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Let’s Not Fall Into The Gap: Balance and Harmony Pay Well Indeed
We have the dollar carry trade leveraging bonds, derivatives and emerging markets, as if they are not volatile enough. Sugar is up 90% and the Big4 in our $2000 Moneyback Guarantee Asset Allocation Report are net short:
http://www.bloomberg.com/apps/news?pid=20670001&sid=aU57G6hGJ_Pk
7. Financial Failures:
In 1987 the weekend before Black Monday, American Savings, the largest S&L, was about to implode. The Federal Reserve, Federal Deposit Insurance Corporation, Federal Home Loan Bank Board and Treasury worked over the weekend to find a larger buyer, but could not. S&L bankruptcies continued to soar, culminating with the recession of 1990 and the RTC Resolution Trust Corporation bailouts from 1986 – 1995 taking some $153 Billion out of the economy, plus 30 years of 10% interest on that amount for a total of $2.588 Trillion:
http://www.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf
In 2008 similar happened with Bear Stearns, Lehman Brothers, Wachovia and Washington Mutual, kicking off a panic that took the market down by half in a year. A 50% drop requires a 100% gain to break even.
Today, personal and business bankruptcies are up 20% over last year, despite tightening the law.
http://online.wsj.com/article/SB20001424052748703932904574511733633191024.html#printMode
There are stories of more big bank writedowns and taxpayer costs in excess of $4 Trillion for bailouts.
Last week, CIT, described by the Treasury Department as systemic risk too big to fail, and thus recipient of $2.33 Billion of TARP Taxpayer money, failed anyway, meaning the Treasury is unlikely to recover taxpayer money that went into someone else’s pockets.
The Wall Street Journal described this as a triumph of markets over ministers. We shall see in the fullness of time what we already know in our heart of hearts, that that is yet another theft from prosperity by big government.
