The sky is falling… truly…

… and don’t let anyone tell you otherwise.

You don’t have to take my word for it. There are much brighter and much better informed people out there that know the ins-and-outs of what is happening and they aren’t fooled. The following essay is by one of the smartest funds managers globally. The first paragraph of the essay is a must read for everyone and I’ll excerpt it below. If you want to be of service to friends and family, make sure they read this.

“Brief remark – from early reports regarding the toxic assets plan, it appears that the Treasury envisions allowing private investors to bid for toxic mortgage securities, but only to put up about 4% of the purchase price – the remainder being “non-recourse” financing from the Fed, Treasury and FDIC. This essentially implies that the government would grant bidders a put option against 96% of whatever price is bid. This is not only an invitation for rampant moral hazard, as it would allow the financing of largely speculative and inefficently priced bids with the public bearing the cost of losses, but of much greater concern, it is a likely recipe for the insolvency of the Federal Deposit Insurance Corporation, and represents a major end-run around Congress by unelected bureaucrats.”


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