Fundamentally Sound...


We have been told over & over & over & over & over & over & over by administration officials, three treasury secretaries, two FED chairmen, congressional leadership, & the president that our financial system is strong & our economy is fundamentally sound.
Something must have changed this week. Based on the most recent events, which we are told almost caused a collapse of the banking system, there can be no doubt that our financial system is NOT strong. And there is a very good argument that the economy is NOT fundamentally sound.
If the government has to rescue or bailout the entire banking system in order to avert a systemic financial collapse, that is not good, strong, or sound. Whatever the new & improved resolution is, it cannot be done with ease or inexpensively. There will be huge & mostly negative repercussions resulting from the things that are being planned in order to fix or save the system. Doing nothing & allowing the problems to play out would be worse, much worse, than doing what our leadership is telling us we must do to prevent the natural course from happening.
Trust & confidence is in tatters. Foreign investors cannot be looking upon this as good or leading to a better investing environment in the US. Since we rely on foreign “generosity” in order to fund everything we do, that will prove to be a very bad thing. Interest rates will rise dramatically & the US dollar will decline in value. Gold will rise in value. Our financial health will continue to deteriorate whether or not the bailout proceeds.