Sunday, September 28, 2008

Best of the Net - Weekend Edition September 26-28, 2008

The circus continues in Washington this weekend, as some sort of "plan" involving a lot of money is attempting to be rammed through the US legislature regardless of massive public opposition. Here are videos of what some of the more sensible officials have stated in the last few days:

Burgess: watch video here

Bunning: watch video here

Shelby: watch video here

"Ticker Guy" watch video here

Kaptur: watch the video here she gives the wrong solution, but 'A' for effort.

Paul: watch the video here

I know this blog has taken a bit of a political focus in the last few weeks. I wish I could honestly sit here, and discuss with you what the best way is to effectively manage our personal finances. I wish I could tell you what stocks to buy, and which to stay away from. But the fact of the matter is, these developments are so much more important that it simply renders most other issues irrelevant. If government attempts to become the arbiter of prices, we end up in a different world. Plain and simple. The government will essentially be managing our finances. Not us.

This kind of interventionism is resulting in the very "all bets are off" mentality shift that threatens to destroy our markets. Certain people take losses, not by the rule of law, but by government decree. Others get 'rescued.' Government gets to decide who's who. Legal contracts previously signed by both parties no longer matter. This mentality shift explains why thousands of people all over the world are withdrawing their funds from banks. Washington Mutual, Bank of East Asia, Fortis and Bradford and Bingley have all been liquidated this weekend. Major bank runs are happening all over the world. People know that there is not enough physical cash to cover all deposits at any one time.

By attempting to bail out the system, governments all over the world are perpetuating exactly what they are trying to prevent. The more they try to intervene, the faster the loss of confidence will occur and the more it will spread. My prediction of "the Fed eventually being seen as an emperor without clothes" has come true. Not only is the emperor naked, but he is dancing around drunkenly and scaring all the guests.

If you have not already, make sure that you have no more than $100,000 in any one bank account. The assets that are most safe in a situation like this are short term government securities and physical precious metals.

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