Stocks Remain Sluggishly in Stall Mode Awaiting Greek Workout

Considering that there are nearly 7 billion people on Planet Earth, one wouldn't think that the economic fate of a country as small as Greece (population: 10,787,690 in the 2011 census) would rattle markets as much as the Hellenic nation has, but there's much more to the equation than just Greece and its populace.

If Greece is unable to come to terms with private and public financiers, and have their people agree to even more stringent austerity measures, there's the very real chance that Greece would formally default on its debt and thus be driven from the EuroZone. Ancillary to that argument is the suspicion that other derelict nations which use the Euro as their primary currency - countries such as Portugal, Spain, Italy, Belgium and Hungary - might also fall under the sway of separation from the Euro currency, a chain of events that would surely bring financial markets and whole economies to a state of panic and confusion.

So, while the unity party in Greece and Premier Lucas Papademos ponder their next moves, the world slowly turns.

Stocks were little changed for the third straight session in New York, treading water in a narrow trading range on a paucity of volume. However, if anything has been learned since the near-death experience of 2008, maybe the merry marketeers have discovered that slow is good.

Stocks have advanced at a snail's pace this week, with the Dow adding 19 points and change over the three days. Despite the angst over the situation in Europe, some are still finding equities worth buying and, yes, holding.

Should Greece formally default, it should not be the end of the world for US investors in particular. There's been plenty of time to decouple from Europe, though the effect of a cascading currency crisis would, almost certainly, have a deleterious aftermath.

On the opposite side of the equation is the hope-against-hope that the Greeks will accept austerity, private bondholders will take a 50-70% haircut and the troika will also manage to find a way to sweep the unpaid debts under the rug of international finance.

Since the ECB, IMF and our own Federal Reserve can just flip the money switch at will, there's little doubt that whatever the circumstances, and however dire the conditions for the people of Greece, the economic Ponzi scheme will continue without as much as a loud belch from the bowls of central bank vaults.

As it was in 2008 in America, little will change, although the though of visiting the home of the Acropolis and the Parthenon with American money at an exchange rate measured in cheap drachmas instead of overvalued Euros is rather appealing.

Dow 12,883.95, +5.75 (0.04%)
NASDAQ 2,915.86, +11.78 (0.41%)
S&P 500 1,349.96, +2.91 (0.22%)
NYSE Composite 8,083.47, +13.76 (0.17%)
NASDAQ Volume 1,952,598,125
NYSE Volume 4,050,664,250
Combined NYSE & NASDAQ Advance - Decline: 3218-2394
Combined NYSE & NASDAQ New highs - New lows: 279-11
WTI crude oil: 98.71, +0.30
Gold: 1,731.30, -17.10
Silver: 33.70, -0.49

European Banks Borrow $639 Billion From ECB; Oracle Tanks Techs

Santa Claus came and went. Apparently, his next stop was in Europe, where today, 523 struggling banks on the continent grabbed for $639 billion (489 billion euros) from the ECB's newest lending facility, which offered a sweetheart of a deal: 1% interest over three years. We should all be so lucky.

The huge amount of borrowing was frowned upon in the US. As the news hit America's shores, futures went into the tank on the perception that the amount borrowed was much higher than originally forecast and the sneaking suspicion that although the European banking system was obviously weak, it actually was in much worse shape than originally thought.

Stocks sent almost the entire day underwater, as poor results from Oracle last night after the close sent shock waves through the tech sector. Though the Dow, which was down as many as 104 points, and the S&P finished marginally positive, the NASDAQ ended the day with a serious loss, though it too cut its losses roughly in half by day's end.

In Washington, there was still no progress on the bill which would keep the current social security payroll deduction at current levels and also extend unemployment benefits to about two million people, as the House of Representatives announced their work for the week completed.

The bill was soundly passed in the Senate, and rejected by the House, mostly along party lines.

Also in Washington today, the Justice Department announced a $335 million settlement with Bank of America (BAC), stemming from a DofJ claim that Countrywide - since acquired by Bank of America - discriminated against over 200,000 black and Hispanic mortgage borrowers by charging them higher rates and fees than white homeowners.

While the settlement was the largest of its kind ever, the amount is a mere pittance in comparison to the economic damage wrought by Countrywide and other lenders during the mortgage and housing bust. BofA will pay the money directly to the government and the DofJ will supposedly dole out the proceeds to individuals and families affected by the discriminatory practices.

Attorney General Eric Holder, who seems to only show up after his department settles a case, said, "With today’s settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation.”

It should be amusing to track exactly where that money goes.

There are just two more trading sessions before Christmas, three shopping days and a total of seven trading sessions remaining in 2011. Most investors can't wait for the year to end, as stocks have flat-lined for the most part and actually are well off the highs set in late April.

Dow 12,107.74, +4.16 (0.03%)
NASDAQ 2,577.97, -25.76 (0.99%)
S&P 500 1,243.72, +2.42 (0.19%)
NYSE Composite 7,388.52, +27.55 (0.37%)
NASDAQ Volume 1,866,553,125
NYSE Volume 3,574,281,500
Combined NYSE & NASDAQ Advance - Decline: 3153-2488
Combined NYSE & NASDAQ New highs - New lows: 194-95
WTI crude oil: 98.67, +1.43
Gold: 1,613.60, -4.00
Silver: 29.25, -0.29

The Instant Market: Draghi and Bank of America Take It Down Two Notches

Once again, we are treated to the new reality of the "instant market" wherein news, or rumor, directs the flow of funds into or out of select equities, and today's catalysts were, as usual, from Europe (must have some news from Europe to move markets: it's the law) and oddly enough, from our old friends at Bank of America (BAC).

First, Europe. US markets opened with some hope and small gains across the indices. That was, until shortly after 10:00 New York time, when ECB President Mario Draghi commented that the ECB would not step up it's bond purchases, noting that monetary financing of states was not part of the treaty upon which the EU was formed. (Imagine, a world political leader actually sticking to what was agreed upon. A novel approach.)

That took the markets down a big notch, with the Dow, after hitting its highs of the day earlier - up 60 points - falling a full 120 points - to down 60 - in about an hour's time after Draghi's comments.

Draghi also said that any talk of the Euro-zone breaking apart were "morbid" and that the Euro was going to remain intact as a viable currency. He punted this gem:

I have no doubts whatsoever about the strength of the euro, about its permanence, about its irreversibility. But you have a lot of people, especially outside the euro area, who spend a lot of time in what I call morbid speculation.

While Draghi may be right about the morbidity part, the thought that the Euro is irreplaceable or inviolate is nothing more than CYA job protection. He's paid to oversee the ECB, and talking up the currency is part of his job. Somebody ought to hand Draghi a history book. Greece fell, Rome fell, Germany rose and fell a couple of times, at least. Nothing lasts forever, and, with only 11 years of history under its belt, the Euro is experiencing something of a severe confidence crisis, if not a complete failure by some of its constituents.

