So a bailout was finally passed - practically forced - but what difference will it make?  Do you think it’s going to save anything or anyone at this point?  The state of California alone has already said it’s pretty much out of money.  Talking heads and experts are in agreement that we’re basically in a bear market now.  No longer do I hear questions over “whether we are really” in a recession or not.  Over the last two weeks, if you’ve been closely reading the Financial Times and WSJ as I was, you might have felt as scared as I finally did about this mess.

Don’t get me wrong, I haven’t been taken by surprise with this.  I’d been reading about the crash-course the US economy was heading on ever since about 2002 (when I started reading about it; not when the economy took the wrong turn).  August 2007 was just a hint and confirmation of what was coming.

The questions I have now are: (1) why hasn’t the dollar fallen lower? and (2) why isn’t gold up higher?

If you have some good ideas about that, I’d like to know.  One reporter in the Financial Times put it aptly: of course it’s possible for the US government (which is able to print its own money) to bailout some US banks, but what would happen if this scenario played out in Europe?  Deutsche Bank and UBS have holdings and obligations much greater than their respective national governments.  And Germany cannot print its own money.  So Germany could not bailout its own banks.  Do you think it will be the Chinese or Japanese stepping in in such a case?  I think we could definitely see that.  The good thing, though, is that pure real estate speculation, greed and the illusion of the “American” Dream didn’t spread amongst the French and most European countries.  It’s been a product of pure capitalism and its solution will also be a product of such capitalism - i.e., other countries coming in like hawks, like Japan, to buy up the failing entities.

We’re already living in a totally globalized world.  Nations are just names.  Yesterday I fixed my computer by talking to two young kids in the Phillipines and Bangalore.  Most of my house furnishings come from China, some designed in Sweden, others in India.  With an increasingly interwoven world system, there might be less and less places to “hide” your money (ie., keep it safe) in situations such as the US faces today.  I must admit that the media response to the economy currently seems a bit hyperbolic, but nevertheless it’s getting even to me.  I’m thinking it might just be a good time to pay off debt rather than invest.  But some of these income trusts are showing some really good sales, too.