Rick Raw: Wall Street Machinations Lead to Disaster –Bailout Reaches 700 Billion

By Rick Grant rickgrant01@comcast.net www.rickatnight.com

The shameful financial disaster of last week led to the staggering 700 billion and possibly up to a trillion dollar taxpayer bailout of the Stock Market. This ugly cancer had been festering in backroom machinations and unrestrained naked greed for some months. At first, Treasury Secretary Henry (Hank) Paulson urged the honchos of the ailing companies to work it out–there would be no bailout. However, the impending market implosion cast a dark shadow over
Paulson’s decision to hang tough.

Then, the market plunged like a BASE jumper off Angel Falls and Paulson had no choice but to capitulate and reverse his decision. An unprecedented bailout was the only option to prevent the complete collapse of the Stock Market and America’s economic health.

How did this happen? Where was the SEC and Paulson when things were going wrong? Well, W’s policy of laissez faire (non-interference) had not stopped the greed addled Wall Street gambling junkies from overstepping their boundaries by running fast and loose with their credit versus their income. Suddenly, Lehman’s credit rating dropped and they couldn’t get the credit they needed and it set off a chain reaction. Merrill Lynch was rescued by Bank of America in a $50 billion takeover. Lehman filed for Chapter 11 and laid off thousands of bitter employees.

The excrement hit the fan when AIG dropped into a gigantic blood bath of red ink. Now Paulson was sitting on the atomic bomb of bailouts. Where would it end? Would a trillion be enough? It couldn’t have happened at a worse time. The Iraq War is eating up multi- billions of dollars a month and the national debt clock is spinning faster than Eva Longoria on Dancing with The Stars. "Hell, print more money and load up the taxpayers’ burden," the fat cats yelled

The deepening crisis hits the average person in the gut. It’s our hard-earned dinero that is bailing out these money grubbing swine on Wall Street. Throwing money at the problem without new regulations does not make sense. Clearly, these cowboy investors can’t be trusted with triple A credit. Indeed, the complex nature of this crisis is rooted in Wall Street’s insider culture. Most people just worry about their 401Ks or invest in mutual funds for retirement.

Over the long haul, those diversified investments will ride the market caprices well but make less money. Now, the government will step in to safeguard investors money but it will throttle the brand companies by imposing strict regulatory limits. Instead of mutual fund managers pushing to get 18% percent for their customers, investors will have to settle for a meager 7%–and be happy it’s safe.

After this debacle, the brand investment houses will become like regular banks with FDIC backing, but lousy interest. Many conservative investors are touting gold as the safe bet. But, there are conflicting opinions about the wisdom of investing in precious metals. The bottom line:

Ordinary people (you and me) can’t trust the big brokerage houses to give us unbias information. E-trade is a new model of safe but higher interest than one’s hometown bank. And, one can move one’s money back and forth between E-trade and one’s bank. Fluidity is a necessary advantage in these hard times.

Frankly, I’ve been burned in the markets and when I got out to save my plummeting bottom line, I paid a price. I was left vulnerable to the IRS weasels, who went for my jugular. Hell, the way I see it, one might as well go to Vegas rather than invest one’s money in the Stock Markets.

The only people that win at the markets are experienced traders who know how to make back losses. But these guys are gambling addicts, just like the glassy-eyed chip holding junkies one sees in Vegas. The lesson: Stick with FDIC protection. At least one knows one can get back one’s original investment plus paltry interest.