BANKSTERS

In the 1930's bankers were called Banksters...like now.

As blame is laid on all for the past mistakes by Wall Street and Washington.....de leveraging globally continues...this is deflationary until it stops. This is every one's worst fear as this equals depression. Is it different this time? We think so....mistakes were made in the 1930's that were NOT addressed in a timely fashion, unlike now...lawmakers and central bankers are working at warp speed to address the challenges. This will eventually turn towards reflationary pressures...their goal. Watch Gold as your bogey, when it turns up the global economies will begin to stabilize. Oil and Nat gas also will define a bottom when it arrives.

Most people we speak to don't understand what is happening much less the velocity of change underway. All is unprecedented and record setting. Declines by hundreds of well managed multi-billion dollar multi-national companies to below book value, 4 times earnings and 2 times cash flow is stunning to say the least...all in a matter of a few weeks. When GE and Goldman raise new money at 10% this tells you the new cost of capital for everyone else is much higher. If well run companies trade below book value than ones less so could go much lower as well as the market. But we don't think this will happen ....this is the definition of panic when the world has come to a standstill for lack of confidence, trust and complete lack of liquidity.

We highly recommend watching the one hour video stream dated October 1st, 2008 of Warren Buffet's interview with Charlie Rose. http://www.charlierose.com/ Warren outlines in laymen terms what has happened and how it will be fixed over time.

Derivatives that were described as "utterly foolproof" in the perfect world are being proven not so in an imperfect world right now....as they have brought the free world to its knees. Eventually they will be virtually eliminated because counter party risk will not be met and forced to be written off. The $400 trillion dollar shell game will have been proven just that....but this will continue to be a very scary time for everyone.

Calling a bottom here will continue to be dangerous and ill advised.

Arguably the smartest mortgage banker in the USA said Friday that foreclosed homes have ten buyers 10% below current prices. He believes that we are within 10% of the bottom in house prices and we agree. He believes the turn is not far away and will surprise the masses when it does turn. So if a large part of this current freeze and panic is classic crowd or herd mentality and the psychological aspect improves....the stock market might begin to discount that possibility soon.

With elections still a month away, and no leadership until a new congress is seated in early 2009 as well as a new cabinet and a general understanding of tax policy, money will continue to be risk adverse. There are always buyers "at a price" and we have not seen prices like this in a very long time.

Danny Boy seen here always has a great attitude.