You Can't Polish A Turd...

...but with enough money you can rap it in a bow and pass it off as sweet chocolate. Where does one begin after a basket of PURE BULLSHIT has been dumped in your lap. No mule shit mind you, PURE BULLSHIT. The US Fed has now proven beyond a shadow of a doubt the financial chicanery they will stoop to in an effort to pull the wool over the widening eyes of the World Financial Collective...not to mention the American Public.

We begin the day at 5AM est with news out of London that Gold was edging higher.

Gold edges higher on continued dollar weakness
LONDON (Thomson Financial) - Gold was higher in early London trade as investors eyed continued weakness in the dollar, but gains have been capped by investors cashing in, with prices at elevated levels.

At 10.08 am, gold was trading at 977.60 usd an ounce against 970 usd in late New York trades yesterday. Last week, gold hit a record high of 992.90 usd before consolidating on profit-taking ahead of the much touted 1,000 usd mark.

"Gold has seen a steady start this morning and is likely to remain extremely volatile in the short-term as the metal is caught between further profit taking from investors and speculators forced to cover margin requirements, and ongoing investment demand given the bullish tone across the commodities spectrum," said TheBullionDesk.com analyst James Moore.

Funds have been pouring into commodities to hedge against dollar weakness and recessionary fears in the US. Gold has benefited from its traditional role as a safe haven asset during times of economic turmoil, as well as being boosted by inflation concerns and its use as an alternative holding to the US currency.

Later today, investors will be watching the release of US balance of trade data for January at 12.30 pm GMT, which could weaken the dollar further, in turn boosting gold, analysts said.
http://www.fxstreet.com/futures/news/article.aspx?StoryId=5085d1be-231b-4754-81e4-649f245c0339

Gold has cleared 975 overnight and Silver has tagged along and risen into the 19.80s. At 5:30AM est the following headlines rolls across our screen, and Gold and Silver are exploding higher. With the US Trade Deficit numbers coming out later this morning, we anticipate a big reversal in the Precious Metals today.

European government bonds extend losses after above-forecast German ZEW
LONDON (Thomson Financial) - European government bonds extended losses after a better-than-expected German ZEW survey raised hopes that the downturn in Europe's largest economy may not be as severe as previously thought.

The ZEW economic expectations index rose to -32.0 points in March from -39.5 in February, well above forecasts for a deterioration to -40.0.

"March's surprise rise in the German ZEW index provides some encouragement that investors do not expect a deteriorating outlook for the US and problems in financial markets to spell disaster for the German economy," said Jennifer McKeown at Capital Economics.

Although the index remains at a very low level and most responses will have been taken before last week's dismal US payrolls data, today's ZEW survey "could clearly have been far worse".

"It seems that the recent run of broadly positive news on the Germany economy, including January's strong industrial production figures, has reduced investors' pessimism," she said.

Resilient data, official's remarks boost euro
Also contributing to the euro's gains were remarks by German Bundesbank President Axel Weber, who is also a member of the European Central Bank's rate-setting governing council. He said German economic growth for 2008 would likely come in near potential.

"Demand is broadly based and supported by increasing employment. Therefore we are sticking to our forecast that GDP growth should be around potential," Weber said, according to Dow Jones Newswires.

Weber said price pressures remain a worry, however, after German inflation hit 3% last autumn. "It is not at all sure that the average inflation rate will subside significantly," he said.
http://www.marketwatch.com/news/story/resilient-data-german-officials-remarks/story.aspx?guid=%7B8ECA13C8-4413-464E-A0B7-DA69BF54249E%7D


The Euro promptly knocked the US Dollar to the canvas and began dancing circles around it reaching 1.5494 over the next hour. Gold and silver vaulted higher as the Dollar re-entered its death spiral. Gold quickly reached 985.50 in London and Silver 20.28. The race to $1000 Gold looked like is was back on with a vengeance.

Coincidentally, perhaps, perhaps not, the Wall Street Journal published an article this morning suggesting that the Fed might have some new tricks to help ease the credit crisis up its sleeve.


Will Fed Try Something New to Aid Markets?
With worsening strains in credit markets threatening to deepen and prolong an incipient recession, analysts are speculating that the Federal Reserve may be forced to consider more innovative responses -- perhaps buying mortgage-backed securities directly.

