Thursday, September 25, 2008

Proposed Bailout is Too Little, Too Late; Too Much, Too Soon- Dr. Martin Weiss warned Congress


Martin Weiss has been a faithful watchdog for a long time, well respected writer, and adviser. I used to subscribe his newsletter for years & his research is impressive. He foresaw a lot that ha happened. Weiss noted that the notional (face value) amount of derivatives held by U.S. commercial banks is $180.3 trillion."

"One single institution, JP Morgan Chase (JPM), holds $90 trillion, or 49.9% of all derivatives held by U.S. commercial banks, a concentration of risk that is unprecedented in modern U.S. history."
BTW, didn't JP Morgan just took over WaMu today, when JP Morgan is knee deep in Derivative time bomb itself.

New data and analysis demonstrate that the proposal before Congress for a $700 billion financial industry bailout is too little, too late to end the massive U.S. debt crisis; and, at the same time, too much, too soon for the U.S. Government bond market where most of the funds would have to be raised.
Their figures and opinions in this white paper should be considered seriously.

This is the mother of all financial crises.

if you listen to Glenn Beck, but he believes Congress has no intention of solving our problem with the bailout, he just thinks they are trying to make sure that the inevitable crash happens slowly instead of quickly.

I agree with Glenn Beck's analysis, but as Weiss & Larson point out...

This bill, approaching $1 trillion, is so extreme, it is undeniable that

1. It could double or triple the federal deficit in a very short period of time.
2. Such a dramatic increase in the deficit would drive up the cost of borrowing not only for the U.S. Treasury, but also for other bonds and for millions of Americans seeking a mortgage or other credit, since Treasury yields are the benchmarks against which most borrowing is based.
3. To the degree that the Federal Reserve purchases U.S. government securities for its own account to help support bond prices, it would devalue the U.S. dollar, risking a dollar collapse and the flight of much-needed foreign capital from the U.S.
4. Ultimately, either of these outcomes — sharply higher U.S. interest rates or a U.S. dollar collapse — could seriously aggravate the very debt crisis that the bailout plan seeks to address.

You can read Dr. Martin Weiss's White paper he submitted to Congress recently in pdf file:

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