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

More POMO Equals More Momo; Less for Your Dollar

For the uninitiated, POMO stands for Permanent Open Market Operations, which, well, really doesn't explain anything, but let's just say this is how the Federal Reserve has been handing money over to primary dealers for the past 6 1/2 months, through various coupon pass-throughs and bond-repurchases.

So why POMO causes MOMO (slang for "momentum") is that these primary dealers have to do something with their newly-minted free Fed paper money, so they thrust it into the stock market and goose up shares of Apple (AAPL), Netflix (NFLX), Chipolte Mexican Grill (CMG) and other darlings of the "Fast Money" crowd.

The Fed is furiously throwing money around these days, attempting to keep the Ponzi market afloat before John Boehner decides to cram it all back to the Fed by insisting on budget cuts. Mr. Boehner best watch what he says or soon enough there will be calls for him to step down as Majority Leader in the House. Treasury Timmy and Bingo Bernanke don't like cuts in spending as it really diminishes the impact of their unilateral pumping of all things financial.

Of course, Mr. Boehner's calls for $2 trillion in budget cuts is laughable and will never happen. Even he knows that, but he must maintain the posture of a "conservative" even though he and his Republican members (except a brave few - very few - Tea Partiers) are as quick to spend a buck as their Democratic counterparts. There will be a few trifling spending cuts announced as part of some kind of compromise, but it won't matter. The government is about as desperate and broken as the stock markets, and that takes some doing.

So, today, on the back of a ramp job yesterday, we have more momentum playing, goosing stocks back towards the highs they scored a few weeks back. There are about 30 more POMO days before the Fed cuts the cord in late June, so expect the equity indices to be heading for higher highs before then. As long as the mainstream media can keep the public convinced inflation is marginal, transitory or immaterial, and that $4 or $5 gas is now acceptable, there will be no turning back the tidal wave of Federal Reserve Notes banging prices higher around the world.

Quoting Diane Keaton in her role as Annie Hall, from the Woody Allen movie by the same name, "la dee da." Welcome to the centrally planned economy.

Dow 12,760.36, +75.68 (0.60%)
NASDAQ 2,871.89, +28.64 (1.01%)
S&P 500 1,357.16, +10.87 (0.81%)
NYSE Composite 8,550.49, +72.30 (0.85%)

Advancing issues far outpaced decliners, 5077-1471, so one could call today's ramp-up, POMO-induced rally, broad-based, if one so chooses. Most of it are just calling it "nowhere to hide the devalued dollars." On the NASDAQ, there were 142 new highs and 34 new lows. Over on the NYSE big board, new highs were well ahead of new lows, 240-16. This is, in fact, easy to accomplish with free money, no restraint and near-record low volume - again.

NASDAQ Volume 1,996,086,625.00
NYSE Volume 3,778,728,750

Crude oil, despite an announced 25% margin hike which takes effect tomorrow, gained $1.33, to close at $103.88. And now, since oil has been sufficiently beaten down, we hear that numerous refineries are partially shut down, just in time for the nicer weather. Welcome to $4.00 and $4.50 gas coming to a fueling station near you.

Gold continued to strike back against the empire of debt, gaining $3.20, to $1516.30 up to the minute. Silver added 76 cents, at $38.47. The precious metals now have added momentum to meet and exceed previous all-time and multi-year highs before the end of June.

The government reported today that import prices (almost everything that US consumers purchase) rose 2.2% in April, on the heels of a 2.6% rise in March. Year-over-year, the increase was 11.1%

The 12-month advance in April was the largest year-over-year increase since an 11.2 percent gain between April 2009 and April 2010.

So, no, there's no inflation, just record import prices two years running.

Keep printing, Mr. Bernanke. We will continue to buy silver and gold, POMO and MOMO notwithstanding.

Armageddon Arrives in Commodities; Stocks Next

As has been the ongoing motif of this blog for many months, the grand Bernanke experiment is now experiencing some of the nasty side effects. Today's action in commodities, particularly silver and crude oil, came as a stark reminder that leveraged positions can go very, very badly in very, very short spans of time.

It was just last Friday that silver stood at the precipice of $50/ounce, approaching the all-time high. As of this writing it is now trading on the spot market at $34.76, a drop of 30% over just four days. WTI crude oil futures were at $116 on Monday, and today it closed on the NYMEX at $99.80. All those sheiks and oil robber-barons drooling over $4/gall gas across the USA can now wipe their chins with their sell tickets.

Stocks were also not immune from the liquidity trap. The Dow was down as many as 200 points around midday, but recovered a bit into the close. Still, leveraged bets (margin) on selected stocks have finally begun to display inherent risk and the carnage has only begun.

What set off today's massive selling spree were a number of unrelated events which combined to turn the trading day into an economic tornado, tearing through asset classes like a Midwestern twister. First, a series of margin tightenings on silver speculation that has been ongoing from Sunday night began the unwinding process. Silver had been hammered for three straight days without buyers on the downside. Then, with the 8:30 am release of some truly horrible weekly unemployment claims, the spring was coiled tighter.

