The Biggest Bubble the World Has Ever Seen

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After the implosion of the subprime lending bubble, former mortgage executive Daniel Sadek sat back and asked, "If my loans were so bad, why did Wall Street keep buying them?"  

Why? When emotions supplant analysis, smart people do stupid things. Sometimes really, really stupid things. Wall Street bought Sadek's loans not because it liked the fundamentals, but because it was riding a wave of seemingly endless euphoria. "People have to buy homes," they thought. "The secondary market will keep buying these loans … forever!"

If something can't last forever, it won't. If there's one thing we've learned in the past two years, it's that reliance on a market driven more by emotions than analysis leads to calamity. More specifically, those who rely on irrationality lasting forever are often pushed to the brink of failure. Just ask Citigroup (NYSE: C  ) . Or Bank of America (NYSE: BAC  ) . Or Bernie Madoff.

That said, have a look at Warren Buffett's warning from the latest Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) shareholder letter:

When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary.

A U.S. Treasury bubble. With 30-year Treasuries yielding 3.7% at a time when the Federal Reserve is blowing up its balance sheet, it's hard to refute its existence. The rush into Treasuries became so severe that short-term yields turned negative late last year, meaning investors were literally paying the government to hold their money. Heck, even Madoff investors thought they were getting a good return.

Not surprisingly, Uncle Sam is exploiting every second of this rush to "safety." From a $787 billion stimulus package to a $700 billion bank bailout (with plenty more to come), the Treasury bubble has provided a seemingly endless fountain of borrowing power.

How endless? On the face of it, endless enough that the Obama administration has proposed trillion-dollar deficits for the foreseeable future. Endless enough that tax cuts along with spending increases can be implemented at the same time Ben Bernanke promises that inflation will remain in check. Endless enough that, by golly, people are still lining up in droves to buy them.

Good luck with that
But like every other episode of financial madness, the Treasury bubble will end. Why? Pick your catalyst of choice:

  • Investors will find a more productive use for their money.
  • Investors will realize that the U.S. can only print its way out of debt.
  • Global economies will wean themselves from dollar dependence.

The counter argument is that economies with a savings glut -- primarily China -- are forced to purchase Treasuries lest their own economies lose American demand. By buying Treasuries, China kept our interest rates low, spurring consumption and allowing the shelves of Wal-Mart (NYSE: WMT  ) and Best Buy (NYSE: BBY  ) to be stuffed full of Chinese goods.

That symbiosis worked wonders for years, but global economies seem more than eager to end the "you save, we misbehave" relationship. Just last month, a director-general of the China Banking Regulatory Commission expressed his true feelings for the situation: "We hate you guys," he said, "but there is nothing much we can do."

Comments like that likely lead people to believe that outsized Treasury demand can last forever, which is what's scary. That same reliance on the notion that "Investors must buy these … forever!" is the same attitude that eventually did in the subprime bubble.

In fact, China is doing something. As Foolish colleague Tim Hanson showed yesterday, China's latest stimulus package has three goals: (1) Spend money on a social safety net, (2) spend money on domestic infrastructure, and (3) spur domestic consumption -- the polar opposite of its previous policy of pumping money into Treasuries.  

Add it up
Our personal savings rate is going up, but it's still not nearly enough to finance our ambitions. In other words, between massive spending deficits and financial bailouts, we're relying on the irrationality of global investors' flight to Treasuries at the exact time those same investors are planning the endgame. Call that what you want -- decoupling, globalization, whatever -- it's the hallmark of a bubble ready to burst. And just like every other bubble, those enjoying the benefits often refuse to acknowledge its existence until it's too late.

Don't get me wrong: I'm an optimist at heart. I just think that optimism is beneficial insofar as it's rational. Assuming we can borrow as much as we want at minuscule interest rates is not rational. What do you think about this incredibly important issue? Feel free to share your thoughts in the comment section below.

