That Didn’t Take Long Dept.

Those following this blog know what happened within a day of the last posting.  We were able to get a Special Alert out to our members on Sunday evening as this drama unfolded.

The questions coming back seem pretty straightforward: Now what?

Since even the comedy channels seem to have their radar up for AIG, getting that company refinanced would be Job One.  I assume it will be taken care of during this week.

It strikes me that the bullet that gets you is always the one you didn’t see.  So worrying more about U.S. financial institutions is probably not focusing on the greatest threat at the moment. 

I will be looking around other US sectors, and around other countries, for potential sudden problems with the capacity to derange the global system.  And I’ll add what I’ve said before: thank goodness for the single competent officer in the Bush administration, Henry Paulson, who has done a great job with these issues to date.  Ben Bernanke, ditto.  I continue to have faith in both of them.

Meanwhile, oil and energy prices will be coming down, which is one of the secondary problems in all this.  Sen. Maria Cantwell begins hearings this week on increasing proof from trade records that the price spikes of the last year were caused by speculators, and not supply / demand variances, much in agreement with many like comments made here.

Other commodities are also coming down, as speculators pull out not only of oil, but of other metals and foodstuffs.  In other words, like Bogart in the swamps of Africa, we are ridding ourselves, at least temporarily, of the leeches I’ve been calling “vampire investors” – a new class of Wall St. specialists who have been taking the world’s commodities for an accelerated ride. 

It won’t be long before they return, I think, because they seem to have no sense not only of common weal, but even for their own survival.  Don’t kill the host, most brainless leeches and other parasites already know the mantra.

Meanwhile, the banking lobby should be taken out to the shed to have their xxxxx kicked, and then we can go about reinstating the various measures from the Glass-Steagall Act that we learned in 1929 on, and that they spent the last ten years throwing out.  Banks are not shopping mall investment vehicles, period.

This is going to be a very rough week, and I’m glad I’ve been strongly in cash since my liquidity contraction warning in February of 2007.  Now we get to wonder: is the cash itself safe?