(snip)"Bob Moriarty
July 14, 2008
Naw, it's not a recession. It's a depression for sure. Those who have been reading me for the last year or listening to my radio interviews have been forewarned. The rest of the market is just now waking up.
Last Friday, July 11, 2008 after a 99% decline in the price of IndyMac from $36 a year ago to $.28, the FDIC announced seizure of the bank. It's the second largest bank failure in US history. But it won't be for long.
Fannie Mae and Freddie Mac have their heads on the chopping block and they are next. Along with Lehman Brothers, Bank of America, UBS and loads of others. They are all underwater and have been for a year.
I'm 61 and the single most important day economically in my entire life was August 15, 1971. That's the day Nixon broke the last tie between the US Dollar and gold. It was the kiss of death for the dollar because it allowed both governments and consumers to go on a wild spending spree: all believing they could write checks that would never be cashed. Well, it's time to balance the books and the books have been cooked.
Soon, maybe this week, the US government is going to announce nationalization of Fannie Mae and Freddie Mac. They are leveraged 65-1. That will be the most important financial day in your lifetime. It will be the end of the US dollar and our Republic.
Here's what it means. The US Government is going to take over $5.3 trillion dollars worth of mortgages, most of which are underwater and will never be paid. The theory is that the US will make Fannie and Freddie paper good by making it as good as US Treasuries. Actually the opposite will happen.
Imagine that you have a giant 100-gallon punch bowl filled to the brim with delicious tasting Rum Punch. And someone drops in a tiny turd. What does the next glass of Rum Punch taste like? Right.
The US government is on the verge of turning their nearly worthless paper into used toilet paper. Nationalization is a vote for hyperinflation."(snip)
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It's not going to going to be the end of the world, or even our long run of relative prosperity.

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