Most of those "morbid" speculators give the Euro another six to eighteen months, tops. And while it may indeed survive, and prove Draghi correct in the near term, it's another bad idea stemming from too many government bureaucrats attempting to furnish a centrally-planned socialist solution where none was needed. In many ways, the Euro resembles the Medicare/Medicade mess in the US, wherein the government stepped all over the established free market to create a system that is out of control and benefits mostly large medical insurance companies instead of real people with health care needs. The Euro was supposed to affect the entire continent in magical, positive ways. It has, thus far, produced a great deal of pain, financial inequities and sparked a world-wide crisis, even though that crisis was well underway, being all about fiat money anyway.

Stocks drifted along until about 3:00 pm ET when the PPT or whomever was hitting the bid - for hours - on Bank of America at 5.00 - 5.03, stopped, failed and rolled over. The bank that many equate with the financial collapse of 2008, hit a fresh, 33-month low, hitting 4.92 prior to closing at 4.99, an important figure, since many funds, by charter, cannot trade in stocks priced under 5.00, or must severely limit the size of their investment in such low-priced equities.

With banks under pressure the entire session, the demise of BAC took the whole market down the second notch, into the close. So much for recovery, at least by the "well-capitalized" US banks, whose ledgers are an indecipherable miasma of imaginary valuations, off-balance-sheet assets and liabilities and mark-to-model fantasies. With books so complex and confusing most CPAs don't understand them and after relentless support from the federal government (much of it in secret), is there any doubt that most stock pickers have shied away from US financial stocks as a whole?

Bank of America, along with Citigroup and JP Morgan Chase, to name just a few, should have been broken up in 2008-09, when they were insolvent (and still are, largely), though that would have ended the near-total dominance of the Federal Reserve and its constituents over all transactions in the US economy and beyond, and the rich bankers and their supporters simply could not stand for that. Instead, it was easier for them to socialize the losses on the backs of the US taxpayers.

Bank of America's recent swoon is only a small chapter in the ongoing saga that will bring down the oligarchical nature of our corrupt political and financial system. 99%ers are celebrating.

A couple of items of note:

Ron Paul, the Republican presidential candidate that the establishment loves to hate, has taken the lead in Iowa accordind to the most recent polling by Public Policy Polling (PPP), one of a handful of organizations tracking the rise and fall of candidates in the upcoming (January 3) caucuses.

The results have Paul at 23%, leading Mitt Romney (20%) and a rapidly declining Newt Gingrich (14%), even though Romney recently picked up the endorsement of the the Des Moines Register, Iowa's leading newspaper. Paul is also reported to have taken in more than $4 million over the past weekend, and now is in second place, behind Romney, in New Hampshire.

Also, a searing report on where we're headed in 2012, called the Thunder Road Report, leading with the cryptic warning, "Dear Portfolio Manager, you are leaving the capitalist sector and heading into a full-spectrum crisis."

The entire report is available at the end of this post.

Anybody seen Santa?

Dow 11,766.26, -100.13 (0.84%)
NASDAQ 2,523.14, -32.19 (1.26%)
S&P 500 1,205.35, -14.31 (1.17%)
NYSE Composite 7,142.45, -95.21 (1.32%)
NASDAQ Volume 1,591,603,125
NYSE Volume 3,659,820,750
Combined NYSE & NASDAQ Advance - Decline: 1230-4469
Combined NYSE & NASDAQ New highs - New lows: 110-290 (blowing out)
WTI crude oil: 93.88, +0.35
Gold: 1,596.70, -1.20
Silver: 28.87, -0.80

TRoad25

LIQUIDATION DAY: Stocks, Oil, Gold, Silver All Whacked

If one is expert at reading the market's tea leaves, today was an opportunity to test your skills on just what the massive, liquidation-style selling in commodities was foretelling.

Since there wasn't any news from Europe upon which to trade, perhaps it had something to do with yesterday's non-eventful Fed policy announcement. Many of the larger market participants were hoping the Fed would announce some new iteration of QE, and, since there was none, decided - as of yesterday at about 2:30 pm - to begin liquidating assets in as orderly a manner possible without spooking the markets.

If that was the case - and it's probably not - the markets got a bit spooky in today's trading, though the real action was in commodities, especially oil, gold and silver, which were pounded down so hard it seemed that some of the world's most valuable assets were quickly becoming worthless.

The reality of the matter is probably much simpler, though unseen to most casual observers. Since last week, when the ECB and EU met on the last two days of the week, stocks have been rending lower, and today came the margin calls for anybody long equities and stretched out. There's also the much larger matter of imminent danger in Europe, either in the form of a complete and final Greek default, a bailout of Germany's CommerzBank or perhaps the ultimate collapse of the Euro as a currency of any value, the continent's plaything falling below the critical 1.30 level against the US Dollar today.

Libor rates have been on the rise recently and spreads are also widening, exacerbating the already tense liquidity condition for Europe-based banks. China and India are seeing growth stall out, mostly due to the dire conditions in Europe, but also due to internal stresses.

Perhaps it's the combination of all these bad things happening at once, which is not coincidental in today's globally-connected financial universe. When tough times come to one of the major developed countries or regions, like the Euro-zone, the ripples are felt around the world, and surely, judging by the weight and depth of today's commodity rout, something very fundamentally wrong is about to commence, because massive outflows from gold, especially, usually signal a liquidation event. And liquidation events usually precede solvency events, which, for most of the Southern European nations, is at the heart of the matter.

Gold was down massively, but was easily outdone on a percentage basis by its fellow PM cousin, silver, which broke through support levels and finished in New York down nearly 7.5 percent. So much for safe harbors! Crude oil, about which just about anyone who drives a car wishes it were at $65 per barrel instead of $100, took a deep slide as put contracts at a $65 strike in latter 2012 continue to pile up, potentially pushing the commodity futures into backwardation as the world supply has quickly become a glut on soft demand.

As far as stocks are concerned, the sense is that a lot of traders are closing their books for the year, locking in whatever profits they might have and selling off losers, as the trend in new highs vs. new lows would indicate.

US indices are just about at break even for the year, which is quickly coming to an end, with just 12 trading sessions remaining in 2011. The Dow Jones Industrials, the most resilient of the US indices, is up less than 3% on the year, or 246 points. The S&P and NASDAQ are already in the red to the tune of a 3-4% decline on the year and NYSE Composite takes the cake, down 780 points since last December 31, a nearly 10% decline.

Sure enough, something very disturbing to financial markets is primed for implosion. It's probably Europe, and it's probably going to be very bad and not fixable. Meanwhile, back on Wall Street, the masters of the universe are searching the skies for a jolly fat man on a sleigh pulled by reindeer in hopes that the highly-anticipated and nearly-annual event of a Christmas rally will get them back somewhere close to even by year's end. As for the highs reached back in April, forget them. Those levels may not be seen again for another 10 to 20 years.

Special shout-out to DanK, who turns a youthful 59 today. Hey, another 1/2 year and Dan can start liquidating his IRA without penalty. There is a silver lining, even though silver ain't exactly what it used to be, say, eight months ago.

