sweetheart deal gets hammered out without so much as an afterthought about the stockholders and the employees (all of their bonuses were paid in stock options by the way) for a measly $2 a share. The damn stock closed Friday afternoon at $30 a share and somehow over the weekend it is worth less than 10% of that … give me a freaking break, this deal is rotten to the core and anyone with half a brain knows it! Hell the Sterns buildng in NYC is worth $8 a share so how in gods name can ANYONE sit with a straight face and value it at $2. I bet the cigars and champagne were flowing along with the back slaps that night, the old boy club had just screwed the world again!

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If I see one more idiot reporter on TV saying OPEC needs to pump more oil to bring the prices down I think I am going to smash the TV! These so-called financial reporters haven’t clue one what is driving the price of gas but it’s about damn time they learned! The one and ONLY reason oil is skyrocketing is the dollar dropping like a lead weight from 30,000 feet! You don’t hear anything about prices for gas skyrocketing in Europe do you? Nope and the reason is THEIR government isn’t trashing their currency.

So you can stop bitching about OPEC and the oil companies because THEY have no control over it (well the oil companies have some control). The fault lies squarely at the feet of the US government and the FED. If they hadn’t had their heads up their asses for all these years, ignoring the writing on the wall that the US economy was about to fall off a cliff, we might not be here right now! But handling this problem falls into a long line of ineptitude shown by this administration. So why they ‘whistled’ the fires began in the economy. Hell even when the first major problems showed up last fall they still claimed “the economy is strong” … all the while knowing damn well things were getting ugly (and I can’t believe for one second they didn’t have a clue).

Because they ignored the whole economic mess for so long the FED has now had to assault the US Dollar by drastic cuts in the lending rates. Do some research and find out how far the dollar has dropped over the last 6 months, then compare that to the amount oil has gone up! Once you are done figuring it out you will soon know exactly whom to blame and how to fix the mess. But the economy is “weak” and needs stimulus right? Bullshit! The only thing “weak” in the economy is the amount of bull found on financial organizations ledgers. The FED is trying to bail out their billion dollar buddies on Wall street, all at the expense of YOUR purchasing power. Every time you see a news report about the FED rate dropping just remember YOU are paying for it every day when items become more expensive to buy!

So the next time someone tells you they need to pump more oil explain the facts to them!

So the markets across the world started seeing exactly how screwed the US is over “our” weekend and holiday and they went into a tailspin. Who the hell could blame them, when you strip off all the bullshit away from the US economy it’s a feeble old man with no clothes! The Nikkei on Monday was down over 750 points sparking the “oh my god” attitude to the rest of the world. I actually saw pictures of Indians (the SE Asia types) praying to a big screen hoping the numbers would reverse! Sorry my Indian friends, your god can’t help you here; this is a job for Super FED!

The stories go Ben and company spent the whole night in meetings deciding what to do about this mess but do us both a favor and don’t believe that crap! I told my wife at 8pm Monday night Ben and company would do at least a 50 basis point cut before the market opened with the top at 100 basis points and I slept damn well JUST LIKE Ben and his cronies did! It took them about 30 seconds worth of phone calls to decide on that .75 point cut that “saved the world” and then they too all went to bed! So “Super Ben” saved the day …. or did he? Personally I think he screwed us (the US) SO BAD he may have actually put the final nail in the coffin. Mr. Bernanke followed the Allan Greenspan play book by the letter and once again gave up the US dollar and OUR well being to save his rich ass buddies on Wall Street but who cares, he saved Wall Street didn’t he?

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Something happened Friday that could have some extremely ugly repercussions over the coming weeks and it is one of the scariest things I have seen yet in this ugly, ugly mess of an economy. The news that really bothered me was that AMBAC’s rating was dropped two levels from AAA to AA. Now I knew it was probably going to happen and Jim Cramer from Mad Money has been screaming about them possibly breaking the law for some time, as a matter of fact he scared the hell out of the people at CNBC’s Squawk Box the other day when he went on a scathing rant about AMBAC and MBIA … you can see it here. Now I’m no expert on the bond market, far from it, but I know enough to know this is a touchy area of the economy that really needs to stay healthy! What bothers me and so many others that know what is going on with this mess of an economy is what this downgrade could mean to the economy and so many so-called rock solid bonds that have been safe and sound for so many years.

You see AMBAC is an agency that insures bonds. Between them and their competition, MBIA, they insure a combined $700 billion (yes that’s with a B) in bonds. Because of this rating cut AMBAC will not be allowed to back any new bonds, as a matter of fact the bonds they now insure could come into question and that is ten times more dangerous to the financial market than the subprime mess itself! If in fact these bonds were downgraded the loss to financial institutions could very well be devastating. Donald Light, a senior analyst at Celent has said “The concern is that downgrades will lead to a reduction in the value of portfolios at dozens of financial institutions” and then went on to say “Bond insurers are the lynch pin holding together valuations of portfolios of all kinds of financial institutions”.

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I’ve been warning about the coming economic problems in the US for a few months now, maybe not as much as I should have but then again I’ve been trying to protect my own family against the coming shit storm so maybe I’ve been a little lax in my warnings. You can’t blame me for taking more time than normal to try and save my friends and family though!

So here we are, I’ve been saying for close to 4 months that the federal government would hold off as much bad news as possible until after the Christmas shopping season and by god I was right! The reason they had to hold off all the bad news is that the US economy has been “stroking along” for the past several years based on the retail consumption of US citizens! The latest information shows that 70% of the US economy is based on shopping, not manufacturing, not exports, not anything that would show a healthy economic sensibility! It’s ALL been based on you and I whipping out the old credit card and saying charge it!

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