The financial bailout has been disapproved just recently, contrary to what the article which I have included will say. When a better one finally does get approved (assuming any bailout will be approved), it’s best to check out this article for the events which may occur.
ANALYSIS and PREDICTIONS*:
* See financial disclaimer at the end of this article…
1. The financial bailout will be approved
Lawmakers are privately being warned that if they do not pass this bill, the entire global financial system will collapse. Publicly, they only say we “might have a recession,” but behind closed doors, they realize the whole system is at stake. That’s why a bailout bill will ultimately be approved.
2. Temporary euphoria will spike the stock market.
You’ll likely see this on Monday: A declaration that “the problem has been solved!” and a huge spike in stock prices. For a day or two, everyone will talk about how great it is that we’ve all been saved, and what wonderful leadership we have in Washington, and look how the stock market is proving them right!
This is all, of course, a smokescreen. It will, however, be a great opportunity to buy the dips in gold stocks, gold mining stocks and other equities that run counter to stock market euphoria.
3. Foreign central banks will reassess their purchasing of U.S. debt.
With the U.S. taking on another $1 trillion in debt, foreign central banks will realize the game’s over, and the U.S. is never going to be able to pay back its IOUs. As a result, many foreign banks will either stop buying U.S. debt, or even start trying to sell off the U.S. debt they already carry.
The result of this is increased costs of borrowing for the U.S. There is a small chance that there could be a panicked sell-off of U.S. debt, but I put this chance at only 10% or so. However, this is an important article worth considering on this point: http://www.bloomberg.com/apps/news?pid=…
Regardless of what foreign banks do, it will suddenly become MORE expensive for the U.S. to borrow money. Imagine the country paying credit card interest rates just to borrow money that it’s using to pay the INTEREST on the debt it already owes to other countries!
4. Following the false euphoria, investors will sober up as they learn about the actions of central banks, and the stock market will begin to teeter, then head downward. Yet more banks will fail (Wachovia now looks dangerously close…).
Yet more money will be created out of thin air to bail them out, and every time another bank is bialed out using new (created) money, foreign central banks get closer and closer to pulling the trigger on a fire sale of U.S. debt.
5. The Christmas shopping season will be sharply down
With consumers increasingly concerned about their finances (and many losing their jobs), the upcoming Christmas shopping season will be quite bad. Expect to see massive discounting across most retailers. Newspapers will report how terrible the Christmas season is, and even retailers like Wal-Mart will report seasonal sales dropping compared to 2007.
6. A wave of bankruptcies will sweep through retailers
Following the poor Christmas performance, a wave of bankruptcies will sweep through mass-market retailers.
This wave of retailer bankruptcies will spell yet more financial chaos for the banks already walking on thin ice. Expect to see yet more financial institution failures announced in January, 2009.
Why? Because as retailers fail, their landlords will be left holding devalued commercial real estate! It’s like the housing bubble, but now in the commercial markets, all over again. And guess who holds the mortgages on all the commercial retail space? Banks, of course. The same banks that are already leveraged beyond all reason.
7. The Fed cranks up the printing presses
All this time, between now and January, 2009, the cost for the U.S. federal government to borrow money will steadily rise. As the cost to borrow money becomes too much to bear, the U.S. government (in conspiracy with the Fed) will fire up the printing presses (metaphorically speaking, of course) and start creating hundreds of billions of dollars of fictitious money.
If you or I did this, we’d be arrested for counterfeiting, but when the Fed does it, it’s somehow legal. So instead of taking money from foreign central banks (which will increasingly refuse to loan money to the U.S.), the government will start taking the money from YOU.
This could start happening in early 2009, or depending on events, the crooks in Washington might be able to delay this for a few months (or even a couple of years), but this looks like the most likely outcome.
What it’s all REALLY about…
In all, this grand financial bailout is not about bailing you out, it’s about ripping you off. It’s all about stealing the savings of hard-working people like you and me, and transferring that money to the government where it’s redirected into the pockets of criminal bankers who fettered away all that cash over the last twenty years (and now want us to pay for it).
Thus will begin the runaway hyperinflation of the U.S. dollar, and the draining of your savings.
The key tipping point here will be when foreign banks stop buying U.S. debt or, just as dangerously, when foreign banks start SELLING OFF U.S. debt.
Either one will trigger a landslide rush to dump U.S. debt, flooding the market with useless paper that no one wants to buy.
Germany, China and many other countries are already calling for an end to the American Empire (see http://www.reuters.com/article/newsOne/… ).
Sadly, China actually has a way to accomplish that end. All they have to do, right now, is start a fire sale of U.S. debt, and the American empire crumbles within days.
This is what happens when you’re a debtor nation. You give up control and power to those who own your debt. As the U.S. claimed to be “fighting for freedom” in Iraq and the Middle East, it was actually imprisoning its own citizens in a matrix of never-ending debt, handing over the keys of control to China, Japan and Middle Eastern nations who now decide the fate of this country.
There is no way out of this financial mess that does not involve depleting the savings of American citizens. Your government is not going to BAIL you out; it’s going to SELL you out as it moves to protect itself and its corporate buddies.