Despite the US’s dire financial straits, investors still take its “full faith and credit”, which backstops the FDIC, for granted. This is changing as federal throws its backing at every bad debt under the sun.

With each new guarantee, the US stretches its credibility and weakens the value of its guarantee. In recent weeks, “full faith and credit” has been used to insure 5 trillion of Freddie/Fannie debt, 3 trillion dollar in money market, and another 1 trillion dollar in bank deposits (raising FDIC limit from 100,000 to 250,000). On top of this, the treasury is now planning to further extend its guarantee to all bank deposits, Interbank lending, and the senior debt of financial institutions. This is insane. If the government tries to guarantee all bad debt, then its guarantee loses all credibly, effectively guaranteeing nothing.

So be careful, the FDIC insurance on your bank account is becoming increasingly worthless as the “full faith and credit” of the US government becomes a bad joke.

On the other hand, I only know of one credit union that failed in our country in the last 5 years: not bad. Main Street is doing a LOT better than Wall Street, probably due to common sense.

Save the healthy banks and non-banks, close the weak ones, and toss a coin on each one in the middle. We don’t want to bailout all of them; actually, we really don’t want to bailout any of them …

We could do a lot more for the country with the $700 billion: unemployment, social security, medicare, energy, bridges, etc., and we should.

Until the economy works through the real losses of “bubble values” in most assets (not just housing and private property, but also commerical prop. and of course stocks), the stock market is a fool’s paradise.

Today and perhaps for a FEW more days, weak-wisted shorts will be taking profits and speculators will be jumping on a euphoric short term rally that had to come and has to fail. (And this probably won’t be the last big rally before we see the bottom next year.)

Any big rally may be the time for SOME to slowly sell into these short term rallies if they can’t stomach another 20-40% downside on the Dow.

The long term affect of all these countries expanding their money supplies to gurantee bankrupt banks, companies, and individuals does NOTHING to erase the reality of REAL capital/credit destruction. It MAY be necessary to unfreeze credit markets in the short term, it may even help some, but it is only inflationary in the long term, and “long term” doesn’t mean far in the future. Probably by next summer we will see inflation rearing its ugly head right in the middle of a recession. What could be worse?

-the offer precedes the purchase.

-those who can afford to invest in stocks (and choose to do so on their own accord) and then quibble about loosing money (in something they know is a risk) are martyrs. it’s like baking a cake for yourself and then complaining about gaining weight.

to answer the blog question, i play blackjack now.

But not many. And with the general corporate malfeasance out there, I wouldn’t want to guess which ones.

The world economy has been propped up and pumped up by excessive borrowing for a long time. Even if governments can pump in enough borrowed money to keep the system from totally crashing, the fact remains that economic growth via borrowing is an illusion. Now that nearly every individual, company and certainly all levels of government are against a wall for servicing more debt, we must now shift to an economy of living within our means. In other words, produce as much as we consume.

It also means that running 70% of our economy on consumers spending borrowed money will come to a huge grinding halt when borrowing stops.

This will mean that the numbers for our economy will SHRINK. This means less consumption and a whole lot less waste. Good in the long run. But I wont be buying stocks any time soon.

I am very confused dissapointed in the behavior of BOA: it appeasr that they overpaid for ML and then indicated surprise at the severity of the financila siuation in general. I now question their business acumen and prowess.

The real kicker though is the slashing of the dividend by 50%. You don’t take away what is already in hand of the stock holder, unless it is a really compelling reason; purchasing ML is not.

I hope I am wrong, but until I see better of BOA I won’t be sending additional “optioanl cash contributions to my BOA DRIP.

Oh Warren, WARREN, wait for me!

Perhaps our economy is too weak after all 2 million dirt poor sub prime borrowers making less than $32,000 a year each have sunk our economy. All the talk shows are saying they are the cause for the stock market to lose 7 trillion dollars in value from a year ago to today.

LOL this is funny so that is how weak our economy is if 2 million people making $32,000 a year or less can sink it.

This rally will die once the governments quit trying to bump up their ponzi scheme