Government Sues 17 Banks Over Faulty Mortgage Backed Securities

This news broke early on Friday, but details were just coming in as the markets were closing.

The Federal Housing Finance Agency is the conservator for failed federal GSEs, Fannie Mae and Freddie Mack. The agency seeks a total of $196 billion in damages in state and federal courts from the named defendants, including some $24.853 billion from Merrill Lynch and First Franklin Financial (owned by Bank of America). All of the charges are made in connection with false or misleading representations and warranties made to Fannie and Freddie by the banks.

The list is pretty much a who's who of the sub-prime and general mortgage crisis which pushed the global economy to the brink of disaster back in 2008, including such notables as Goldman Sachs, Bank of America, JP Morgan Chase, Citigroup, Countrywide Financial (now part of Bank of America), Deutsche Bank and others.

American Banker points out that the largest exposure - $57 billion - belongs to Bank of America (BAC) because the bank not only sold $6 billion of MBS to Fannie and Freddie, but the figure grows larger when factoring in the damages charged against Merrill Lynch and Countrywide, both acquired by BofA during the financial crisis. JP Morgan Chase has to deal with $33 billion in claims, including those of Bear Stearns and Washington Mutual, both of which were taken over by JP Morgan Chase.

Below is the press release in which the agency lays out the charges. Here is a link to the individual cases.

FHFA

While most of the American public must be cheering this news, it's about the worst that could happen to the TBTF banks, being that their reputations and balance sheets are both on shaky footing. The hardest hit will surely be Bank of America, which is being sued by virtually the whole planet, including AIG and USBancorp.

The litigation involved in these cases will likely take many months, if not years, to settle and will cost the banks dearly in legal costs, which are already taking their tolls on profits.

In addition to the banks, a multitude of individuals are charged with various violations of securities laws, though none of the CEOs - such as Jaime Dimon, Dick Fuld or Lloyd Blankfein - are among the defendants. Obviously, the government is going after the lowest-hanging fruit in an attempt to garner public support by going after "bad guys."

This is a developing story with far-reaching implications for the global economy. MoneyDaily will stay abreast of events as they develop.

With any luck, we may witness actual "perp walks" as the lower-level employees implicate the top rung of the banking elite. The thought of seeing Jaime Dimon or Lloyd Blankfein in leg irons and handcuffs is almost too delicious to consider.

Stocks Slide on NFP ZERO JOB GROWTH; FHFA Sues Big Banks

The Markets

Once the August Non-Farm Payroll report was out, US equities were as good as done. The BLS reported - for the first time since February, 1945 - that no new jobs were created in the month. That's right. Zero. None. Squat.

Adding to the general jobs plight and blight in the US, July and June gains were revised lower. July was down to 85,000 from 117,000 previously reported and June figures showed that employers added just 20,000 jobs in June, not 46,000, for a net loss of 58,000 jobs from previously-believed figures.

Off of that kind of defining news on the economy, stocks dove at the open and stayed down all day long, finishing near their lows.

The other major market mover was news that the Federal Home Finance Agency (FHFA) - the agency tasked with overseeing the conservatorship of Fannie Mae and Freddie Mac - was in the process of suing as many as 17 major banks over faulty underwriting on - you guessed it, didn't you? - soured mortgage backed securities (MBS). This news was breaking all day, though details were trickling in at the market's closing bell.

The banks being sued were Bank of America, Merrill Lynch (a subsidiary of BofA) for $22.4 Billion, Citigroup, Barklays, Nomura, among others.

Dow 11,240.26, -253.31 (2.20%)
NASDAQ 2,480.33, -65.71 (2.58%)
S&P 500 1,173.97, -30.45 (2.53%)
NYSE Composite 7,250.73, -192.73 (2.59%)
NASDAQ Volume 1,582,149,000
NYSE Volume 4,363,518,500
Combined NYSE & NASDAQ advance-decline: 1075-5448
Combined NYSE & NASDAQ New highs - New lows: 20-147
NYMEX WTI crude oil futures: 86.45, -2.48
Gold: 1882.50, +57.10
Silver: 43.25, +1.75

The big winners on the day were the prudent and astute conservative investors holding gold and silver, both of which were boosted significantly as the fear of a looming recession rises and problems in Europe escalate over the second Greek bailout.

Basically, anybody who doesn't believe either a) we're already in a recession; b) the first recession never actually ended; or c) we're about to go into a recession, simply has not been paying attention, or, is paying attention to the globalist media's consistent pleadings that the economy is doing just fine.

With the nitwits in Washington more intent on getting re-elected than fixing real problems, the United States, and by inference, the rest of the world is sinking deeper and deeper into a global depression which likely won't be resolved without drastic measures (war, currency debasement, bank failures on a grandiose scale).

With that in mind, let's party the three-day weekend away with the following:

IDEA: Don't Google it, Bing it!

Most of us use Google for searches, but Bing is better. Not only does Bing offer more options, better video and image coverage, but they have a rewards program by which users can accumulate points and eventually redeem them for some nice items (it takes a while, but if you search a lot, they add up).

What does Google offer besides a lot of ads next to search results? Nothing.

Try Bing. It's better.

Battling the Kleptocracy - Part 1

Editor's Note: In an effort to provide some clarity for regular people (working types or entrepreneurs, with incomes under $100,000, often well under) on the rigors of the modern economy, this blog will devote itself in part to coverage of markets (stocks, bonds, commodities), but more to an understanding of how the US economy, since the 1980s, has become unfair to the middle class, biased against wage earners and how it promotes a gross inequality of class, income and privilege, favoring the ultra-wealthy.

It is the intent of the author to offer constructive advice to millions of Americans who unknowingly and unwittingly submit to this poorly-conceived construct of economy and methods and practices to thwart and escape the clutched of a debt-driven fiat money environment.

The "Battling the Kleptocracy" series shall be composed of posts containing two parts: first, an overview of the day's events on the markets; second, an informational section of practical ideas to help foster a counter-cultural movement away from the status quo.

The Markets

Despite the usual non-eventful numbers from the ADP private employment report (+91,000 for August, on expectations of 100K) and another downward drift in the Chicago Purchasing Managers' Report (PMI) reading of 56.5, from 58.8, stocks blew out in the morning and drifted lower throughout the day. Only a desperate, late rally saved the major indices from posting negative returns on the session.

Dow 11,613.53, +53.58 (0.46%)
NASDAQ 2,579.46, +3.35 (0.13%)
S&P 500 1,218.89, +5.97 (0.49%)
NYSE Composite 7,528.39, +64.39 (0.86%)
Combined NYSE/NASDAQ advance-decline: 3936-2651
Combined NYSE/NASDAQ new highs - new lows: 66-19
NASDAQ Volume 1,986,423,750
NYSE Volume 5,188,927,500
WTI crude oil futures: 88.85 -0.05
Gold: 1824.50 -10.60
Silver: 41.58 +0.23

Comment: Blah. The usual churn in the face of overwhelming debt pressure and stagnation in developed nations.

Idea: Get your money out of Bank of America

There once was a time when banks were trusted pillars of society, mostly local and involved in the communities they served. With the advent of computerization, globalization and the rise of a mendacious class of ultra-wealthy supra-nationalists, circa 1980, the repeal of Glass-Steagall (1999) and the overwhelming force of mass media and central bank control (Federal Reserve Act of 1913), the common notion that banks served communities was no longer valid.

Not to put too fine a point on it, but banks have probably always been rooted in deception and money-grubbing, but banking and legislative activity of the past 30 years provides an excellent background to the root evil of the Kleptocracy, which, loosely defined, is a societal/economic system which routinely skims wealth from those who least can afford it, to the benefit of those who need it the least.

In 2008, Bank of America, under the guidance of the since-discredited Ken Lewis, purchased Countrywide Financial Corporation, at the time the largest originator of residential mortgages in the United States.

Guided mainly by greed and without proper due diligence, Bank of America blundered into (or possibly under influence and threats from the Federal Reserve) what will go down in history as one of the worst corporate deals of all time. The purchase price for Countrywide was reported at $4.0 billion, though some analysts, notably those employed by Bloomberg, put the figure at $2.5 billion, as BofA was already carrying some of Countrywide's portfolio. The bank also purchased once-heralded brokerage firm, Merrill-Lynch, in another bad deal, at the height of the financial collapse of 2008, though that purchase is a topic for another time.

Countywide's portfolio of mortgages turned out to be so rotten, loaded with no-doc loans, NINJA (No Income No Job Application) loans and other variable-rate and exotic mortgage flavors that BofA soon had a mess on their hands, though the executives of the bank were loathe to mention that fact to shareholders. Thus, we experienced the sub-prime meltdown, the financial crisis and more, that continues to this day.

Bank of America was insolvent and only was salvaged via underhanded loans, guarantees and bond repurchases from the Federal Reserve. Their losses on soured mortgages are so deep and so broad, that even these infusions cannot and will not prevent Bank of America from falling into deep default at some point (probably already happened a few times already) and eventually being broken up or forced into bankruptcy.

The bank is the largest in the United States as measured by deposits, but the costs of litigation from the Countrywide deal will eventually sink it. The following are stories from just the past three days, with more to come.

It is advisable to pull all funds from Bank of America as quickly and as quietly as possible. They do not abide by any laws, much as a cornered wild animal might act in rash and irrational manners. They are doomed, and with them, other financial institutions will be ruined or significantly impaired. You do not have to face ruin along with them. Put your money in a local credit union or sound local or regional bank. Avoid other mega-banks like JP Morgan Chase, Wells-Fargo and Citi. They are part of the counterparty risk which will be destroyed when Bank of America falls off the shelf.

