Happy Tuesday! This is usually the day I answer my mail, but I haven’t gotten much this week. I’m also in the middle of a 4-part series called “Generations” about the generational changes that are taking place in the election of 2008, and I’ll answer that mail when it’s all over. Time for a brief commercial message from our sponsors.

This week I did get some mail from an old friend I met during my daze spent arguing with supporters of the Tech Bubble, or its later incarnation Housing Bubble: The Empire Strikes Back. We used to chide people who had put everything they had into stocks like Yahoo, Amazon or (Father, forgive them, for they know not what they do) eToys. It was our contention that a better investment might be bullion precious metals such as worn coins with no face value (aka “junk silver”) and canned goods (aka “tuna”).

For those of you not keyed into it, the Fed acted on Sunday to cajole JP Morgan to buy out rival investment house Bear Stearns for a fire sale price, with all the futures guaranteed by the Fed.

So it’s finally come to pass. Bear Stearns sold for about 6 cents on the dollar and almost no one is complaining because they know the real value might be negative. It might yet take down Lehman and, who knows? Maybe even Legg-Mason might be caught.

Funny how it sucks to be right after all.

Yeah, it does suck. I don’t know about the rest of you bears, but I can’t even manage a decent does of schadenfreude right now. I’m not all that stocked up on junk silver and tuna, either, but I know a few people followed my advice and invested heavily in TIPS (Treasury Inflation Protected Securities) which are up considerably since last July. There is a real fear of stagflation out there, which I wrote about back in December.

http://www.authorsden.com/visit/viewblog.asp?authorid=55121&blogid=26241

What I think I’ve learned about financial matters is this: retribution is neither swift nor judicious, but is instead slow and utterly arbitrary. Casualties rarely include those who have it coming to them.

For example, the Federal Reserve has turned on the printing presses to bail out these brokerage houses and will almost certainly have to leave them on for a while. This will happen despite the fact that the US Dollar has already fallen about 17% against the Euro in the last six months. They have to keep the presses rolling because the alternative is that the financial system as we know it will collapse. The people who made this mess will be bailed out, and the rest of us will pay for it because the alternative is a cascade that could well lead to Depression. You want it to suck bad or suck way, way bad?

That’s what my old friend was lamenting. Even those of us who know history are still doomed to repeat it. There will always be ahistorical idiots who blithely think they have discovered the secret of free wealth without significant work, and their dazzling allure will give them real power to make it happen – for a while. We rumpled types who are fixated on this “reality” shit can only sit back and watch. Screaming and yelling would do us about as much good to stop the process as it does to stop a roller coaster from falling – but everyone gives it a good shot since it makes them feel better.

Ah, well. If you would all send me mail as wabbitoid47 at yahoo.com I’d be answering it rather than kvetching about being right after all. I’d prefer that. Now, back to our regularly scheduled programming – the series on Generations in the electorate.