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View Full Version : The Bailout Plan - What does it mean? - Especially for gold and T Bonds...



Tylerdurden
09-21-2008, 04:16 PM
Originally published September 20th, 2008.
Many investors in the Precious Metals sector are worried that the "bailout plan" announced yesterday will resolve the crisis with the effect that things will return to normal and gold and silver will as a result go into retreat once more. Nothing could be further than the truth. There are several important observations to make regarding the "bailout plan". The first is that it is obviously born out of desperation. The second is that it is Grand Larceny as its aim is to unload all of the debts and obligations accrued by banks, brokers and various other large corporations and institutions as a result of years of recklessness and incompetance and sheer greed off onto the taxpayer, the underlying reason for this being the extensive crony connections between Wall St and Washington and the associated enormous political clout Wall St exercises in Washington. The third observation is that as far as arresting the financial crisis is concerned, it simply can't work and won`t work - the proposed $1.2 trillion slush fund intended to fund this giant garbage dump is still peanuts compared to the towering $47 trillion debt market and the even larger derivatives time bomb.
Not only will the bailout plan not work, but it is set to spread the contagion to a crucial area that has so far been sacrosanct - the US T-bond market. There are several reasons for this. One is that continued government interference in the free market to defend wrongdoers from the consequences of their actions is rapidly destroying Wall Street`s credibility as a global financial center. A blatant example of this is the banning of short selling in the stocks of selected companies which amounts to nothing less than criminal interference in free market processes, which is what you would expect to see implemented in a Command Economy - this is the sort of thing the Commies used to do. The second is that the US government and the Fed are clearly treating international investors as idiots - does it seriously expect them to go on endlessly buying Treasury paper when they know that the proceeds are going to be used to bail out and prop up companies that have arrived at the brink of collapse due to mismanagement and incompetance? They are not going to and that is the reason for the collapse in T-bonds on Friday and when foreigners stop buying Treasury paper the US government has got itself a big, big problem - the result will be skyrocketing interest rates and an economic implosion.
continued.....http://www.safehaven.com/article-11301.htm

skuthorp
09-21-2008, 04:50 PM
Tyler, with all your obsessive faults I think you manage to do a good job as the Forum's Bell-weather.

"A bellwether is any entity in a given arena that serves to create or influence trends or to PRESAGE FUTURE HAPPENINGS." You may go off half cocked, you may get unnecesarily obsessive and abusive but you do manage to dig up the early signs of things that would burst upon others otherwise unheralded.
I too have my reservations as to whether the bail out of debt and the criminal incompetents that have caused it will work. And I do not think that many realise yet the implications of this debt for the American spere of influence or financial the state of your own nation in the median future.

MiddleAgesMan
09-21-2008, 05:50 PM
Ditto.

Scott Rosen
09-21-2008, 07:56 PM
If nothing else, the bailout will further weaken the dollar. Historically, that means commodities, including precious metals, rise in price.

Last week, gold and silver rose on the news of the bailouts. They rose on the days the Dow declined, and rose on the days the Dow was up.

Donn
09-21-2008, 08:03 PM
Last week, gold and silver rose on the news of the bailouts. They rose on the days the Dow declined, and rose on the days the Dow was up.

Well, they rose, but I'm not too sure it was either "on news of the bailouts" or as any reaction to the movement of the Dow.

Scott Rosen
09-21-2008, 08:21 PM
Well, they rose, but I'm not too sure it was either "on news of the bailouts" or as any reaction to the movement of the Dow.
I agree. What's interesting is that metals took off like a rocket and didn't seem to react to the moves in the Dow at all.