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Fool contributor Morgan Housel owns shares of Berkshire Hathaway. Wal-Mart Stores, Berkshire Hathaway, and Best Buy are Motley Fool Inside Value picks. Berkshire Hathaway and Best Buy are Motley Fool Stock Advisor selections. The Fool owns shares of Berkshire Hathaway and Best Buy. The Fool has a disclosure policy.

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  • Report this Comment On March 05, 2009, at 11:38 AM, omt68 wrote:

    Very timely article, thank you.

    I will be the first one to comment, or rather ask: what is likely to happen when this bubble burst?

  • Report this Comment On March 05, 2009, at 12:03 PM, capitalismisdead wrote:

    the dollar is no longer the reservce currency and america becomes a third world country....get ready.

  • Report this Comment On March 05, 2009, at 1:34 PM, Savannahboy wrote:


    Unfortunately, the end game is hard to predict. Worst case scenarios are hard to imagine (rioting, looting, basically Katrina on every street in the U.S.) But realistically, the dollar is ultimately going to get pummeled. It may be worth 25% of what it is worth today by the time it finally stops falling. That in itself sounds crazy but 25% is realistic and almost optimistic. If the federal debt reaches $30 trillion or so we won't take in enough revenue to even service the debt. After Obama's next two years we will be half way there. That's scary. However, as a capitalist we must look for ways to benefit from the calamity. One way is to short Treasuries. TBT is a good place to start. There are other funds but that one seems to be a popular one. You could also buy gold, but I just don't understand gold enough to recommend buying it. Gold to me has no inherent value. It has historical value, but you can't eat it or plant it, or run your car off of it. I just don't get it. Anyway, good luck planning for the end.

  • Report this Comment On March 05, 2009, at 2:08 PM, MotreyRool wrote:


    You guys sure must wake up in the morning and bemoan the sun shining. Yes there are major problems in our system, starting with our government. It is supposed to be for the people, of the people, and by the people. Unfortunately, a chosen few have decided to that the fruits of someone else’s labor is theirs to spend as they see fit. Dr. Walter E. Williams would call that slavery. I would call it steeling from future generations.

    With regard to our money being worthless, and the eventual collapse of our currency, it’s not the end of the world. There have been many countries that have had major currency collapses, who were back on their feet within months of a major restructuring. (most recently New Zealand)

    How did we Fools not see this coming? A dept that is completely out of control, a war with a faceless enemy that 99 senators voted for, a complete generation of people who feel they are entitled to health care, welfare, car-care, new hair, …etc., A house and a senate who are controlled by lobbyists, a president who passes a bill forcing banks to lend to people who can’t repay them, a federal government who thinks “promoting the general welfare” allows it to spend spend spend and spend some more. (Wow this is starting to sound like a political rant)

    Fresh starts are not such a bad thing. Unfortunately, it means grandma might be moving in, one of our major sports leagues might collapse, and we all might have to cook a little more often, instead of going out to eat 3-4 nights a week. We’ve all been saying, “the young people today don’t know how tough it is out there.” . . .

    We’re all about to find out how right we are, but it’s still O.K.

    Motrey Rool

  • Report this Comment On March 05, 2009, at 2:29 PM, dividendgrowth wrote:

    I hear people whining about US printing money all the time.

    I suggest they look into finances of Britain, EU, Japan, Russia, and all those "wonderful" emerging economies.

  • Report this Comment On March 05, 2009, at 2:37 PM, atlantiscats wrote:

    I already told you, this IS the time the big dogs are out cherry picking while the rest of you are covering your heads. I've seen this before and I know what it looks like (yeah, I'm THAT old).

    So, what to do? Forget gold unless you know when the top is because, when the bottom on that baby falls, it falls too fast for you to get your money back. And as Savannah has pointed out (you can't eat it).

    If you have any money now is the time to invest in that foreclosure. I'm talking the $700K that is going for $300K. Get that. Plant your gardens and this too will pass kids. BTW, these Bible thumpers ALWAYS come out now saying "IT'S THE END TIMES!!" Forget it. It's been the beginning of the end from the begginging of time. Nobody is going anywhere.