Initial claims for the most recent week (last week in April) came in at 474,000, the highest since August of 2010, off expectations for a number around 400,000. So much for Hope and Change, Bernanke's Zero Interest Rate Policy (ZIRP) and QE2. The smart money has made its way out of Dodge and the rest of the pilgrims are scrambling to leave town with whatever they can salvage.

While commodities were being ravaged one after another, stocks were salvaged from the brunt of the storm, though they eventually faced capitulation and will likely be under pressure from the opening bell on Friday, after the April non-farm payroll report goes public at 8:30 am EDT. Following the unemployment number, expectations have been ratcheted lower. The expected number of new jobs created during the month was supposed to be around 200,000, though that's been trimmed to 185,000 and even lower by some analysts. Anything under 185,000 will produce a bloodbath. Even anything over that will likely induce more selling, on a faster pace than today's, because this is a liquidity trap, and economic numbers - good, bad or indifferent - may not matter at all.

The winners on the day were the US dollar, which majestically made its move all the way from a low of 72.81 (about the point at which Mssrs. Bernanke and Geithner were having accidents in their pantaloons) to a close at 74.08, a move of roughly 1.5%, which, in the world of currencies, is enormous. This created a vicious, self-reinforcing virtuous loop, with the dollar's rise causing commodity margin calls, and a risk-off scramble in stocks.

The other winner was bonds, which explains much. Bonds are the lifeblood of the Ponzi scheme between the Treasury, Primary Dealers and the Federal Reserve which gave us the illusion of prosperity against the backdrop of an eroding dollar. Bumping right up to the debt ceiling, the Fed intervened in a very big way today - behind the scenes, of course - to dampen risk appetite and make fixed income investments the choice for the foreseeable future. They had to, being backed into an untenable position.

It was truly a momentous day, one which we've been preparing you for with our reminders all week that the narrative was changing with the (fictitious) slaying of Osama bin Laden. And now, change has come to us all.

Dow 12,584.17, -139.41 (1.10%)
NASDAQ 2,814.72, -13.51 (0.48%)
S&P 500 1,335.10, -12.22 (0.91%)
NYSE Composite 8,397.40, -109.21 (1.28%)

Advancing issued were submerged by decliners overall, 4183-2412. The NASDAQ recorded 48 new highs and 52 new lows, the second straight day of high-low reversal. On the NYSE, there were 100 new highs and 36 new lows, mostly due to the elevated levels reached recently. It's hard to imagine the daily lows not overtaking the highs within the next week. Volume was magnificently higher as sellers sold with both hands.

NASDAQ Volume 2,241,177,750
NYSE Volume 5,510,796,500

Crude oil took an earth-shattering drop of over 8%, losing $9.44, to finish at $99.80. The selling is certainly far from over as the tempering of emotions in the Middle East after the slaying of OBL will surely push prices back to some level of sanity and take out the majority of the risk premium and speculative fever.

Gold, which had been holding up relatively well with respect to other precious metals, finally took a beating, losing $43.40 (nearly 3%), to its current trading level of $1473.10. Silver took the worst of it again, falling another $4.73, to $34.66, but there is a silver lining for the faithful in precious metals. Most of the true believers - who only hold physical metal and use the futures and ETFs only as a hedge - have a cost basis below $20/ounce.

Technically, they've lost nothing, and could still sell right here for a hefty profit. But they won't, and are actually looking at this momentous correction as a buying opportunity, hoping to snatch up more metal at what they perceive as bargain-basement prices. The general strategy is to buy once everything has more or less settled out. Nobody is really worried about catching the absolute volume, and a few days of upwards trending will not entice the hardiest of the breed. They will wait until a bottom is confirmed. Like love, they'll know it when they see it. The same strategy holds more or less true for gold bugs worldwide.

The holders of gold and silver will eventually rule the world as we approach - at breakneck speed - the eventual destruction of the global fiat money regime and the likely collapse of more than a few governments. What has happened in Greece, Iceland, Ireland and Portugal will eventually visit the shores of Japan, the USA, Great Britain, France and even China.

We are still reeling from the catastrophe of the housing bubble and collapse and the general liquidity and solvency crisis of 2008. The measures taken by the Federal Reserve and other central banks has been to throw more money at the credit monster they created, but it has resulted in extreme imbalances everywhere. The thinking at the top of government is focused already on the elections of 2012. The betting is that the US government and the financial community will have a time making it there unscathed.

If this looks anything like 2008 to those wizened enough to learn from history, those people would be on the right track, except, this time, it's likely to be worse and without any magic bullets, because the Fed is all out of them.

Death of Osama bin Laden Springs Bernanke Trap

Whether or not one accepts the story of the demise of Osama bin Laden as gospel or Golem, there is no doubting that the mainstream news media is treating it as the truth, and celebrating it with requisite aplomb.

It served as the leading commentary to an otherwise dull Monday, especially in the financial markets. At one time, the capture or death of the man who was widely recognized as the mastermind of the 9/11 attacks was thought to able to create a market rally of dizzying proportions, but today's response was muted, if not downright dismissive of the manhunt that took nearly ten years, untold thousands of lives and over a trillion dollars.

