The Bailout.

Well it is getting close to the hour of the bailout. Will it happen? Most likely yes. Will it matter? In my humble opinion it will not. The damage has been done.

For those of you who follow me you know my greatest fear is that the average US citizen has zero savings. Most, in fact, about 96% of the US can't make it a week without a paycheck. How will this bailout help them. It won't.

Once and only if the few banks that will be around can get back to lending, the lending requirements will be like climbing Mt. Everest. Think about this for a moment. The average US consumer credit score is between 690 to 720. Banks were charging huge interest rates to these consumers when they could lend. What do you think it will be like when they start lending again? The average consumer will not qualify for a loan. This will soon be a painful wake up call for America.

To compound this problem the consumers who do have credit are now being notified that their credit lines are closed and until they can pay what they owe they have no available credit. So what is the consumer to do? No credit and no savings makes for a messy problem. Food, gas, heat, shelter all cost money.

The capital market has a unique ability to flush out bad planning really quickly. The US has been in a bad planning mode for sometime now. The warning bell rang 13 months ago and we ignored the ominous signs that the financial markets were in trouble. Readers this is bad. Very bad.

So now what. My predictions:

• Bailout goes through, barely
• FDIC limit raised to $250k and why? Who has $250k in cash laying around......
• Banks either gobble each other up or we see massive bank failures
  
• Mark to market kills accrued value. Assets will be significantly reduced across the board
  
• The treasury lines and discount window will not be enough to tie banks over or cover "toxic" debt
  
• Financial markets will freeze up again in about 25 days. Enough time to attempt to flush "toxic" bad debt
  
• Short selling banned for another 30 days
  
• More panic sell off by the average 401k holder and small time investor
  
• DOW 7300
  
• Money Markets hit .96 cents for $1. Money Markets will be a thing of the past very soon
  
• Hedge Funds will collapse and then the fun really starts.....
• Once market goes into free fall we will see massive layoff's
  
• Layoff's will have to be funded by State Unemployment
• States will now rush to Federal Government for bridge loans to stabilize their businesses
• Federal Government will have no money to lend
  
• Next, study the history of October 29th, 1929

Our leaders failed the US citizen. But we really failed ourselves by not taking responsibility and live within our means. Good luck.