Market Turmoil Hits Home

The last three days have resulted in stock market losses not seen since September 11Th 2001. With nearly a 11% drop in the Dow Jones in just 72hrs. IRAs, 401ks and just about every Milford stock portfolio felt the shock.

There were lots of people today staring at the markets in complete despair as they assessed their personal losses yet again. This all at a time when everything from energy prices, to property taxes and food costs are on the rise. Making matters worse Milford is now under a credit crunch with 350 active foreclosures on homes whose value have been either stagnant or in danger of a further decline.

The global and American economic situation is dire, and is now hitting home and sobering even the most optimistic people in our town. Finding a safe haven for retirement funds is becoming increasingly difficult as America's once largest banking institutions like Merryl Lynch, AIG, Freddie Mac, Fannie Mae, and Lehman Brothers continue to show signs of distress and failure.

No one knows for certain if we have seen the worst of this economic crisis, but few have even prepared for the potential for negative events that accompany a severe economic situation. A recession is defined as two quarters of back to back negative growth, but what do we call Five or Six or maybe even Ten. Just 18 months ago the Dow Jones was at 12,500 and now it would appear possible that the index could breach the 10,000 mark making our economic misfortune in the coming months potentially worse then the height of the terrorist acts of 9/11.

On Wall street the blame game is in full swing, fear is high, our federal leaders are worried about contagion and a panic that could spread to every sector that is still in somewhat good condition. This is rapidly becoming clear that our brokers and portfolio managers are out of control and are unable to reasonably guarantee the safety and sanctity of any investment that bears even the slightest risk.

The economic climate in town is one of loss, uncertainty, and worst of all a feeling of helplessness in what to do next. Some a while back called for the purchase of Gold others have gone more ominous and advocated for the purchase of food as you cannot eat Gold. It would appear at the moment that all investors are in a bind and are facing some very hard choices.

Wall Street Has A Record Day

The market gyrations have spun the other way today, the news on wall street although in my opinion not that exciting spurred some impressive gains. Many "bullish" investors felt the market was undervalued and the FED easing liquidity in the markets sent stocks surging higher. Even in lieu of the fact that oil hit a new record high.

While everyone on wall street is happy with the incredible run up in gains, some experts are still pessimistic and feel that this up down trend is nothing to celebrate. The markets have been unusually wild due to many factors and the news changes every hour. Investors are still urged to look at the "big picture" including the economy. Market "bulls" still need to keep tabs on the Consumer Price Index, as well as inflation and M3 the money supply.

Gold is still hovering just under $1,000.00 dollars after it has had an impressive run up, the US Dollar is still lingering in record low territory and consumer debt is till dangerously high at 2.4 Trillion. In order for such impressive gains to have meaningful weight several of these troubling conditions must reverse themselves. One indicator that has "all eyes focused" is the jobs report and in light of Citibank's 30,000 person layoff accompanied by a difficult housing sector, may make today's market victory a Pyrrhic one likened to a "bottom" bounce. In either way, and wether you are a "Bull" or a "Bear" I am no financial advisor, so consult your professionals for their take on your specific investment strategies.

But it is my opinion that one good day is no indication of a trend, although I do hope it ends up being just that... a upward trend. Time will tell and I certainly was happy to see Wall street regain some lost ground.

Rethinking Wall Street, The Federal Reserve Vs. "Laissez Fare" Economics.

John Maynard Keynes, Milton Friedman and Murray Rothbard, started this ongoing debate many years ago. Each argued the the merits and misery of two competing economic philosophies. "Laissez Fare" Economics is viewed as Libertarian in principle, because it begs the government to leave its hand out of the economy and trust business to flourish on its own.

The principle of "Laissez Fare" is an economic system that economically challenges people who are unwilling to work, are lazy or lack the basic self respect and pride needed in the furtherance of their life. It does not, however, allow for the rise of Fascist Oligarchs and Monopolies. In principle it leaves the running of our commerce to ourselves in a manner that ensures free and open trade with all nations.

Our current economic system as seen by the Federal Reserves intervention today was a display of unparalleled meddling, a desperate move to stop the volatile market decline on Wall Street. This interventionist policy takes the free choice out of the hands of people like you and I who have our own principles and ideas on commerce.