The euphoria felt at the White House on Sunday night was not reflected in the trading on Wall Street, though the death of the world's most infamous terrorist did manage to provide a suitable cover story for crashing silver, and, to some degree, calming the Midas effect in the gold pits.

Other than those obvious manipulations, the death of OBL did less to inspire confidence than it did to induce relief that the most evil person in the world had finally met his maker. The rest of the moves in the market could widely be attributed to nothing as earth-shattering as the ordinary movement of the US Dollar against other fiat currencies, particularly well=reflected by the dollar index (DXY).

Initially higher on the news, the DXY lost ground throughout the day, finally bottoming out at 72.72 in early afternoon before rallying back to 73.04 at the 4:00 pm NY close. The decline and subsequent rise in the dollar index was the primary mover of stocks throughout the session, in an inverse relationship that has been in effect since the first round of QE in 2009.

In essence - apply tin-foil hat here in appropriate degree - the timing of OBL's death came at the perfect time for the world's money men. The dollar had been in a vicious slide over the past three months, which fueled the commodity and stocks boom, but was also threatening to undermine the reserve status of the US dollar. The decision to "pull the trigger" - whether real or imagined - quieted dollar devaluation fears, for now, but also took down stocks, creating a Bernanke Trap, in which monetization of US debt and the associated demise of the dollar gives rise to inflation and commodity speculation but the inverse could foment a stock market correction or crash and more severe economic fallout.

Thus, with the death of Osama bin Laden, we have a new enemy, the evil genius chairman of the Federal Reserve, the man behind the curtain pulling the levers, Ben Bernanke, and he is hopelessly trapped into a scenario in which neither outcome is preferable or palatable. One might assume that the esteemed chairman will side momentarily with the monetarists who believe dollar hegemony is preferable to runaway inflation and rioting at gas stations, though making assumptions in the age of political markets is a dangerous game.

For today, the dollar and Bernanke have survived, barely, but tomorrow may be another story altogether. In the very least, we can be assured that the killing of Osama bin Laden represents a shared view at the very pinnacle of power that the the overarching narrative needed to be changed, and abruptly.

Mission Accomplished.

Dow 12,807.36, -3.18 (0.02%)
NASDAQ 2,861.84, -11.70 (0.41%)
S&P 500 1,361.22, -2.39 (0.18%)
NYSE Composite 8,641.56, -29.85 (0.34%)

Market internals belied the slight declines. Stocks which lost ground far outnumbered those gaining, 4135-2454. On the NASDAQ there were 177 new highs and 28 new lows. The NYSE had 337 stocks make new highs and just 13 reach new lows. Obviously, the new highs were made early in the session, before the dollar began to rise and kill the carry trade (now known as risk on). Volume could best be described as either laughable, embarrassing or just plain disinterested.

NASDAQ Volume 1,768,677,875
NYSE Volume 3,669,946,000

WTI crude futures actually fell 41 cents, to $113.52, though that hardly can be construed as relief for motorists already feeling the pinch from $4.00 gasoline. According to AAA, the average price for a gallon of unleaded regular gas is now $3.95, so, $5.00 by summer becomes a distinct possibility in at least 10 states. Already 14 states are experiencing average prices above $4.00, with Hawaii the highest, at $4.57. The lowest average price is in Wyoming, at $3.60, hardly a bargain.

Precious metals were hammered down by the movers and shakers at JP Morgan and the Fed, with gold getting hit with a $19.80 decline, down to $1545.90 as of this writing. Silver took the brunt of the action, with five margin hikes in the past two weeks putting the kibosh on larger speculation in the paper markets. Silver fell $4.39, to $43.55, a point which may actually trigger more paper selling and eventually result in ramped up physical buying.

There's little doubt that the masters of fiat money at the Federal Reserve will do anything to keep gold and silver from appreciating, though they've been an abject failure up to this point. The Fed simply cannot stomach competing currencies and gold and silver amply qualify. If it means the end of screenings at airports and reduction of global tensions, maybe it's a worthwhile tradeoff, but the other side of the Fed's coin is already painted red. Any squelching of precious metals by pumping up the US dollar is likely to have similar deleterious effects on the risk trade in stocks.

At the end of the trading day, Tim Giethner made his appearance and the purpose of all the frenetic activities of the past 18 hours suddenly became crystal clear. The Treasury outlined plans to extend the deadline for raising the debt ceiling to the first week of August, thus delaying or deferring a crisis in the congress.

America teetering on a debt default with the currency debased for the whole world to see must have appeared as the opportune moment to divert attention by killing public enemy #1.

Mission accomplished, indeed, but beware the ultimate costs.

Headlong Into Hyper-inflation

After last week's mini-correction - which is probably the worst decline we'll see for a while - stocks and the Fed are back on track, pumping newly-created POMO dollars into the system for the banking crooks to parlay into stocks. Up, up and away!

