If McCain is voted into office – which I’m beginning to think is going to happen – we’re in for a rough ride. Policies as a whole aren’t going to change and we’ll continue to fund a war that is no longer any of our concern. The money being sunk into that could be better spent. I’d like to see the government step in and take responsibility for the fact that our national deficit is out of hand. I mean, we’re owned by countries that have, on several occasions, expressed hostilities towards us and are known to have WMD. So, my notions are not pie-in-the-sky, I assure you.

What I can say is that the credit card burst won’t bring the end of the financial industry as we know it. Yes, we’re in a bad time right now, but historically speaking, we’ve always been able to bounce back. Yes, the banking industry is taking a large beating, but as I pointed out, not every bank and credit union is going under. It’s all about balance.

Taking a step back, I think whatever happens will be for the better. As human beings money is just a representation of good deeds & favors. We can all revert to barter and trade, forget about the little pieces of paper. ;) (Could we?)

The problem is not so much all these problems as a whole, which the country would dig itself out of, given enough time and chomping down the sour apple. The problem is credit default swaps and leveraged credit instruments which create money out of thin air. Those investment instruments have been leveraged as far as they could [they are not bound to the same oversight as the banks, silly government regulators]. What that means is that as the foundation of these debts fails the entire construction, as a matter of course, has to fail. The Carlyle Group has seen one of its investment arms, Carlyle Capital, implode overnight. There’s -nothing- left of it. They failed to make some margin payments and it folded almost immediately.

When more of these failures occur, that’s when your financial system vaporizes. Taking a loss is one thing, totally disappearing is another. Bear Stearns had two hedge funds that went nix from one day to the next. You can’t recover what is no longer there.

Look at the state of Fanny Mae and Freddy Mac. They insure 40%+ of the US mortgage market and they are basically insolvent. They will be bailed out by the US government, because that is what the promise was, but that has to come at the expense of some serious financial consequences. And how long is the US going to be able to finance all these failures? The US dollar is fiat money, M3 [emission of paper currency] is now a secret, and the US has made it its business to make as many enemies abroad as they could. These are the people who can sink the US economy overnight by sending back all the dollars they bought.

A total collapse of the financial system seems dramatic and with a healthy economy, good foreign relations and a balanced budget it would never happen. Unfortunately, none of these are present today. The foreign relations hold up only because of what it would mean to actually tank the US economy. That cannot be done without serious repercussions for the world economy.

Somewhere, somewhen there has to be a consequence for the American citizen. Joe Sixpack might hope that when he keeps his end of the bargain all will be alright. At the same time the financial world, which really should know better, hasn’t kept up its end of the bargain. And they have more power.

I don’t like doom and gloom better than the next guy, but unwarranted optimism is just pie-in-the-sky. We’re in serious trouble, the world over. The reason is regulations. If banks were tightly regulated, it could not happen. Rampant capitalism -must- end up devouring itself, just as unfettered communism will consume itself. The idea behind the system is not what causes the problem, it is the people within the system that are the inherent weakness.

Wow, some post huh? You asked for my thoughts, I think a lot about these things [which does not make me an expert].