    My prediction: sooner than later, a new energy source will pop up and the race will be on... 0 energy. Just like the PC, it will be the next big thing. Kinda like "cloud computing".


  • Report this Comment On March 05, 2009, at 2:43 PM, Rasbold wrote:

    Not the "End Times", but raunchy.

    When the money comes out of the bonds, the inflation is going to suck. Two investment classes will really triumph.

    Real Estate and Gold.

    "If you have any money now is the time to invest in that foreclosure. I'm talking the $700K that is going for $300K. Get that" - Totally on the money!

    And mining and miners... Dredge, sluice, pan and your Dow will Never Jones!

  • Report this Comment On March 05, 2009, at 2:51 PM, 1234MNKU wrote:

    Motrey Rool,

    While I’ll agree with the majority of your “entitlement” arguments—I feel that you are dead wrong on throwing healthcare into the mix. Healthcare should be a human right, and it is incredibly unfortunate that an illness can and does bankrupt families in this country.

    I can fully appreciate the innovation and breakthroughs that come out of the private sector, and there clearly needs to be compensation for their contributions to healthcare. With that being said, the rate at which healthcare costs have gone up, and continue to go up, are unsustainable and it has become clear that the wheel is broken.

  • Report this Comment On March 05, 2009, at 3:32 PM, AlexanderAkhavan wrote:

    Unlimited health care can never be a right. Part of the reason (one of many) this country is going downhill is that people refuse to accept limits. Currently, if the family wants their 97 year old completely demented grandmother to have "everything" done, the federal government pays for it. No questions asked. When I say everything, I mean full life support in the ICU, dialysis etc. Its complete madness and this kind of thinking will bankrupt the USA.

  • Report this Comment On March 05, 2009, at 3:41 PM, markhout wrote:

    I am also thinking that real estate in general will be a good hedge against inflation after the current correction. However, doesn't inflation come with higher interest rates ? and what will the effect of rising rates will be on the value of properties ?

  • Report this Comment On March 05, 2009, at 4:35 PM, XMFSinchiruna wrote:
  • Report this Comment On March 05, 2009, at 4:46 PM, TheStucks wrote:

    That's the problem with RE as an inflation hedge. RE and interest rates in a normal environment hold an inverse relationship.

  • Report this Comment On March 05, 2009, at 6:33 PM, vriguy wrote:

    Yes there is a bubble, or something close to it. It is another reason to be investing in real estate, stocks, commodities: stuff that has value even if the dollar drops massively. We will not become a third world country. Given that every economy is in trouble, my money, literally, is on the proposition that the US will outperform Europe and Japan, and we will remain richer than the Chinese on a per capita basis. Diversify, and hunker down. This too shall pass.

  • Report this Comment On March 05, 2009, at 6:44 PM, CIGA wrote:

    "You could also buy gold, but I just don't understand gold enough to recommend buying it. Gold to me has no inherent value. It has historical value, but you can't eat it or plant it, or run your car off of it. I just don't get it."

    "Forget gold unless you know when the top is because, when the bottom on that baby falls, it falls too fast for you to get your money back. And as Savannah has pointed out (you can't eat it)."

    Unfortunately both of these statements lack a fundamental understanding of gold and how it functions -- it's a currency -- has been for thousands of years -- and it can't be created out of thin air and it has no counterparty risk. In the last 2 years it is doing exactly what it is supposed to be doing -- protecting peoples wealth in times of in times of crisis -- people who put their money into gold in the last two years see that it is doing exactly what it is supposed to do. If you look at it as an investment or speculation then you will likely get screwed -- it's insurance against the idiots, thieves, and sociopaths at the head of government and the banking system.

    Yes -- if you don't understand gold then you shouldn't be in it. But do your homework and you'll realize this isn't the top and gold is likely to go much higher.

    And as far as the "you can't eat or plant gold" comment -- well you can't eat or plant paper currencies either. But of course you can use paper currency to heat your home if you have a fireplace so in a way it could be more useful than gold.

