Friday, December 10, 2010

As the World Turns... or, As the Fed Turns the World Into Trash

You really have to hand it to our genius Chairman of the Federal Reserve, Ben Bernanke. He's so smart, he managed to lose a couple billion dollars on his recent bond purchases. Not a problem for him, really, he's just another hired hand, but he's now openly adding to the national debt load, which, in case this needs repeating, is completely unpayable and out of control.

How did Uncle Benji lose $2.4 billion in a month, you ask? Maybe announcing the timing of his "buying spree" otherwise known as QE2, in advance, gave the Primary Dealers (those from whom he was purchasing) the opportunity to ramp up interest rates to their benefit (and the public's detriment). Would they do that? would execs at Goldman Sachs, Morgan Stanley or Merrill Lynch steal your grandmother's purse in broad daylight if she accidentally left it unguarded?

It's exactly what happened. Otherwise, why did interest rates spike the moment the Fed announced their POMO schedule? It's open theft on the American public. May the Fed and all member banks rot in the very worst of hells for eternity.

Making matters even more absurd and detrimental to the health of the US economy, the Fed today announced its latest schedule of market "operations," by which they will monetize another $105 billion of Treasury debt and thus fund the bankrupt banks with more easy money.

Equity markets responded as they should to easy money flows, with gains across the board in the major indices.

Dow 11,410.32, +40.26 (0.35%)
NASDAQ 2,637.54, +20.87 (0.80%)
S&P 500 1,240.40, +7.40 (0.60%)
NYSE Composite 7,823.30, +41.16 (0.53%)

Advancing issues overwhelmed decliners, 4334-2199. NASDAQ New Highs: 243; Lows: 28; NYSE New Highs: 203; Lows: 47. Unfortunately, many of the NYSE New Lows were bond funds, many the repositories of municipal pensions. As these lose money, debt crises in the various states continues to grow. In New York, California and Illinois, state budget deficits have reached crisis stage. Volume, overall, was miserable, as normal.

NASDAQ Volume 1,754,129,500.00
NYSE Volume 4,996,264,500

In the commodities space, a bit of a breather. Oil, thankfully, has backed off a bit after flirting with the $90 level, losing another 58 cents today, closing the week at $87.79. Gold's last print was at $1385.80, down $1.20. Silver was also relatively quiet, spending the entire day in the red, though down only 8 cents, at $28.68.

Finishing off a ho-hum kind of week (though admittedly, the Fed has us on the edge of our seats), the following animated video helps explain why JP Morgan Chase is rich, though maybe not for long, and why you should own as much physical silver as you can afford.

Hilarious video of how JP Morgan is up to its neck in short silver contracts with no good way out.

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