According to the Fed's published schedule of monetary injections, today was slated for $6-8 billion in outright coupon purchases. In other words, the Fed is buying back bonds from the Primary Dealers which were purchased just a few weeks ago, presumably at a loss, a small loss, but, nevertheless, a loss, so that the banks will remain willing participants to the Zimbabwe-ification of the US financial system.

These continued injections have become so commonplace that nobody bothers to report on them or even think about them. For those unfamiliar with the process, let's recap:

Step 1: The US Treasury issues bonds in certain amounts and maturities.

Step 2: Primary Dealers (AKA Too Big To Fail (TBTF) banks) buy the bonds.

Step 3: The Federal Reserve buys the bonds from the TBTF banks.

This is the simple process by which our currency is devalued every day and how the banks are shoring up their horrifically-insolvent balance sheets. While the Fed takes a loss of say, half a billion a day, the banks record the transaction as a profit. Viola! The banks are once again sound. The only problem is that the Fed is holding huge amounts of government debt.

Now, if you've been following carefully, you might question the process. Why bother? Why not just give the banks the money directly from the Federal Reserve, since they have the ability to just create money out of thin air?

Ah, what about the government's obligations? They must issue debt, so the game must continue. The auctions, however, conducted in secrecy, electronically, so that only a few people - ostensibly Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner - know who's buying what and for how much.

That's a problem, for obvious reasons, and explains, in part, why some people are beginning to think that the entire economy of the United States has already sunk and is being kept afloat by a massive fraud, perpetrated by the Federal Reserve, Treasury Department and the nation's six to eight largest banks (with assistance from European Central banks who are doing pretty much the same thing).

Nobody is buying US government debt. Nobody could be that stupid. The Fed is buying it all, monetizing the debt, smashing down interest rates and destroying the currency. The tiny little secret nobody wishes to speak of is that the rest of the world had better play along or their currencies will be flushed straight into the toilet along with billions of Ben Bernanke Bucks.

Yes, the Federal Reserve is buying all Treasuries issued, cooking their own books and helping out the banks, because, if they don't do it, we'll just have to liquidate those TBTF institutions and Jamie Dimon (our next Treasury Secretary) and his wealthy friends wouldn't like that. Besides, the Fed and the banks and the politicians they control would no longer be able to sway the American public every which way, as they choose.

Think about it. The Chinese stopped buying our debt at least a year ago. They are trying to unload it as fast as they can without causing a panic. Japan is also no longer interested. Reportedly, the UK has been buying scads of the stuff, but they're even more broke than we are, so that's a gigantic canard.

The Fed is buying all, or nearly all, of US debt issuance. We are a self-dealing, Ponzi-fied, Zimbabwe on steroids. There's no doubt about it and there's also no way out. The Fed cannot stop creating money because it just gets more and more worthless every day. It's being spent as quickly as they can put it into circulation, forcing prices higher and higher, inflating everything on the planet - including stocks - in a very devious, vicious cycle all caused by the bankers who imploded the world's economy back in 2008 when they couldn't figure out a way to cover all their bets without all of them failing.

That is when Hank Paulson, then Treasury Secretary, with Ben Bernanke as his willing accomplice, figuratively held a gun to the heads of the President, George W. Bush, and the leaders of congress and demanded $700 billion dollars with no strings attached. It was the crime of the century, committed in broad daylight, in front of hundreds of millions of people worldwide.

Ever since then, all we've gotten for our time and money is a song and dance, orchestrated to keep us all in line and dong the "recovery boogie." It's such an absolute charade, a sham and a complete lie that a lot - and I do mean a lot - of people are coming to the conclusion that it's not working, that we're stuck in this no-jobs, no-growth, high-inflation limbo until the the bar finally falls to earth.

The big holders of mortgage-backed securities are suing the banks with regularity. They want their money back for all the bad securities issued by the banks, backed by mortgages which were written with no other purpose than to have the homeowner default.

Insurance companies suing banks, with the Fed printing money as fast as they possibly can and prices rising globally because of it results in an unsustainable situation. It's already bad, and quickly getting worse. The rest of what suffices for news these days is just for show.

Think about it. In Wisconsin, they're trying to fill a $3 billion void in their budget. Why, the Fed issues twice that amount through their Treasury purchases EVERY DAY! Oil hitting $100 a barrel? All caused by uncontrolled speculation and outright thievery. There's a glut of oil out there and what the big energy companies are really worried about is people rationing their use of gas, taking fewer trips and buying less. with so many people out of work, they have little driving to do, and the oil companies are just trying to remain as richly profitable as they've always been by CHARGING MORE TO FEWER CUSTOMERS.

QE2, the Fed's gambit to restore economic prosperity by issuing more paper money, is slated to end by June. After that, it's anybody's guess, but the path of least resistance - and most sense, from an OMG mentality - would be to continue printing more. There's no economy, tax revenues have fallen off a cliff, and the Fed, because they've chosen to keep insolvent banks operating instead of closing them down, is powerless to do anything but what they've been doing for 2 1/2 years: print, print, print, and when you're done printing, print some more. Hello hyperinflation, followed by an acute depression, the worst ever seen. See you in Hades, Mr. Bernanke, because that's precisely where you and your policies are sending everyone else.