The Fed Funds Rate cut of .75% was amazing in calming the U.S. market, but was troubling for the U.S. dollar as those international nations who trade with us begged us not to cut the rate. Many nations already are burdened with dollars that become worth less every day, dollars some nations in Opec are refusing to accept.

There is an illusion going on that only a handful of people see, an illusion that magically keeps an appearance that our stock market losses are low. It does this with inflated dollars that are worth less. To put this into a simple perspective imagine you purchased a new car for $10,000.00 and after driving it for ten years you sell it for $12,000.00. You are under the illusion that you just made 20% on the sale of your car. What would you then do if you found out that $12,000.00 today only could purchase what $3,000.00 purchased ten years ago?

The math is simple, Inflation robbed you of $9,000.00 or 90% of the original purchase price. The real horror about inflation is that many Americans are becoming savvy of the Federal Reserves tricks. The Fed concerned about letting their inflation scam out of the bag, found a way not to include food and energy as part of their reported inflation figure. This is probably due to the negative and embarassing image image to the Fed that these wrecklessly inflated items represent. Thes Items, used most often by us, have artificially surged 10%-20% in price over the last year. You confusion over these "cooked books" is deliberate and amounts to nothing more than the science of aggregate Federal Grand Larceny of us the people.

To make things look even rosier our leaders enter America into treaties like NAFTA and GAFTA and Export our jobs and manufacturing to countries that have no labor unions, few human rights laws, and extreme poverty. We in turn are calmed into believing that these cheap toxic slave products is the true purchasing power of the dollar. Meanwhile inflation gets reported at an unbelievable 4.1% (Something to remember next time you buy a gallon of gas and milk.)

History always shows that in the end, the Federal Reserve Systems policy of creating money out of thin air fails, and fails hard. We have seen this in Germany with the Deuchmark and every other place on Earth where a policy of printing money for debt was ever undertaken.

Today's market volatility, is not over only delayed a while. Our country has made more debt and empty promises than it can afford to pay for. America is becoming a nation up for sale at the bargain price of desperation and failed economic policy. If we can recover from the horrific mistake of excessive debt, greed, broken promises, and our systematic attack on our right to exist as a nation, it will be several years of hardship gone by.

I personally believe that the Federal Reserve System has failed in its function and now is the time to press for a return to a "Laissez Fare" Economy with a sound monetary sytem.

Credit Card Debt Soars to One Trillion!

Some time ago I warned that the faltering subprime credit mess would put pressure on consumers to turn to their credit cards for money. The start of 2008 is showing just that, many American's have now "balooned" their credit card debt to a record one trillion dollars.

This is an enormous problem as our entire economy is built on a system of credit. Debt is what makes it possible to own a home, buy a car, build a business and believe it or not retire. But why does a person need credit to retire? The answer is that inflation, low Social Security payments, and stock market madness has led to a revolution in "Reverse Mortgage" retirement. This allows an elderly person to sell their home to the bank before they pass on.

Identity theft has compounded this debt problem, and resulted in a decrease in FICO Scores. The signs of contracting credit is placing a burden on all areas of the American Economy. Banks afraid of more defaults are eliminating subprime lending, creating superfunds to absorb losses and even borrowing from overseas investors.

Today Gold hit $900.00 per ounce, this is an indication that world markets are becoming increasingly pessimistic about the U.S., and possibly the Global Economy. The real challenge will emerge when the new bankruptcy law is imposed against Americans who believe that going broke is an option as if like it was for our parents. This may not be the case anymore, because the level of difficulty in having your debt pardoned, and being granted a fresh start is not what it used to be.

Bailing on your debt has more in common with trying to bail on child support today. Although there is no "official" debtors prison we do have "contempt of court" of which is the same thing. For now America's future economic fate is no longer in Americas hands. We have something called a "Dollar Peg" that is in the hands of foreign nations who are mired with troubled dollars they no longer want.

Many nations are already distancing themselves from the U.S. currency, while Americas leaders continue to ignore all the warning signs even those from Americas chief accountant David Walker who has gone public on the debt and credit fiasco undermining our national sovereignty.

David's message, recently was again on Glenn Beck.