Notes from theInvestment Underground 

Thursday, March 12, 2008 Recoleta, Buenos Aires, Argentina

Free money is destroying America… 19% interest on your money… Going long on banks… Getting out of gold… "Shorty" Guzman vs Bernie Madoff… More Greenspan guff…

*** Porter Stansberry says "free money is destroying America." We couldn’t agree more. The idea that the government can ‘fix’ things is as bogus now as it was during the Great Depression. The government, by creating the biggest credit bubble of all time through the Federal Reserve, caused the economic disaster we now all face. The idea that it can now solve the problem through more free money is an outright sham.

As Porter says in today’s DailyWealth:

Nowhere in history will you ever discover a market whose efficiency was improved by government interference. Likewise, history is bereft of even

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The image below shows what Jim would call “max-pain” in the on going storm of mortgage resets.

We are now in the midst of a mind numbing peak in resets of subprime mortgages. Gee, could this be why retail sales and consumer confidence have fallen off cliff? And while we’re at this grim peak, remember that reset doesn’t equate with instant default. Default takes 90 days to happen and then once foreclosure proceedings are started, depending on the state, it can take up to a year before the foreclosure actually happens. So even with a peak in resets now, banks and the courts will be busy for the next year dealing with whatever carnage results from this

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