OpEd: Why Wall Street Matters; A reflection on CASH; "Fixed" Investments;

One of the cruel happenings on the day after a Crash on Wall Street ---any crash---is the pundit talk of folks that celebrate because "Thank goodness we were in CASH"-----that line is delivered in a very straight tone. Everyone knows who hears it that it is a pure lie.

So. For the every day laborer who has a 401K or pension, and lets the pension manager do the thinking, what is to worry about?

It is that word "CASH."

Most folks that are investing in "Fixed Investments" and getting a return of 3% might think they are in CASH or in an investment that is "guaranteed" by the government in some way----but most are in reality only guaranteed by the insurance company, or under the umbrella of a pension guarantee corp guarantee, which upon examination has limited ability to really cover the possible losses if these fixed funds have been or are dabbling in CMO, Collatoralized Mortgage Obligations or fancy hedged investments.

In summary---those who have to worry are the lenders----and if you have "fixed investments" in your retirement fund, YOU are the lender or bondholder. Thus YOU have a huge stake in the current Wall Street mess.

After all the fancy analysts in their Armani suits have switched to their sweatpants with backpacks and cleared out their desks, it is the small investor that stands to lose if the banking system cannot be stabilized.

This morning the index measuring "junk" or high risk bonds in desperate straights had risen from the index 200 to 800, or four times higher, and the Libor rate or the rate banks loan to each other had doubled from around 3% to around 6%. That in a word is FEAR in the Streets.

There has been contraction of credit in business as well as home equity lines as well as changes without notice in credit card limits. There may be further sharper limit decreases in these items. College loans may be affected, and some lenders have already discontinued their participation. In short...widespread pain nationwide and not just in stock portfolios.

Stay tuned.