Bank of America hid the potential of an AIG lawsuit from regulators and investors, knowing about the possibility of an extensive and expensive legal undertaking, as far back as January of 2011.

CEO Brian Moynihan is selling off parts of the bank piecemeal in order to raise cash.

On Tuesday, Bank of America announced plans to shed another piece of its mortgage business.

The $8.5 billion settlement which the bank secured in federal court is being challenged on a number of fronts, including the FDIC, FHFA, a homeowner's group, the NY state Attorney General and even Goldman Sachs. The settlement was supposed to put to rest claims on over $170 billion in bad loans, but has since fallen apart due to these and other objections. Litigation, which BofA hoped to have settled in one fell swoop, will likely take years and add billions to the bank's continuing mortgage miasma.

Additionally, a 2008 ruling is being challenged by the state of Nevada which would void an agreement on loan modifications which Nevada officials say the bank did not honor.

And, just today, US Bancorp sued Bank of America for $1.75 billion over loans it purchased in 2005, citing faulty underwriting.

Huge Gains on Oversold Conditions for Stocks; BofA Near-Death Experience?

Like overeager rookies who ignore the third base coach's stop sign and instead bowl headlong towrd home plate only to be thrown out, traders today simply looked past negative economic data and piled into stocks on the grounds that the market was oversold.

Sure, stocks have hit the skids of late, but for good reasons, like the debt contagion in Europe, the weak and stinking banking system in the US, continuing unemployment woes and the threat of a double-dip recession, but the old "oversold" mindset was front and center on this day, despite new home sales checking in for July at 298,000 units on a consensus of 310,000 and last month's figures revised lower, from 312K to 300K.

According to the logic of traders, housing doesn't really matter, and neither did that rare Northeast earthquake just after 2:00 pm, or the Richmond Fed's Factory Index, which fell from a reading of -1 in July to -10 in August.

Nope. Market's oversold, despite all recent data and expert opinion pointing at a weak second half at best and a full-blown deflationary depression at worst. Maybe somebody tipped then all off that the chairman, Ben Bernanke, will simply announce, in his Jackson Hole speech on Friday, that he will print more greenbacks if the economy continues to slide towards insolvency and desperation.

Then again, the primary players in this little financial drama are mostly momentum-chasers and day-traders, so maybe it all makes perfect sense. After all, the Wall Street of 2011 is not for investing, it is for immediate profit and self-gratification. Kum-bye-yah! It's a new age phenomenon.

While stocks were quickly eviscerating last week's losses, not all of them were going skyward, especially Bank of America, which touched down at a new 2 1/2 year low of 6.01 before mid-day. The mighty BofA is beset on all sides by questions over the veracity of its own numbers, the grinding legal costs associated with faulty mortgage dealings and a surprising shortage of capital - after being bailed out and getting preferential, secret treatment from the Fed during the financial crisis of 2008-09 - which may force the lender to sell off whatever good assets it has remaining and/or still need to make a secondary offering in the market in order to satisfy new, more stringent capital requirements a few months down the road. Bank of America (BAC) closed down 12 cents at 6.30, a new, 2 1/2-year, closing low.

Let's face it. Bank of America looks more like a shabby slumlord than a quality mortgage lender and it's only a matter of time before they go belly up or are taken over by the government and broken up in pieces to rivals like JP Morgan, Wells Fargo and Goldman Sachs.

Not that those banks are any more secure or trustworthy. In fact, Goldman Sachs (GS) has troubles of its own, despite following the market and posting a measly 0.35 gain today, closing at 106.86. The stock peaked in January at 175. Simple math says that's a nasty loss since then.

Whatever. The market is oversold, people. Buy more.

Dow 11,176.76, +322.11 (2.97%)
NASDAQ 2,446.06, +100.68 (4.29%)
S&P 500 1,162.35, +38.53 (3.43%)
NYSE Composite 7,209.59, +228.97 (3.28%)

Advancers smacked down declining issues, 5440-1239. The NASDAQ finished the day with seven (7) new highs and 146 new lows, while the NYSE posted 13 new highs and 169 new bottoms. The combined, 317-20 edge for new highs over new lows reiterates the strong sell signal the market has been blaring for three weeks. Yes, it may be oversold, but a today's gains were more the knee-jerk, dead cat bounce variety rather than a solid gain on fundamentals, which would be sustainable, should such fundamentals ever appear.

The trouble with investors and this market in particular is that nobody wants to face the undeniable fact that although most companies are lean, mean and posting solid profits, new quarter and next year's numbers will be up against some strong results, those provided by artificial stimulus and excessive monetary easing. Additionally, the bear market rally that began in March of 2009 is getting a bit long in the tooth. At 30 months, it may be time for a long term change of direction and sentiment.

Volume, on such a big run as today's, would have been much more robust if there was deep, underlying commitment by traders and investors. Maybe the traders have commitment or should be committed. Real investors are in cash, gold, silver and hard assets these days. What substitutes for a real equity market is all hype and subterfuge, devoid of substance.

NASDAQ Volume 2,129,302,500
NYSE Volume 5,913,402,500

Today was also a banner day for "gold is in a bubble, but we're running out of oil" preachers. WTI crude was up $1.02, to $85.44, and if you don't think gas has come down with the price of oil, you're right, though CBS news offered some blatant propaganda (likely prepared right from a press release by the American Petroleum Institute) as to why that is the case. It was pure bunk, delivered with the straight-faced lie that gas could drop another 40 cents by Christmas. Geez, Louise, thanks, we'll keep that in mind as we all go broke well before December.

As for gold, no "silver-slap-down" margin hikes were required (correction: the Shanghai Gold Exchange lifted gold margins for forward contracts the second time this month to 12% beginning on Friday - tip of hat to Tyler Durden at Zerohedge.com) to send the yellow stuff down $68.70, to $1829.40, after it had breached the $1900 level (hitting a peak of $1917.90) in Asian trading. Silver was also trampled by the fiat-leverage folks, losing $1.83, to $41.89. So much for the safety of hard assets, eh?

Don't be dissuaded by one-off moves prompted by the evil fornicators of the global banking cartel. Hard assets will outshine, out-gain and outperform all paper assets in the long run, and already have for the past 11 years running. Paper money, backed by nothing but ungodly, unpayable levels of indebtedness are going to die an awful death and the grim reaper is already sharpening his scythe. Either that, or all the paper money in the world buys less than it did yesterday, for eternity.

Finally, for those with a morbid fascination or those who know the meaning of the apocryphal acronym TEOTWAWKI (look it up), here's our old pal Henry Blodget expounding on why Bank of America's real capital needs may be more in the $100-200 billion range than the controlled-media's claims of $20-30 billion and Bank of America's response that he is making "exaggerated and unwarranted claims."

US Banking Sector Flattened as Secret Fed Loans Are Revealed

If you're fond of following foreign markets (and who isn't in today's meltdown environment?), the oddest of patterns emerged as planet Earth spun East to West.

Most Asian markets opened with gains, though ended up sporting losses by the end of their trading sessions. As the focus turned to Europe, gains were seen across the board early, though those faded late in the day, with the German DAX finishing slightly in the red.

When it was America's turn, the futures pointed to a bright open following a dismal end to the prior week and the Dow burst to an early 200-point gain. After that initial boost of enthusiasm, with the major indices hitting their highs of the day in the opening minutes, it was mostly downhill as investors sold the rally and the markets ended essentially flat for the week's opening session.

To the surprise of almost nobody, financial stocks were hard hit again, led downward by old, reliable Bank of America (BAC), which is facing a serious liquidity/solvency/honesty/continuity crisis after announcing on Friday that it intended to cut 3,500 jobs in the third quarter, with perhaps as many as 10,000 job cuts by the second quarter of 2012. Bank of America closed down 55 cents, at 6.42. The funeral dirges should begin any moment for the nation's largest bank by deposits.

While that news was certainly a disheartening blow to the non-productive paper-shufflers in the financial cesspool sector, a story that has gone largely unreported by the mainstream media was quite possibly the underlying cause for much of the weakness in the banking business.

Bloomberg reports that the Federal Reserve secretly doled out as much as $1.2 trillion to US banks, foreign banks and other financial and non-financial firms - including McDonald's and Caterpillar - from 2007 to 2010. Not of word of the story was spoken on CNBC, though the news spread rapidly through the blogosphere and the web's alternative media.

Reactions ranged from disgust to contempt, with a healthy dose of outrage from most astute followers of the Fed's financial foibles. It is unprecedented that the Fed would stoop to such lows as to attempt to conceal transactions from the prying eyes of the press and the American public, though it is hardly unexpected.

What may be worse than the contemptible actions by the Fed is the depth of the subterfuge within the halls of congress and the White House. The bulk of these secret loans were being made while the public was languishing over the absurdity of TARP and the Obama stimulus in early 2009. How many congressional members and presidents - Bush and Obama - knew of the skullduggery while it was being undertaken are questions to which the American people deserve answers, though judging by how many firms received loans over such a long period of time and with a Justice department that is loathe to issue subpoenas to anyone connected in any way with the financial services industry, the wait for such answers may be a long time in coming, if ever.

The information was obtained by Bloomberg through a Freedom of Information Act request that was continually blocked, challenged and evaded by the Fed. Now that it is out, it's evident that most of the popular media wants no part of the story, focusing instead on the fall of Tripoli and the end of the reign of Colonel Gaddafi in Lybia. The implications of tis story are breathtaking in scope and what it means for democracy and freedom, not only in America, but in the rest of the world, against an increasingly desperate global banking oligarchy.