"As credit stresses intensify, the possibility of unconventional policy options by the Fed has gained considerable interest, said Michael Feroli of J.P. Morgan Chase.

He said two options are garnering particular attention on Wall Street: direct Fed lending to financial institutions other than banks and direct Fed purchases of debt of Fannie Mae and Freddie Mac or mortgage-backed securities guaranteed by the two shareholder-owned, government-sponsored mortgage companies.

Fed officials have said that, at times like these, the prudent course is to evaluate all sorts of ideas, many of which may be rejected.

Since 1932, the Fed has had the authority to lend, against collateral, to individuals, partnerships or corporations other than banks in "unusual and exigent circumstances," subject to the vote of five members of the Board of Governors. (The board has seven seats, but two are currently vacant.) This power has never been used.

Mr. Feroli noted that Congress in 1966 gave the Fed temporary authority, made permanent in 1979, to purchase obligations of government-sponsored enterprises, such as Fannie Mae and Freddie Mac.


Since 1932, the Fed has had the authority to lend, against collateral, to individuals, partnerships or corporations other than banks in "unusual and exigent circumstances," subject to the vote of five members of the Board of Governors. One pauses to ponder just what that may entail. The lender of last resort, that's what it means. The Fed is desperate... And before I can brew my morning cup of coffee and almost at exactly the same moment the US Trade Deficit numbers are released along side a stunning news report from the Fed.


Trade gap widens to $58.2 billion in January
WASHINGTON (MarketWatch) -- The U.S. trade deficit widened slightly in January as strong exports were offset by higher oil prices, the government reported Tuesday.
The nation's trade gap widened by 0.6% in January to $58.2 billion, the Commerce Department reported.

The trade deficit for January was still below the consensus forecast of Wall Street economists, who were expecting a deficit of $59.5 billion in January.

U.S. stock futures jump on new Fed lending program
LONDON (MarketWatch) - U.S. stock futures on Tuesday surged after the Federal Reserve announced it's expanding a securities lending program, which helped to offset another record high for oil prices and downbeat outlooks from Texas Instruments and WellPoint.

To promote liquidity and "foster the functioning of financial markets more generally," the Federal Reserve said Tuesday it's expanding its securities lending program. The Fed will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight, as in the existing program.
http://www.marketwatch.com/news/story/us-stock-futures-surge-new/story.aspx?guid=%7BAE4A4C52%2DCF58%2D454A%2DBDD4%2D0C809ECE61C4%7D&dist=TNMostRead

Fed turns on the spigot of money again
Mortgage-backed securities will be swapped for safer Treasurys
WASHINGTON (MarketWatch) -- The Federal Reserve and other leading central banks doubled to more than $400 billion the amount of money they're willing to lend to banks and bond dealers, hoping to flood dysfunctional credit markets with enough money to get them working again.The Fed announced a new temporary lending program on Tuesday that will allow participants in the bond markets to swap the mortgage-backed securities that they can't currently sell for highly liquid Treasurys that they can. The hope is that the extra money in the financial system will restore trust and keep prices of illiquid securities from plunging.
http://www.marketwatch.com/news/story/fed-extends-emergency-lending-program/story.aspx?guid=%7B9AF5E673-0BA7-40E6-9D35-8B639C7860E2%7D

Read Fed press release here:
http://www.federalreserve.gov/newsevents/press/monetary/20080311a.htm

If this doesn't smell like a BLATANT effort by the Fed to prop up the stock and bond markets, then the effort has never been made. Incredulous! The Fed is going to PRINT MORE MONEY and buy literally worthless securities from floundering banks? Yes they are! Gold and Silver promptly turn tail and plunge back towards Monday's lows. The Dollar miraculously gets up off the mat and scorches the Euro in it's rebound on this "news". I scratch my head and ask myself if this is Dollar positive. How can it be? The Fed has just devised a way to pump BILLIONS of Dollars into the financial system and avoid an inter-meeting Fed Funds rate cut. The shorts on Wall Street are caught completely off guard by this news, and the stock markets open up with jaw dropping gains. No matter how you slice it, this is NOT good news...it's very bad news. VERY VERY bad news...Things are WAY worse than even the most pessimistic prognosticators could even imagine.

