The Summer of Our Discontent?

Hi Gang,

Welcome to my Liz-Vision blog! From now on, you can feel free to come here anytime... I can't promise that if you're "down and out and you're feeling cold" that I'll bring you up with a rainbows-and-sunshine view of the markets, but I CAN promise that you'll get my vision of the REAL story-- as best I can discern-- about what's going on.

I'm actually on vacation right now in a beach town on the Atlantic Ocean but things are happening all around us so quickly so I thought I'd post.

About 4 months ago, my co-anchor David Asman and I started talking amongst ourselves about how worried we were about Fannie Mae and Freddie Mac. Both of these government-sponsored mortgage giants have been horribly managed over the years and the rot within was starting to creep out to the skin. Both David and I were getting tips from our smart trader friends...we'd compare notes on a daily basis, but it seemed no one else was worried. Well.

Hello "BACK STOP." That's what we have today. And if you listen to those same traders who saw it all coming, they'll tell you an all-out government takeover is just around the corner. Who knows, except I have a nagging feeling this is all going to trigger some kind of domino effect that won't be pleasant for much of the U.S.

It's already started. Just the psychology of it. Here's my Liz-Anecdote of the Day: I ran into WalMart* (notice I put the asterisk AFTER the name because heck, Walmart paid some marketing outfit to tell them they need to change the star to an asterisk and move it to the end of the name) to buy a blowdryer because I forgot mine on the trip. I ended up, as most of us do, buying 19 other things I'm not sure I needed (among them, Transformer pajamas for my 4 year old son and a Hannah Montana sparkle shirt for my 6 year old daughter, 3 Cliff protein bars and some Aloe) and when I got in line, I noticed the woman in front of me. She, too, had a bunch of things and was standing with her little daughter. As we got closer and closer to the cashier, all of a sudden, she dumped half the stuff she had to the side, turned to her daughter and said, "We didn't really need that stuff anyway." She left with two things.

I have to believe that this scenario is being played out in many check-out lines across the nation. People are thinking twice. Maybe it's just the fear, or perhaps it's the reality of their shrinking pocketbooks ("wallets" on the West Coast) courtesy of high gasoline prices. Look: I am a huge optimist about this country... having intensely covered the dot-com implosion in 2000 and the subsequent Bear Market, I understand that the bad times don't last forever. But shriveled dot-coms didn't require government billions to save them. They simply went under. Survival of the Fittest and all. The wheat was separated from the chaf and the chaf was dumped out with yesterday's newspaper. But in this case, the Treasury Department, the Federal Reserve, AND the US government are disinclined to let the mortgage biggies and financials names whither, die and end up curbside. I wonder what THEY know that WE don't?

Thanks for checking in.

Liz