Will the Federal Reserve and Treasury to Bail out States and Municipalities that are Insolvent, while inflating equity bubble? Can they afford to try?
In two years, the U.S. Economy has become De facto "Socialized" by the Government doing one thing: Issuing Debt.
We are deeply disturbed to say that the U.S. Equity run up during the past 12 months has been and continues to be artificially created.
When you make money available to Institutional Banks and Investors at "0%", the capital will do the only thing it can; speculate and inflate prices.
The problem is, this does nothing for "Main Street USA", who can't borrow at "0%" or anywhere near that, can't get a home mortgage, can't restructure their current home mortgage, is unemployed to the tune of 15% on a real basis, and attempting to live on substantially reduced wages and inflating food and energy prices, all courtesy of the Federal Reserve and Treasury.
Which leads us to the question, will the Federal Reserve and Treasury bail out the Insolvent States and Municipalities, that are now suffering as well from the fact that "Main Street" is still in a Recession?
We can't make the math work, because it does not work. The U.S. Economy is not based upon "Bailout Nation" economic model and the further we go down that road, the larger disaster in the Equity and Debt markets will be.
Remember, the Federal Reserve is still hiding the football on trillions of dollars in defunct mortgage backed securities.
Who then will pay the bill when it comes due?
Stocks: CHK, RRC, DVN, EOG, APA, APC, XOM, SD, XTO, CVX, BP, MRO, EP, WMB