Of course, with the media hitting the ignore button on the story and most Americans less-than-concerned with the fate of their own country, it's likely that the thievery and secrecy will continue unabated without even a hint of impropriety at the highest levels of the government.

One more story caught the attention of traders late in the day, that being reported first by Reuters with about 20 minutes remaining in the session. Apparently, Goldman Sachs CEO Lloyd Blankfein - yes, the very one who equated the business of Goldman Sach's with "doing God's work" - has hired, along with other executives at the firm, attorney Reid H. Weingarten, a partner with Steptoe & Johnson in Washington D.C. amid accusations that his firm acted fraudulently leading up to and during the 2008 financial crisis.

Goldman Sachs (GS) ended the day off 5.25 points (nearly 5%) on the day, with all of the losses occurring in the final fifteen minutes of the session.

Speculation will almost certainly run rampant with this news, but it could be yet more evidence that the global banking system has run completely afoul of the totally-corrupt political system and the long knives are about to be unsheathed. Should Blankfein and others from his firm be criminally charged, the end of fiat money could be at hand in short order with many undetected and unknowable circumstances to follow.

Corruption at the highest levels of government has been a feature in America for many years. The only remaining question is when Americans will finally have had enough of it.

Dow 10,854.65, +37.00 (0.34%)
NASDAQ 2,345.38, +3.54 (0.15%)
S&P 500 1,123.82, +0.29 (0.03%)
NYSE Composite 6,980.62, +10.52 (0.15%)

On a day in which volume was repulsively weak, declining issues led advancers, 3562-3027. New highs on the NASDAQ numbered just nine (9), with 244 stocks reaching new 52-week lows. On the NYSE, a similar story, with just 13 new highs and 247 new lows. The combined tally of 22 new highs and 491 new lows is a screaming sell signal.

NASDAQ Volume 1,983,095,500
NYSE Volume 5,436,260,000

While it was expected that oil prices would decline upon the fall of Lybia, since that nation's supply would soon go back online again, Brent crude fell, though the other oligarchy - that of the oil barons - managed to tighten its grip on the American consumer a bit, raising WTI crude futures $1.86, to $84.12 per barrel.

The largely unguided public is fighting back against the perception of fraud and debauchery and the failure of the global economy by buying precious metals with gusto. Gold set yet another record, rising $39.70 on the COMEX, to $1,891.90, though being reported at kitco.com at $1907.20. Silver gained 89 cents, to $43.32, but, as of this writing, was quoted at $43.85.

Events are moving a breakneck speed, despite Wall Street attempting to cool off prior to Fed Chairman Ben Bernanke's Jackson Hole speech on Friday. While many pundits await the all-clear signal from the chairman for another round of quantitative easing (money printing), the evidence is clear that the first two rounds - QE1 and QE2 - did more harm than good in the overall scheme of things, plus, in light of the breaking news by Bloomberg, the chairman and his cronies in the banking business and politics will do as they please, the public be damned.

This is the environment in which we must now tread. It is one of complete disregard for laws, principles of economics or even the most simple forms of common decency, honesty and principle.

Debt Downgrade Fallout: Stocks Shattered, Gold Soars, Europe a Wasteland

At 9:00 pm Eastern time on Friday night, August 5, S&P officially released their downgrade of US debt from AAA to AA+, prompting widespread panic and sharp rebukes from the White House, who claimed, in effect, that S&P had made what amounted to "math errors."

Over the weekend, much was made of the downgrade, as the Obama hit the airwaves with gusto, rebuking the call from the ratings agency. Fitch and Moody's had previously reaffirmed the US debt as AAA, the highest possible sovereign bond rating, but S&P would not back down, and the downgrade remained in effect.

What S&P reasoned was that the US government did not take the necessary steps - in its theatrical production of waiting until the last possible moment to pass a debt ceiling increase - to address the structural problems facing it. S&P rightly concluded that US debt levels were and continue to rise and discretionary spending levels have not been controlled. Therefore, they downgraded the nation's debt and threaten to do it a second time, sometime around November, if the 12-member congressional committee charged with dealing with long term debt does not come up with actionable, concrete, debt reduction proposals.

As markets opened on Monday, the effects of a global panic were evident, especially on the heels of a 10% decline in US indices over the past two weeks and Thursday's dramatic sell-off of over four per cent on major markets.

First, it was the Asian markets which tanked at their various openings and continued through the day to sell off anywhere from 1.5 to 4.0%. Next up was Europe, where the crisis over bailing out Italy and Spain have reached a point of no return. EU officials stressed that they would be in the market with the ECB, buying up italian and Spanish debt, but that did little to change the outlook of investors, which had turned sour over the past fortnight.

Appetite for risk was at a low, as European markets suffered steep losses. England's FTSE was the best of the lot, down only 2.62%. France's CAC-40 took a 4.68% loss and Germany's DAX shed 5.02%. Other Euro-zone markets fell between 3.76 and 6.11%.

By the time US markets were to open, index futures had been hammered down to presage an inauspicious opening. Within minutes of the bell, the Dow was down more than 200 points, the S&P had taken a 25-point hit and the NASDAQ fell more than 70 points, though those declines were nothing compared to the carnage that lay ahead.

By the end of the day, after a minor rally in the first 15 minutes of the final hour, stocks were trading at or near their lows, with the Dow Jones Industrials surrendering the 6th-worst performance in its history. While the Dow suffered a 5.5% decline on the day, the other indices were actually much worse, with the NYSE Composite topping them all, coming home with a 7.05% loss.

It wasn't just the debt downgrade that spurred the sell-off. Conditions in Europe have worsened significantly over the past few months, to the point that European Union officials are without reasonable solutions to the debt contagion spreading across the region. While the ECB has managed to prop up smaller countries like Greece, Portugal and Ireland, Italy especially poses a much larger concern.

All the European leaders could muster on Monday was a terse statement which offered no concrete proposals but plenty of assurances, which was be roundly written off by markets. To wit:

We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth

That was the extent of the communique from the magnificent seven of the United States, Canada, Great Britain, France, Germany, Italy and Japan.

The irony is that one of them, Italy, has been the source of the most recent anguish.

Essentially, the funds available to the ECB fall short of meeting the debt purchases needed to save Italy and Spain. Europe will have to engage in quantitative easing, as was the case in the United States over the past two years, to stave off defaults and the threat of a cascading crisis which would envelop all of Europe and likely doom the 11-year-old Euro currency.

If the EU decides upon cheapening the currency - which it almost certainly will do - theknock-on effect will be to sink the Euro, probably close to parity with the US Dollar. As the dollar would grow in strength, commodities, particularly oil and gas for auto use, would plummet, a boon to US drivers and to the general economy. Costs of imports would also decline, on a relative basis, giving American consumers more purchasing power.

Within the same scenario, however, are pitfalls for the global manufacturers and companies that populate the S&P 500, NASDAQ and the Dow. A stronger US Dollar would make them less competitive in foreign markets, shrinking margins and thus, profits. Thus, the great selling rush today was more of a statement on the global condition rather than that of the debt downgrade, which, when all is said and done, won't amount to a hill of beans. In fact, treasuries were up sharply today, as yields fell to their lowest levels in over a year.

The benchmark 10-year note fell 25 basis points in just one day, from 2.56% on Friday to 2.31% on Monday. The 30-year bond fell 19 basis points, to 3.65% as the yield curve continues to flatten. Money is going out of stocks and into bonds, and whether they're AAA or AA+ doesn't matter to those seeking a safe haven. The ridiculously low yields offered are a moot point. As one trader put it, "Investors aren't looking at making money; they're more concerned with getting their money back."

And, therein, the next crisis, in bonds, especially if the US government doesn't get its house in order soon. Higher rates and another downgrade could trigger a default of impossible proportions as the US would be unable to roll over its debt and fund itself without incurring higher borrowing costs. Ditto for Europe. Rising interest rates signals the end game for fiat currencies globally and back to some form of honest money, most likely on a gold standard.

The market events of the past few days, in which the major indices lost more than 10% are not the end of the crisis, but rather the beginning of the end of a great generational bear market that began in 2007 and will eviscerate all risk assets until nobody wants to hold anything any more.

Markets have entered the final stages of the third leg down. QE 1 and 2 staved off the collapse, but there will be no bailouts this time around. It's every man, woman, child and company for itself. There will be some winners, but mostly there will be losers, anguish, agony and the disappearance of great hordes of wealth.

Dow 10,809.85, -634.76 (5.55%)
NASDAQ 2,357.69, -174.72 (6.90%)
S&P 500 1,119.46, -79.92 (6.66%)
NYSE Composite 6,895.97, -523.10 (7.05%)

The internals were equally as stunning as the headline numbers. Declining issues decimated advancers, 6553-375, a ratio of 17.5:1. It was truly one of the deepest, broadest declines in stock market history. On the NASDAQ, there were four (4) new highs next to 725 new lows. The NYSE had just three (3) new highs, but 1292 stocks making new 52-week lows. The combined total of seven (7) new highs and 2017 new lows rivals or exceeds the figures presented during the fallout of 2008-2009.

Volume was at the highest levels of the year, exceeding that of last Thursday, which was then the high volume day of the year. Investors aren't just scared, they are trampling each other running through the exits at breakneck speed.

NASDAQ Volume 4,002,857,250
NYSE Volume 11,046,384,000

Crude oil futures were pounded again, as the front-month contract on WTI crude fell $5.57, to $81.31. Gas prices will soon fall below $3.50 - and possibly below $3.00 - a gallon as current supplies are depleted and replaced by less expensive distillates. According to AAA, the average price of gas in the US is now $3.66 per gallon, but the deep declines have not yet been factored into the equation. That will happen over the next two to three weeks.

