Seriously.

Go read the previous Ticker.

Here's the fundamental and market picture.

There were many who said that we would not have a recession in 2007, including Bernanke, Buffett, Paulson and dozens of others.  The government and its minions took actions that would "promote moderate growth over time."

In the first part of 2008 we heard the same siren song - there will be no recession, there will be no cataclysm.  "The economy is fundamentally sound."

Actions continued to be taken that amounted to giving whiskey (looser credit) to a drunk (the credit junkie that is America.)  The drunk developed cirrhosis and liver cancer from all the extra booze, which he readily consumed.  The warning signs continued to pile up, I and a few others reported them, but we were universally ignored.

Now the drunk (our economy) is in the hospital puking up blood and his liver enzyme levels are off the charts.  He's anemic, obviously jaundiced, and near death.

Congress and our government has one last chance to stop the insanity, in that The TARP has been pulled over so much that its now out of money, and Treasury will inevitably come back to ask for the other $350 billion.

Congress, our President-Elect, and our President have only one action they can take that will save us from the abyss.

They must say no and instead start issuing subpoenas and indictments, shutting off the booze, and they must do so now.

I have no reason to believe Congress or our executive (incoming or outgoing) will do this.

But if they do not we are likely to see a "relief rally" somewhere here into the end of the year, then a grueling 2-year+ crash much as happened in 1930-32, culminating with somewhere between a 75 and 90% loss in the major indices, essentially destroying both equities and the corporate debt market.

Unemployment will go north of 10% on the "official" statistics, and U6 will approach (if not breach) 20%.

GDP will contract slowly at first but the consumer-led spiral will accelerate into 2009, reaching a cumulative 20% off the peak by the end of 2010.

To Congress, and President-Elect Obama:

Who are you going to listen to now?

The men and women who have been consistently wrong?  Secretary Paulson and Ben Bernanke, both of whom said all the way up until they presented their "bailout" proposal that "The economy is fundamentally sound?"

The men who said they wanted to help "Main Street" and then gave $70 billion to Wall Street bankers for their bonus pools?

The men who said they were going to buy distressed mortgage securities, then instead spent the entire first-half allocation on handouts so their "friends" could raid weaker rivals, and in addition re-wrote tax policy in the dark of night to grant those same favored friends $150 billion in extra giveaways you didn't vote on?

Or will you listen to people like myself who have been consistently right.  The people who told you time and time again that this bailout not only would not work but would not be spent where Treasury and The Fed said it would?  That it would go to benefit not Main Street but Wall Street and other banking interests, including (quite possibly) foreign investors and governments, further impoverish the taxpayer, and yet do nothing to address the root of the problem - excessive levels of debt throughout the system?

You cannot unseize the financial system and restore the normal functioning of the capital markets until the unsustainable and irredeemable debt has been defaulted.

Will you finally listen to The American People - who were solidly against this bailout - and all the other bailouts?

I believe we may be days, weeks or (at the outside) months away from The United States reaching the point of no return in the mismanagement of this financial mess.

We are dangerously close to investors worldwide coming to the realization that Ben Bernanke at The Fed has taken in "collateral" that is not worth anything close to what has been claimed - that is, that he's been lying all along.

In fact, if you remember back when Bear Stearns was first bailed out we were told there was little chance there would be any impairment on those so-called "assets" as a significant haircut had been taken - but The Fed has been quietly writing down the "assets" in "Maiden Lane", the Bear Bailout facility, without any significant announcement or discussion with Congress.  (Yes, I know, Blackrock "claims" the collateral has been performing well on a cashflow basis. If all this is true, why can't we all see the details?)

Should investors around the world (and in the United States) come to believe that Treasury, The Fed and Ben Bernanke are liars, they would then be forced to conclude that they have in fact conspired to monetize a significant part of the bad paper "accepted" through the various facilities - which would mean The Fed has been "printing money" (despite telling you he had not in his latest Congressional testimony.) 

The consequence of that conclusion would almost certainly be immediate capital flight and a "sudden stop" shutdown of foreign investment in our Treasury Markets.  How would Congress respond if Treasury was unable to market its securities except through monetization ala Weimar Germany? 

Do you really want to face that possibility and what it would mean for America?

Adding to this is the fact that China has announced an intent to prop up their own economy through a massive fiscal stimulus package.  The difference between China and The United States is that China has a huge surplus.  The bad news is that it is largely in dollars and US Treasuries.  To fund this stimulus they will almost certainly either consume some of this surplus or at least stop adding to it.  In addition the gulf oil states are seeing their local equity markets collapse even faster than ours; they too are going to be forced to redirect foreign exchange reserves internally to support their economies and citizens.  

When you add all this up you are forced to conclude that the door is slamming closed on the United States for foreign subsidization of our budget deficits just as we attempt to ram through more than a trillion worth over the next six to twelve months.

It is not going to work.

Congress, President-Elect Obama, America.

You have a choice.

Your choice comes down to either forcing the bad debt into the open and accepting the economic turmoil that will result (and there will be plenty of it), and a cessation of deficit spending (or at least a return to the area of 1% of GDP until the economy turns) or you are likely to see 10% of America calling this home within the next two years.