Dow 12,226.34, +95.89 (0.79%)
NASDAQ 2,782.27, +1.22 (0.04%)
S&P 500 1,327.22, +7.34 (0.56%)
NYSE Composite 8,438.55, +60.51 (0.72%)

Advancing issues outpaced decliners, 4051-2535. NASDAQ new highs: 144; new lows: 21. NYSE new highs: 258; new lows: 15. Volume was back down in the doldrums again, so everything is back to normal.

NASDAQ Volume 2,057,503,500
NYSE Volume 4,593,278,500

Oil prices fell again today, down 91 cents, to $96.97, but the damage has been done. Regular unleaded gas is now at a national average of $3.37 per gallon. Seven states are already over $3.45. Want to see a recession created almost overnight. Push ol to $115 a barrel and gas to a national average of $3.75 and see what happens. The protests in Wisconsin will look more like a picnic compared to the mass outrage that induces. Already, people are reconsidering their choices of paying $75-150 a week to get to and from a job that pays them less than $400 a week, taking home $300-340. For many, it's just not worth it any more.

Meanwhile, gold bugs and silver surfers are loving the chaos. Gold was up again today, but only by 60 cents, to $1,409.90. It was as high as $1,416 in earlier trading. Gold is now being pressured downward, or at least held down, for two reasons. First, the banker's know that everyone watches gold as a proxy to fiat currencies, so they are suppressing demand. Second, the very same banks want to hoard it, because they know everyone is right. The global economy is as close to complete meltdown as it was in the fall of 2008.

Silver got all the gains today, up 91 cents (same as the drop in oil, coincidentally), to $33.80. We're unsure whether or not that's a new 30-year high; we only know that $50 per ounce is the number that stopped the Hunt brothers back in 1979-80. When the bubble they created finally burst, Nelson Bunker Hunt, who purportedly lost more than a billion dollars in one day, said, "a billion dollars isn't what it used to be."

And, so, those immortal words, while the Fed pumps billions into an eventual oblivion, ring more true than ever, today.

Turnaround Thursday? Well, Almost

The panic in the markets has subsided for now, even though conditions in the Middle East continue to spin out of control, especially in Libya.

Stocks zig-zagged across the flat line on Thursday, with oil pricing higher in early trade. Closing in on 2:00 pm ET, the equity markets were skidding badly again, but, as has become the norm, all of a sudden word spread that President Obama and Treasury Secretary Tim Geithner - neither of whom have a lick of expertise in the oil business - put out the word that there was enough supply of oil in reserve to withstand any kind of disruption, and, just like that, stocks and oil prices quickly reversed course, with oil dropping and stocks rising.

As an aside, gold and silver were slammed to the earth. Just prior to 2:00 pm, the Dow Jones Industrials were off more than 120 points, the NASDAQ dipped 17 points and the S&P 500 has crashed through the 1300 plateau, dropping more than 13 points.

Trading for the remainder of the session involved insiders scooping up shares on the "supposed" cheap. Still, three of the four major averages finished in the red despite the best efforts of the PPT or whatever we're calling the mechanics under the hood of the stock markets.

Dow 12,068.50, -37.28 (0.31%)
NASDAQ 2,737.90, +14.91 (0.55%)
S&P 500 1,306.10, -1.30 (0.10%)
NYSE Composite 8,276.29, -16.63 (0.20%)

Advancers broke a two-day trend and finished ahead of declining issues, 3630-2902. On the NASDAQ, new highs outdid new lows, though narrowly, 49-41. So too on the NYSE, where there were 83 new highs and just 18 new lows. Volume was nce again heightened, though below levels of the past two sessions.

We're clearly at an inflection point in the markets and considering that tensions in the oil-rich area of the world are still at high pitch, a resumption of a little panic may occur at any time, depending on circumstances and how hard the Fed and other officials pump the "all clear" signals. The Arab nations aren't the only ones experiencing a bit of displeasure. Here in the USA, protests continue to mount over budget and public union issues in various states. This chapter in world history is far from over.

NASDAQ Volume 2,112,375,750.00
NYSE Volume 5,799,687,500

The front end futures contract at the NYMEX - which was playing above 100/barrel prior to market opening, actually posted a decline on the day, dropping 82 cents, to $97.28. Gold posted a modest gain in NY trading, but at this writing is trading down $9.60, at $1402.10. Silver was hammered down all day long, down in the NY session and currently sporting a loss of $1.43, at $32.11. The machinery of chicanery is once again vigorously at work in all markets, propping them up with unlimited resources.

While many average working Joes and Janes may take solace in today's turnabout, it comes as yet another shining example of how the financial elite control everything they please, even entire global markets, or so they believe. The realities of life here in the US and elsewhere in the world are not quite as rosy as the oligarchs and politicians would have one believe. Little by little, freedoms are being eroded, and soon, as we're seeing with the assault on public labor unions, they'll take more money from the middle class, calling it "shared pain."

