MarketWatch: World's unraveling — according to plan

Unraveling according to schedule

By Peter Brimelow, MarketWatch


NEW YORK (MarketWatch) -- A Fannie-Freddie bailout fillip in financial markets? Maybe, but a megabear says it just shows the world is unraveling right on schedule.

Harry Schultz' The International Harry Schultz Letter was posted last night right about the time the Fannie Mae-Freddie Mac bailout was reported. But Schultz anticipated it, writing sarcastically:

"Flash: As we go to press, the US Government reveals plan to take over Freddie Mac and Fannie Mae, the biggest bail-out by taxpayers in history. It also wipes out the shareholders! Sunday selected to avoid stock market action same day, just as bank closures are told after market close Friday. That tells you what shape markets are in when government and CEOs hide behind holidays."

Schultz had earlier made his overview clear (I'm translating slightly from of his text-message style):

"Fed maneuver room approximately gone. Any $US injection big enough to avert a depression triggers runaway inflation. If not big enough: depression. US on knife-edge. Gold helps you either way.
"Which brings us to (Pimco bond king) Bill Gross. He went crazy last week, urging government to bail out everyone, to save the system. Either he is a closet socialist, a corporate fascist ... or just trying to get government to bail him out of 61% of his toxic waste mortgage backed securities."

Schultz suggests just two alternative scenarios, both equally appalling:

"If Bush bails them all out, the die would be cast for inflation unseen in the West since 1923 Germany. If no bail: Hello, 1929." ......(more)

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