Friday, March 20th, 2009
2115 hrs
On October 29th, 2008, I opined the following and I will
simply just repeat what I wrote.
"Credit excesses have not been wrung out of the system.
All we've done by the machinations of the TAF, PDCF, TSLF,
CPFF, MMIFF, ABCPMMMFLF....er, Yes, I mean the "TAF, PDCF,
TSLF, CPFF,MMIFF, ABCPMMMFLF" is to shift the problems
onto the public balance sheets by risking taxpayer money.
These stunts will sooner or later lead to a revolt in the
fixed income markets and will likely lead to a currency
devaluation. We will be a banana republic."
This past week has been a rather interesting one. The
talking heads have declared and called the SP 666 number
a bottom. Then on Thursday, we all got word that the Federal
Reserve will now start outright purchases of longer term
debt to help out credit markets. The US dollar collapsed,
commodities rallied but NOT in other currencies. The Federal
Reserve has essentially devalued the dollar!!
YES, THE FEDERAL RESERVE HAS ESSENTIALLY DEVALUED THE US
DOLLAR.
My brother, Vivin Oberoi wrote me the following the very
evening :
"It is an unfortunate fact of our lives that B-52 Ben
controls the value of our money. I am not going to mince
any words. When one sees everything (and I mean everything)
BUT your savings account go up in price, there is only ONE
conclusion. The value of the dollar is plummeting. This is
NOT a bottom has been reached and recovery is around the
corner move. Gold is rocketing up. Commodities are but NOT
in other currencies. The Fed and the government are now
going to finance their “fight debt with more debt” economic
policy with our savings accounts.
Make no mistake about it, we have now joined ranks with the
likes of Argentina where government spending is financed by
printing money. The Fed is going to print money, buy newly
printed government bonds, transfer trillions into the treasury
which will then be spent. This is the form of looting that
marks the culmination of debt induced crises that are then
mishandled. The savers are now being shot. I am extremely
depressed about the prospect of losing my hard earned
savings. That is all I have to say."
That is all I have to say....
- aLV
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1 comments:
I ran across your blog through your photo site. I'd just like to say that Alvin Hall, financial advisor, advised a group of women (of which I was a participant) in January 2003 to not keep your money in banks that offer 100% + mortgages, and to not invest in the stock market, but to keep your money in cash until things settled down. I followed his advice...
You won't lose your savings if you keep it in cash. But you could lose your savings if you invest it in other financial instruments...?? So maybe you won't make passive income from your savings, but the mattress is looking pretty good now...
Finally, when the European economies in the Euro Zone went from their former currencies to the Euro at varying conversion rates, in Italy, employers literally translated salaries to the penny based on the conversion. Retailers instead translated the old number in Lire to a new number in Euro, effectively doubling the price of everything overnight. The government defended this by saying it was merely an optical illusion.
Even before the financial crisis hit, 20% of families could no longer make it to the end of the month, and half of those not past the first half of the month...
There is NO excuse for what happened here. It was the government's responsibility to make sure that prices were converted appropriately. 5 years later when they looked at the statistics of how many families were below the poverty line, they admitted they didn't do what they were supposed to (big surprise). But now what? At least in the United States there's an explanation, whether it's palatable or not...and a lot of people benefited from the outrageous returns while they lasted...
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