Many with a better handle on things than most are opting out, refusing to play along and suffer what's almost certain to be an eventful future. They are preparing, saving, planning and divesting, growing their own food and buying up precious metals and machinery for the day the wheels come completely off the train of money printing and manipulation.

Euro Stress Tests a Joke and Wall St. Loves Them

Apparently, according to the central bankers of the world, and especially those in the US and Europe, banks are well enough capitalized to easily survive any kind of future monetary event.

That was the official word from Europe, where it was announced today that only seven of 91 banks in the region failed the European Union's stress tests. The other 84, for the most part, are not only well-capitalized, but strong, vibrant and growing.

After much hand-wringing and posturing over the past four months and with the goading and encouragement of not only Treasury Secretary Tim Geithner, but Fed Chairman Ben Bernanke (who, incidentally is currently on a visit to Europe), Europe followed the lead set down by its American counterparts in 2009 and conducted their own rather flimsy and opaque tests to determine how the largest banks in the region might fare under certain - supposedly bad - economic conditions.

The tests, as in America, revealed very little about banking in the Eurozone. Except for giving European leaders and banking executives a little more breathing room by taking media focus off of them, the stress tests were designed wholly to persuade the general population that all is well in the world of global finances, which begs the question, "why all the fuss in the first place?"

In the broadest, most general terms, what the conduct of the combined central banks of the nations of Europe and the US, plus the mega-banking operations scattered around those countries shows is that the entire financial calamities of the past two years were either made wholly of flimsy cloth or that the economies of many of these nations, and the USA, are in perilous conditions.

Choose whichever poison suits you best, but keeping the banking system and sovereign debt structures at status quo is probably grand for bankers - for now - and pretty much meaningless - for now - for the general populations. Later on, within months, most likely, the truth shall be exposed for all to see, that the nations and their central banks have been painted into a liquidity corner from which many cannot escape without severe austerity measures or default on scads and scads of debt.

With an entire global structure built upon fiat money with nothing to back it except a nation's good word, the eventuality of final collapse is assured, the only remaining question being a matter of timing. The politicians, bankers and associated ruling class participants will keep the charade going for as long as they can. In the meantime, in towns and cities and states across America and across Europe, the dismantling of the middle class will continue apace. Credit cannot and will not be extended to anyone with less-than perfect credit histories and sufficient collateral. Major corporations will continue to flourish at the expense of smaller rivals. Stocks will head up, and then down, and then repeat the pattern. Slowly, almost imperceptibly, the structure of governance and the prosperity of individuals will fall prey to the ravenous appetites of massive governments and business structures working hand-in-hand.

All that one can hope for under these conditions is for a continuance of the deflationary spiral which has been fought at every chance by the central bankers, though mostly in vain. Some of the largest economies in the world continue to limp along with interest rates at or near zero and credit choked off to the general public. Obfuscation and new regulations will only serve to exacerbate the situation until the populations finally give up or rise up.

In Europe, surrender is not so easily assumed. In the United States, it is almost certain, except for a very small percentage who will fly under the radar of the government, skirting the laws and rules, until they too are caught in the widening liquidity trap.

It's not a pretty picture going forward and it may take years to fully play out, but the absolute scurrilous nature of Europe's attempt to mollify the public is handwriting on the wall, writ small, but with larger implications.

As for Wall Street's role in the continuing dance of fools, stocks waited patiently on Friday, hugging the unchanged mark until after the stress test results were released. Once assured there would be no serious blow-back, the major indices took off on a tear toward and beyond their 200-day moving averages, as presaged right here on these pages in yesterday's post.

After the results were announced, traders took a few breaths, some supposedly went out onto their terraces for a smoke, and when they resumed trading, about 12:45, proceeded to take stocks higher in a hurry, pushing the Dow Jones Industrials up more than 100 points in the nest 45 minutes. The die already cast, the trades were executed.

All closed higher, and especially important, the S&P 500 finished the week above the 1100 mark, yet another sign that there's absolutely nothing to be concerned about. Your jobs are safe, your pensions in good hands, with the government and the Masters of the Universe on Wall Street continuing to monitor the health of your and your children's portfolios.

If it wasn't for all of this being so neatly wrapped up on a glorious summer Friday afternoon, one might presume that it was all preordained, completely organized right down to the final neat detail.

Dow 10,424.62, +102.32 (0.99%)
NASDAQ 2,269.47, +23.58 (1.05%)
S&P 500 1,102.66, +8.99 (0.82%)
NYSE Composite 6,965.11, +63.20 (0.92%)

Advancing issues led decliners, as expected, by a healthy margin, 4992-1425. New highs exceeded new lows, 298-80. Volume was at almost the exact same level as that of the previous two sessions; not surprising, since these days it's just the same people moving the same stocks back and forth, to and fro.

NASDAQ Volume 2,263,999,250
NYSE Volume 5,161,690,500

Commodities markets were a bit more rational, with oil closing down 22 cents, at $78.98; gold losing $7.80, to $1,187.70; and silver dipping two cents, to $18.10.