Dow 11,823.48, -131.46 (1.10%)
NASDAQ 2,539.31, -39.96 (1.55%)
S&P 500 1,211.82, -13.91 (1.13%)
NYSE Composite 7,184.75, -92.87 (1.28%)
NASDAQ Volume 1,794,074,500
NYSE Volume 4,233,398,500
Combined NYSE & NASDAQ Advance - Decline: 1784-3900
Combined NYSE & NASDAQ New highs - New lows: 72-256 (three straight days in the red, and widening)
WTI crude oil: 94.95, -5.19
Gold: 1,586.90, -76.20
Silver: 28.94, -2.33

So Much for Europe Being Fixed; US Stocks Dashed over Persistent Fear of Euro Collapse

Let's face it. There's no easy way for europe to fix the mess they've created without a lot of pain, including bank failures, a massive, long-term deflationary depression, government overthrows and the near disintegration of the Euro-zone, those countries which exclusively use the Euro as currency.

After last week's up-and-down Thursday and Friday sessions, marked by trepidation over the ECB's interest rate cut and a demure stance on monetary policy by new ECB head, Mario Draghi, and Friday's euphoric rally on the umpteenth outline of a Euro solution, Monday turned just plain ugly for European bourses and US indices.

Anybody who understands the enormity of debt that's been built up by Europe and the US - not only in the government, but by the banks, financial institutions and households as well - sees no end to the crisis in Europe, and the distinct probability that their problems - being partly those of our own banks and our Federal Reserve - will become ours. The massive overhang of public debt, much of it owing to national pension funds like Social Security, has always been an albatross around the necks of European leaders and now it is quickly becoming one for whoever leads the US (Take your pick from Obama, the banks or the congress. None of them are doing a good job.).

And while Social Security is set to run in the red for another year (this being the first), what are congress and the president fighting over? Whether to cut the Social Security contribution paid by employees and/or add a tax on the wealthy. The fact that the latest boondoggle is being branded as "payroll tax" - a wholly incorrect moniker - tells exactly how deep and severe the US fiscal condition has become.

If the government big-wigs actually came clean on the issue and said they want to cut Social Security contributions so people can afford to buy food, gas and maybe the occasional iPad or plasma TV, the cat would be out of the bag, permanently.

As it stands today, Social Security is DOA. Current beneficiaries can expect payments though the next five years, maybe, but, eventually, there's not enough money going into the system to support the huge numbers of upcoming recipients from the Baby Boom generation, most of whom have less than $40,000 saved for retirement (Hint: that's not enough), and cutting contributions is going in exactly the wrong direction.

On Capitol Hill, most senior congress-people know that Social Security will have to be substantially changed in order to survive and the changes will have to be dramatic measures, like raising the retirement age to 70 or 72, means testing, so that people who don't need it won't get it, and raising the limit of contributions from the current first $106,800 of income to something more realistic, like the first $200,000 of income.

Making high-earners pay more would add more money to the SS coffers at the same time the government is cutting the percentage take from employees. Still, most of the measures even considered by congress and the White House are nothing more than stop-gap measures designed to satiate the masses until the next big election, in November, 2012.

In the meantime, the economy continues to struggle along, unless one is inclined to take their lead from the ruthless bankers on Wall Street and cheat like crazy, paying people off the books, under-reporting income and generally skirting the IRS at every turn. Hey, the big corporations do it, so why not everyone else.

At the bottom of all the financial malaise is the collapse of government, as we've witnessed in the Middle east and North Africa, is now spreading to Europe and Russia, and thanks to people actually taking change of their own lives and their own finances, is quickly gaining ground here in the USA.

There is one way to stem the crisis in the United States. Elect Ron Paul president. The mainstream media is currently dancing around Dr. Paul, whose positions have been consistent and poisonous to the status quo, but there's no doubt mainstream America is listening to the 76-year-old Texan, as he continue to gain ground in Iowa and elsewhere.

Compared to the current leaders, Newt Gingrich and Mitt Romney, a Ron Paul - Michelle Bachmann ticket is sure beginning to look like a winner.

When Americans ask themselves, "which of the Republican candidates are most like us?" the answer becomes obvious.

BTW: Volume was so low today that the markets could have closed at noon and hardly anyone would have noticed. Even fewer would have cared. That's what happens when trust flees markets. People, and money, follow out the door.

The Euro hit a two-month low against the US Dollar, below 1.32. The end of the Euro is coming, and sooner than anyone dares think.

Dow 12,021.39, -162.87 (1.34%)
NASDAQ 2,612.26, -34.59 (1.31%)
S&P 500 1,236.47, -18.72 (1.49%)
NYSE Composite 7,363.49, -139.39 (1.86%)
NASDAQ Volume 1,523,045,375
NYSE Volume 3,421,469,750
Combined NYSE & NASDAQ Advance - Decline: 1272-4386
Combined NYSE & NASDAQ New highs - New lows: 79-120 (flipped to red)
WTI crude oil: 97.77 -1.64 (head back to 80-85 range)
Gold: 1,668.20 -48.60 (deflation signal)
Silver: 31.00, -1.25

European Crisis Summit Outlines Plans, Markets Reverse Course

After lengthy deliberations which reportedly lasted well into the evening, European leaders emerged with the outline of a fiscal union designed to maintain the current structure of the EU and the Euro-zone nations which use the Euro as currency.

Left out of the plan was Great Britain, which said it would not succumb to another layer of regulations from the Eu, especially since it still has the British Pound as its sovereign currency.

One highlight was the decision to cap the new permanent rescue fund at 500 billion euros.

Additionally, European central banks will lend 150 billion euros to the International Monetary Fund’s (IMF) general resources. Non-euro EU states will offer around 50 billion euros to the IMF. Having the central banks on board is a new development that was widely cheered by market participants as it should encourage sovereigns outside of europe to pitch in to an IMF fund as well.

Details of the complex plan and new treaty language are expected to be finalized by March, leaving plenty of time for intrigue and dissent in the interim.

Stocks in Europe were higher, with the French, German and UK markets scoring the largest gains. In the US, the effect of the summit was a reversal of the previous day's losses, resulting in a negligible net gain or loss over the two days market players had been anticipating with some anxiety.

So, after all the drama over Thursday's ECB policy meeting and the Friday's EU summit, the end result after two days of nail-biting was a 12-point loss for the Dow Industrials, about two points down on the NASDAQ and a six point loss on the S&P. Indeed, it was all much ado about nothing with the major averages ending the week with marginal gains.

Everyone on and off Wall Street can now get back to doing whatever they do until the next European crisis event, which, if recent history is any guide, should be some time next week.

Dow 12,184.26 186.56 (1.55%)
NASDAQ 2,646.85 50.47 (1.94%)
S&P 500 1,255.19 20.84 (1.69%)
NYSE Compos 7,502.88 133.36 (1.81%)
NASDAQ Volume 1,651,333,125.00
NYSE Volume 3,698,613,000
Combined NYSE & NASDAQ Advance - Decline: 4746-907
Combined NYSE & NASDAQ New highs - New lows: 141-67
WTI crude oil: 99.41, +1.07
Gold: 1,716.80, +3.40
Silver: 32.25, +0.72

European Mess Smashes Stocks; How Treasury Secretary Hank Paulson Screwed America

Yesterday in this space, an ancient Wall Street adage was invoked: "Never short a dull market."

We fairly dismissed the idea that, since the US market was basically on hold until the Europeans meet, greet and decide the economic fate of the continent, US stocks would wallow in hopeless delusion, because the Europeans, somewhat like our very own beloved congress, seem incapable of walking and chewing gum at the same time.

