Say A Prayer For America

It should come as no surprise that the initial reaction from the metals markets on the news that this mother of all shit sandwiches will be force fed to the American public is for them to go down, and the US Dollar up. What a freaking joke! No single event in the history of mankind could be more negative for a "local currency" than the events of the past 10 days. To even suggest that this shit sandwich will taste good and fill the bellies of the poor boys on Wall Street is to invite public stoning. Folks, the end of life as we know it in the Western World is at hand. Grab you ankles and kiss your ass goodbye.

It is with stunning realization that our entire way of life is one giant Wimpy Burger. "I'll gladly pay you Tuesday, for a hamburger today." Our entire way of life exists by way of one insurmountable mountain of debt. Nothing is ever really bought, and nothing is ever really sold. The entire economy is an Alice in Wonderland world of make-believe and I.O.U.'s. How pathetic we are to boast that we are the most powerful nation on earth. Humpty Dumpty has a better chance of getting his act together than the US Financial System does.

Isn't it amazing that after countless bailouts, with promises of "this will fix everything", nothing has been fixed, and the price of Gold drops with each one. Truly stunning the shear stupidity of all that we have witnessed over the proceeding six months. Lies, Lies, Lies, and more Lies from a government that boasts truth and democracy. I don't know what is worse, the US Governments LIES, or the rest of the Worlds failure to call the lies into the open, and then kick the USA to the curb for stealing from the world community. The USA is a pillar of lies, learn to live with that fact, and you may survive the coming Mega Depression.

$700 BILLION? The Fed dumped over $1 TRILLION into the financial system over the past week, and never "asked" for a penny of it from the taxpayers...and NOTHING was fixed. $700 BILLION more? It ain't gonna make a damn bit of difference just because the asked if it was OK.

Oh Stop It! You're Killing Me...

WE LOVE THIS NUGGET of irony, idiocy or just plain cant so much, we have to repeat it – clutching our sides and doubling-up in laughter, tears streaming down our disbelieving faces:

"The reality of the situation is that an open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention..."

So said Henry Paulson, US Treasury secretary and ex-Goldman Sachs chief, in Shanghai on 7th March 2007. Hank was lecturing Chinese officials (who this week allowed short-selling on their domestic equity markets for the first time) at the so-called China-US Strategic Dialogue summit.
http://news.goldseek.com/GoldSeek/1222457974.php

Making a Deal with the Devil
The urgency for passing this bailout bill is based on the claim that the American economy will collapse if nothing is done. If the government were to stay out, and allow the market to function, there will certainly be a great deal of economic pain. Companies will go bankrupt, banks will fail, real estate and stock prices will keep falling, and many people will lose their jobs. However, government action will not prevent any of this. At best, it will merely delay the inevitable, but only at the cost of increasing the severity of the underlying problems, thus making their ultimate resolution that much more painful to endure.

The bottom line is that there is no way to resolve our economic problems without a severe recession, and our politicians need to level with the public. As a nation, we gambled on the alluring riches of real estate and we lost. The price must be paid. Contrary to the Bush Administration rhetoric, the fundamentals of our economy are not sound. If they were, we would not be in this mess. Recessions are meant to restore balance, purge excess, and liquidate mal-investments. On that score we have a lot of work to do.

We are being told that this plan will help the economy by keeping the spigots of consumer credit flowing. However, to really address the fundamental problems, those spigots must be tightened. Since we have already borrowed and spent ourselves into bankruptcy, the last thing we need is for consumers to borrow more.
http://news.goldseek.com/EuroCapital/1222451786.php

What $700B won't buy: a quick fix for the economy
SAN FRANCISCO (AP) -- Not even $700 billion will be enough to spare the United States from more economic anguish if the government's proposed banking bailout pans out like similar desperation moves during the past two decades.

It usually takes years to recover from a financial crisis severe enough for politicians to ride to the rescue with truckloads of taxpayer money.

Take, for example, the U.S. government's August 1989 bailout of the savings-and-loan industry.

The stock market fell by 12 percent within the first 14 months of the rescue plan while the economy slipped into an eight-month recession that began in July 1990. Housing prices that had just begun to erode continued to fall for another three years.

There's little reason to believe it will be dramatically different this time around, particularly since this bailout involves harder-to-value assets and comes with the U.S. economy already on the edge of a recession, if one hasn't begun already.

The government is hoping its intervention will unclog the lending pipeline, but that isn't a certainty either, said Sung Won Sohn, an economics professor at California State University, Channel Islands.

"If I am a medium-sized bank on Main Street, simply because the government is bringing a bailout package to Wall Street doesn't mean I am suddenly going to change my mind and start lending money again," Sohn said.
http://biz.yahoo.com/ap/080927/bailout_fallout.html


Best outlook for silver since the days of the Hunt brothers
Not since the Hunt Brothers tried to corner the silver market in the late 1970s has there been more dramatic news for silver prices than last week’s confirmation from the Commodity Futures Trading Commission enforcement division is investigating the silver market.

Retail investors have recently been big buyers of silver bars and coins, while something fishy has been happening in the futures market with short positions. Silver investors have written hundreds of emails to US federal regulators and the result is a fresh investigation.

‘We take the threat of manipulation in the futures and options markets very seriously and employ a number of measures to prevent, identify and prosecute it,’ says Stephen Obie, acting director of enforcement.

The argument from silver bugs is that a small number of US banks have been holding a large portion of short positions — or bets that silver prices will fall — on the New York Mercantile Exchange. And indeed data shows that two US banks increased their short positions between July and August by 450 per cent and controlled 25 per cent of the market.

This time it is the enforcement rather than oversight division of the CFTC that is tackling the investigation. The oversight division performs overall market surveillance. The enforcement division looks at activities in a specific time period.

It may be that the CFTC enforcement division investigation reveals no wrong doing over the summer. Silver has always been a volatile commodity, and price swings can also be to the upside and benefit investors. But this investigation also puts the spotlight on silver at a very interesting moment in the precious metals bull market.
http://news.silverseek.com/SilverSeek/1222408200.php

All traders should have stops in to protect positions against theft by the CRIMEX should Gold fall below 860, and Silver 12.60. Catching a falling knife is dangerous. Breaks above 920 Gold and 14 Silver are signals to add to positions on the way up.

Say a prayer for America.