Will the $700 Billion U.S. Government Bail Out Work? History Says It Won't!
Don't be lulled into believing Wall Street and Washington have this financial crisis under control.
A melt down, a world-wide economic collapse may only be days, weeks away. Please take steps immediately to protect yourself and family.Go To Original
It is often said that those that fail to pay attention to history are doomed to repeat its mistakes.
I wish I could be enthusiastic about the $700 bailout package being proposed but I just can't be. Last night as I was reviewing the news of the day's events, the testimony before Congress by Secretary of the Treasury Paulson and Fed Chairman Bernanke as well as the news about Warren Buffet's $5 investment in Goldman Sachs when I realized there was something very familiar about everything was happening.
All of a sudden I started searching high and low in my personal library in a frenzy. My wife was so taken back she tried get me to tell her what I was so desperately looking for when and then hidden in a corner I found the book I was looking for and had read over 20 years ago... "Panic on Wall Street" by Robert Sobel.
Many are openly scoffing at the notion of a crash like 1929 occurring in this day and age but they really shouldn't. Robert Sobel's book "Panic on Wall Street" shows clearly that the danger is greater now than has ever been before - all one has to do is look at the parallel between the events taking place now on Wall Street, and in Washington and those that took place back in 80 years ago to realize all these emergency steps could STILL be leading us to the biggest economic collapse in history. This amazing book shows why...
In 1929 as Wall Street nose-dived John D. Rockefeller stepped in to buy stock to support the market and much in the same way Warren Buffet is stepping in to buy shares in Goldman Sachs (GS) in a sweetheart deal.
Then a group of large banks came together in 1929 to create an investment pool to support each other. That pool was $20-30 million just like several banks did week which created a pool of $70 billion dollars.
Third, short selling was banned when things started to get really bad and that happened last week. It is time to wake up to reality and protect your assets.
We're being told the financial system almost melted down last Wednesday evening - the reality may be nothing can stop the meltdown based on the lessons of 1929.
You must take steps to protect yourself!
You buy insurance for your house, car and life. Do you buy insurance for your net worth, nest egg or portfolio? If not, then we have to ask the question, "Why not?"
You see it is "crunch time" for the United States and its capital markets much less the markets of the rest of the world. There are two minutes left in the game. The home team (the U.S. market) is down by 4 and if a touchdown is not scored the season is over. Is it that bad? No, it is even worse.
Treasury Secretary Paulson and the billionaires backing this plan are trying to push through a bailout plan for the entire financial system based on a three page document that offers no specifics and is essentially a blank check. Paulson believes in this emergency we need an economic Czar who has the complete power to make the decisions he believes will provide the solution and end to the crisis.
This incomplete nature of the proposal and the amount of power being sought has Congress and the Senate are arguing and fighting over the plan. While the scope and size of the crisis comes to the light of day its "politics as usual" parties on all political sides are fighting to add all sorts of pork. While they fight we are inching closer to a crisis that will make 9/11, the 1987 Stock Market Crash and the Crash of 1929 look pale by comparison. Why am I so negative...
Simple. First there were stock and bonds. Next came along options and then futures. If Wall Street stopped there, then we would not be in the current mess we are in. Instead Wall Street went on to create derivatives that numbered in the hundreds. The most toxic are Credit Default Swaps (CDS). This instrument is pretty simple and may be the next shoe to drop.
Here's how CDS work: A buyer pays money to insure that in the event of a default the buyer would be protected by a seller who took in the premium and invested the returns. The problem is that the biggest seller in this game AIG has become insolvent and they could not make good on their obligations as Lehman, Fannie Mae and Freddie Mac failed in a matter of weeks. The size of this liability is many times the $70 Billion pledged to AIG last week by the U.S. Government. In fact, the risk could be many multiples of the $70 Billion.
This is too dangerous of a situation to ignore. Literally, you could wake up one morning in the very near future to the news that a Domino Collapse over night has shut down the world's banks, brokerage firms, credit cards companies and financial markets. The Dow now trading at over 10,800 when trading opens again could very well open at 7,000 and slide down another 2,000 points as investors try to salvage some liquidity. People who are not prepared will be destitute and those who are prepared and know what to buy in the wake of the financial tsunami will be the next crop of multi-millionaires and billionaires. I'm hoping to guide you through any such situation but FIRST you have to take immediate steps to protect your wealth.
Finally, I must repeat...
Over the past several years I have been recommending, in fact BEGGING you to add PHYSCICAL gold, platinum and silver to your portfolios. In the past I've recommended 15% of your savings. This should now be increased to 30% of your savings in this crisis.
This crisis could blow up at any moment and create a wave of inflationary pressures that literally wipes out the value of the U.S. Dollar and virtually all paper money.
If you're not holding gold and precious metals you're very economic survival is at stake: REGARDLESS OF WHAT THE POLITICIANS PROMISE!
Call immediately and speak to one of my precious metals experts at 1-866-697-4653 and find out which gold, platinum and silver coins I am recommending.
Finally, gold is up another $35 today (and $80 since I wrote to you yesterday)