Housing Meltdown: Panic Time

The bailouts to date went largely to financial houses for a reason - they were attempts to cover up the massive housing market fraud by filling the equity chasm with taxpayer dollars. Said attempts were blessed by politicians of both parties - all puppets of the very bankers who were in trouble. Nary a thought has been given to merely acknowledging, let alone finding a remedy for the staggering underlying fraud. I'm relieved that those days seem, at last, to be coming to a close.

As more lenders suspend foreclosures, more state attorneys general look into this mess and as more class action lawsuits are filed, it finally appears that this is coming to a head. At issue now is whether there remains any semblance of civil and criminal justice in America, or whether the bankers have corrupted even that.

Bad as they were, the housing/mortgage related problems we've seen up to now have merely been the warm-up. The real show starts soon. For a short and not at all sweet look at where we're at, read Ezra Klein Interviews Janet Tavakoli from the Washington Post. As Janet says in the interview, "this is the biggest fraud in the history of the capital markets"

A massive writedown is in the offing, and trillions of dollars of paper wealth will simply disappear when that happens. As this plays out, it will devastate the financial markets. Markets that have already priced Quantitative Easing II into the equation. Markets that are poised at recent highs, entirely unsupported by fundamentals. It's time to take a VERY defensive basic position with your investments. Food, gold and silver, household supplies, fuel and guns/ammo come to mind. (Anything Bernanke can't ruin.) Then cash, in hand, sufficient to pay at least half a year's payments. Only after that level of self-sufficiency is achieved should any money be at play in any market, and I'm at a loss to discern where such money might be safe through what's coming.

(Dang. I'm going to have to dust off my Jubilee article and re-post it...)