With the indices all closing above their 200-day MAs, one might assume that the bulls are off and running once again, but I purport that it is only a temporary condition, based entirely on strong earnings reports (notwithstanding everything else, a very positive sign, but wholly in contraction with economic reality) which will come to a sudden end next week. This looks every bit like a temporary summer rally, which end as quickly as they begin.

Perverse Dollar Trade Sends Stocks South

The US Dollar was stronger against most world currencies on Thursday. Stocks fell.

If that sounds odd to you, it should. The normal relationship of a strong dollar to strong stocks has been undercut in recent days as the new carry trade of borrowing cheap dollars and investing in risky equities has produced one of the more remarkable rallies of the past 100 years.

Sadly, it cannot continue. Eventually, days like today, when the dollar strengthens and stocks are obliterated as traders are forced to liquidate out of positions, will proliferate, killing the stock market rally. Either that, or, stocks continue to climb while we kill the dollar. Today's trading may have been illustrative in just how perverse and destructive the inverse relationship has become. One way or another, somebody's got to lose, when the truth is that a stronger dollar should encourage more investment in stocks and US companies, rather than the reverse.

There's a bit of illogic to this trade, so excuse me for thinking out loud here. If it's true that many of the hedge funds are already out of this market, then today's trade would not have occurred. There would have been honest bets on stocks, not liquidity-driven hedge-type activity. So, that argument is probably full of large holes.

Then there's the idea of trillions on the sidelines - some say as much as $3 trillion invested in money market funds, some more in bond funds and plenty in cash. Just because those people don't want to engage in the high risk of equities, it does not necessarily follow that they'll want to jump in when stocks are cheaper. Were that the case, they had ample opportunity back in the Winter of 2009-10. So, toss that rationale.

What makes sense is that the dollar will continue to weaken until the Fed signals that they're going to begin raising interest rates. Estimates of when that might happen range from June 2010 to some time in 2011. What's certain is that the Fed cannot keep rates at "near-zero" for much longer. Other nations have already begun raising interest rates - Australia and Norway to name two - while more are hinting at doing the same. When the Fed decides to begin raising rates the dollar will stop sliding against other currencies. It will actually begin gaining when our blessed federal government decides to start acting like adults and do something about the enormous deficits they are running.

Both of those events - Fed tightening and government responsibility - are inevitably tied to politics, and, with mid-term elections upcoming in less than a year, there's a good bet that there will be action by then, in fact, 4-6 months before the elections. So, June sounds like the right time for the Fed to boost 25 basis points, maybe even 50. It's also likely that the federal budgeting process will begin sounding more Republican, even though it will be dominated by Democrats.

So, where does that leave stocks? Little changed until then. The bull market remains intact, the carry trade goes on for a few more months, because, as the market is the ultimate discounting mechanism, the Fed moves will be baked in long before they actually occur. The rally should run nicely through January, and even into Spring, with a small respite during the summer and glorioski! another rally just in time for the election!

That's one way to play it. Ignore all the talk and chatter about the carry trade, weaker dollar, etc. and focus on good companies making money. Sooner or later, fundamentals will be your friend, and, by all indications, they're not too bad right now. A year from now, the crash of 2008 will be a fast-fading memory.

Dow 10,332.44, -93.87 (0.90%)
NASDAQ 2,156.82, -36.32 (1.66%)
S&P 500 1,094.90, -14.90 (1.34%)
NYSE Composite 7,117.64, -109.07 (1.51%)

Today's final numbers could have been much worse. The dollar actually weakened throughout the session, and stocks pared their losses after 10:30 am. The Dow was down 170 in the early going and gained much of that back by the closing bell. At the end, declining issues outnumbered advancing ones, 5210-1381, or nearly 4:1. It was one of the more lopsided days in recent memory, though hardly a rally-killer. It should be noted that options expire tomorrow, so much of the trading had to do with gains and losses on option trades. There were only 108 new highs, as compared to 67 new lows. The indication is that stocks are weak, though this measure cannot be trusted on a one-day move. We'll need more evidence that the bears have control before changing strategy, which remains bullish with a target of 10700 on the Dow by year end.

NYSE Volume 4,909,767,500
NASDAQ Volume 2,148,559,000

Commodities would be expected to take a hit, especially oil, which fell by $2.12, to $77.46, but gold actually rose $1.00, to $1,142.20. Silver gained 5 cents, to $18.46 per ounce. The precious metals markets have shown a recent trend away from the dollar trade. They can now be considered almost anti-currency, as they act as a hedge against all fiat (paper-based) currencies, which just happens to be everywhere in the world.

Other then the dollar movement, there was a little bit of news that might have moved markets so severely. Tim Geithner testified to the committee looking into financial reform, and any time Timmy opens his mouth in congress, it's usually a bad thing. A couple of members actually think he should resign. Not surprisingly, most of those requests for Mr.Geithner to step aside came from Republicans.

Early in the day, the entire world was reminded that bureaucracies seldom function perfectly, as air traffic across the nation was grounded due to an FAA "glitch."

