Maybe the lesson is perseverance or possibly stupidity. For more than a year, I have been grabbing every megaphone I could find to shout like some Chicken Little that the “Sky is falling,” and that the debt bomb would go off. We have been trying to get our film IN DEBT WE TRUST seen to heighten public awareness and have used sites such as Stopthesqueeze to argue for a fight back

I hate to admit it, but most of the media has acknowledged the problem but then ignored it. I was feeling more marginalized than ever. How could, I asked concerned people, the anti-Bush Majority, the progressive movements—shucks, anyone—ignore this obvious menace?

The people who weren’t listening are listening now—not necessarily to us but to the whooshing sound of money, large amounts of it, being flushed away as the market drops and Central banks pump HUNDREDS OF BILLIONS into the financial system worldwide as the subprime—what I call the subCRIME—scandal leads to a loss of confidence in credit markets,

Suddenly the story is everywhere—still not covered with a who gets hurt perspective like the one in IN DEBT WE TRUST or any focus on the rip-off and crooked operators who were profiting off the crisis but it is getting out there. Yes Houston, we have a problem and its not just a few tiles on the shuttle. This ENDEAVOUR is, as they say in deep ship.

Lets recap. Last week President Bush tried to bolster confidence in the system with a morning press conference. While all may have been well in his mind, the market got the signal and went KABOOM. A 387 point drop in the afternoon and then the big money boys got scared and started pumping money llike ballast to keep the ship afloat We know that it was more than $100 BILLION from the Fed but other Central Bankers joined in to try to CONTAIN the CONTAGION of more slippage. As far as I know, I was the only one who called for a CRIMINAL INVESTGATION in a commentary that got lots of pick up and comment. Check it out and see what you think.

The response showed that I and those of you reading this newsletter are not alone in seeing the dimensions of this crisis. But the plot, is shall we say, thickening because of concernsthat the government’s response is and will aide Wall Street, and bail out the very people who caused the crisis in the first place. Horrors, what irony—or may that is what we have come to expect.

“The issue is often referred to as “moral hazard,” reports the now shrunk in size New York Times,” meaning that the risk-takers who brought on the panic would feel bailed out and would be more likely to do it again.”

The optimists are counseling that all is basically well and that a cut in interest rates will end the volatility and permit us to go back to sleep, but not everyone is so sure, as Reuters reported at week’s end:

NEW YORK, Aug 12 (Reuters) - High volatility and low liquidity will likely dominate emerging sovereign debt trading this week, as investors wonder how many more funds or banks carry toxic assets backed by U.S. subprime loans.

While some, like chief-economist Vladimir Caramaschi from Fator brokerage in Sao Paulo, argue that “at least for now the crisis is restricted to the credit market, without a relevant impact on the real economy,” others foresee trouble not so far ahead.

“The central bank’s actions signaled that there is a serious problem, this time regarding liquidity. If you have less liquidity, you may reduce the availability of cash for consumers in the future, impacting the whole economy,” said Kelly Trentin, an analyst with SLW brokerage in Sao Paulo.

The report continues: “There is a growing fear of a recession down the line. Most forecasters say a recession is not on the immediate horizon, especially now that the Fed has sent a “We’re here to help” signal to stressed markets. But the consensus view is for a 26 percent chance of recession in the next 12 months, says the August release of the widely watched Blue Chip Economic Indicators survey. That’s up from 23 percent in July.”

BE VERY AFRAID

None of this was supposed to happen as Indian analysts Vinod Kothari & Rochak Agarwal reminded us:

Circa 2005, the US housing market was booming. As conveyed by the June 2005 Time magazine’s cover title “Home $weet Home,” the housing market was minting money for everyone. Amid this, every individual in the US was living the American dream to own a house. Housing prices were consistently rising and appreciation was the highest over the past 30 years. This, coupled with historically low interest rates, prompted most people to buy “investment properties”.

Now many are in danger of losing those properties and their homes as real estate market sours and foreclosures rise. They conclude: “So, the worry that the problems that emanated in the sub-prime market might spread into a crisis of global scale is not entirely unfounded.”

Mark Trumbull of the Christian Science Monitor says that many Americans are getting VERY, very afraid:

“The current upheaval in financial markets is hitting some highly specialized lenders and investors the hardest, but it hasn’t stopped there: It has big implications for the whole economy.

The stock market has become much more volatile in the past few weeks. Borrowing has become tougher for home buyers and some businesses.

These effects come as ordinary Americans have greater financial wealth but also more debt than ever before. It also coincides with financial industries becoming increasingly complicated and global in scope.

Behind all this lies a big question: If the turmoil on Wall Street gets worse, how large an effect will it have on Main Street – in communities where consumers are already burdened by high gas prices and falling home values?

THE PENTAGON’S RESPONDS TO DEBT (AP)

Need a down-payment for your home? Seed money to start a business? The Army wants to help — if you’re willing to join up. Despite spending nearly $1 billion last year on recruiting bonuses and ads, Army leaders say an even bolder approach is needed to fill wartime ranks.

Under a new proposal, men and women who enlist could pick from a “buffet” of incentives, including up to $45,000 tax-free that they accrue during their career to help buy a home or build a business. Other options would include money for college and to pay off student loans.