I wrote a two part series about the bail out on my blog (www.onemillionbucks.net). I’d love to know what you think about it?

If our economy is a bleeding wound, the bail out bill is a band aid. It makes you feel better, but you really just have to wait for the blood to clot.

In the mean time, the dominos have started to fall as they said they would without the bailout money being effectuated. the dominos have started to fall internationally and all of this is happening at a time when companies are reporting 4th quarter earnings. then you got idiots like Jim Cramer telling everyone to panic, then you got something called the short sale ban being lifted after Wednesday. Lots of things culminating once again into a perfect storm. so why are the markets still unstable and diving and why are the credit markets still frozen? because the bailout came too late and because dumb ass Paulson was twiddling his thumbs for two weeks rather than getting things lined up for when the bill did pass. I guess the bill wasn’t so urgent after all, or was it since the markets are falling.

yes, i’m buying more, but what the hell?

I think that the fact that this hit globally is what sent the market down this time. But, with the fact that we’re in a global economy, were investors really that surprised?

Really, though, it could be tied up in the solution. Which is, in my opinion, first purge the U.S. government of the imbeciles who helped get us into this mess with their promises to do the inverse and years of feeding off the gullibility of increasingly desperate middle Americans.

That means Bush and anybody remotely like him has got to go. A President McCain, for instance, would be the death knell for world markets for a lonnng time to come.

Then get us out of Iraq. Strategically and maybe slowly. But get us out. Stop the spending, reconsolidate our military, and reestablish what we can of America’s moral authority (if that’s not now an impossible oxymoron).

Tighten the dollar up again. And tackle the debt. We’re already in the throes of a meltdown, so do it now while the pain that will demand can co-mingle with the rest of it. Kind of ripping off a band aid fast rather than slow.

Taxes on the wealthy, alas, have to go up (that includes me, by the way). With the irony being that they have to go up because the political party that made sure the rich got richer in the short-term is the same that has forced us to have this price to pay now. And only the rich have the money in their pockets to do it.

Extend the retirement age. Leisure is dead for awhile. Early retirement? Forget about it. There’s a generation that may never be able to retire.

These solutions aren’t pretty. But then, what did we expect. Dawn always comes. Parties always end. If you’re going to spend all night doing body shots off the belly of the Statue of Liberty, how could you imagine you’d wake up with anything BUT a big fat hangover?

$700 Billion. Where does it get us? Nowhere. Another $900 Billion being pumped into the financial system. What did that do for us? Tanked the market 800 points intraday. I’ve now lost over 15% in my retirement accounts (assuming they are index funds) in less than two weeks. So, it’s OK to bail out the institutions that caused all of this havoc in the first place and pay the Executives millions of dollars? What about the average person that now has to work longer or return to work because their retirement savings were killed? Apparently, our politicians don’t really care about the every day person. At least not yet.

There was an interesting section on 60 minutes this Saturday about how we got into the credit mess: how it is not just about failed mortgages – only about 5% of total mortgages failed – but about this whole market for mortgage-back securities and derivatives based on mathematical models. Also credit default swaps – a type of insurance for these obligations which was not called insurance to avoid regulations. We also had a lecture at work about the current crisis and information technology – I work for a major IT company in research, so they thought it would be interesting. I missed it, but a co-worker went. Apparently they explained all these models in details. He has a PhD in physics and knows math very well too, but even he said some of these models were hard to understand. He told many of these math models were based on premises that while the probability of one sub-prime mortgage failing is high, the probability of several of them failing in this package is low and so on. So while one mortgage was rated D, after they applied these formulas they would rate the whole package of them AAA. Kind of alchemy – turning lead into gold. The main problem though was that math models don’t quite take human emotions like panic into consideration. As well as the possibility of declining real estate market, and its effect.

The same program on 60 minutes showed an example of how frozen credit markets affect businesses: McDonald was denied a loan by Bank of America. I’d bet McDonald is a whole lot better off financially than Bank of America even if Bank of America is one of the “better” banks.
I also heard on the radio today that New Jersey is having trouble finding buyers for its bonds.