Most of them could not get arrested at a bong party, either, but the various inabilities of the ruling elite are not a primary concern. What they're doing to your money, your economic present and future, are.

And they're making a god-awful mess of it.

Just before US markets opened, the ECB announced a rate cut of 25 basis points (0.25%) to one percent, which was annoying to the majority of traders, who, as always, wanted more. A 50 bip reduction would have satiated their appetite for freer money for the while, but the ECB also announced that they would be extending loans of up to 36 months (that's three years for the mathematically-inept) to banks on the continent.

That was met with some enthusiasm, but within minutes, newly-appointed ECB president Mario Draghi dashed hopes at the press conference, claiming that the rate cut vote was not unanimous, signaling a lack of conviction on the part of ECB participants.

Stocks plummeted at the open in the US and only partially recovered late in the day as news leaks from the EU summit meeting beginning tomorrow indicated that a fiscal pact would be pursued by EU member nations, but even that news was short-lived as the major indices closed near the lows of the day.

Europe has become the focal point of global equity and commodity trading as it grapples with the potential for debt contagion among sovereign states and bank failures across the European Union. While difficulties in Europe may not directly affect the economy of the United States and other countries, it will have a pass-through effect, as pain anywhere in the global financial system is felt - to varying degrees - everywhere else.

Hope is now high that the crisis summit - a macabre circus in its own right - will produce some lasting, positive resolution, but the more one looks at the condition of Europe, the less one believes that there will be a positive conclusion short of destroying the Euro as a currency, an outcome that may have more benefits than downsides.

Until tomorrow, at least, stocks took a beating, as once again, the bulk of traders were hoping for positive results from another gang that can't shoot straight.

While on the topic of governments and their follies and foibles, an article by John Crudele in the NY Post should be at the top of the discussion of just how corrupt and obnoxious Wall Street has been and continues to be.

Crudele has been saying for two years that Paulson and other elements of the government were corrupt. In today's story, he finally gets confirmation from Bloomberg Markets that then-Secretary of the Treasury Hank Paulson was passing along insider tips to his buddies at Goldman Sachs (where he had served as CEO prior to being named to head Treasury by President Bush) and others.

Crudele says:

Under former Treasury Secretary Hank Paulson, confidential government information was regularly leaked to select people on Wall Street.

That's all one needs to know about how tightly intertwined Wall Street and top officials of the federal government are intertwined, but it brings up an essential question, or questions: Where are NBC, CBS, CNBC, ABC, FOX on this story, and why hasn't Attorney General Eric Holder announced an investigation?

The answers are simple. Bit players like Martha Stewart and Rob Blogojeich go to jail. Fat-ass scum-bags like Hank Paulson, the architect of TARP and god-knows how many other deceitful financial scams sail off into retirement sunset.

No wonder there is an ugly undercurrent of dissatisfaction and distrust in America. The people at the top have been screwing the public for years, yet not a single one is even investigated. Instead, we are subjected to daily wild market swings and the spectacle of former congressman, former New Jersey governor Jon Corzine explaining to a congressional panel how he didn't know what was going on while his firm, MF Global, raided the coffers of client money to the tune of $1.2 billion.

Corzine won't see the inside of a prison; that you can count on. Neither will Hank Paulson. But some ghetto kid who sells a bag of weed because it's the only way he can make a buck, will receive the full extent of what now humorously is called "justice" in America.

Face it, people, with the thieves and connivers we have in government, we're all royally screwed and the wake-up call is probably a few decades too late.

Thanks to John Crudele and the NY Post for his ground-breaking and tireless reporting efforts. It's amazing he hasn't been fired yet.

And seriously, isn't Ron Paul the only Republican presidential candidate that is electable? The others are either pandering flip-floppers (Gingrich, Romney) or wing-nuts (Santorum, Cain, Bachman, Perry). That leaves only Mr. Paul nd Jon Huntsman as viable candidates. But the mainstream media, which relies upon access to the corrupt political machines running the country, will have no part of either of them.

The best advice is to ignore all of them and fend - as best one can - for oneself and one's family, but, eventually, unless the liars, cheaters and thieves of Wall Street and Washington are rooted out and made to pay for their crimes, America is doomed.

Dow 11,997.70, -198.67 (1.63%)
NASDAQ 2,596.38, -52.83 (1.99%)
S&P 500 1,234.35, -26.66 (2.11%)
NYSE Composite 7,369.52, -190.19 (2.52%)
NASDAQ Volume 1,843,290,125
NYSE Volume 4,222,942,000
Combined NYSE & NASDAQ Advance - Decline: 774-4842
Combined NYSE & NASDAQ New highs - New lows: 100-89
WTI crude oil: 98.34, -2.15
Gold: 1,713.40, -31.40
Silver: 31.54, -1.09

US Markets Stalled Out, Waiting for Europe's Next Gambit

There's an old Wall Street adage that goes something like, "don't short a dull market," but, if this market goes any higher and gets any duller, the adage might as well be thrown out along with most long positions in stocks.

After Tuesday's snooze-fest, Wednesday's market was even sleepier, with participation at low ebb. Volume has nearly completely dried up, but the thin trading has reduced volatility somewhat. In fact, the VIX, which measures implied volatility in the S&P 500, hasn't pitched above 30 (an abnormally high level to begin with) since November 30, or one week ago.

What traders are most concerned with is once again Europe, but more specifically, the two days of meetings scheduled in Europe, one by the ECB, tomorrow, and the other a crisis summit of leaders of the Euro-zone nations on Friday that is hoped to pave the way toward an end of the two-year-old debt crisis that has gripped European markets and locked down US markets for the past two days.

As is the usual case with relying on Europe to fix our own stock market, it's probably a bad idea. Some leading economists of the region, particularly those from Germany, who have the best view of the situation, are saying that whatever solutions come out of this week's crisis summit, Europe's problems are likely to remain contentious for another eighteen months to two years.

Noting that, and understanding that debt issues which took decades to produce are not going to be solved at one meeting (it has been promised before and not been delivered), so one has to question both the positioning in US stocks, which have been essentially flat since the middle of August, and the reliability of ancient words of wisdom in an era that has been marked by unusual actions from the Fed and other central banks in developed countries.

If everybody's waiting on Europe, just what do they expect? A grand plan which all 17 countries that use the Euro as currency can agree to? Good luck with that. European leaders are now calling for majority consensus rather than unanimity. Meanwhile the ratings agencies, specifically Standard & Poor's, are scaring the daylights out of each and every one of them, threatening credit rating downgrades across the continent if there's no substantial progress come Friday.

What this telegraphed sucker punch from S&P is saying is more political than economic, essentially telling all of Europe to stop playing around the periphery and get to the core of the matter, which would entail some countries (think Spain, Portugal, Italy and Greece) having to give up some degree of sovereignty in order to remain in the good graces of the European Union and the ECB. And while fiscal unity, or, at least some semblance of fiscal responsibility would be a step in the right direction, the citizenry of those countries might not take lightly to having new masters above their own elected leaders somewhere in Germany, Brussels or France.

Since the crisis meeting isn't until Friday, that's probably when US markets might perk up, but, if the game plan remains the same in Europe - promise much, deliver little - they will be sending a message to markets around the world that the issues present are too large, too diverse and too complex for all 17 Euro-zone nations to reach agreement on any unifying principles laid down.

