Financial Sense Blog

As the time draws near for the second coming of Paulson’s Bill of fiscal resurrection for the chosen on Wall Street we are required (strangely in the words of the Church of England wedding rites, possibly the least adhered to imprecation in human history) to compose our minds to consider that which is to come.

The term “credit crisis” can actually be broken down into two separate yet related categories. On the one hand the credit problem is a crisis in confidence. Confidence, after all, is the baseline requirement of any banking system. This is especially true for one as vast and reticular as the U.S. financial system.

There is nowhere to hide in this market. At some point the expression, “there’s always a bull market somewhere” had to prove itself to be wrong. And now is the time. Save for bear funds, there is not a bull market anywhere.

Why does only one man out of 435 members of Congress and 100 Senators speak this way? Why is he a pariah and a “nut case” among his fellow political “leaders” and most of the public as well? Perhaps the severity of the upcoming financial crisis will force the public to re-examine the underlying common sense of Dr. Paul’s words.

Our wretched economy of false valuations cannot continue much longer. It is the domestic counterpart of President Bush’s past friendship with Vladimir Putin. It is the fantasy world of an everlasting bull market and “successful” government bailouts.

It is clear that credit cycle reconciliation events are moving fast. Deleveraging, a theme I have been incessantly harping on almost all year, has clearly kicked into high gear. It’s thought in various circles that Paulson and friends helped engineer the near vertical decline in commodity prices sparked in mid-July.

Today, Germany’s IFO Institute announced that its business climate index for September fell to 92.9 (from 94.8), which was below expectations. With that, key measures of business confidence in Germany, France, the United Kingdom, Italy, Japan and the United States are all below where they were three years ago.

Tinker Bell started life as a character in J.M. Barrie's play first performed in London in 1904. She co-starred in the subsequent novel “Peter and Wendy”, and has since appeared in numerous adaptations including the widely known animated Disney film Peter Pan. In the original book and play, Tinker Bell is described as a common fairy who mends pots and kettles, i.e. a tinker, and is often referred to simply as "Tink".