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World Markets Correct On Fears of An Obama Administration ...

...and a socialist U.S.A.

By Mexitli
Published on LatinoLA: October 10, 2008


World Markets Correct On Fears of An Obama Administration ...


According to a London based equities trader who had the mic. on CNBC's Squawk Box Europe, Euopean investors are worried that the United States is turning socialist. The pundit pointed to the proposed nationalization of major banks and the government bailout of major investment firms as well as the likelihood of Barack Obama becoming the next President of The United States and socializing medical care which opens the door to socializing other major industries.

Traders in London are now calling Friday, Oct. 10th, "Black Friday." European Central Banks lowered rates in an coordinated effort along with Asian countries and the U.S. but to no avail in Europe. Asian markets are correcting as this article is being written.

Investors Warren Buffet in the U.S. and Richard Branson in England have come forth to calm investors' nerves but investors don't seem willing to step in and buy corporate bonds when Lehman Brothers bonds are only expected to pay around .086 cents on the dollar. President Bush also spoke today about confidence in the markets but he is a lame duck and not very bright. The only thing Bush has accomplished is the raping of The United States Constitution. And Europeans cannot understand why Americans elected him not once but twice.

So many dynamics are at work at the same time and all for the worse. Mark to Market, for example, is butchering portfolios with high credit equities. Mark to Market is an accounting principle that basically states that markets are better at valuing an equity than individuals or government bureaucrats are. OK, without making an normative statement, that seems credible.

Mark to Market in practice.

Since almost everyone understands how supply and demand works in the housing market an easy analogy can be made: Lets say 10 people own 10 homes each valued at 1 million $$ each. More buyers than sellers holds the price steady and this price is expected to rise over time (consumer confidence). But if the buyers cant buy and a homeowner sells his home for 900K, then the other 9 homeowners are called by their loan companies and told they owe 100k to keep their homes. In the futures market this would be a "margin call." With buyers still absent from the market, another homeowner sells his home for 800K, and now 8 homeowners are called again for another 100K and 1 homeowner is called for 100K.

Now everyone wants to sell before they owe more and all hell breaks loose.

What caused people to sell their homes for less than what they owed in the first place was the price of gas. Strictly speaking, gasoline was the proverbial "straw that broke the camel's back." People had to choose between making their mortgage or putting gas in their tank. And since people have to get to work, the tank won. But these homeowners didn't have typical fixed rate loans from a reputable bank/ mortgage lender. These homeowners were mostly poor and minority with less the impeccable credit. They had so called "Ninja" loans (no job, no credit). No job, no credit, no problem to qualify for a home loan from Fannie Mae and /or Freddie Mac. Fannie Mae and Freddie Mac are government sponsored enterprises (GSE's) set up to bolster homeownership in the U.S. And the politicians in charge of overseeing these GSE's were bought off with bribes, otherwise known as contributions. Like prison inmates paying off the guards, these politicos looked the other way when red flags were raised by those politicians not on the take about potential debacles in the financial markets.

Surprisingly, this whole mess started with a decline in California real estate values. In California, homeowners watched things go from bad to worse in less than two years. Then Florida, which had a condominium glut. Then A.I.G. failed (an insurance Company) and it was called a very dangerous scenario since they were an international company. Next, the entire U.S. Financial system collapsed and then so did Europe's and Asia's.

Martial Law was threatened.

Some members of congress were warned of martial law if they did not approve the bailout. With the U.S. Army, 1st Brigade, 3rd Infantry Division deployed and patrolling the streets of America, a move not seen since the end of the Civil War, with Posse Comitatus and habeas corpus both suspended by President Bush, what choice did congress have but to ultimately approve the bailout?

What a mess.

Enter the U.S. Presidential elections with Barack Obama in the lead, a man that has used cocaine, started his political career in the living room of a terrorist whose bomb killed Americans and is unrepentant and wishes he did more. A man who has voted consistently leftist more than any other senator, A man that has accepted more contributions from Fannie Mae and Freddie Mac lobbyists than any other senator, A man whose wife is finally proud of her country (now that her husband is a the Democratic nominee), A man whose pastor has stated, in no uncertain terms, "God Damn America," A man who has less than 18 months in serving as a U.S. Senator, A man slicker than Slick Willie himself who won the Democratic nomination by saying he would end the war in Iraq in 14 months and that he had the wisdom to vote against it in the first place from Hillary Clinton, and then didn't choose her as his running mate when she would've brought millions of voters to his campaign, it is no wonder that Europeans and Asians are angry that they have lost trillions and, therefore, can no longer depend on the U.S. for anything.

But what can they do about it?

Not much, except abandon the market capitalist failed model and that could be worse. Perhaps that 45 trillion $$ economy which dwarfs all other world economies should be broken into sectors? California has long given to the federal government more than it receives. A ratio of .80 cents on the dollar paid in federal taxes by Californians goes to support the United Welfare States of America. And most of that goes to those "New Yorkers."

And now Barack Obama wants to socialize medicine. How much more will you have to work to give free medical to the other 49 states? Devaluing the dollar will not work in the future since many countries are using the their own currencies and not the dollar. When someone questions how much socialized medicine will cost they are asking how much more will the dollar be devalued. 50% means the American worker loses 1/2 of his /her wage, savings and purchasing power, which is why devaluation takes place silently. But devaluation is needed so as not to owe the Arab countries (for their oil) and China so much money.

Recently, we saw the failure of U.S. ethanol as a fuel. Why? Because the U.S. Insisted on using maize- a food and not a a fuel. While successful projects like the one in Brazil have worked fine because they use sugar to make ethanol. Additionally, ethanol made from maize requires 1000 gallons of water to to produce just ONE gallon of fuel. Again, let's look at which congressman and women take the bribes.

Three things the U.S. maintains is military power, however, the U.S. has lost its submarine technological superiority and its satellite defense superiority and its Air Force is aged and dilapidated, a 45 trillion dollar economy (was the world's largest, but is now second to the E.U.) and its control over its people, who increasingly turning isolationist and nativist and referring to themselves as "sheeple."

Identity politics do not work when practiced in multi-cultural economies. The predominant race/ethnicity prevails every time. And those who oppose this system are labeled racist and separitists. Right now, the world is worried that Barack Obama, the leftist, socialist, will become the next president of the U.S. And socialism will prevail in the U.S. White Europeans and white European Americans are increasingly leaning towards the socialist model in order to save their rule while alienating the rest of the world and American citizenry who thought they could count on the U.S. to be center-right.

The world views Obama as the next F.D. Roosevelt and not the next JFK.

And that's why the markets are correcting. And that's how you'll pay for it.

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