    Anyway -- don't listen to me. Do your own homework and you'll realize gold is insurance in times like these. And it's only going to get worse in the near term.

    I agree -- gold is inherently worthless. It has little industrial use, it doesn't chemically react and it doesn't rust and doesn't degrade. All reasons why it makes a good type of money.

    Gold is a currency and insurance and it continues to function as such.

    Until the crisis is over (whenever that is) gold is not tanking.

  • Report this Comment On March 05, 2009, at 6:50 PM, MAcDScientist wrote:

    It would seem from the posts above that if real estate is going to be the next hot sector, then REITs would be the place to put your money. REITs have really been beaten down to the point that many are now penny stocks. Even if the REIT has cut or eliminated dividends now, as RE picks up wouldn't the dividend come back? With $300,000, I could buy a lot of KFN, or NRF, or AHR instead of just one house.

  • Report this Comment On March 05, 2009, at 7:00 PM, JIMRH1 wrote:

    I think gold is the only thing worth buying now. Obama and his cronies are trying to spend this country back to prosperity and it may work for a while but when the chinese and other countries stop buying our debt the whole u.s. economy will implode...It's getting very scary

  • Report this Comment On March 05, 2009, at 7:34 PM, xetn wrote:

    Ok, your lead paragraphs said it all, summed up with the terms investor euphoria. No body held a gun to anybody's head and forced them to make stupid investments, including over-priced housing, and bad loans by bankers. All of these activities are motivated by individual greed, not just the bankers. So, none of these classes deserves nor should they receive bailout money, especially the 9 million homeowners that BO wants to give a "free ride" too. All should have equal treatment or no treatment. So the best alternative is BANKRUPTCY!

    And to the person that suggested we are all "entitled" to free health care: WRONG! Nobody is entitled to anything, except "Life, Liberty and the pursuit of Happiness. Everything else is your own personal responsibility. But that is the mind-set of most people these days, no one wants to take personal responsibility for anything. Just let government save us all is the current thinking. Who do you think government really is? Government is nothing but a parasite living off of the citizens of the the country. And you think that they know better how to take care of you and your money better that you do? What a laugh. But the really funny thing is that the do know how to steal it from you.

    As for gold, it is a medium of exchange (money). But it has historically been a store of wealth, so it could be a good place to park your money so when the dollar is worthless from all the Fed printing, you will have something to buy food with. The big concern about gold is that the government may outlaw the ownership of gold like FDR did in the 30's and confiscated it all at the "point of a gun".

    To the person that said "get China out of the dollar" that is just plain stupid. They are the largest purchaser of treasuries and are helping finance the US's spending binges. But if we continue to piss them off regarding tariffs and making public statements to the effect that they are manipulating the Yuan, then you just might get your wish. Then who will be left to purchase our debt?

  • Report this Comment On March 05, 2009, at 7:55 PM, Dean47 wrote:

    Default or inflate. Either way the bondholders are the next bagholders...IMHO.

  • Report this Comment On March 05, 2009, at 8:39 PM, CIGA wrote:

    OK once again some homework would be in order.

    First of all, yes in the 1930s it was illegal to hold gold. But if you check your facts, almost no gold was confiscated or surrendered and no one was prosecuted for not surrendering their gold -- if you have information to the contrary, please present it here.

    Next, at that time the US was on the gold standard. This is no longer the case. So the Feds don't need to get gold to ramp up the electronic printing presses -- they just print money at will. Which they have to continue to do.

    In the history of paper money -- printing money always led to crazy inflation. Look at modern day Zimbabwe or Weimar Germany. You can't spend or print your way out of a mess which is what OBAMA! and the gang are attempting to do.

    I actually think OBAMA! has the best of intentions and is altruistic, but what's the point of becoming the captain of the Titanic after it has hit an iceberg.

    More likely than not, gold will have to enter the official monetary system again someday to keep all this fiat currency in check.