In that scenario, we may just get another two days of slumber on the street as even more participants make a premature exit from stocks in 2011, fleeing to cash or bonds until the dust settles after the holidays.

And what about that Santa Claus rally that usually commences over the final two weeks of the year? There may be one, but it won't have much gusto on low volume and it's not likely to last long. Stocks are already creeping back toward their late July - early August levels and there's just not enough economic "juice" in the system for which a rally can be sustained. The major US indices have flirted recently with the flat line for the year and that's probably where they're going to remain.

Meanwhile, all one can do is hold one's breath waiting for Europe's next move. Everyone is waiting to exhale.

Dow 12,196.37, +46.24 (0.38%)
NASDAQ 2,649.21, -0.35 (0.01%)
S&P 500 1,261.01, +2.54 (0.20%)
NYSE Composite 7,559.71, +20.39 (0.27%)
NASDAQ Volume 1,654,001,000
NYSE Volume 4,158,213,000
Combined NYSE & NASDAQ Advance - Decline: 2804-2747
Combined NYSE & NASDAQ New highs - New lows: 119-63
WTI crude oil: 100.49, -0.79
Gold: 1,744.80, +13.00
Silver: 32.63, -0.12

Santa (Ben Bernanke) Arrives Early in Europe; Gold, Silver Surge

Stocks worldwide were up sharply Wednesday on the news that the Federal Reserve, in conjunction with the Central Banks of Canada, England, Japan, Switzerland and the European Central Bank (ECB) agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points.

It was an early Christmas gift that sparked a speculative rally and kept Europe from unraveling, again.

What we've repeatedly heard is that the current calamities of the Euro-zone are nothing like those encountered on American soil in 2008.

The plain fact that banks in Europe are under dire stress and in need of liquidity not only reprises 2008, but adds a crescendo affect that's akin to adding the NY Philharmonic, the Ohio State marching band and the Mormon Tabernacle Choir to the efforts of the Boston Pops.

Stresses on European banks, especially those in France, Belgium and Italy, have been exacerbating on a near-daily basis, with the potential for global contagion even greater than when Lehman Bros. was allowed to flail and fail.

Thus, as some unknown Europe-based bank was about to go under - rumors say $265 million in overnight borrowings from the ECB was the tip-off - the global elitist Central Bankers conspired to lift liquidity by lowering the borrowing rates on US Dollar swap arrangements by 50 basis points (1/2 percent).

Magically, not only was the global Ponzi financial system saved for the day, week or month, but the added benefit of having global equity markets spike 3-4% higher came along as an intended consequence. Yes, the globalists know what they're doing. Too bad for them that it doesn't work long term, as we know so well from recent history, circa September, 2008.

Here's a post, by none other than some character calling himself John Galt, that has both the 2008 and current Federal Reserve press releases. The similarities are striking, but also magnificent was the 2008 aftermath, the worst financial crisis of the last 70 or so years, and the resultant crash of the equity markets.

So, Santa came to town (Europe) dressed as Ben Bernanke, with his trusty elf, Tim Geithner, in tow, passing off presents to the good (and bad) bankers across the continent. While this constitutes Christmas and a Santa Claus Rally about a month prematurely, what can Europe and the global economy expect when the holiday actually arrives on December 25, lumps of coal, or perhaps soaring gold and silver prices?

The actual timing of the eventual collapse is still unknown, though this desperation move seems to indicate that the global financial structure is crumbling faster than the "unseen hands" of the central banks can prop it up. A dive in equities may not coincide with Christmas - that would be a shame - but rather sometime in early 2012, likely in the first quarter and quite possibly in January as profits are taken early in the year on stocks pumped to unwieldy heights in December. The net results being a relatively weaker dollar and higher prices for just about anything one consumes or needs. When the crash comes, of course, the Euro will descend and the dollar will rise, though the effect is probably short-term, until the Easter Bunny fills up those empty bank liquidity baskets again.

As the adage implies, this massive liquidity gift may indeed have a silver lining, encrusted with much-higher-priced gold.

Prior to the Fed's announcement, the People's Bank of China cut bank reserve requirements for the first time in three years, by 0.5%, amid signs that the Chinese economy is slowing due to slack demand for China's exports, particularly from Europe.

After the announcement, with futures up dramatically, ADP released its November Employment Change results, showing the creation of 206,000 private sector jobs during the month. The private survey is a regular precursor to Friday's BLS non-farm payroll data.

Third quarter productivity was measured as up 2.3%, while unit labor costs fell 2.5% as companies hunker down, doing more with fewer employees.

Fifteen minutes into the trading session, Chicago PMI reported a big jump, from 58.4 in October to 62.6 in November. It was an unnecessary boost to a market which had already spiked higher at the open.

There was no fade in this one-day rally, coming conveniently on the last day of the month, traditionally the day reserved for "window dressing" by fund managers. Stocks were up monstrously on the open and continued along a high, flat line for the rest of the session, until a final short-covering episode in the final fifteen minutes pushed indices even higher.

Just speculating, but it had to be one of the best market moves of the year, if not the best. Volume was sufficient, though not overwhelming. The late-day surge may be indicating that even more easy money will flow from the Fed to the hampered Eurozone.

As to whether the moves in stocks are sustainable and the even more important question of whether or not Europe is "fixed," the answers will only be known at some future date. The most cogent commentaries on Europe suggest that today's coordinated central bank motivation only covers over a dire condition in the European banking sector and is nothing more than a liquidity band-aid on a solvency open gash. Europe's funding problems remain unresolved, though any mention of default or collapse has probably been delayed by a few weeks or a month.

And just in case you're worried about food shortages or another recession, the Obama administration and congress actually did accomplish something, recently having lifted the five-year-old ban on slaughtering horses in America. Not to worry, though. Americans won't be eating Little Red Pony or Trigger any time soon (we hope). The meat will likely be shipped to Japan or Europe. However, if this is a trend-setter, cans of Lassie, Rin Tin Tin or Boo Boo Kitty may be in supermarkets soon. Dog food and cat food may take on newer, twisted meanings.

Dow 12,045.68, +490.05 (4.24%)
NASDAQ 2,620.34, +104.83 (4.17%)
S&P 500 1,246.96, +51.77 (4.33%)
NYSE Composite 7,484.49, +334.78 (4.68%)
NASDAQ Volume 2,386,048,000
NYSE Volume 5,808,163,500
Combined NYSE & NASDAQ Advance - Decline: 4913-861
Combined NYSE & NASDAQ New highs - New lows: 161-68 (this has rolled over)
WTI crude oil: 100.36. +0.56
Gold: 1,745.50, +32.10
Silver: 32.73, +0.88

Super Committee Epic Fail; Ron Paul Weighs In; New Government in Spain; Last Days of Euro?

Despite rumors of some kind of "a new idea" from senator Max Baucus that the congressional super committee would reach some kind of deal - a rumor that boosted stocks from their midday lows - there appears to be no deal in the works before the Wednesday, November 23, deadline.

Americans should have expected no less from a congress that hasn't met the public's perception of actually doing their jobs in well over a decade, some say longer. After all, they only had three full months to reach agreement on a plan that would cut the budget deficit by $1.2 trillion over the next ten years, a paltry $120 billion per year.