Gold was the big winner of the day, soaring $61.30, to $1,713.20, another all-time record price as investors, companies, nations, central banks and housewives scrambled to find reliable assets. Silver, still constrained by high margin requirements, gained $1.17, to $39.38. Silver is almost certainly the most under-appreciated asset in the world, though that will soon change. As the crisis escalates and governments make more and more bad moves, the precious metals will skyrocket to unforeseen heights.

The banking sector took it on the chin, but none more than Bank of America (BAC) which is on the verge of a well-deserved bankruptcy. shares of the nation's largest banks fell 20% on the day, losing 1.66, to close at 6.51. Just a few weeks ago, BofA was trading at a price nearly double that. The unfolding mortgage crisis, brought about by Bank of America's 2008 purchase of Countrywide, has become a fatal blow to the once proud institution.

David Tepper's Appaloosa Management Fund has reportedly sold its stake in Bank of America (BAC) and Wells Fargo (WFC), while significantly trimming Citigroup (C) from the portfolio.

Adding to the irony, AIG has sued Bank of America for $10 billion, citing "massive fraud" in its representations of mortgage-backed securities (MBS).

However, Citigroup analyst Keith Horowitz takes the booby prize for reiterating a "buy" rating on Bank of America shares this morning. Timing is not one of Mr. Horowitz's strong points, it would appear.

On top of all this, the FOMC of the Federal Reserve will issue a policy statement Tuesday at 2:00 pm EDT, followed by a news conference from Chairman Ben Bernanke. That alone should equate to another 300-point decline in the Dow.

For those with a morbid curiosity, check out the slideshow of the 10 worst days on the Dow, already outdated, as August 8, 2011, will go down in the history books as the 6th worst day for the blue chip index of all time.

Henry Blodgett and Aaron Task have a nice summation of the situation in the video below:

Markets Soar on New Gang of Six Debt Ceiling Proposal

Supposedly, the government will fix everything by changing the way the CPI is measured, which means that Social Security recipients are about to get whacked by way of inflation.

If ever there was an inept government being led around by its nose by financial masters, this one is it. Whatever Wall Street wants, Wall Street gets. As for the general population - the ones who pay all the bills and pay for bailouts and frauds - they receive the shaft.

The current legislation under proposal, offered by the Senate's Gang of Six, promises %3.7 Trillion in savings, some of it - about $1 Trillion - supposedly to come from increased revenues. House Republicans have already started making noise about it, since the plan calls for some tax increases. While President Obama seemed to be thrilled about the plan at a 1:30 press conference, party leaders Harry Reid and Mitch McConnell seem to have been cut off at the knees after working on an alternative plan to both save face and raise the debt ceiling.

Nonetheless, Wall Street acted as though manna was being dropped from the heavens, boosting stocks an additional 100 points on top of the bogus 100-point, low-volume, morning melt-up.

Forget TV dramas and soap operas. The best one is being played out right on CNBC every day with the fraudulent bankers running the politicians in a light-hearted farce known as the US economy.

Dow 12,587.42, +202.26 (1.63%)
NASDAQ 2,826.52, +61.41 (2.22%)
S&P 500 1,326.73, +21.29 (1.63%)
NYSE Composite 8,254.38, +118.85 (1.46%)

Advancing issues led decliners by an unhealthy margin, 5167-1418. On the NASDAQ, there were 68 new highs and 34 new lows. The NYSE showed 79 new highs and 32 new lows. The combined total of 147 new highs and 66 new lows completely reversed yesterday's dour numbers. Volume was as pathetic as it gets, especially on a 200-point Dow move.

NASDAQ Volume 1,842,038,625.00
NYSE Volume 4,228,335,000

Commodities changed direction on the day as well, which is not surprising for WTI crude oil, which continued it's up-and-down daily fluctuation, rising by $1.57, to $97.50. The lowered prices for gold (-$1.30, to $1,601.10) and silver (-0.12, to $40.22) are also in line with the corrupt rigging in those markets.

The best news of the day came from the financial sector, which was offering its own version of "recovery summer." Bank of America (BAC) posted a loss of 90 cents per share in the second quarter, mostly attributed to mortgage put-backs and side deals with note-holders. The stock traded as low as 9.40 following the pre-market release of second quarter results, ending the day down 0.15, at 9.57, another new 2-year low in a recent string of them.

Goldman Sachs (GS) also released fiscal first quarter results before the bell and came in with numbers in-line with analyst expectations, .

From the article linked above:

Revenue in Goldman's core fixed-income trading division fell 63% sequentially and 53% year-over-year due to reduced trading activity and economic uncertainty. That, along with weakness in its lending-and-investing division, led to an 18% year-on-year decline in overall firm revenue.

Doing "God's work," huh, guys? God must be angry.

Stocks Drop, Metals Pop, BofA a Major Flop

As the debt crisis in Europe evolves, worries over the US debt ceiling non-negotiations continue to complicate matters for traders. Fear is pervasive on the Street and the pace of progress (what little there is) seems to suggest that congressional Republicans and President Obama are on a collision course in which the August 2 deadline for raising the debt ceiling might come to pass without a resolution, or, at least one with any real teeth.

The stalemate over raising the debt limit has been pushed by the Tea Party faction in the House of Representatives, and it's done nothing but squander time and any understanding between the opposing factions. Talks have broken down twice in the past two weeks and lawmakers seem to be no closer to a deal than they were a month ago.

What's at stake should the deadline pass without a resolution to raise the debt limit would be the credit rating of the US, which has been threatened by ratings agencies Moody's and Standard and Poor's. Even if a deal is somehow worked out, the wrangling over the issue has sent the wrong message: America looks more like a third world country than the leader of the free world.

The arguing and posturing has helped to stall the economy because businesses don't want to make major moves - like hiring or opening new facilities - with so much uncertainty in the air, and that has taken its toll on stocks.

The week started off the same way last week ended, on the wrong foot, with stocks down sharply at the open and plummeting to the lows of the day by noon. The Dow was down 180 points at that point and the NASDAQ had shed some 46 points before bargain hunters (read: morons or the PPT) stepped in to shore up the losses. None of the major indices saw even a glint of the positive side. In fact, closing levels were near the high points of the day.

Dow 12,385.16, -94.57 (0.76%)
NASDAQ 2,765.11, -24.69 (0.89%)
S&P 500 1,305.44, -10.70 (0.81%)
NYSE Composite 8,135.53, -91.51 (1.11%)

Decliners led advancers by a wide margin, 5363-1213. The NASDAQ recorded 36 new highs and 71 new lows, while the NYSE had 37 new highs and 93 new lows. The combined total favored new lows, 164-73. With that indicator flipping over again and no progress on any economic front, the recently-resumed slide in stocks should lengthen and deepen. Volume was sluggish, and that's being generous.

NASDAQ Volume 1,726,375,125
NYSE Volume 4,103,216,500

Commodities were led by gold, which broke through the $1600 mark, finishing at $1,602.40, up $12.30 on the day. Silver was up more than 3%, rising $1.27, to $40.34. The ascent of the metals over the past two to three weeks has been a resounding note of no confidence in the fiat money system and general financial malaise caused and exacerbated by central bank intervention.

Crude oil continued doing its odd two-step, as WTI finished down $1.31, to $95.93. Of course, this one-off loss will likely be offset by gains tomorrow. Such is the way rigged markets function. In the end, there will be no summer relief for drivers who are paying close to $4 per gallon. The nationwide average for a gallon of unleaded regular remains high, at $3.68, with ten states over $3.77.

Bank of America continues to be the least-loved stock or bank in the nation. Shares of the beleaguered financial institution fell to yet another 2-year low, closing at 9.72 as reports emerge that the company needs to raise $50 billion in order to become a healthy, functioning bank again. One can only imagine how the bank's books would look had they not been bailed out in 2008 by the federal government (taxpayers). Some - this writer included - still believe it would have been better to allow BofA to go into default and bankruptcy and have the huge bank broken up into smaller parts.

The jury is still out on that one, though it still appears that those favoring bankruptcy for the biggest banks may have been on the right track all along. BofA still may not make it through to 2012 and beyond. They are broke, busted and insolvent and are a primary reason for the suffering of millions of Americans who have lost homes and jobs because so much effort was spent by the government to help the bank, rather than actual citizens.

After the close, IBM reported second quarter earnings with an EPS of $3.09, ahead of analysts' estimates of $3.03. The company raised guidance for the full year to “at least $13.25″ per share, up from a prior estimate of “at least $13.15″ per share.

Last Hour Rally Salvages Gains, Though Markets Down for Week

A tumultuous week came to a very anti-climatic conclusion on Friday, as the President issued a challenge to congress to come up with the "framework" of a deal within the next 24 to 36 hours to solve the wrangling over the debt ceiling and budget issues.

President Obama's 11:00 am new conference did little to move the matter in a more positive direction, and stocks languished throughout the day, finally putting together a half-hearted momentum rally in the final hour of trading.

In Europe, 82 of 90 banks passed the European banking Authority stress tests, but eight failed - four of them in Spain - and 12 more received barely passing grades.

Citigroup posted better-than-expected second quarter results, but still finished in the red for the day. Taking its cue, Bank of America (BAC), which reports on July 19, fell below $10 per share, finishing exactly at 10.00, after trading as low as 9.88, the lowest in more than two years.

The entire day was rather disjointed and purposeless, as stocks drifted around until the ramp-up at the close.

