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All those terrible things are going to happen anyway.

You might be right, but I doubt it. I do not expect to see mass rioting in the streets (outside of a few inner cities, as we've seen in the past, for specific causes of the moment.) I don't expect that society will collapse. I do expect that the majority of people, outside of some problem areas, will be able to carry on their lives in a fashion that resembles their current life.

What we're seeing here, I believe, is the "Banker Consolidation Act of 2008". For most banks to sell their bad mortgage paper to this new Rescue Bank (or whatever it's called) the bank will have to mark the asset to market value. That will bankrupt perhaps a thousand banks.

The big banks hate competition. Now and then, they drive out all the little competitors. This happened in the 1930's, in the Savings & Loan crisis, and now.

The few favored big banks, such as JPMorgan Chase, will be able to pick up the failed banks, minus their toxic waste. This will strengthen the balance sheets of the surviving banks.

We saw the rehearsal of this with Bear Stearns. The Feds got the toxic waste (guaranteeing $30 Billion of it) and JPMorgan got the rest of it.

Not all this was a grand plot. Much of it, such as some of the growth in hedge funds and unregulated complex derivatives that only a computer program could understand, is just plain greed, writ large. Nothing new there, except the Bigger Font used this time (more zeros before the decimal point.)

And some of this will conveniently play into the larger, looming crisis of Social Security, Medicare and Medicaid, whose unfunded liabilities dwarf this current bailout by nearly a 100 times! The only way out of that mess, short of national default or the widespread breakdown of society (and the Second American Revolution) will be inflation. We are off to a great start on this round of inflation with the current bailouts.

Over the next decade, I'm betting on inflation reducing the value of a dollar by perhaps 10 percent per year. Some years, inflation may peak at 20% or 30%.

When the foreign countries (China, Russia, Saudi Arabia, Japan) holding vast piles of dollars and Treasuries decide to send that paper back home, to us, it could get painful. The dollar will cease being the world's currency, and weaken further relative to some other currencies. This will continue to unfold (China has already stopped growing its dollar reserves) over the next few years.

Shorter term (next year or three) I'm betting that we continue in a bear market, with significant bear market rallies. We likely entered a bear market rally on Thursday this week, through the first month or two of 2009 (though it will have its ups and downs.)

We will be in a serious recession, with rising unemployment, for the first couple years of the next Presidential term.

The survivors of this financial crisis will include JPMorgan Chase and Goldman Sachs (whose former CEO Henry Paulson is now conveniently running Treasury, for a few more months.)

The survivors will also include many small banks that minded their P's and Q's (Pints and Quarts -- old nautical term) and present no threat, nor much of a target, to the fat cats.

When Warren Buffet commented that derivatives were weapons of mass destruction, he was right. These weapons are now being used, as we speak, by the fat cats against their doomed competitors.

I think that the fat cats honestly do want to pull off this theft of vital body organs without killing the host (our country ;). So far, they seem to be succeeding.

However, free market capitalism, personal liberty and respect for our Constitution are not high on their list of priorities.