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"Whoever controls the volume of money in our country is absolute master of all industry and commerce . . . and when you realize that the entire system is very easily controlled one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate." -
- James A. Garfield, assassinated President of the U.S.

To date, Garfield remains the only sitting member of the House to be elected President of the United States. He was only in office for 6 months, and perhaps that’s why the aforementioned quote is so prescient. He wasn’t in Washington long enough to be smothered by self serving groupthink.

George W. Bush has been in office for almost 94 months, and history will not remember his judgment calls kindly. Empowering Paulson and Investment Banking Inc., and letting them hurry this country into an alarmist state sadly reminds me of a movie I saw before about Iraq. Last night, Bush not only looked scared, but he sounded scared. This is not what we needed. We have ourselves a crisis of confidence in the leadership of both our country and financial system. This culture of the Bush administration’s fear mongering is a “Trend”. Last night, the President of the United States literally threatened that the USA could “slip into a financial panic”. Are you kidding me?

Never mind Larry Kudlow’s call to action again last night that this bailout bill is going to get passed and that you should wakeup and buy yourself some US pre market futures. This is not a time for entertainers who have been wrong for almost the entire -25% swoon in the S&P 500. This is not a time for fear mongering. This is a time to wake up, smell the coffee, and realize that the said leaders of this mess need to stop talking and hand over the keys to your country. They didn’t have a proactive risk management process, and they should not be entrusted with scaring this country into financial Armageddon.

Hank Paulson has been to China many times. Why didn’t he tap Bush on the shoulder and tell him that if he says the words “financial panic” on national TV that the Asians could actually take those words literally? There are rumors spreading like Bush fires in the South China Morning Post this morning that China is ordering banks to stop lending to US institutions. Rumors are what they are, and who knows if this is true, yet… but Taiwan moved to a completely unexpected emergency rate cut last night. Watch what these Asian governments do, not what they say.

In Germany, their Finance Minister (who also has a TV), Peer Steinbruck, bypassed the hearsay and when straight on the record saying that “the US will now lose status as superpower of the global financial system”. He didn’t say that in German. No words were minced.

After opening higher, European markets are selling off because America’s crown jewel of industrial economic cycles past, General Electric, is guiding down earnings big time this morning. Maybe GE’s CEO, Jeff Immelt, called George Bush, and scared the living daylights out of him last night – maybe that’s why he had that look on his face; I do not know. I do not know what promises were made prior to this administration getting all of their economic facts straight either. What I do know, is that the proposed bailout plan was premised on Hank Paulson being called into action by his cronies at Morgan Stanley and Goldman Sachs, not Main Street America – and now GE is telling you the rest of the story. Let Buffett worry about Goldman – this is a far reaching economic problem that will take time to think through.

This is not a time to panic. This is a time to be thoughtful and prepare. The only thing worse than making grave judgment mistakes, is making the same ones over and over again. In my life, I have learned as much from people in terms of what not to do than anything else. I think Dr Bill Maynard states this more succinctly, “when what you are doing isn’t working, you tend to do more of the same, with greater intensity”… that’s not leadership. That’s just being plain dumb.

The US Dollar understands this. It’s trading down again this morning, and has lost an expedited -5% of its value since our said leaders put the integrity of their handshakes on sale. Odds of a Fed rate cut at the October 29th meeting have shot straight up this morning to an 80% chance, and the TED spread (LIBOR minus 3mth Treasuries) is blowing out again. The world is now as scared as we just made it.