They told us everything was going to be OK.
They told us the finance industry was still healthy. And they told us that the equity markets were just fine and dandy... that our 401Ks were safe... and that we shouldn't be worried about keeping our money in the banks.
At best, they were stupid. At worst, they lied.
In the past 12 months alone, the losses in equity value from Bear Stearns, Freddie Mac, Fannie Mae, and Lehman Brothers total approximately $200 billion.
That's $200,000,000,000 erased from existence. Gone.
The fallout from these losses are catastrophic to those who tried so desperately to pacify the public. Banks are now so scared of getting stuck they will not lend to each other.
The next bank to fail is anyone's guess. But make no mistake about it, there will be billions more lost.
Fannie, Freddie and Lehman Brothers are now dead in the water, while Bear Stearns, Merrill Lynch and "too-big-to-fail" AIG got lucky bailouts.
We are going to have to work the rest of our life and can't retire. Despite a lifetime of working and saving, like a thrifty squirrel burying acorns in the backyard, now we're broke!
A lot of us buried acorns at AIG, thinking it would be hard to find a more conservative, rock-solid place to put retirement money than into preferred shares that were guaranteed to pay dividends are ideal for retirement.
Something the experts didn't let us know was that somewhere along the way, AIG had stopped being rock-solid. The government has now bought AIG and wiped out the stockholders. We get to read in the papers that AIG's new owners will not be paying preferred stockholders their promised dividends.
Most of us have cut back on spending and have seen the value of our homes drop and our mutual funds and 401(k)s, less secure.
Inflation is getting almost no public attention. As prices go up and wages do not, we have no choice but to buy less!
Fear has made it next to impossible to borrow for anything. A couple of years ago Bankers were begging people to take money off their hands and now banks are scared of getting stuck. They won't even lend to each other.
If this freeze continues there is no avoiding the Great Depression II.
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