The Fed is following up on their promise to do anything and everything to save the stock and bond markets...the financial system... And sadly, this "trick" will fail just as the countless other before it have. Wall Street is Euphoric today...a false sense of hope at the expense of those caught short when the Fed pulled a fast one on them. If this "move" isn't inflationary, then I don't know what inflation is. I just wish I could print money they way these criminals do.

Needless to say the "weak hands" dumped Gold and Silver into the "smart hands" today to chase the latest pipe dream of the US Federal Reserve. The Dollar rally? Just another short squeeze in a market that is going so low it may never see the sun again. Nobody wanted the Dollar at 5AM est this morning, and the lines to buy Gold and Silver were growing in length. 8:30AM rolls around and the Fed unveils another in a long line of tricks to prop up the US financial markets, and it was lights out. And the cockroaches of Wall Street once again covered the floor. This "Dollar rally" will fool a few, but amuse many more as the opportunity to buy Gold and Silver on sale has been extended.


Dollar soars as Fed announces liquidity measures
"In a nutshell, this demonstrates the Fed will use every means at its disposal to get the economy going," said Jonathan Lewis, founder of Samson Capital Advisors in New York.

Some market participants, however, said the dollar's gains were probably not sustainable, especially as recent U.S. economic data has been almost universally gloomy. Some economists believe the economy is already in a recession.

"The economic rationale for buying the dollar is that this encourages confidence in the U.S. financial system, but, earlier this morning, the market was selling the dollar on exactly the same logic," said Alan Ruskin, chief international strategist at RBS Greenwich Capital, in a note to clients.

Ruskin said the dollar's rally probably has more to do with the market being caught off guard by the Fed's liquidity injection and being forced to cover short dollar positions.
http://biz.yahoo.com/rb/080311/markets_forex.html


But there's another story today, one from yesterday that is now forgotten, the story that most likely led to the Fed's call to the printing presses this morning:


Market panic after Bear Stearns reports
Panic swept the credit markets on reports of an insolvency crunch at both the US investment bank Bear Stearns and the mortgage giant Fannie Mae, triggering a dramatic surge in default insurance and rumours of yet another emergency rate cut by the US Federal Reserve.

Credit default swaps (CDS) measuring bankruptcy risk on Bear Stearns debt rocketed from 246 points to 792 on fears that it had been unable to raise capital to cover mortgage losses and was preparing to invoke Chapter 11 bankruptcy protection.

The company denied the reports, insisting that it had $8bn of ready credit lines and enough funds to meet its debt obligations for the next year without having to sell assets or take out fresh debt. "There is no truth to the liquidity rumours," said a spokesman.


The Fed has been "loaning" [giving money away] to floundering banks in exchange for "collateral" since the beginning of the year via their TAF bi-weekly auctions. They've given away BILLIONS already to date, and none of it has helped a damn thing. As a matter of fact, the credit markets are in worse shape going into today than they were when the Fed began handing out money in January. What makes anybody believe that this new "sleight of hand" is going to work any better than the last? Today's Fed response to the "credit crisis" is but another new drug for the zombies on Wall Street convinced that the floundering Fed can and will fix this whole mess. THEY CAN'T! The can try to, pretend to, but they never will. The problem can not be fixed. The Fed offers another bandage to a patient that desperately needs a tourniquet.

A week from now, probably less, the Dollar will once again be digging new lows, Gold and Silver vaulting to new highs. The US Dollar was raped today, soon to be left in a heap alongside the curb. Whose going to pay for this deceit, this deception, this CRIME? We all are... for years and years to come.

And in case you forgot to check the price of Oil and gasoline this morning:

Oil hits record above 109 usd/bbl as weak dollar triggers buying
http://www.fxstreet.com/futures/news/article.aspx?StoryId=99ef945d-d107-480c-af59-719cb37e2126

Gas Prices Rise to New National Record
http://biz.yahoo.com/ap/080311/oil_prices.html

Yep, good idea...sell your Gold and buy Dollars. LOOOOOOOOOOOOOOOOOOOOOOOL!