The stranglehold by Republicans' refusing to authorize any kind of tax increase at all has boondoggled the entire effort, so that automatic cuts, mandated by the debt limit debate of the past summer, will take effect, though not until 2013, making cutting the budget deficit - by tax increases or program cuts - an election year issue of grandiose magnitude.

Congress' inability to get anything done caused stocks to sell off sharply, with the deadline just two days off and prospects severely limited.

Presidential candidate Ron Paul suggested that congress and the president take a few steps back and adopt the same budget that passed in 2004, on the premise that 2012 expected federal revenue ($2.3 trillion) roughly matches the budget from eight years ago. Paul's idea is brilliant in its simplicity, though probably a non-starter for most of the brain-dead congressional members who would have to vote on the idea.

Meanwhile, across the pond, European "leaders" saw the sixth change in government since the debt crisis began as Spain elected into office the conservative Popular Party. Spain follows Ireland, Portugal, Slovakia, Greece and Italy in ousting parties that could not navigate Europe's ongoing crisis.

A report by Credit Suisse called “The ‘Last Days’ of the Euro,” warns that the 12-year-old currency may be under enough excess strain that the entire currency experiment could collapse soon, as the ECB struggles to create a funding mechanism that would take some of the pressure off Germany and, to a lesser extent, France.

All of these events and ideas led to a serious drubbing in US stocks, though the main catalyst for decline was surely the inaction by congress. As it has failed so many times in the past, expect this latest fiasco of central planning to escalate into finger-pointing, name-calling and another lurch toward anarchy in the USA.

Congress, state and local governments (mostly though the fascist attacks on "Occupy" protesters) have repeatedly shown that they have a general disdain for the people of America, preferring to focus their efforts on gaining re-election. Thus, they are, slowly, but surely, losing the ability to govern. If economic conditions don't improve in a dramatic way soon, or deteriorate further, expect the wheels of government to begin the process of grind to a halt before finally falling off completely.

It's a testament to the failed politics of crony capitalism and support for only the wealthiest Americans that are causing serious dislocations and mistrust of government at all levels. Elected leaders can stop it if they so choose, but they seem all too caught up in ideology to do anything constructive.

For this market, the old fascist line, "the beatings will continue until morale improves," seems oh so appropriate.

Dow 11,547.31, -248.85 (2.11%)
NASDAQ 2,523.14, -49.36 (1.92%)
S&P 500 1,192.98, -22.67 (1.86%)
NYSE Composite 7,134.73, -147.74 (2.03%)
NASDAQ Volume 2,063,252,500
NYSE Volume 4,050,063,750
Combined NYSE & NASDAQ Advance - Decline: 908-4780
Combined NYSE & NASDAQ New highs - New lows: 45-275 (oopsie!)
WTI crude oil: 97.41, +0.11
Gold: 1,678.60, -46.50
Silver: 31.12, -1.30

Stocks Whacked as Italian Bonds Blow Out, Euro Dives

Today was all about Italy, in the aftermath of Tuesday's tumultuous parliamentary session, Italian Prime Minister Silvio Berlusconi announced that he would resign after parliament passes economic reforms demanded by the European Union. He also promised not to run in Italy's next election.

While the initial market response to Berlusconi's departure was mildly positive, in the belief that a new government might make a difference, the bond markets broadly disagreed, sending yields on Italy's 10-year note to over 7%, a level broadly believed to be one at which Italy would not be able to finance itself. The country has built up a mammoth debt load of €1.9 trillion, and financial experts agree that at 7% on the 10-year and an even higher rate on the five-year, Italy will be unable to avoid either default or a bailout by EU authorities.

With the bond markets were facing up to Italy's demise, the Euro traded lower against other currencies, including the US dollar, which, in turn caused a collapse in US equity prices, culminating in a mammoth decline on the Dow of nearly 400 points or 3.2%, with the other major indices dropping by even larger percentages.

The conditions in Europe continue to deteriorate by the day, and the Italian problems could bring on an even more calamitous situation than has prevailed prior to this most recent debt catastrophe because Italy is simply too large for a bailout. There simply is not enough money available to the ECB or the recently-enlarged EFSF.

All other economic data and financial news paled by comparison to the realization that Italy would follow Ireland, Greece and Portugal down the debt-hole.

Every market sector was lower, led by financial stocks, conglomerates and basic materials, each of which registered a decline of more than 4.5 percent.

It was a dismal day for stocks, but one the market had been anticipating, though hoping it would never come. A default by a country the size of Italy may cause the Euro to become vastly devalued (and maybe even doom it as a viable currency), pushing up the US dollar, exactly the opposite of what the Wall Street insiders prefer. It's another seminal moment in the financial crisis that will not end.

Dow 11,780.94, -389.24 (3.20%)
NASDAQ 2,621.65, -105.84 (3.88%)
S&P 500 1,229.11, -46.81 (3.67%)
NYSE Composite 7,357.91, -314.00 (4.09%)
NASDAQ Volume 2,107,168,250
NYSE Volume 4,639,047,500
Combined NYSE & NASDAQ Advance - Decline: 634-5048
Combined NYSE & NASDAQ New highs - New lows: 39-97
WTI crude oil: 95.74, -1.06
Gold: 1,791.60, -7.60
Silver: 34.36, -0.79

Market Melt-up Continues for US Stocks

News from Europe that the Slovakian government would re-vote on extending additional bailout funds to banks via the ESFS was like a sugar-coated treat to the childish cretins of the Wall Street investment community.

Shortly after the close of markets in the US yesterday, the Slovakian parliament became the only one of 17 countries to turn down the additional relief package proposal, sending shock waves throughout the EU and the rest of the financial universe. The package needed the approval of all members. Within minutes, however, there was talk of a deal on a re-vote, paving the way for a steady flow of funds to repair badly-damaged and close to insolvent European banks which have bourn the brunt of rolling bailouts to Greece, Ireland, Portugal and soon, Spain and Italy.

There was widespread optimism that the Slovak parliament would rework the proposal to fit their agenda and save Europe from imminent collapse. As has been the case for so long with all things Euro-related, the overseeing body of the European Union (EU) and the European Central Bank (ECB), a slight shift or change in the rules always seems to be the tonic whereby the Euro remains a "viable" currency and staves off the collapse, first, of Greece, and eventually the entire structure upon which the Euro currency is based.

With such confidence that European leaders would tread along the same path upon which the US staved off financial armageddon in 2008 after the Lehman Bros. bankruptcy, stocks were sent higher throughout the session, assured that the classic Ponzi scheme of international finance has finally gone global.

Along that line of thinking, John Embry, Chief Investment Strategist of Sprott Asset Management, said, in an interview with King World News, that stocks could decline by 40% if the European crisis turns into a repeat of 2008, and added, "I think investors have to be aware of the degree of manipulation in all of the markets here and not make the mistake of being momentum players. They shouldn’t just try to go with what is working and jump on board because a lot of this is manufactured for the sake of appearances."

Exactly. Global leaders don't want to see another major disruption like that of 2008, because their main concern is holding onto the reins of power they have secured, even if it means lying about where money is coming from, going to, bank balance sheets, stress tests and just about everything else if it means they get to keep their high posts.