    Gold is money and gold is insurance and I think most people will be surprised at how high it goes. There will be scams related to gold, but if you simply get the real stuff you won't go wrong.

    But if you are afraid of gold and it becoming illegal then buy silver. Or buy bullion coins like Gold Eagles -- they are actual currency so as far as I know they government can't confiscate it's own currency -- well ... then again... who knows....

  • Report this Comment On March 05, 2009, at 9:35 PM, JohnG25 wrote:

    Who is John Gault?

  • Report this Comment On March 05, 2009, at 10:50 PM, TDUBFISH313 wrote:

    Even if gold became illegal, it would be like trying to confiscate every gun in the US.

  • Report this Comment On March 05, 2009, at 11:46 PM, CIGA wrote:

    Gold will not become illegal.

    And next decade, some who read this post will remember -- damn -- that idiot on that comment board was right.

    And really I'm not that smarter than anyone else, but just lucky enough to have seen the writing on the wall.


    The sad truth is, gold will go much higher, but the reasons for it will result in many nice, honest, hardworking people suffering.

    Things are going to get much worse. I wish people could see that before it's too late, but I doubt it.

    Best of luck to you all.

  • Report this Comment On March 05, 2009, at 11:58 PM, zgartz wrote:

    Twicw in my lifetime the DOW and an ounce of gold have printed the same number.

    I call it the X factor when the falling DOW price crosses the rising gold price.

    This will happen again at probably 3000.

    The bursting of the bond bubble will drive the gold price up like a rocket and it will meet the DOW coming down.

  • Report this Comment On March 06, 2009, at 12:03 AM, brdmartin wrote:

    This is certainly an interesting, and often frightening conversation we are having here. I don't usually post on message boards, but I feel the need to make a few points here.

    First off, this whole economy illustrates how little we really understand about economics, and I think anyone who claims to know what is going to happen, are just deluding themselves.

    "Government is nothing but a parasite living off of the citizens of the the country." (xetn)

    This kind of thinking is something I've been hearing quite a bit, and for a long time, and it's amazing to me that people actually believe that it is this black and white. In my opinion, both government and business are double edged swords, and can be extremely beneficial or extremely harmful, depending on the actions of these organizations.

    Our government at one time supported slavery, but now has rules in place (laws) to help ensure that people of all races have their life, liberty, and happiness. Likewise, business has created horrid things such as sweat-shops, but can also create wondrous products, and do things like fund a reading program at a school (as they have done at my school). Intent, and the ability to fulfill that intent seem to be the biggest determinate of any organization's positive or negative influence on the world.

    XETN, I mean no disrespect, and I ask in all sincerity, are you really suggesting that anarchy would be better, or would be the solution to the world's problems?

  • Report this Comment On March 06, 2009, at 12:38 AM, tymetobail wrote:

    As a student of American history and government, I think this is all too sad. To watch what the framers had struggled to create as it unravels before our eyes. I say buy bonds, go out and spend, create home businesses, such as ebay or crafts and lets get this economy going again as we did in the beginning with small businesses and ingenuity.

  • Report this Comment On March 06, 2009, at 4:33 AM, nilshp wrote:

    Any ideas on when the Treasury Bond Bubble will burst?

  • Report this Comment On March 06, 2009, at 4:51 AM, nilshp wrote:

    And how high gold will go when it does?

  • Report this Comment On March 06, 2009, at 6:00 AM, CIGA wrote:

    $1500/oz Gold by 2012 is my magic number. But that is likely too low. Other numbers thrown around depending on who you read are $2000/oz, $3000/oz and the highest number I have heard to date is $12,000/oz. I'm not saying that will happen, but gold has definitely not topped and anyone who researches this properly will realize the same thing.

  • Report this Comment On March 06, 2009, at 6:48 AM, TMFMarlowe wrote:

    I think it won't so much pop as start slipping back down later this year. As soon as there's any light visible at the end of the tunnel, people will -- as you said -- find better places to put their money.

    And if that light fails to show, well, then they'll be dumping Treasuries for other reasons.

