There is a lot of stuff going on in the markets these days – hard to figure out.  I actually read one of the most illuminating explanations for the credit crisis in an Investment Newsletter from Stansberry Research.  In it, he described how the lynchpin of the whole credit crisis was the role played by AIG in insuring mortgages so banks could buy more than they should have.  Once default rates started going up, AIG’s insurance was supposed to kick in, and their liabilities started increasing a lot, at which point they needed more cash, which brought about the bailout by the government (they seem to be doing that a lot these days.)  Interesting read – it’s in the current month subscription of PSIA at Stansberry Research – good stuff.

A friend of mine also sent me this site, which I thought was hilarious.  All the links work, and since I’m a big fan of comedy, plus I’m following recent events fairly closely, this was the perfect combination.  It’s great.

So where do we go from here?  That’s the $64,000 question isn’t it?  It will be interesting to find out whether the government “bailout’ does what it’s supposed to do to restore credit to the markets.  I wonder how many executives will want to make use of it, knowing it will cut their salaries significantly?  I would imagine it will be a last resort for most of them.  I also wonder if this will stimulate banks to start lending again, as desired, or if they will be overly conservative in fear of more write-downs, bank failures, and toxic assets.

With the presidential election around the corner, that’s also going to affect a lot of the current and future economic conditions.  Will history prove accurate?  Typically, when the economy has weakened leading up to an election, and unemployment has increased (both of which have happened this year), the incumbent party has always lost the election.  Does that mean we’ll have a democratic president and republican Congress?  Does anyone even care any more?  As a personal side note, I’ve been fairly disappointed in the blatantly unconservative nature of the typically “conservative” Republicans, especially recently with the huge increases in government power, spending and reach, and the Democrats continue to lean towards the idea of large government as a nursemaid that provides a safety net for everyone, everywhere, which is, honestly speaking, impossible to finance.  I believe there are a lot of disillusioned folks out there like me?  Is there any real difference between the two parties anymore?  Strange times we live in, for sure.

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