For the week, the Dow shed 177 points, the NASDAQ fell 70, the S&P gave back 27 and the NYSE composite dropped 183 points.

The late rally made little sense, unless one gives credence to the thought that it was a positive sign from the markets that a debt ceiling deal would be hatched by Monday.

Dow 12,479.73, +42.61 (0.34%)
NASDAQ 2,789.80, +27.13 (0.98%)
S&P 500 1,316.14, +7.27 (0.56%)
NYSE Composite 8,227.04, +35.91 (0.44%)

Advancers led decliners, 3945-2570. The NASDAQ offered 40 new highs and 34 new lows, while the NYSE had 62 stocks make new 52-week highs and 51 reach new lows. The combined total of 102 new highs and 85 new lows is cutting the margin rather closely and is reflective of the choppiness inherent in current markets.

NASDAQ Volume 1,825,291,125
NYSE Volume 4,370,969,000

A swath of economic data points offered no suggestion of improvement. The CPI fell 0.2%, the Empire Index returned a -3.76, industrial production and capacity utilization were both stagnant at 0.2% and 76.9%, and the Michigan consumer sentiment fell from 71.5 in May to 63.8 in June.

Crude oil continued on its zig-zag path, gaining $1.55, to $97.24. Gold hit another record, up 80 cents, to $1,590.10. Silver was up 38 cents, at $39.07 per ounce.

The NFL lockout continued, but both sides seem intent on reaching a deal, saying they would continue working over the weekend in order to conclude talks as early as possible without jeopardizing the preseason or regular season.

Maybe congress should take a hint from the players and owners. The American people have had about as much stalling and posturing as they can handle.

Stocks Continue Slide through Sixth Straight Session

Another day, another decline on US stock markets.

One should not be at all surprised by the development that stocks have found the path of least resistance to be lower. After all, they were goosed the past two years by almost $2 tillion in Federal Reserve subsidies and slippery dealings by the major banks.

Once again, stocks started out near their highs of the day, and, through a choppy session, ended in a massive sell-off into the close. The NASDAQ took the brunt of the beating, never making it out of negative territory the entire day. Again, this is unsurprising, as most of the momentum stocks which drove the two-year rally are indexed on the NASDAQ.

The bigger picture involves risk of all sorts, much of which is unquantifiable, such as the level of interest in, or general terms of, the bailout of Greece and whether or not the congressional clowns can come to some agreement on lifting the debt ceiling or not. Absent reliable information on either of those issues, and adding to the fact that there's scant economic data upon which to trade, stocks took another leg down in what is fast becoming a summer of discontent.

Perhaps the government agents and Wall Street wizards should be just happy to take their lumps in money, lest the American public come after them hammer and tong. They have destroyed not only the general economy of the nation, but have misused the public trust to a point at which there no longer is any.

The path to Dow 10,000 or S&P 1000 is likely going to be paved with the corpses of the major banks, still insolvent in many regards, especially Bank of America (BAC), which hit another tw-year low today, losing 0.11 to 10.54. Wells-Fargo (WFC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) all took on water, though these stocks and the averages were all aided by a futile, though furious, late rally in the final fifteen minutes of trading.

Dow 12,048.48, -21.87 (0.18%)
NASDAQ 2,675.38, -26.18 (0.97%)
S&P 500 1,279.56, -5.38 (0.42%)
NYSE Composite 8,081.33, -50.34 (0.62%)

Despite the seemingly paltry losses, internals were crushed once again, and therein lies the problem with the markets. Almost everything is still overvalued and the reversal, by fear, extends to all equities. Declining issues hammered advancers, 4824-1767. On the NASDAQ, there were 22 new highs and 140 new lows, Over on the Big Board, 23 new highs, and 97 new lows, putting our totals at 45 new highs and 237 new lows, the fifth straight win for the lows, an expanding margin of difference and a sure sign the correction has further leg-stretching to do.

Volume perked up a bit from the previous two sessions, another indication that the selling pressure is intense and not about to abate.

NASDAQ Volume 2,038,875,125
NYSE Volume 4,442,987,500

Defying all logic, crude oil futures rose $1.65, to $100.74, as OPEC nations meet in Vienna, but came to no agreement on raising production quotas. It was another rough day from precious metals speculators, with gold down $6.90, to 1537.80, and silver off 17 cents, to $36.97.

Markets may get some relief from initial unemployment claims due out prior to the market open tomorrow, but counting on that is akin to betting the Cubs will make the playoffs. Not a sound bet.

Stocks Pounded Again as No Catalyst Exists; BofA Gets a Taste of Own Medicine

After last week's carnage, traders lined up on Monday for what looks to be one of the duller trading weeks of the year, though the Greek bailout crisis in Euroland might change the scenario a bit.

There is scant economic news and the quarter doesn't end until June 30, so there are no corporate quarterly earnings reports on which to trade, which leaves markets in a situation nearly resembling "every man for himself."

Inasmuch as traders are a courageous lot, there was some horse-swapping in the session, though most of it was in the form of shedding assets because the US economy looks to be falling back upon itself and could be headed for another recession. QE2 ends abruptly just after options expiration on the 17th, so one could expect an even more severe downturn at that time.

Banks are once again in the cross-hairs. They led today's decline and are possibly among the worst risk assets to be holding at present, especially in the case of the big ones: JP Morgan, BofA, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo.

While many have taken to calling this a "soft patch" - which is just another term for "I have no idea because I only can make money when stocks go up" - more hardened economists see the current condition as analogous to the Fall of '08, as Greece (and maybe Spain, Portugal and Italy) takes the place of Lehman Brothers and another solvency crisis comes to bear.

However, it could be even deeper than that, with one of the major US banks finally throwing in the towel. In that case, it's likely to be Bank of America (BAC), which was highlighted in Fortune magazine on Friday.

In the article linked above, contributor Abigail Field - who has penned a number of solidly-researched pieces on the mortgage crisis - claims that the extent of sloppiness, incompleteness and outright fraud contained in mortgages originated and securitized by Countrywide (taken over by Bank of America in 2008) is likely much more severe and perverse than anyone had imagined and BofA wasn't letting on about it.

Bank of America is easily the one most crippled by the mortgage and foreclosure crisis and the extent of their losses may have been (probably is) grossly understated, both by the bank and by regulators. The sheer volume of bad loans, fraudulent documents and outright chaos in the mortgage servicing department of Bank of America would have taken down a smaller institution years ago, but BofA is the nation's largest bank and they've been aided continuously by the Federal Reserve, at taxpayer expense.

The severity of the crisis continues to dog the mega-bank at every turn and they may have to make the decision of off-board the entire Countrywide unit in order to salvage what remains of their institution. Of course, this is speculation, but the regulations still being written for the Dodd-Frank bill may be complete enough to call for an orderly winding down of the bank should it pose systemic risk, and surely it does.

To a lesser extent, Wells-Fargo (WFC) faces the same situation, as they managed to snatch up Wachovia - and all their no-doc, low-doc loans - during the turmoil of the financial crisis.

On the day, both stocks finished well into the red, with BAC falling to its lowest closing level since May 15, 2009, breaking below the close of 10.92 on November 30, 2010, losing 45 cents, to 10.83. Wells-Fargo (WFC) lost 0.60 to 26.26 and is close to making a double-bottom.

Today was a truly ugly day on Wall Street, as stocks simply lost value steadily, albeit slowly, throughout the session. The lows of the day were reached shortly after 3:00 pm and an abrupt rally fizzled in the final minutes. Nothing but reluctance to sell is keeping this market from an outright crash.

Dow 12,090.11, -61.15 (0.50%)
NASDAQ 2,702.56, -30.22 (1.11%)
S&P 500 1,286.17, -13.99 (1.08%)
NYSE Composite 8,115.87, -106.28 (1.29%)

Despite the modest declines, internals were shattered. Losers dominated winners, 5175-1436. The NASDAQ posted just 31 new highs, overwhelmed by 131 new lows. On the NYSE, there were just 27 new highs, but 65 new lows, putting the combined number at 58 new highs to 196 new lows. This is the third straight day of the lows beating the highs. On Thursday of last week, it was 115 to 76 and Friday saw 130-68, both in favor of new lows.

This is a very telling sign that we are about to enter a serious correction which should last months, at least through September. A ton of money has already fled stocks and more will follow. Volume was moderate, but only because there are fewer and fewer players every day.

NASDAQ Volume 1,826,802,125.00
NYSE Volume 4,034,310,000

Crude oil futures fell $1.21 to $99.01. Gold advanced $2.40, to $1544.80. Silver finished up 51 cents, at $36.80

Finally, in the video below, some justice was served in Florida, where Bank of America got their just deserts.

Making Money at the Margins and Why the Rigged Game Doesn't Matter

OK, all you wise guys who think they know how the markets work and how to make money in them. If you've been paying attention the past few weeks and months, you may have noticed some kinds of patterns that have developed, both in individual stocks and in the general indices.

One such pattern is playing out right now, and, of course, as all things on Wall Street are now played out in factors of milliseconds, this one and its tangential cousin, is pretty obvious.

First, let's look at the overall picture and then we'll jump into the tangent by-product of what is essentially a swing trade that takes place over the span of a few weeks, but can be played by the day, hour, or, if you have ultra-fast connections, the millisecond.