    John Rosevear

  • Report this Comment On March 06, 2009, at 9:02 AM, capitalismisdead wrote:

    if anyone here doubts the seriousness of this issue take a look at the highly UNpublicized speech from Mr. Vladamir Putin at Davos.

    and to the person that mentioned that collapsing currencies arent the end of the world - - you cant compare the new zealand dollar to the USD. the usd is the RESERVE currency..ALL COMMODITIES are traded in dollars....We only function because foreigners buy our do not realize how the US has abused this power of the last 50 years and implications of losing this status has on our country....

  • Report this Comment On March 06, 2009, at 9:17 AM, ipgms wrote:

    You guys crack me up. Many people make it sound like the end of the world (or the US). I like it because it is making everything really cheap.

    The major problem with the economy right now is fear. Yes, some businesses may fail. Yes, there may be significant inflation but all these things have happened before and life has continued. But it is lack of buying and spending because of fear that is hurting the economy the most.

    So I will keep buying stocks (even if the market goes down some more) knowing that everything will go back up. China has already reported increasing in manufacturing for the last three month.

    My very simple views.

  • Report this Comment On March 06, 2009, at 11:19 AM, tlbland2 wrote:

    I shorted treasuries using TBT last December and closed out the position for a 15% gain a couple weeks ago. So, I am a believer. Since then the TBT has fallen from 49 to 44 pointing out the fact people are still heavily favoring treasuries.

    What is the best way to short treasuries? What price?

  • Report this Comment On March 06, 2009, at 11:42 AM, capitalismisdead wrote:

    re - short treasuries--- try RYJUX....

  • Report this Comment On March 06, 2009, at 11:55 AM, 1stGradeStudent wrote:

    $12,000/oz of gold will probably destroy the electronics industry.

    The present bailout package is ludicrous.

    The Marxist solution of redistributing wealth is another joke. Are the “poor” any better off today than they were in 1965?


    Our government has “redistributed” $12,000,000,000,000 from the producers to the non-producers in that time frame. That money could have paid off the national debt. The Socialist would probably say we haven’t done enough nor suffered enough.

    Giving away stuff to people and countries only makes criminals out of them. Getting something for nothing is stealing which strips away the dignity of those receiving the “free” stuff. Why do we think we’re so hated in the world?

    One thing is certain, we can count on government doing what it always does – Tax, Spend and Expand under the guise of saving us.

    The solution to the fastest economic recovery is the suspension of income taxes which is easy to implement and closes the door on greed, goofy “rules” and unjust and unfair distributions of benefits. The United States would become the Tax Haven of the world. Foreign and domestic investment would skyrocket. No more borrowing by companies to build their infrastructures or begging China and others for loans.

    Of course, that would mean that the government would have to give up some of its control over us.

    I wonder what the founders of our country would do now if they were here facing the situation we are now in.

  • Report this Comment On March 06, 2009, at 11:59 AM, capitalismisdead wrote:

    1st grade...thomas jefferson would abolish the federal reserve immediately and turn banking back into a service rather than the scam that it is today.

  • Report this Comment On March 06, 2009, at 1:16 PM, badidea777 wrote:

    I know this started as an article on a pending Treasury bond bubble, but I feel I must comment on 1234MNKU's assertion that healthcare should be a human right.

    Yes, some people are born with health issues that cannot be avoided, but this is the laziest, fattest country on the face of the earth, and most of the health issues our fast food nation faces are self-created.

    Do you know how many obese people auditioned for the current edition of "The Biggest Loser"?


    A quarter million very heavy people actually got off their asses and made an attempt (however feeble) to get on a TV show to lose weight. Just imagine how many did not even have the motivation to take that simple step - and Rick Santelli is whining about irresponsible people buying homes they can't afford. That cost to our economy is a drop in the bucket compared to the cost of providing health care for all the obesity-related diseases in this country.

    It is ironic that a web site dedicated to risk vs reward would include an assertion that we can do anything we want with our bodies (eat too much, drink, smoke, take drugs, etc.), but if it gets us in trouble, we should turn to the government to protect us from our own stupidity.

