World Markets Plunge - DJIA Futures Down Nearly 500 Points, page 26

Originally posted by cpdaman
the game could continue if the gov't and fed combine for a bailout. this would increase prices (or prevent a free fall in assets like housing and stocks) at the expense of IMO bonds and higher increases in the costs of living across the board. in this situation GOLD would soar!

for people in the real world and in the real economy the budget cuts (as well as the higher cost for state gov'ts to get loans) will lead to cuts across the board in funding for , employment construction ....you name it big problem

The euro is no better than the dollar for OPEC country's (they are both fiat's)

The ironic things is that w/o a gov't bailout (which i can't put a % on) then prices for assets will deflate and fiat dollar will be worth more, the reason i think this % is less, is that gov't and bankers are in bed and the bankers are hurting badly, most bankers seem to need the bailout.

well it appears that with the election's approaching the efforts have been stepped up by Gov't agency's and corporations (fannie mae and freddie mac) to help stop the fall in housing prices by allowing these two organizations to invest and provide a "floor of support" in the mortgage industry, this will also help banks to slow continuing writedowns.

If housing prices can be stopped from falling with these "bailouts" then consumer spending should not go into free fall. i don't know enough about the info to know if this just help's the banks from losing all their collateral via further writedowns or wether it will stop the fall in housing values soon.

IMO as long as the dollar remains the world reserve currency and OPEC continues to re-invest in U.S treasury's and maintain their dollar pegs than the inflation from this bailout will be exported out of the united states for the most part. This is the same mechanism that supports the U.S consumer driven world economy. Bank capital is still low so their lending will still be drasticaly slowed and consumer's will find it tuff to get loans, however the degree to which this will effect the real economy is yet to be seen.

Silver is really soaring. Should the yield on the 10 year bond rise we may see the fed reverse intrest rate policy after the elections, after the banks get re-capitalized. Until then i think the dow may make another run to 14,000. oh and the dollar may have resumed it's tanking after a 3 month break. quotes.ino.com...

The wild card is credit derivatives i.e Credit default swaps , commercial real estate and then business earnings, perhaps all we are seeing now is the federal gov't insuring their boys in wall street are "insured" by .gov before the # hits the fan for main street, or perhaps the real economic downturn will be softened by this bailout. I dunno and OPEC will have a say as well they must continue to invest in treasury debt or intrest rates will rise and the bond market may be in trouble.

Eric janzen has a good post on I-tulip forums talking about the future scenario's.

[edit on 27-2-2008 by cpdaman]