[Homestead] Fannie/Freddie bailout question
bobford79 at yahoo.com
Sun Sep 7 12:46:10 EDT 2008
Don, you have a better understanding of the intracacies than I could gather from reading the material I have read. I just don't understand, why being debt free is good. I have always believed that until recently. I wish I had leveraged all of my hard assets into cash a few years ago. Everyoner one else walks away from their responsibilities with no shame. What benefit did I receive by living responsibly?.............bobford
----- Original Message ----
From: Don Bowen <don.bowen at earthlink.net>
To: homestead at lists.ibiblio.org
Sent: Saturday, September 6, 2008 7:13:38 PM
Subject: Re: [Homestead] Fannie/Freddie bailout question
It is all somewhat confusing. The financial crisis that all were telling us
would be over by the 3Q but is instead slipping deeper and deeper. The
unemployment numbers are growing. The real number for the unemployment is a
bit over 11% and growing.
Early in this crisis the Fed dumped tons of money in the system, that is how
he got the name Helicopter Ben. The ECB did the same all under the notion
that the US crisis could be decoupled from the rest of the world. The Euro
soared against the dollar and oil prices soared. Then it is noticed that
there is no such thing as a decoupling in a global market.
The euro is falling which is one of the things making oil cheaper. As the
worldwide economy starts to sink oil consumption has fallen and so have
Some of that money dumped into the system went into oil futures, some when
into good futures, some just went but a good share of it stopped in the
member banks coffers. They are concerned about a liquidity crisis and need
to hang on to the money. In response the fed opened the discount window to
other less well regulated institutions.
Dumping all that money has significantly increased the risk of hyper
inflation but the Fed cannot fight inflation without further forging the
economy down. I have no idea how much the plunge protection team has put
into Wall Street index funds but it does not appear to be working.
Where is it headed and what should we do? I have no idea and from the looks
of things neither does Paulson or Bernake. As mentioned in the WSJ article,
this is another huge problem that will be inherited by the next
Stealing a line from Gene, we as homesteaders may be better poised to
survive the coming economic storm. If you have minimal debt, can grow and
process at least some of your own food, can hunker down.
Don Bowen KI6DIU
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