Financial Bailout will Lead to Demise of the Dollar as Hyperinflation Saps Savings

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(NaturalNews) This is an important analysis and update on the financial bailout situation. It was posted first to our Mindful Wealth Email List (see below).

ANALYSIS and PREDICTIONS*:
* See financial disclaimer at the end of this article...

1. The financial bailout will be approved

Lawmakers are privately being warned that if they do not pass this bill, the entire global financial system will collapse. Publicly, they only say we "might have a recession," but behind closed doors, they realize the whole system is at stake. That's why a bailout bill will ultimately be approved.

2. Temporary euphoria will spike the stock market.

You'll likely see this on Monday: A declaration that "the problem has been solved!" and a huge spike in stock prices. For a day or two, everyone will talk about how great it is that we've all been saved, and what wonderful leadership we have in Washington, and look how the stock market is proving them right!

This is all, of course, a smokescreen. It will, however, be a great opportunity to buy the dips in gold stocks, gold mining stocks and other equities that run counter to stock market euphoria.

3. Foreign central banks will reassess their purchasing of U.S. debt.

With the U.S. taking on another $1 trillion in debt, foreign central banks will realize the game's over, and the U.S. is never going to be able to pay back its IOUs. As a result, many foreign banks will either stop buying U.S. debt, or even start trying to sell off the U.S. debt they already carry.

The result of this is increased costs of borrowing for the U.S. There is a small chance that there could be a panicked sell-off of U.S. debt, but I put this chance at only 10% or so. However, this is an important article worth considering on this point: http://www.bloomberg.com/apps/news?...

Regardless of what foreign banks do, it will suddenly become MORE expensive for the U.S. to borrow money. Imagine the country paying credit card interest rates just to borrow money that it's using to pay the INTEREST on the debt it already owes to other countries!

4. Following the false euphoria, investors will sober up as they learn about the actions of central banks, and the stock market will begin to teeter, then head downward. Yet more banks will fail (Wachovia now looks dangerously close...).

Yet more money will be created out of thin air to bail them out, and every time another bank is bialed out using new (created) money, foreign central banks get closer and closer to pulling the trigger on a fire sale of U.S. debt.

5. The Christmas shopping season will be sharply down

With consumers increasingly concerned about their finances (and many losing their jobs), the upcoming Christmas shopping season will be quite bad. Expect to see massive discounting across most retailers. Newspapers will report how terrible the Christmas season is, and even retailers like Wal-Mart will report seasonal sales dropping compared to 2007.

6. A wave of bankruptcies will sweep through retailers

Following the poor Christmas performance, a wave of bankruptcies will sweep through mass-market retailers.

This wave of retailer bankruptcies will spell yet more financial chaos for the banks already walking on thin ice. Expect to see yet more financial institution failures announced in January, 2009.

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