Let me ask you this. What is the reason why historic government bailouts of financial institutions is occurring? What is the objective? Secretary Paulson says priority #1 is insuring financial institutions are adequately capitalized, such that time might be bought so presently illiquid assets can “work out.”

Yet he is addressing only the symptom leading to this need for massive government bailouts. He and every other monetarist monkey is missing the cause — the very reason why these bailouts are necessary. And this is found in our profound incapacity to generate real, tangible, productive wealth enough to sufficiently honor the mountain of financial claims built up over the past 30-40 years under the “globalization” regime.

Not until such time this fundamental reality is addressed — leading to a massive bankruptcy reorganization and a structural reordering of the global financial/economic arrangement in such a way as makes debt the servant of man, and not the master — will accelerating attempts (with no end in sight) at recapitalizing financial institutions work to restore confidence. Given this fact, then, the global economy will remain capital starved for as far as the eye can see. Therefore, every asset class is, right now, gravely threatened with a prolonged, excruciating devaluation, as the need to raise capital will not only persist, but all the more likely widen.

I recommend you read Gerald M. Loeb’s “The Battle for Investment Survival” written a few years after the historic bear market of 1929-1932. The case for putting all your eggs in one basket is made. Indeed, this might prove a timely read given the fact our present vulnerability absolutely dwarfs that which led to the Great Depression…