While banks and the people who run them are most responsible for economic calamities over the past few years, politicians share much of the blame, enabling the ill-conceived schemes of the financial class with endless bailouts, ruses and guarantees while much of the global economy is reduced to a pile of worthless, paper rubble.

There was some late-day selling - a chink in the globalist armor and yet another indication of manipulated markets as there was no move to quiet the rally - and stocks finished with only about half of the gains racked up over the session. For instance, the Dow Jones Industrials were up by 209 points at about 2:30 pm, but closed with a gain of just 102. It pays to be a tape watcher these days, as waves of both buying and selling can occur at any time on any given day, no matter the news.

Only on major company reported earnings after Alcoa kicked off 3Q earnings season with a substantial miss on income Tuesday. PepsiCo (PEP) reported before the open that it had earned 1.31 per share after some one-time items, beating the Street estimates by a penny. The gains were largely attributed to Pepsi's aggressive pricing policy in which the company boosted prices around the world on its popular soft drink and snack brands.

Therein lies the conceit and thinly-veiled deceit of Wall Street. PepsiCo saw margin compression in the quarter, as operating margin narrowed to 16.5 percent from 18 percent a year earlier. Earnings for the giant company - with revenue approaching $18 billion in the quarter - have been mostly flat for the past year. Price increases, workforce reductions, cost-cutting and balance sheet shenanigans are what drives this company these days. Growth is largely the result of internal manipulations, not market share increases. Over the past five years, growth has slowed to a mediocre 5.87% per year, though making even that low level over the past few years has been difficult.

Dow 11,518.85, +102.55 (0.90%)
NASDAQ 2,604.73, +21.70 (0.84%)
S&P 500 1,207.25, +11.71 (0.98%)
NYSE Composite 7,263.69, +102.43 (1.43%)
NASDAQ Volume 1,998,280,250
NYSE Volume 5,355,361,000
Combined NYSE & NASDAQ Advance - Decline: 5250-1511
Combined NYSE & NASDAQ New highs - New lows: 41-35 (a reversal, which should not last)
WTI crude oil: 85.57, -0.24
Gold: 1,682.60, +21.60
Silver: 32.79, +0.79

Obama Speech a Big Flop; Greece May Default Over Weekend

The Markets

The rhetoric in President Obama's address to a joint session of congress last night was so far over the top with his screeching, "Pass this jobs bill" over and over ad nauseam that the conclusion is that congress, though they may like some of it, will do everything in its power to delay, disrupt, debate and defeat Obama's American Jobs Act (AJA), and this time they would be doing everyone a favor.

Here's a Daily Kos blogger who lavishes on the praise for Obama's oratorial skill a bit too heavily (for our tastes), but basically has most of the details right.

Here's NPR's take:


The very last thing we need in this country is a bill wrapped in the flag (lest we forget the president advising congressional Republicans to put "country over party") which delivers little more than promises of tax credits to small business, but spends billions on teachers ($35 billion to be exact), repairing schools (the bulk of the $100 billion in infrastructure spending) and cuts the payroll tax contributions for both individuals and small businesses.

If this jobs bill is passed in any form, it's effect on unemployment will be minimal because businesses hire when they need work done, as in servicing more customers, and that just isn't happening in many small, medium and large American businesses. Consumers have been cutting back, and business cuts back to accommodate the slackening demand for their goods and/or services. Nobody hires because the government offers an incentive to do so, except those wishing to game the system, and there are plenty of those around.

No, the congress should delay and defeat any bill which proposes to spend more money we don't have. The first Obama stimulus - a much larger package - has already proven to be a failure, and this bill comes a number of months late and many dollars - and ideas - short.

The reaction from the markets on Friday was a collective sigh and a return to the "sell" button.

Obama's public bust was not the only item that rattled traders over the final session of the week. European markets were hammered down again, and that sent the dollar soaring against the Euro, which meant that the carry trade of shorting the dollar and buying stocks has gone up in smoke and the machines don't have an algo for that.

Persistent rumors that Greece was about to default, possibly over the weekend, sent European bourses down in droves and sent the US Treasury 10-year note to a record low yield of 1.92%. Also roiling markets was the abrupt resignation of ECB chief economist Juergen Stark, apparently over the continued buying of bonds by the ECB.

The combination of the European crisis escalating again and the failure of the president to offer any convincing plan to combat unemployment sent stocks back to levels not seen in nearly three weeks with the Dow closing below 11,000 for the first time since August 22nd.

The S&P 500 broke through several support levels and is only 31 points away from its August 8 closing low of 1119. The NASDAQ fared better, though not by much, finishing 126 points above its August 19 closing low of 2341.84.

If the rumors about Greece prove true, monday's markets could prove a bloodbath of monstrous proportions, but, even if the Greeks decide to play along, the European financial crisis won't simply fade away, nor will the sluggish environment in which the United States is currently embrolied.

Dow 10,992.13, -303.68 (2.69%)
NASDAQ 2,467.99, -61.15 (2.42%)
S&P 500 1,154.23, -31.67 (2.67%)
NYSE Composite 7,045.01, -212.35 (2.93%)
NASDAQ Volume 2,066,526,125
NYSE Volume 5,467,812,500
Combined NYSE & NASDAQ Advance - Decline: 1083-5459
Combined NYSE & NASDAQ New highs - New lows: 22-353
WTI crude oil futures: 87.24, -1.81
Gold: 1859.00, -10.60
Silver: 41.60, -0.74

The woes of Bank of America continue. They and other banks tied up in the robo-signing scandal may still face extensive civil and criminal charges after the 50-state Attorneys General reaches a "global solution" which has been rumored to be about $20 billion. New York AG Eric Schneiderman has been pursuing Bank of America through his own offices and is not participating in the investigation by the other 49 state AGs. Schneiderman is pushing to claim that BofA and others fraudulently transferred securities to investors, pledging the same notes to more than one group. His investigation continues.

Of all the bright guys out there who cover finance, bank analyst Chris Whalen, the founder and managing director of Institutional Risk Analytics, is among the very brightest of all, so when he says Bank of America (BAC) should file for bankruptcy, maybe CEO Brian Moynihan and others should listen. See Whalen make his case in the video below.

Here We Go Again: Europe, US Equity Markets Smashed

Like a pop band performing an encore number, the wild, swing days of last week are here with us again, doing a sophisticated limbo beneath the various 200-day moving averages. The continent formerly known as Europe slowly is sinking into a combination of economic atrophy and social anarchy while the country previously preferred to as the greatest democracy ever invented, the USA, shifts and contorts like a belly dancer with stomach cramps and gas.

One could take their pick today from a generous selection of tawdry economic news and data, beginning with the story reported by Zero Hedge that an unnamed European bank (speculation is that its either Societe General or an Italian or Austrian bank) borrowed $500 million from the ECB's emergency lending window at a 1.1% rate.

That got the entertainment kicked off in Europe with a notable bang, as the major bourses in the land of socialism held blood-letting sessions with the national indices down between 4 and 6%, Germany's DAX leading the way lower with a 5.82% decline.

