New Panic in Washington
WASHINGTON IS PANICKING AGAIN! It’s getting ready to throw hundreds of billions MORE dollars at this crisis within days. In his update below, Mike Larson reveals why these desperate measures can only crush bonds and stocks in the weeks ahead — and why you’re likely to have yet another great opportunity to double your money as weak stocks crater. Read it now. — Martin 
GM needs $50 billion more …
Q: Where will it all end?
A: In the greatest orgy of government borrowing in recorded history!
INSIDE: The next shoe to drop in this crisis — and how it could hand you gains of 46.1% … 89.9% … 106.7% or more …
WITHOUT options, margin or short-selling …
Exclusively with ETFs that are as easy to buy or sell as Microsoft or IBM …
All for the price of a single gallon of gas: As little as $2.47 per day!
By Mike Larson
Dear Subscriber,
Nearly everywhere you look, another massive corporation is announcing staggering losses and begging Washington for billions to avoid bankruptcy.
CASE STUDY #1 — General Motors: $25 billion wasn’t enough — needs $50 billion more to survive! GM’s sales are down 20% in a year. Its share price is down nearly 90% — from $31.14 a year ago to $3.36 at yesterday’s close.
The last time GM stock was this low, Harry Truman was in the White House, and Elvis Presley was in grammar school. And now, analysts are warning that America’s largest automaker may soon be worth zero.
Investors have every reason to fear for GM’s survival: Last Friday, GM posted a $2.5 billion net loss for July, August and September, bringing its 2008 losses to $21.3 billion.
Worse: Yesterday, the company revealed that despite the $25 billion in Washington aid already on the way, it is now burning through its cash reserves at the staggering rate of $2.3 billion per month.
The company’s top executives now freely admit that without a bailout, GM will likely go broke in the first half of next year.
Alarmed that an estimated 1.4 million GM workers and suppliers could suddenly find themselves out of work, House Speaker Pelosi huddled with car company executives to arrange another, additional bailout of up to $50 billion. And during his visit to the White House yesterday, President-Elect Obama urged President Bush to sign the bill when it passes Congress.
CASE STUDY #2 — American International Group (AIG): $150 billion refinancing announced yesterday!
First, the Fed gave AIG an $85 billion line of credit in a failed attempt to save America’s largest insurer.
When that failed to work, the Fed added $38 billion more through its borrowing facility.
And when the company continued racing towards failure, the Fed agreed to buy more billions of AIG’s toxic commercial paper.
Now — just yesterday — after announcing it still lost a whopping $25 billion in July, August and September, the government revealed that it refinanced AIG’s earlier loans with better terms and gave them still MORE money, for a new, total rescue package of $150 billion!
That’s just ONE single company, and already it has gotten as much money as the entire U.S. population got from the economic stimulus package of 2008.
CASE STUDY #3 — Fannie Mae: Losing money so fast, it could need as much as another $100 billion or shut down completely!
Despite the $100 billion already spent to bail out Fannie, the company has revealed that it lost a staggering $29 billion in the third quarter — an announcement that means America’s largest mortgage lender will probably need untold billions more to avoid a total shut-down.
Ten Billion Here … A Hundred Billion There …
Before You Know It, You’re Talking REAL Money!
Anyone who thinks that these three companies are alone — and there won’t be hundreds more lined up behind them to demand their share of the greatest bail-out bonanza in history — is dreaming.
Just yesterday, we heard more calls in Congress for a second huge stimulus package in an attempt to get shell-shocked consumers to begin spending again.
And anyone who believes the government can magically create all of this wealth out of thin air is greatly mistaken. They will have to BORROW the money. Indeed, last week — even BEFORE this latest news hit the wires — the U.S. Treasury announced that it will borrow a total of $550 billion — more than the entire deficit for ALL of fiscal 2008 — just in the last quarter.
But even that record-smashing amount is only the tip of the iceberg: Goldman Sachs analysts announced that, to finance an $850 billion federal deficit … to buy $500 billion in bad assets … and to roll over $561 billion in maturing Treasury securities, Washington will have to borrow TWO TRILLION DOLLARS!
|
Paying the piper for U.S. Gov’t Bailouts:
$2.7 TRILLION in loans and commitments — and more to come! |
|
| TARP | $700 billion |
| Bear Stearns | $29 billion |
| Detroit Big Three | $25 billion |
| AIG | $150 billion |
| Fannie and Freddie | $200 billion |
| Mortgage-backed secs. | $144 billion |
| FHA Rescue bill | $300 billion |
| JPM for Lehman | $87 billion |
| Fed’s TAF program | $200 billion |
| Commercial paper | $50 billion |
| Fed currency swaps | $740 billion |
| Total: | $2.7 trillion |
Worse: That $2 trillion will almost surely STILL not be enough: Just to cover the bailout loans, investments and commitments the government has announced SO FAR, the total bill comes to a whopping $2.7 trillion. (See table at right).
As the U.S. economy continues to crater … as federal tax revenues continue to plunge … and as Washington continues to run amuck with new bailouts … Washington could easily add another $1 trillion or even more to this borrowing spree!
A NEW Orgy of U.S. Government
Borrowing Is Directly Ahead!
This reality — the fact that the greatest tidal wave of Treasury bonds in history is about to slam into the markets — means two things:
1. Plunging bond prices: Like any other investment, when the supply of bonds rises, bond prices fall. Given the mind-boggling size of this borrowing binge, we’re now staring down the barrel of one of the most devastating bond market crashes ever.
2. Huge profit potential for contrarian investors like us: Investments that soar when bond prices plunge are about to give you the opportunity to multiply your money throughout the rest of 2008 … throughout 2009 … and beyond!
In fact, this great government borrowing binge gives us not just one, but TWO opportunities to go for windfall crisis profits in the weeks and months ahead …
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