PUBLISHER: C. S. Franklyn II                      Copyright (c) CSF 2008

BAILING OUT THE SUB-PRIME CULPRITS & SENDING US HUSH MONEY!

During the 20 years that we have been retired, 15 of those years have included the Greenspan low interest years. The FED took the Prime rate down to the lowest level in sixty years and Certificates of Deposit (CDs) yielded as little as 2.6% on Jumbo CDs. Banks play games with these CD figures so that customers do not buy the longer term CD which means the customer has to buy a new CD every 6 months to a year!

In the past two years, rates worked their way up to 5.5% with some banks inducing Seniors to switch banks with attractive 6% CDs although they were for relatively short durations. BASED ON THIS EXPERIENCE, I AM NOW PREPARED TO MAKE A FIRM STATEMENT AS TO WHAT WE HAVE TODAY IN THIS COUNTRY IN RESPECT TO MONETARY POLICY: The USA policy on Monetary control has adopted a concept best described as FISCAL COMMUNISM!

If you are too young to retire, you will care nothing about the above comment. But, in time, you will retire and you will find that devaluation of the dollar, blamed on inflation, will plague you as it has us Seniors. The chance that your 401K Plan really will carry you comfortably through your retirement is very slim! If you have already retired before age 70, I suggest that you find another job and go back to work. Within ten years, those nest eggs you guys have been bragging about will be the size of a Plaines, GA peanut!

IT IS HANDOUT TIME IN THE LAND OF OZ!

What do you think about the on-going bailouts by the government as a move to "get the Economy moving again"? Trust me, it is the weirdest thing I have ever seen and I believe the Economists who are advising Bush -- all Jews, of course -- are demonstrating some unbelievable guts when the President announces that he wants to get that money into our hands so we can spend it and save the Economy! Is he kidding or is he that dumb when it comes to the simple facts about buying, selling, investing and keeping food on the table?

Here's my "take" on this strange behavior which has FED Chairman Ben Bernanke and the Congress -- both of them -- preparing a handout of billions of dollars. If you don't have any money in the bank as we experienced when I was working, you may not see all the stuff  that is happening and how weird it is! Let me share with you what I see!

The Sub-Prime Mortgage Scandal has already created a correction within the housing market with new fixed rate mortgages which may help some people. But Real Estate & Mortgage firms went hog wild when they got the GO AHEAD to lower Buyer qualifications, so much so that millions of houses were moved into the hands of people who could never pay OFF those loans when their variable rates jumped higher as bank rates advanced. This Scandal was caused by certain people and certain Agencies and certain Groups BUT, no one in particular has been identified and ordered by Congress to tell how it all happened and who was the major promoter!

WE CITIZENS NEED TO KNOW THAT ANSWER! My cynical view suggests that all of this began in Washington among savvy long serving career members of the House and Senate! Like Barney Frank and Chris Dodd -- both long-serving Democrats!

Meanwhile, while the loan industry is trying its corrective action, we have The FED dropping the Prime rate nearly 3% in the past few months! CD rates have been dropping even more. These changes thus far have dropped our available living income by $200.00 per month. When we renew our CDs, we will lose a total of $700.00 a month which means we will fall back into deficit financing! At the same time, fuel, food and services have all increased substantially. Now, let's stop here and analyze this situation:

If the yield on our Accounts and CDs is cut by $700.00 per month or about $8,000 per year, WHERE DOES THAT MONEY GO? Actually it stays in the bank where it will help to relieve the banks losses or exposure due to the Sub-Prime theft! Great deal for the Banks since they were complicit in the Sub-Prime Scandal! It appears that the Managements who made a lot of money out the Sub-Prime Mortgage are going to be bailed out by You and Me! Many on Wall Street who package mortgage paper for investors have laid off their people, so the overall impact for this White Collar Crime will be minimal among those crooks who profited most from it! I don't see much Justice in that!

Next, inside The Beltway, Bush and the Congress are preparing a bill to unload $180 billion into the Economy via your pocketbook! The loan rate is down to a new low which is intended to get people to borrow more money and do something with it that will spur the Economy!

So -- we have three actions going on to flood the country with dollars, The FED is sucking dollars out of the Elderly Savers accounts and savings and the Loan Industry is reworking those fraudulent mortgages for those who -- theoretically -- could still make the payments on a fixed-rate mortgage!

What we have is a three ring circus where everybody is competing for attention! What, I ask, could prompt this kind of frenzied activity?

I believe the answer is GUILT! Those responsible for the Mortgage Scam know the truth about it and those most responsible are trying to avoid finger pointing and accusations that will solve nothing and put all of them in an embarrassing position during this 08 Election period! So, what is being done, is what Washington does best: throwing money at fixing the problem! After all it is only paper! But, don't forget, this huge, simple minded, reckless reaction will impact the Purchasing Power of our Dollar! It's the Dollar and the knowledge by banks outside the USA that is pushing prices higher -- PLUS Futures speculation which, incidentally, is NOT regulated!

As to the money that Bush and The Congress is fretting over, it is HUSH MONEY to placate those who will make the most noise if and when the Truth becomes known -- especially during the current election period! There may be more Bad News coming, too!

The FEDS role is not to "hold harmless" all the Jew-owed firms involved in this huge money scandal, but it seems that is what is happening! It can be rationalized that both deserve to be saved from mortal wounds. To fix one party, both will be relieved! I have a feeling that there is a much larger shock coming!

In the 1980s, the government enacted laws to establish Individual Retirement Accounts (IRA). The idea was to have Seniors invest in Mutual Funds and other qualified investments. That money, $4,000 per year per couple would be sheltered from taxation/ It would earn interest and after age 70.5 years they would have to withdraw a certain minimum amount at which time they would pay taxes on it. How did this work out?

Well, first I want to point out that the idea caused trillions of dollars to go to Wall Street, the people, you will recall, who THE FED believes it was created to protect from losses! It turned out to be a bummer! Why? Because, about 1990, Greenspan started to drop the Prime rate and he kept it down very low throughout the Clinton-Rubin period which caused an overheated Market which led to a variety of problems that surfaced on Bush's watch! Let's try to remember that Bush spent a lot of money responding to an attack by International Terrorists!

The current plunge of the Rate will remain low for a long time and those Seniors who are trying to remain solvent, will find themselves in dire straits by 2010!    

 JayQ

February 1, 2008  

NEXT