What we are witnessing folks is the entire financial system in this country unraveling right before our eyes. I personally worked in the financial field for over 15 years... and I will tell you that I know for a fact that this system is a house of cards. Virtually every company trading on wall street is OVER VALUED...Every stock that trades has something that we in the industry call a P/E ratio which stands for price to earnings ratio. This is basically the price in which the stock is trading at relative to it's earnings per share. For example if a stock is trading at $20 per share and earns a profit of $2 per share than the ratio is 20/2 or put another way the investor is buying a company that is trading at 10 TIMES it's earnings.
That's basically like someone coming to you saying hey I got this idea that can make us a profit of 10 bucks and all I need from you is to invest $100 in the idea..oh and by the way there is a very good chance you could lose ALL your money. It sounds crazy when put in those terms I know... yet that is what millions of Americans are doing when they invest in the stock market where many if not all of the companies are trading at 10, 15, 20 or 25 times earnings and some are even trading with no earnings at all or even taking loses.
So this is not just limited to the financial sector...over valuation is a problem endemic to the entire U.S. economy...The problem for this country now is that the jig is up and foreign investor confidence is diminishing FAST and the U.S. is no longer the only game in town. So many investors are shifting their funds to Europe, Asia and even emerging markets like South America and parts of AFRICA.
Couple all this with the fact that this country is saddled with TRILLIONS of dollars in debt that it will NEVER be able to pay off and the shocking TRUTH starts to emerge... and that is this country is BROKE...The only thing holding this country up right now is it's mystique of being the mighty U.S.A.....and for now foreign money still has a little confidence in that. However, that mystique is eroding fast as the TRUTH about this country's financial weakness is becoming EXPOSED.
If you think that Lehman Brothers filing bankruptcy or Merrill Lynch needing a buyout (unthinkable 5 years ago) is bad just keep on living...you ain't seen NOTHING yet....