As Snarkista writes this, (very early Monday morning) Asian Markets are plunging. Investors are taking little comfort from Washington’s pork-filled $700 billion bank bailout. They’re focused instead on the deepening financial trouble in Europe which threatens to paralyze global growth.
Japan’s Nikkei average is down 4.4%. Hong Kong’s Hang Seng Index is down 3.7%. China, Australia, South Korea, Singapore and Thailand? All down sharply. Indonesia’s key index is down over 5%. Again, the million dollar question is…who holds the bad paper? Answer? Everybody.
Germany announced a bailout package totaling 50 billion euros ($69 billion) for Hypo Real Estate, the country’s second-biggest commercial property lender. This is a small part of a scramble by European governments to save their failing banks. U.S. stock index futures were more than a percent lower, suggesting Wall Street was in for another slide when trading opens this morning.
How long does it take to send an email from the U.S. to Europe? About as long as it takes to make a trade from here IN Europe. Or anywhere else in the world. The instant society we live in has intricately connected us financially as well as personally. Right now, that’s not a real great thing.
What is a lesson from the Great Depression that may help us now? Government raised taxes during the Depression to help fund failing banks and work projects. Businesses closed their doors when the tax burden became too great. Catch-22. If our politicians raise taxes on us now, look out below.
This is the SIXTH time in U.S. history that turning mortgages into securities that can be traded like stocks and bonds has gotten us in deep doo-doo. How freaking long will it take for us to learn a lesson? Fannie Mae and Freddie Mac have been up our politicians’ asses forever, giving them NO incentive to stop the massive fraud going on.
The mess, unfortunately, is not contained to the United States. The world has become a very, very small place. So fasten your seatbelts and save your cash. There is no bailout coming for the citizens. We ARE the wallet.