  • Report this Comment On March 06, 2009, at 1:39 PM, tlbland2 wrote:

    I don't know if there are any chartists out there, but if there are, please look at TLT AND TBT. What is your opinion of the two charts?

  • Report this Comment On March 06, 2009, at 2:41 PM, Dzachl wrote:

    Unlike the rapid decline in housing prices, the large losses in the stock market, and the spike in unemployment, this fiscal "bubble" has the potential to crush our economy for decades. It is the greatest long-term threat to the United States in my opinion. We are taking for granted that a large portion of international trade will continue to be denominated in Dollars and that countries such as China will continue see Treasuries as a means to achieve their own fiscal policies. That this has been the case for so long has been beneficial in the extreme. But all good things come to an end. We must prepare for the bursting of this bubble now or it will hurt us.

  • Report this Comment On March 06, 2009, at 2:55 PM, hindmost09 wrote:

    Hey America,

    Ever wondered how the rest of the world surive on less than $1.00 (American or otherwise) per day? Stop wondering - we (yes, me too) are about to find out!

  • Report this Comment On March 09, 2009, at 3:09 PM, CommonSensei wrote:

    >>And to the person that suggested we are all "entitled" to free health care: WRONG! Nobody is entitled to anything, except "Life, Liberty and the pursuit of Happiness. Everything else is your own personal responsibility.

    Hey xetn, have you heard that the ER can't turn people away, IOW it's already free? So it seems like a good idea to work towards unclogging the ER by making health plans affordable for more people. Unless you're actually advocating we turn the sick/injured away at the door? Because even if you don't care about your fellow man, I doubt you'd enjoy the civil unrest that one would create.

  • Report this Comment On March 11, 2009, at 12:49 PM, kyddfool wrote:

    Motrey Rool is just about the most on-target comment you can read! Some of the old, staid, rejected, old fashioned rules of all - will now be ressurected. AND it's not all a bad thing.

  • Report this Comment On March 11, 2009, at 5:12 PM, GlobalCooling wrote:

    "Assuming we can borrow as much as we want at minuscule interest rates is not rational"

    Our new President is irrational.

  • Report this Comment On March 12, 2009, at 10:30 AM, sa44ron wrote:

    The new president is not irrational. He suffers from what every politician suffers: fragile ego syndrome. As a politician, the answer is: tell me what you want and I will give it to you. You want the value of your house to go up. We can do that. You want yield in your retirement plan. We can do that. You want to refinance your mortgage. We can do that. You want the car companies to be profitable. We can do that. Yes, we can. And we will, just watch us.

    How, you may ask. We will buy the 30 year treasury, pushing down mortgage rates. You refinance your home. We print money. You get all the other things that you asked for above. It's perfect. Is there anything else you want? We can do this because we are only accountable to you, the American people.

    Look what we have done for you in the past. We stopped communism in Vietnam. We had to get off the gold standard (Bretton Woods) in 1973 to pay for the war. But we did it for you. We got through the currency crises in the late 90's. We had to allow the banking system more flexibility (Glass Steagal) to pay for that. But we did it for you.

    What we have today is just like the Savings and Loan Crisis in the early 90's. We got through that, didn't we? Okay, the numbers are bigger, but the Economy is bigger now. We have more money to fix the problem. We will do whatever is necessary to get through this. We will throw bags of money out of helicopters if we have to. Yes, we can. And we will, just watch us.

    (Just don't get in the way)

  • Report this Comment On March 13, 2009, at 5:37 PM, liammateer wrote:


  • Report this Comment On March 14, 2009, at 6:12 PM, thedofca100 wrote:

    why is liammateer screaming at me? Everybody take a deep breath.

  • Report this Comment On March 14, 2009, at 8:16 PM, spiritsfree wrote:

    Hi, I find all of these comments very interesting. I am all in favor of owning Gold...but what about the alternative of Gold Stocks? or other precious metals?

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