Markets Give Paulson a Big FU!

The markets spoke today and they spoke clearly. FU Paulson and your blank check bailout!

This is what happens in a global economy when you start trying to implement policy that blatantly is an attempt to inflate your way out of a mess. These are the checkmate scenarios that I and many others have discussed. Paulson and the FED will have limited options to deal with this, especially when it comes to tanking the dollar. Their mistake is forgetting that although the US dollar is the world currency, the US no longer is the dominant provider of commodities as it was in the Great Depression. In the 21st century, any whiff of the printing presses will cause an immediate flight to safety and a thrashing on the US dollar. That will in turn spike commodities like oil. It will also, ultimately lead to our foreign loan sharks insisting that interest rates go up in exchange for their support of our trade deficit.

On July 15th, I had a post entitled CHECKMATE!!! . The main jist being that the Fed was all out of options at this point. Subsequently and right on queue, the Treasury began to step into the game. It was clear the Fed couldn't support the size of this problem. Quickly however, Paulson and the rest of the government "elite" will realize that they to are in a checkmate scenario. We no longer control our own economic destiny as a country. No debtor nation does. It was and has been a myth to think we did. This was allowed to continue because the unsustainable growth of the US also benefited the very foreign nations that funded this growth (China, Japan, Middle East). As soon as these loan sharks begin to see we are replacing dollars with slugs, that jig is up. Again, the markets spoke clearly at the first hint of this game.