Keith Fitz-Gerald

   

What our elected leaders failed to grasp, unfortunately, and still don't apparently understand, was that this wasn't about politics. It was -- and is -- all about global finance. And now more than ever, global economic issues reach from Wall Street to Main Street, meaning those issues will affect you and me.

So, even though the now-adulterated version of the deal apparently now includes a modicum of accountability, it still is going to add billions of dollars in new debt to the U.S. federal balance sheet. And particularly with the already-brittle U.S. economy, we're hard-pressed to see how Americans will be able to afford a $700 billion taxpayer-funded bailout in any form.

That's $700,000,000,000.00, with a capital "B" and -- count 'em --13 zeros.

Let's Think About This for a Moment

Even in its revised form, the consequences will hang over us for years, and that means this is no time for investors to be speculating, nor is it time to put the proverbial "pedal to the metal."

However, it is time to think about the following:

* Virtually any bailout plan -- regardless of its format -- will ultimately saddle the incoming president and the American people with trillions of dollars in debt that will actually dwarf the U.S. economy's actual output as measured by gross domestic product (GDP). This means that investors must plan for much-higher interest rates – rates that are so high, in fact, that they could easily choke off U.S. growth well into next year.

* The dilutive effect of $700 billion -- not to mention the additional trillions of dollars that still are not recognized as "problem assets" -- will be extreme. U.S. inflation could spike overnight. And the U.S. dollar has a higher-probability than not of cratering from here. (We hope we're wrong on this point, incidentally, but we're not optimistic). This reinforces the investment case for commodities, in general, to begin moving far higher as we have suggested for some time, now.

* At the same time, global growth will continue. In fact, in the years to come, the world's healthiest overseas markets could more than make up for the unmitigated disaster that America has become lately.

The bottom line is this: For the foreseeable future, global investing is the way to go.

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