Despite the global euphoria that greeted Barack Obama’s landslide victory on Tuesday, U.S. stocks posted their greatest post-election decline in history — evidence that investors are now beginning to realize what we’ve been saying all along: “All the king’s horses and all the king’s men can’t put the economy together again.”

Indeed, this would have happened no matter who won the election; the torrent of global disasters was already in the pipeline, already feeding on itself, and already accelerating:

U.S. unemployment at a 14-year high … 250,000 jobs lost in October … nearly 1.2 million jobs lost so far this year … more workers now receiving unemployment benefits than at any time in a quarter century.

Consumer spending — two-thirds of the U.S. economy — taking … Kohl’s, Kmart and many other retailers forced to slash prices 40%, 50%, 60% … major chains like Mervyn’s, Circuit City, Linens ‘n Things and others closing hundreds of stores from coast to coast.

The auto industry sucking fumes … GM, Ford and Chrysler begging for more hand-outs in addition to the $25 billion Washington has already loaned them … Toyota slashing its profit forecasts by more than 66% … Daimler’s sales plunging 18% … BMW profits cut in half.

Technology companies starving for sales … Cisco’s growth rate cut in half … Qualcomm posting a 22% drop in earnings … quarterly profits at Lenovo Group, the world’s fourth-largest PC maker, crashing 78% in July, August and September.

THIS is why Congress is already talking about throwing hundreds of billions more at this crisis. And this is also why you’d better hang onto you hat — because these massive bailouts and handouts guarantee that …

A NEW Orgy of U.S. Government Borrowing Is Directly Ahead!

Earlier this week — even BEFORE this terrible news hit the wires — the U.S. Treasury announced that between last month and the end of the year, it will borrow a total of $550 billion — more than the entire deficit for ALL of fiscal 2008.

At the same time, Goldman Sachs analysts just announced that, to finance an $850 billion federal deficit … to buy $500 billion in bad assets … and to roll over $561 billion in maturing Treasury securities, Washington will have to borrow TWO TRILLION DOLLARS!

But we think it could be a lot more. Just look at the loans, investments and commitments that the government has ALREADY made:

$700 billion to the Troubled Asset Relief Program (TARP) rushed into law in September …

$200 billion to nationalize Fannie Mae and Freddie Mac …

$25 billion for the Big Three auto manufacturers, $29 billion for Bear Stearns, and $123 billion for AIG …

$144 billion to buy mortgage-backed securities (Part of which is included in the item above) ..

$300 billion for the Federal Housing Administration Rescue Bill to refinance bad mortgages …

$87 billion to pay back JPMorgan Chase for financing bad trades made by Lehman Brothers …

$200 billion in loans to banks under the Fed’s Reserve Term Auction Facility (TAF) …

$50 billion to support the commercial paper held by money market mutual funds — so far. (By the way, approximately $1.3 trillion worth of commercial paper would qualify, adding a huge unquantifiable liability to the U.S. government.) …

$620 billion in currency swaps with industrial nations, including aid to the Bank of Canada, Bank of England, Bank of Japan, National Bank of Denmark, European Central Bank, Bank of Norway, Reserve Bank of Australia, Bank of Sweden, and Swiss National Bank …

$120 billion in swaps for emerging markets, including the central banks of Brazil, Mexico, South Korea and Singapore …

Unquantifiable new liabilities to cover FDIC’s new, expanded bank deposit insurance coverage from $100,000 to $250,000 …

And more!

Not including the unquantifiable liabilities, that adds up to nearly $2.7 trillion or about SEVENTEEN TIMES the size of this year’s entire economic stimulus package!

And that $2.7 trillion doesn’t even begin to address Washington’s next attempts to fight this crisis as unemployment continues to skyrocket and consumer spending continues to crash.

Just last week, we heard more calls in Congress for a second huge stimulus package in an attempt to get shell-shocked consumers to begin spending again. We saw GM, Ford and Chrysler huddling with House Speaker Nancy Pelosi to craft another huge bailout for the auto industry. And you can be sure that there will be more to come.

This reality — the fact that the greatest tidal wave of Treasury bonds in history is about to slam into the markets — means two things:

1. Plunging bond prices: Like any other investment, when the supply of bonds rises, bond prices fall. Given the mind-boggling size of this borrowing binge, we’re now staring down the barrel of one of the most devastating bond market crashes ever.

2. Huge profit potential for contrarian investors like us: Investments that soar when bond prices plunge are about to give you the opportunity to multiply your money throughout the rest of 2008 … throughout 2009 … and beyond!

In fact, this great government borrowing binge gives us not just one, but TWO opportunities to go for windfall crisis profits in the weeks and months ahead …

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