It's all about movement and that herky-jerky, up-down action that's become so common over the past ten years or so. Taking a look at the movement of the Dow Jones Industrials over the past two weeks (actually, 13 trading sessions, or the month of May, to date), we find the following:

DATE	GAIN/LOSS	RANGE
5/2	-3	174
5/3	+0.15	190
5/4	-84	220
5/5	-139	253
5/6	+54	208
5/9	+46	160
5/10	+76	141
5/11	-130	171
5/12	+66	279
5/13	-100	227
5/16	-47	194
5/17	-69	249
5/18	+80	128

So, we see stocks go up, stocks go down, but, by the end of the day, the RANGE, from the highs to the lows, are amplified double, triple or many more times the amount of gain.

Why is this significant? Because, if you know which way the market is going, minute-to-minute, day-to-day, obviously, you can make a fortune. And you know those sharpies at Goldman Sachs, Merrill Lynch (owned by Bank of America), Morgan Stanley and JP Morgan have all been boasting some awesome profits on their trades. Most of them will go entire quarters without having more than one or two losing days.

How do they do it, and why can't you and I? Because, they pretty much are the market. Their volume of trades is probably 75% or more of the total volume trading. They can move individual stocks any way they like, whole indices if they work in collusion. Funny word, that collusion. In its barest form, it is defined as: Secret or illegal cooperation or conspiracy, esp. in order to cheat or deceive others. Oh, yeah, and it's very, very illegal.

Now, I'm not saying that these big Wall Street firms are engaging in anything illegal. After all, the government just bailed them out with billions of dollars of taxpayer dollars a few years ago and the Fed keeps shuffling them money nearly every day via their POMOs. So, why would they need to cheat?

Well, nobody has to cheat, but it sure makes the game a heck of a lot easier if you do. And, judging by what these very same firms did when they were hurling mortgage-backed securities and credit default swaps around, they've shown a propensity for, uh, cutting corners and shading the truth, all to their advantage.

By determining the direction of the market due to the size of their cumulative trades, they almost have to make money every day, every minute, every, yes, millisecond. They are the best at their craft, no doubt about that, and they can shave every last dollar off an individual investor's hide. No doubt, they are not very concerned with the success or failure of anybody but themselves and their largest clients, who are likely clued into the game and whose money they use to goose or deflate stocks and whole markets.

Face it, with four or five big firms handling most of the daily volume, does anybody else really stand a chance? And just how reliable are these stocks which are jumping around in inconceivable patterns on a fundamental basis?

It makes one question the validity and freedom of our markets, something which I've called into question many times here. To be perfectly honest, I've often considered giving up this daily blog, because, when one gets right down to the nitty-gritty details, there's no technical analysis needed, no market savvy needed. All one really has to do is go with the flow, day-by-day, every day, to make money, but that assumes you know which way the flow is going. It would be a full time job, though there's no guarantee that even the smartest, most skilled day-traders, armed with the best data and fastest computers, would come out ahead, only because the big boys on the inside would be skimming at the margins all along.

There's little doubt that the traders on the street, employed by the major firms, have a massive advantage, and it's probably much the same way in commodity markets, forex markets and any other market in which they have established a presence. While the markets may be kind to those at the top, the risk level is quite high for everyone else, and that's why I just write about it. I haven't made a single trade in almost two years, and even then I was playing very lightly.

So, what to do?

Honestly, I don't know. I've advocated silver and gold for the past few years, but we've seen recently what can happen there, especially in the case of silver, which took a 30% haircut in just about two weeks time, proving no market is safe from the ravages of the Wall Street gang.

That covers the general trend here. No about that tangential trade. Referring to the chart above again, notice today's action: an 80 point gain and a mere 128 point range. Today's trading was almost all one-way, and I'll wager that tomorrow will be more of the same, and maybe even Friday, too. Why? Take a look at the calendar. Options expiration is Friday and there's plenty of money out there looking to cash in on the upside.

For all the ups and downs over the past 13 sessions, the Dow is only down 250 points, about 2%. By Friday, there's a very good chance it will be less than that, and a whole bunch of traders will be high-fiving each other over their exploits in the options markets.

Hey, it's a lifestyle.

Dow 12,560.18, +80.60 (0.65%)
NASDAQ 2,815.00, +31.79 (1.14%)
S&P 500 1,340.68, +11.70 (0.88%)
NYSE Composite 8,407.48, +74.41 (0.89%)

Things turned dramatically today for now apparent reason. Advancers trounced decliners, 4999-1573. On the NASDAQ, a dead heat. There were an equal number of stocks making new highs and new lows, 52 of each. Over on the NYSE, new highs led new lows, 121-22. Volume was right back in the old toilet, simply because, as stated above, there aren't that many players.

NASDAQ Volume 1,893,562,500
NYSE Volume 3,871,767,500

Crude oil was up sharply, gaining $3.19, to $100.10 on reports of a drawdown in supply and raging fires in Alberta, Canada, home to major oil operations. While Canada is our largest supplier of oil (no, honey, not those nasty A-Rabs), the amount of crude affected is a small fraction of the daily import total, but that doesn't matter to the market manipulators, apparently. Anything to goose the price at the pump a little higher, they'll use it, whether it makes sense or not.

Gold managed a gain of $9.90, hitting the $1496.90 mark, while silver rocketed higher by $1.11, to $35.02. Word has been circulating that the major shorters of silver have cut back their activity to a level not seen since last fall. That should be a signal to most silver players that it's safe to wade back into the market, as the price manipulators have covered their out-of-line bets and gone to play elsewhere.

What else can one conclude from the wild swings and unusual weather but that ours is a very strange and still quite untamed world.

Fade the Banks: BofA, JP Morgan, Citi, Goldman Sachs Under Scrutiny

We found significant deficiencies that represent not only unsafe and unsound practices, but a breakdown in way customers are treated...

That was the statement made by acting Comptroller of the Currency John Walsh in regards to the Consent Order directed at the nation's sixteen largest banks, issued by his and other regulatory agencies yesterday.

Initial reaction was that the ruling was more a wrist-slapping by the regulators, but Walsh came out in its defense, as did others, such as FDIC's Sheila Bair.

The order includes provisions for the banks to undertake a complete review of their foreclosure practices and rectify any errors that may have affected consumers negatively. Additionally, the banks are instructed to pursue a “comprehensive, independent review” of their foreclosures from 2009 and 2010, institute a system for a single contact person for each foreclosure or mortgage modification action. The agencies - which include the Federal Reserve and the Office of Thrift Supervision - will closely monitor the banks' progress, look more closely at their practices and determine appropriate fines for each firm.

These actions, apart from the voluminous litigation already begun and sure to follow, plus the conclusion of 50 state attorneys general is likely to cost the banks a good deal of time, effort and money. When all is said and done, revealing their openly fraudulent practices and procedures will have two major effects: 1) they will not be so prone to play fast and loose with mortgage money, and 2) housing loans will become even more difficult to get.

On the surface these outcomes may be more of a detriment to recovery in the housing market, but homes will at least become more affordable. Making it difficult to qualify for a loan, the cost of residential housing will fall accordingly until some balance is achieved in the market. After that, homeowners can begin going after tax assessments and "fair value" assessments which are now likely more than 40% too high in many hard-impacted communities.

While the process will be riddled with starts and stops, the long-range outcome should be more affordable housing for lower and middle class people, without onerous tax implications. we may be turning a corner after all.

One other note of interest in terms of bank-hating worldwide was Senator Carl Levin's well-directed attack on Goldman Sachs today:

The Senator says he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought collateralized debt obligations without knowing the firm was betting they would fall in value.

Levin believes that not only did Goldman Sachs' executives delude their clients and break their fiduciary trust, but also lied to congress when brought in front of the Financial Inquiry panel.

Heck, as our link confirms, even FoxNews is pushing this agenda forward, but it remains to be seen if Attorney General Eric Holder will come out of hiding and actually pursue prosecution. If not, maybe it's time to indict the AG himself, because Levin and other members of congress have rightly identified Goldman Sachs and their brethren in the "big banking" world as the criminals who caused the financial meltdown of 2008 and sank the economy.

Watch Senator Levin tear into Goldman Sachs' Daniel Sparks:



Wall Street's reaction to this background noise was all-too-typical behavior by the very same banks that have grown in size over the past 2 1/2 years: they turned a perfectly plausible market downturn into marginal gains. The Dow was down 107 points before the pimps and pumpers jacked it up to a 14 point gain by the closing bell.

As expected, in the face of bad news, the financial gamblers could only cover their tracks, put on happy faces and say "all is well." Perhaps these thieves will be singing another tune when a few of them are perp-walked from their ivory towers in full view of the public which has grown to hate them and all they stand for.

All we've seen from the likes of the biggest banks in America is denial of wrongdoing, obfuscation, outright lying, and complete, unabashed manipulation of all markets they touch - bonds, equities and commodities - not to mention the under-the-table mortgage securitization, CDO and debt swap markets.

They are the most ruthless criminals on the planet, completely without conscience, and hopefully, lawmakers are beginning to catch on to their evil ways. Corners must be turned; equity and law must prevail.

Dow 12,285.15, +14.16 (0.12%)
NASDAQ 2,760.22, -1.30 (0.05%)
S&P 500 1,314.52, +0.11 (0.01%)
NYSE Composite 8,374.16, +6.85 (0.08%)

Not to belabor the obviously-fragile nature of the markets, advancing issues outdid decliners oddly enough, 3611-2838. However, new lows overtook new highs on the NASDAQ, 50-49, but new highs remained stubbornly ahead of new lows on the NYSE, 53-23, though the margin has shrunk considerably over the past few session. Volume remained purely a function of lack of interest.