By the time markets opened in New York, futures were careening headlong into the abyss after initial unemployment claims were reported at 408,000 in the most recent reporting period and July CPI came in with a whopping 0.5% rise - a 6% annualized inflation rate - which took almost everybody - except possibly President Obama, who was preparing for a two-week stay at Martha's Vineyard - by surprise, especially after Fed Chairman Ben Bernanke told us all that inflationary pressures were "transitory" (he also confided to Representative and presidential candidate Ron Paul that gold was not money... such a witty fellow).

Were that not enough for the market to digest, a couple more tasty morsels were delivered just a half hour into the trading session. Existing home sales for July were reported at an annualized rate of 4.67 million, after a 4.84 million read last month, but the real hot pepper came from the Philadelphia Fed's Manufacturing Index, which, after posting a tepid 3.2 reading in July, came in - on expectations of a 1.0 reading - at... wait for it... minus 30.7 (yes, -30.7), the lowest number in 2 1/2 years and now on scale with New York's Empire Index which last week posted an equally disturbing negative read of -7.7 on Monday.

Naturally, nobody gave a whit about the New York number, but the Philly fiasco was just too magnificent to ignore. Stocks, already down significantly, swiftly dove further, with the Dow Jones Industrials losing 170 points in the ten minutes following the double dose of decrepitude.

The sudden collapse of index prices was stunning to view, though the gaping maws of CNBC's on-air personalities provided dark comic relief. Stocks drifted for the rest of the day, but managed to stage a last-ditch rally with just ten minutes left in the session, boosting the Dow about 100 points into the close, just in time for options expiry on Friday.

Dow 10,990.58, -419.63 (3.68%)
NASDAQ 2,380.43, -131.05 (5.22%)
S&P 500 1,140.65, -53.24 (4.46%)
NYSE Composite 7,079.41, -339.53 (4.58%)

Declining issues decimated advancers, 6094-634, a nearly 10:1 ratio. New lows overpowered new highs on the NASDAQ, 253-2 (yes, two, as in 2 new 52-week highs), while on the NYSE there were also just two (2) new highs, against 208 new lows. The combined figure of 4 new highs and 461 new lows verifies our repeated suggestion that the highs-lows indicator is as reliable a simple instrument as is available and is currently suggesting that the now-confirmed market correction will shortly morph into a a full blown bear market as Europe and the United State plunge into the fearsome double-dip recession, if not already there.

Volume, despite the ridiculous assumptions made throughout the day by CNBC's dapper Bob Pisani (I really do watch too much TV) that today's volume was not significant, was, in fact, quite strong, and with good reason, as banks in Europe and the US took the brunt of the selloff. European banks were hardest hit, with losses between 6 and 11% on the day.

NASDAQ Volume 2,785,477,500
NYSE Volume 7,141,215,000

Meanwhile, the oil crazies were unloading their gooey stuff as quickly as possible, sending WTI futures down nearly six percent, dropping $5.20, to $82.38.

There were bright spots, and those were in precious metals. Gold rocketed $28.20 to another record price of $1,822.00, while silver tried desperately to keep pace, gaining 38 cents, to $40.69.

As for Friday, one should expect a little more of the same, though it is worth noting that these wickedly manipulated markets have a penchant for turning on a dime, as they did last week. Eventually, however, this all ends in tears, as the Euro will be soon dispatched to currency hell, where it belongs, taking the world economy into a place nobody wants to be.

Smoke 'em if you got 'em and live it up while you can. By Christmas, this could be really, really, really, really, really, and I do mean really, ugly.

Ponzinomics, Feudalism and Fascism of the Highest Order

The following is my response to the video above, and to the wild upswing in the markets today. Just follow the bouncing ball, people, and the sequence of events. Wikileaks founder, Julian Assange, releases a boatload of data and internal memorandum from the State Department which is embarrassing to some of the highest-ranking officials in the world. Assange makes the mistake of telling, in an interview, that he is planning to release data concerning a very large US bank in January of 2011.

By nightfall on the East coast, Assange is wanted by Interpol in relation to rape and "sex crimes." As the day opens in the Far East, markets are pumped higher on positive economic data, and then to Europe, and finally, to the United States, where the Dow rallies for 255 points.

All of mainstream media is suddenly talking about recovery and how Spain won't need a bailout, and how jobs are being created in the US, and how the Christmas season is looking very robust for retailers.

At noon, the Fed, under order of law, courtesy the Dodd-Frank bill, releases the names and amounts of money lent to institutions during the height of the financial crisis in 2008. The list is vast, as are the numbers. It is a mind-boggling declaration of widespread, rampant, credit inflation.

The media continues to excite us with details of how Europe will not suffer any debt contagion, that the crisis is contained. Little time is spent reporting the Fed's release. we are all too busy watching stocks rise, secure in the knowledge that our economy is on the mend.

My contention is that the "rally" is a chimera. It will fade before making new highs, maybe a little bit after, perhaps. But the crony capitalism continues. And Julian Assange will not be a free man for long. He will not be allowed to release any information damaging to any bank, anywhere, at any time.

The banks own most of the world. The ECB and the Fed are only the most visible manifestations of the banking elite. The buy the debt of sovereign nations. They own them. Most are well hidden, or hiding in plain view.

Any questions?

Sure, but first, my reaction to the video. It was a bit over the top. All Americans don't act that way, only the slowest, dumbest, fattest and most ignorant. Unfortunately, their numbers are growing and their progeny will become more cheap, slave labor and credit card users for the rich to fondle and manipulate. That is the elitist game. It's what they do. So, yeah, there are a lot of fat, ignorant slobs out there who have lost nearly any dignity they might have had.

My question is this: What should those of us who believe ourselves to be above that level of wantonness and ignorance do about it? Should we counsel those who are too hypnotized by materialism, television and welfare statism to make better of themselves, to deny materialism and embrace a more wholesome existence?

I'll answer that one myself: Of course we should.

Now comes another antecedent question. After we've counseled our downtrodden brothers and sistahs and they go about their usual wanton ways as though they've heard nothing we've said, suppose one of them comes to us in their miserable way and tries to sell us a laptop that they bought for $198, for $20, for drugs, or food, or gas, or whatever moronic desire they might have at that time. What should we do then?

I'll answer that, too, for myself. I'm sure others might see this differently. My answer, I'd offer them $10, maybe $5. If they're too stupid to see, let them be blind. If you or I don't separate them from their possessions for less than market value, who will? Of course, the elitists, gladly, mind you.

I say it is the duty of all Americans to buy for less than market value and sell for as much as possible, even going so far as to sell to elitists at inflated prices. It is up to the entrepreneurial among us to seize the opportunity the elitists have created for those of us wise enough to make money to do so. I say it is easy if the system plans to endlessly create more money through debt. We should all be pawn-brokers, sharks and sharp deal-makers, for if we are not, surely it will be ourselves at the short end of the next deal and the one after that and so on, until we are slaves ourselves.

Stand up and take from the poor. They have been given our wealth by the rich. Take from the rich, too, if you can. If the economy is going to burgeon upon a sea of debt, then we must open our eyes and aour hands to take what is rightfully ours. we must fortify our own foundations, and to hell from whence it comes, as long as we make it OURS.

Now, if you have any questions, ask somebody else. I've already told you my plan. Acquire.

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