Trash VentThe number one spot to vent!

Well word is out Treasury secretary Henry Paulson has said the first batch of money to be released from the 700 Billion bail out, will go towards major financial institutions. Although at first glance this may seem like an ideal situation we need to really question the governments involvement in free markets. Facing what seems to be the onslaught of a disastrous recession banks and financial institutions have been more reluctant to lend money between each other for fear one or the other may go the way of the dinosaurs. As an investor the thought of having the government diluting share price is not exactly ideal. Under the current Troubled Asset Relief Program (TARP) banks are not forced to sell any stock to the government. In order for the banks to sell bad mortgages debt back to the government, grants the right to the government to purchase some amount of stock.

Bill Seidman, former chairman of the Federal Deposit Insurance Corp has been quoted as saying “The only reason they’re putting money in those banks and the banks are accepting is that the banks will go broke without it. They’re not taking this because they love the government. They’re taking it because the regulator is saying, ‘You don’t have enough capital. If you don’t get more capital, we’re going to close you down”.

Government regulations has forced banks and financial institutions to write down the value of investments back by mortgages. By doing so assets held are now based on falling house prices, not necessarily condusive of what the assets are really worth. Looks like the relief fund and Paulson’s plan is only going to make the select few happy.

Despite an effort by six central banks including the Bank of England to cut interest rates by 0.5%, the stock market and global economy still plummit. The interest rate cuts were suppose to be good news for the market and its investors. A snowball effect has taken place. In this case the snowball is called FEAR. Individuals and institutions alike all seem to be running up hill in hopes to salvage what they can.

With news of the rate cuts we should have seen a positive effect in the market instead we have been getting much more of the same…NEGATIVE RETURNS! US Treasury Secretary Henry Paulson said that more financial firms were expected to fail in the US despite a $700bn government bail-out programme. Are you kidding me? The goverment better have a better answer than that.

With congress voting NO on the 700 Billion dollar relief hard times are coming. All indicators look to be pointing towards a recession.  Many of us who are employed grinding away at a regular 9-5 maybe walking towards a living hell until the economy decides to correct itself.  The question we need to ask ourselves now is How bad will it get? I sit around every night watching the days events recapped on CNN. Trying to make some sense of what is going on. Things seem to be more and more confusing. Interviews being done with panels of supposed experts from financial institutions tell us not to worry and have confidence in the markets but when you are taking 20-40 percent hits, even the people who look at the glass half full start to be a little pessimistic.

The reality is no one has any idea how bad the situation will get. The titanic has just hit the iceberg and we are all into drown. How is it possible that this all stems from bad mortgages? Banks and other financial institutions had a fiduciary duty to make sure that they money was not to be lent to people that did not and should not have qualified. Instead there were corrupt CEO’s and high ranking management that looked to make fat bonuses and risk the finiancial safety of everyone. Now with economy being flushed down the crapper there might be a chance that these same people are entitled to their bonus checks??? Are you kidding me?!?! I hope the FBI and SEC find out who all parties are that were responsible for this and PROSECUTE them to the FULL EXTENT OF THE LAW! If beloved Martha Stewart can do time for trading 250,000 dollars worth of stock, I cant wait to see what happens for the billions of dollars lost. Gordon Gecko from the movie Wallstreet once said “two things that are sure in life…death and taxes”. With the way the market looks I would not be surprised to see an increase in either one.

George W Bush has asked congress to release 700 Billion dollars to bailout America from her financial crisis. The question is how much of this money will trickle down to keep home owners in their houses and how much is going to get scooped up by the sticky hands of fat executives from companies like Lehman Brothers and AIG.

Personally the whole situation disgusts me. How did we ever let the economy get this bad? The country is already 10.6 Trillion in debt and with this move were looking to move that number up to 11.3 Trillion.  Granted America has to do something I am not that sure this is the right move. By the government being able to purchase what some are calling toxic assets, this posses an independance issues between running good government and independant business.

The other option maybe to borrow the money from Countries like China or India. All indicators are pointing to a booming economy for these two. Once again doing so will raises some large issues regarding foreign control in a once economic giant. With all of this going on in the home front one is left to think what are the Americans still doing in the middle east. The war effort must be costing hundreds of millions of dollars a day. Its reminiscent of Russia going bust after the invasian in to Afghanistan.

Looks like Americans are in for some rough times and this is just the tip of the iceburg. Who know maybe 20 years from now Hollywood will make another movie called “Titanic America” home of the sinking free.