NASDAQ Volume 1,728,764,375
NYSE Volume 4,249,863,500

Perhaps in response to the continuing turmoil, or maybe because the "Sultans of Swap" were too busy shedding documents to keep a handle on them, commodities took another robust turn positive. Crude oil gained another $1.00 during the NYMEX session, to close at $108.11, but gold and silver took home the trophies. Gold rocketed to another in a series of all-time highs, gaining $16.80, to $1,472.40 and silver exploded up $1.43, to $41.66, though both were higher in foreign markets, with gold at $1475.70 and silver romping higher at $42.14 per ounce.

Perhaps, more than turning corners, financial markets are meeting their eventual end, with paper currencies under attack from the growing howls of the general public worldwide, unhappy with rising prices and stagnant wages, governments with too much power and not enough nerve, honesty or will to do right.

These explosive moves in the precious metals are not to be taken lightly. The global Ponzi scheme of fiat money is being put to a severe test and is failing badly, today's activity just another warm-up for the real fireworks coming when the US congress considers whether or not to raise the debt ceiling, something they've done 174 times before.

From the ominous sounds emanating from the Tea Party wing in the House of Representatives, these could be the final days not only for the dollar as a reserve currency, but for every form of money not backed by some tangible asset, of which gold and silver are the obvious choices.

After the bell, Google announced its results for the first quarter of 2011, and from the looks of how it was trading after hours, investors were none too pleased that they missed their earnings per share estimate by three cents.

Even though Google topped revenue expectations, the stock was down nearly 30 points in the after-hours, a decline of more than five per cent.

That does not bode well for tomorrow's opening, which of course will have as an added bonus, the earnings release of the bank everyone loves to hate, Bank of America. Friday ought to be a doozy of a day.

Year-End Melt-Up Continues on Low Volume Trading

The monotony of the Fed's POMO-induced stock market rally must be, by now, be putting some investors into a zombie-like coma, wherein they go to their computers and mindlessly punch in more stocks to buy, at market prices. None of them perform any due diligence, glance at fundamentals or look for patterns in the technical charts.

Stock. Buy. Done. Rinse, repeat. Simple as that. There's no other explanation for the unprecedented rise in equities since the beginning of September, but more pronounced in the final month of the year, one which is normally not very volatile.

There are, of course, very few doing this zombie trading. Volume has backed off to some of the lowest levels of the year, in a year that has been branded as one of extremely low volume and interest. Yet, stocks still rise, and, as we mentioned yesterday, some of the biggest gainers are the financial stocks, for reasons still unexplained. The movement in the financial sector is truly from theatre of the absurd. Bank of America, for no apparent reason, gain a full 3% today, putting its December gain at a whopping 18%. That's extraordinary for a company which still has loads of non-performing mortgage loans on its books (somewhere, we're sure of it) and needed $45 billion in TARP money from the government just to stay alive just a year-and-a-half ago.

Dow 11,559.49, +26.33 (0.23%)
NASDAQ 2,671.48, +3.87 (0.15%)
S&P 500 1,258.84, +4.24 (0.34%)
NYSE Composite 7,931.76, +25.66 (0.32%)

Advancing issues led decliners by a wide margin for the second straight session, 3777-2739. NASDAQ new highs stood at 210, to a mere 25 new lows. On the NYSE, there were 215 new highs, 15 new lows. Those daily new high-low figures have been remarkably similar for the better part of the month, and for good reason. Traders (or computers running arb algos) have ramped in and out of the same stocks for the past few weeks and they have been primary contributors to the upside, which also explains how the indices rise on such paltry volume.

NASDAQ Volume 1,627,216,375.00
NYSE Volume 3,900,822,250

Commodity markets were moribund, with the exception of oil, rolling into the February contract up another 66 cents on the day, to $90.48. The pricing in oil is absolutely sick, running $20-30 over normalized pricing due to rampant, unchecked speculation. The attendant rise in the price of home heating oil and gasoline are nothing other than outright theft of American dollars by the oil cartel, comprised not of OPEC nations, but rather gigantic conglomerates, BP, ExxonMobil, Chevron and Royal Dutch Shell.

Gold spent most of the day straddling the flat line, currently down 60 cents, to $1384.90. So too, silver, 15 cents lower, at $29.22.

With just six trading days remaining in 2010 (Markets are closed December 24, but open for a full session on December 31), it appears certain that all of the major indices will end with sizable upside of at least 10% (Dow) and closer to 15% or more on the NASDAQ and S&P 500.

You Owe the Fed $312,606.56; Net is Still Neutral; NJ vs. BofA

As Wall Street slowly wends its way to a year end with a blow-off topping Santa Rally, a few news items - that you won't get on CNBC, promise - were worth noting.

First, the Federal Reserve bought another $9.5 billion in Treasuries today, bringing their total to over $1 Trillion, or, for those who like lots of zeroes, $1,000,341,000,000. The Fed passed China as the largest holder of US government debt a few weeks ago, and now has surpassed the magic $1 Trillion mark, making everybody in the country indebted to the Federal Reserve (well, if you believe we are the government and thus responsible for their debt) to the tune of $312,606.56, roughly speaking.

So, rube, pay up!

The second of the day's big issues was the proposed FCC rules on Net Neutrality, or how the government will allow the big media companies to slice up the internet. What the FCC board did was pass, by a 3-2 vote, new rules, which are essentially the same as the old rules, except that they didn't publish them (rumored to be 100 pages long) and they don't apply to wireless services (phones, iPads, etc.). So, really, what they did isn't really news at all, but might be some day, like when the FCC gets sued again because most people don't believe they have the authority to regulate the internet at all. Larry Downes' guest column on Cnet has most of the dirt.

Our third newsy item is really juicy, however. It appears that some judges in New Jersey's Supreme Court haven't taken kindly to being abused and hoodwinked by some of the nation's largest banks.

The court has ordered a halt to all foreclosure proceedings in the state and has given the largest lenders, Bank of America, JP Morgan Chase, Citigroup, GMAC, Wells-Fargo and OneWest, until the 19th of January, 2011, to “show cause why the processing of uncontested residential foreclosure matters they have filed should not be suspended.”

Apparently, the judges are not convinced that the robo-signing and other frauds perpetrated on the state's courts were mere technicalities and wants the full mea culpa from the banks along with admissions of guilt. This really puts the banks in a tough spot, because they have to honestly and steadfastly assert their positions, which are largely lies and falsehoods about their fatally-flawed foreclosure practices.

Should they fail to convince the justices, they'll face a very long uphill road to ever be heard without prejudice in New Jersey courts. This also opens up the possibility that hundreds of thousands of flawed - and already settled - foreclosures could be reopened if New Jersey's stand becomes a precedent, not only in the state, but across the country.

Get ready for round two of fraudclosure-gate, or whatever they're calling it these days. In a similar vein, the 50 state Attorneys General investigating the foreclosure practices of the biggest banks, have said nothing since rumor broke three weeks ago that they were nearing a settlement with the offending and offensive banks, thus making the current rumor that all deals are off the table, especially since the states of Nevada and Arizona have separately sued Bank of America and Iowa AG Tom Miller, who heads the 50 states' AG investigation, has, together with the US Attorneys office, formed the Iowa Mortgage Fraud Working Group.

The Working Group will "identify and investigate targets for criminal prosecution" and, on the federal level, "will utilize the investigative expertise of agencies such as the Federal Bureau of Investigation (FBI) and U.S. Department of Housing & Urban Development--Office of Inspector General (HUD-OIG). Other federal agencies that may participate in the working group include the Secret Service, Internal Revenue Service, United States Postal Inspection Service, and Social Security Administration."

Ouch, double ouch and triple ouch! Of course, Julian Assange, the operator of WikiLeaks, also contends that he has information that could bring down executives from a major bank, widely assumed to be none other than Bank of America, which, from all appearances, may be in need of a bigger bandage. The bank is currently involved in no less than 35 major lawsuits, most stemming from their mortgage business.

The question then arises, why are people buying Bank of America (BAC) stock, or, the shares of any of the big banks embroiled in the mortgage business, like JP Morgan Chase (JPM), Wells-Fargo (WFC) or Citi (C)?

One would assume, with all of the aforementioned issues, that investors would shun these stocks, yet the reality is that they have been leading the December rally. Since November 30, Bank of America is up 15%; JP Morgan up more than 9% and Wells-Fargo and Citigroup are both up 13%. Either the investor class is being sold a phony bill of goods (wouldn't surprise anybody) or they know something most of the casual-viewing public don't.

They were all up better than two per cent today, leading a broad-based rally.

Dow 11,533.16, +55.03 (0.48%)
NASDAQ 2,667.61, +18.05 (0.68%)
S&P 500 1,254.60, +7.52 (0.60%)
NYSE Composite 7,906.10, +59.14 (0.75%)

Advancing issues trampled decliners, 4680-1871. NASDAQ new highs were 213, to 26 new lows. On the NYSE, new highs led new lows, 257-34. Of course, all of this movement was on dismally-low volume levels.

NASDAQ Volume 1,680,521,625.00
NYSE Volume 3,925,677,000

Oil pushed higher by 45 cents, reaching $89.82. Gold was held in check, losing 30 cents, to $1385.50, while silver posted a two-cent gain, to $29.37. Copper reached an all-time high of $4.3626 per pound, making pennies minted between 1909 and 1982 worth $0.28, nearly triple their face value.

Time to break out the kid's piggy bank?

Dow Down 400+ Points Since QE2

Since the inception of the Fed's QE2 program, throwing billions of dollars at Primary Dealers in exchange for Treasuries - essentially monetizing the government's debt - stocks have suffered mightily, posting losses in 11 of the past 16 sessions and dropping a whopping 445 points since November 7.

