Socialism for the Rich, Darwinism for the Poor (Part II)

Just a few days ago I was posting comments on panic in the market and how to win when you have no escape. On Tuesday the Fed extended its bailout to Wall Street by another aggressive rate cut of 0.75%. The stock market reluctantly gave a little cheer but soon ended by falling another 300 pts on Wed. Why? Wall Street is still not happy. Socialism for the rich is not so easy!

We are now locked in a panic room. Everything is falling including our hedge against inflation, Gold, Oil, soft commodities, etc. Given the unending decline of USD and further rate cut by the Fed in April, the sudden dip of commodity prices does not make sense! But this is where we are now. Panic selling everywhere.

But there must be some good reasons for no escape. I always believe that those rich patients attacked by the leveraging virus are selling whatever securities, investments and other assets even at a huge loss in order to stop the leveraging virus from growing. Is this what they call "de-leveraging"? It has little to do with market fundamentals and of course the Fed's rate cut, pumping liquidity into the financial market, etc., would only invite these rich patients to sell more on rebound! If I am right, then de-leveraging is the heart of the problem with no escape. We are all subsidizing the rich patients' struggle to survive by sharing the losses caused to our investments owing to "de-leveraging".

Why should we subsidize the Fed's bailout of the real culprits? By leveraging the rich patients turned all markets into a MAD BULL. Genuine investors are deprived of the chance to participate. I don't mind if they bear all the consequences of creating such mad bubbles. But now clearly they are spreading the disease to all of us. Everything is declining except inflation. Equities have lost 20%, Gold and Oil almost over 10%, USD has become a die hard currency, EUR and other major currencies are going down to meet USD depreciation and economic slowdown,... All of us are paying the price for the de-leveraging of the rich patients. Socialism for the rich is evil.

I am still not pessimistic and may be we have no choice but to die with the rich patients. I mean my previous leap - invest in the big financials, real estate and mortgage businesses! They will be the ultimate winners even though the world comes to an end.