Currently, the scapegoat is the dastardly Irish, who chose a most inopportune time for their banks to become wholly insolvent and in needs of rescue by the European Union. With debt contagion spreading across to the continent in rapid fashion, the Euro has declined against the greenback, taking the fun of a weak currency trade along with it. As the dollar has strengthened, US stocks have nose-dived, and the rout is clearly underway, whether Ben Bernanke wishes to admit it or not.

Action on the markets today was entirely below the 50-day moving average on the Dow, and ended, after a midday respite, to the downside for the third session in a row. Blaming the Irish may be good sport for Fed bankers, but problems in the Eurozone certainly don't bode well for the ailing US economy. The slow-motion train wreck of Western economies which began in 2007 with the sub--prime mortgage unwind, is, after a $20 trillion reprieve from 2008 to the present, set to gather momentum and careen off the tracks again.

What will eventually prove to be the US economic undoing is still debatable. An expose of Bank of America's immoral and despicable practices in the mortgage arena has been put on the table by Wikileaks' founder Julien Assange. Shares of the Charlotte, NC-based bank fell to a 2-year low, closing at 10.95, on fears of such an event.

Perhaps Ireland's Parliament will just say no to the bank bailout being shoved down their throats by the equally-corrupt European Union, which itself may be a forgotten relic of a failed experiment in a few year's time.

Closer to home, it appears that the lame-duck congress has its hands full in the dwindling time before they decide to do what they do best - go home and do nothing - tackling issues such as the Bush tax cuts and jobless benefits have seen little movement. Congress must also pass a continuing resolution to keep the government operating by December 4, which just happens to be this Friday.

Tomorrow, ADP releases its normal private sector employment report, this one for the month of November, as a precursor to the BLS non-farm payroll data on Friday, which could also sway markets. Consensus seems to be calling for the nation to have created 130-150,000 new jobs in the month. Any number less robust than that could set off investor alarms again.

For today, another $6 billion pumped from the Fed to Primary dealers did little to stem the tide of selling. Stocks rebounded off their morning lows, but suffered a setback in the final hour, all major indices finishing deep in red ink.

Dow 11,006.02, -46.47 (0.42%)
NASDAQ 2,498.23, -26.99 (1.07%)
S&P 500 1,180.55, -7.21 (0.61%)
NYSE Composite 7,430.94, -52.40 (0.70%)

Losses were widespread as losers outnumbered gainers, 4290-2137. New highs numbered 156, while new lows closed to gap, at 103. In an obvious sign of weakness, volume ramped up to numbers not seen since election day.

NASDAQ Volume 2,429,697,750
NYSE Volume 5,643,896,500

Oil took a solid hit, losing $1.62, to $84.11, though it remains at elevated levels. Gold was a star, shooting up $19.20, to $1,386.70 per ounce. Silver also posted a strong gain of 89 cents, to finish at $28.09 on the COMEX.

FUD (Fear, uncertainty and doubt) are on the rise again and the Fed seems powerless to do anything but print more money.

Main Street's Black Friday Turns Blood Red on Wall Street

Mmmm, that's going to leave a mark...

In the continuing control fraud series of gap up/down opens, stocks took the predictable nosedive version today - predictable in that Wednesday's close was greatly to the upside.

With the Dow opening at around 11,100, about 85 points below the previous close, we have the now-well-known condition of trapped longs, who bought and held during Wednesday's uptick rally. In general terms, if you bought on Wednesday and sold on Friday, unhedged, you lost and are now puking up the remnants of your Thanksgiving dinner.

A wiser course of action might have been avoiding the stock markets altogether and making some illegal wagers on football games via the internet. At least you might have won, with the added bonus of the winnings being tax-free. Even had you lost your bets, you could mentally write off the sour investment as entertainment value.

Stocks skidded pretty badly, and, devoid of volume, had no inclination of reversing course, especially since it was a half-day and trading was even more scarce than normal. The run rate was even worse than some of the slowest days - and there have been many since the 2008 collapse - making Black Friday look like a blood-drip from the arteries of the Wall Street Scam money machinery.

Dow 11,092.00, -95.28 (0.85%)
NASDAQ 2,534.56, -8.56 (0.34%)
S&P 500 1,189.40, -8.95 (0.75%)
NYSE Composite 7,500.54, -78.72 (1.04%)

Declining issues dominated winners, 4054-2064. New highs:185; New lows: 51. Volume: fagetaboutit.

NASDAQ Volume 623,831,125
NYSE Volume 1,778,664,375

Oil finished unchanged, at $83.86 per barrel, keeping the price just high enough to extend the prices at the gas pumps for the remainder of the holiday weekend. Gold last printed at $1364.20, down $10.90 on the day, while silver kicked 89 cents lower, to $26.70. Those awaiting a reversion in silver may be seeing the beginning of a 50% pullback of the recent rally, which would put the lustrous metal at $23 and change. A 67% retracement would send it to about $21, at which point one would be highly inclined to begin accumulation for the next leg up, to $35 in the first half of 2011. Of course, a global deflation may take all technical data off the table, rendering all asset classes subject to major price reversals.

Speculation in land may be a viable alternative in the first half of 2011, though another round of descending prices should occur with a massive number of defaults and possible widespread bank failures.

Bank of America continues to be the stock to watch as far as real estate is concerned, as they have - through their 2007 purchase of Countrywide - the largest exposure in residential real estate of any of the major players. The stock hit all cherries today, closing at 11.11, remaining in the bottom of its recent range, and lower than the October 25 close, at the tail end of the "foreclosure crisis." Bank of American (BAC) is signaling what's ahead for homeowners, with already more than 25% of homes with mortgages "underwater," more pain to come, resulting in slower sales at lower prices for the truly most distressed of a growing mountain of distressed sellers.

2011 may turn out to be the year everything finally goes over the edge. Congress and the president haven't yet address the mortgage/banking fraud in any meaningful way, except to hand the banks more money with which to shore up their aching balance sheets and kick the fraud further down the road. Without a workable solution that includes 30-40% principal forgiveness - anathema to any blue-blooded banker - expect real estate prices to decline another 20-25% overall and the US economy to continue floundering like a beached whale.

While many believe we've avoided the dreaded "double-dip" recession scenario for this year, the next one may prove to be even more severe than the first, though even a minor recession leaves the Fed, White House and congress without any useful policy tools. The likely outcome would be to print more money, unless Tea Partiers in congress force the Fed's hand by denying any raise of the debt ceiling in early 2011. An unlikely outcome, but still potentially the best - though painful to the extreme - medicine.

2010 continues to grind towards its conclusion, with optimism bolstered by millions of shoppers on the busiest day of the year. If Christmas saves the retailers and wider stock market, there may be a significant overhang heading into the new year which could collapse stocks as earnings peak out with nowhere to go but down.

Lovely, isn't it?

Currency Wars: Gold/Silver vs. US$ vs. Euro

While there wasn't much of a downdraft in stocks today (the NASDAQ was positive at the close), currency watchers had plenty to occupy their attention as the dollar appreciated against the Euro, though the big winners were Gold and Silver (the shining star of the past two months).

The Fed offered up $6.5 billion to Wall Street in the form or a POMO, but the boys said, "oh, no" and continued their selling of overpriced stocks in the face of Euro woes.

The European answer to Ben Bernanke's blind monkey monetary policy (QE2) was expressly Continental. As Ireland, Greece, Portugal and Spain teeter on the brink of insolvency, the European response was a curt, "you're not so bad; we're worse," as the race to the bottom of the currency abyss accelerated to a manic pace.

The big beneficiaries were manifested in pronounced moves in gold and silver, the former reaching new all-time highs, the latter continuing it's crusade against anything fiat. At the end of the day, owning gold, silver or dollars was the correct bet, against the wishes of Mr. Bernanke, and, at least for today, a complete repudiation of his overt, repulsive monetarism.

One outlier worth note was Bank of America (BAC), which defied all logic and sound investing strategy by posting another in a series of gains. Shares of the nation's largest mortgage lender finished up 24 cents, to $12.60, equaling its close on October 14. Shares had sunk as low as 11.16 (October 25), but have since found new life, though the stock is so heavily shorted, it may be merely a shaking out of weak hands. The stock gapped up at the open and made its best advances in the afternoon, trading as high as 12.73 before settling lower.

Oddly enough, the euphoria from last week, spurred by the Fed's announcement that it would monetize up to $900 billion in debt over the next eight months and sweeping victories in the House by the Republican party, seemed to fade in the light of the new week. Doubters of Fed policy are numerous and many have loudly decried Mr. Bernanke's QE as the wrong prescription for the US and global economies. Among them, US Representative Ron Paul from Texas, who expressed a view that the Fed would fail on its own and that gold should compete with Federal Reserve Notes as currency (see video below).

Additionally, Paul took aim at entitlements on his congressional website, calling for a rejection of the welfare state and offered a position to make Social Security voluntary.

Dow 11,406.84, -37.24 (0.33%)
NASDAQ 2,580.05, +1.07 (0.04%)
S&P 500 1,223.25, -2.60 (0.21%)
NYSE Composite 7,782.20, -18.46 (0.24%)

With the first downturn in the last seven sessions, declining issues paraded past advancers, 3437-3012. New highs led new lows, 691-53, so there's obviously still a good deal of speculation continuing. Volume, however, returned to moribund levels that prevailed prior to last week.

NASDAQ Volume 1,824,770,375.00
NYSE Volume 4,468,926,000

Oil continued to surge, despite the higher dollar, gaining 21 cents, to $87.06, on the front-end contract. The latest print on gold was up $15.30, to $1409.40, while silver amazed again, gaining 95 cents, to $27.71.