Unemployment claims data was benign, and the week come to an end with no important economic data due out on Friday, and just 35 days until Christmas.

Leading Indicators for October were down slightly, while the Philadelphia Fed index was up. We have reached what is known as an inflection point.

After the bell, Dell (DELL) announced 3rd quarter results below expectations. The stock was trading down about a point, or 6.5% in after-hours activity. Gap Stores (GPS) reported a 25% improvement in profits, but the stock was being sold off after-hours, down about 1/2 a point, or 2.5%. Shares of the retailer, which includes GAP stores and Old Navy, have more thn doubled since their lows in March.

Stocks Gain to Open Week; Madoff Gets 150 Years

The most significant news story of the day was the sentencing of serial Ponzi-schemer Bernard Madoff by US District Court judge Denny Chin, who figuratively "threw the book" at the convicted swindler, issuing the maximum sentence of 150 years in prison to the 71-year-old. Madoff will spend the rest of his life behind bars for masterminding the largest securities fraud in history.

Perhaps one of just a few bright lights from the unwinding of the US economy, Madoff may never had been discovered if not for the horrific losses taken by the market in the fall of 2008. It was amid crashing stocks that Madoff first admitted his guilt as he could no longer maintain that his investments were making profits.

Ads Madoff heads out of the spotlight and behind bars, it's worth noting that various frauds, scams and scandals come to light during serious market declines. If Madoff proves to be the worst of them, all well and good, but there was surely more than the solitary machinations of a singular evil genius at work within the latest market crash. The bodies are all now safely buried in the books of Citigroup, Goldman Sachs, JP Morgan, Bank of America, Wells Fargo and Morgan Stanley. The real crimes have been neatly swept under the rug by Treasury Secretary Geithner and Fed Chairman Barnanke.

The words "toxic assets" have been swiftly dispatched from the standard economics news lexicon; those have all been absorbed by the Federal Reserve for future disposal. Accounting rules have been changed to accommodate the bankers, as usual. The same kinds of things happened before and during the Great Depression. Incompetence and lack of foresight in allowing a speculative bubble to get out of hand were the causes then, as now, and there will likely be more scandal, finger-pointing, accusations, firings and eventually, prosecutions of those who undermined the core of our economy.

The economy has suffered severe damage, stocks are overpriced in an unsustainable trading range, but the word on the street is that the bad times are already behind us. We can almost hear Roosevelt's campaigners singing "Happy Days Are Here Again."

We so wish it were so, but evidence points in the opposite direction. While our maladies may not ever approach those of the Great Depression, by some standards they already are. True unemployment figures point to 18-20% currently, but what never gets reported and is at the root of our problem, is the black market or "underground" economy, which the government stopped trying to measure back in the 1970s. From pot dealing to off-the-books labor, this illicit economy grows daily, eroding the tax base along with our confidence in government institutions.

So broad, vast and rapacious are federal and state taxes that companies and individuals are nearly coerced into cheating if only to ensure their own survival. The costs of taxation on business are so odious today that there's actually a disincentive to entrepreneurism. Nobody wants a partner that takes but never contributes. Still, people make money without paying taxes, and that's what - besides the incredible amount in aid to states - is really keeping the economy from going bust. There's a lot of money around, and nobody's starving or freezing yet. Let's hope it stays that way.

Dow 8,529.38, +90.99 (1.08%)
NASDAQ 1,844.06, +5.84 (0.32%)
S&P 500 927.23, +8.33 (0.91%)
NYSE Composite 5,962.50, +55.54 (0.94%)

As market participants apparently had cash on hand and nothing better to do with it, they bid up stocks early in the day and traded sideways after 10:00 in the AM. As well as the final numbers look, the internals were conforming but far from encouraging. Advancing issues beat back decliners by a modest margin, 3540-2858. New highs surpassed new lows, 88-52, but volume was the most tepid in some time, somewhat expected in this shortened holiday week.

NYSE Volume 1,065,345,000
NASDAQ Volume 2,021,623,000

Oil shot up $2.33, to $71.49, as Nigerian rebels attacked an offshore oil rig and China announced it would add to its strategic reserves. Gold finished the day down 30 cents, at $940.70. Silver dropped 18 cents, to end the day at $13.98.

Again, there was little in the way of corporate or economic news. It looks like another slow trading week ahead.

Economic Realities Ignored by Propagandist Media

The media is doing a very nice job of covering up the real issues involving the US economy, the banks, TARP and Treasury's role in the massive fraud being foisted on the nation's public.

Yesterday, Tim Geithner's comments that the "vast majority" of US banks had sufficient capital were largely credited for pumping an afternoon market rally led by the financial sector. That tidbit was so widely reported that it brought back memories of Republican "talking points" to media outlets, all of which parroted the party line during the Bush years.

It now seems apparent that the press corps is still being led by nose rings pulled by the PR machine of the federal government. Much of the news that the government doesn't want the public to know about is widely dispensed by newspapers - which nobody reads anymore - and online, increasingly becoming the true fourth estate. Case in point is that at the very same time Treasury Secretary Tim Geithner was testifying that government programs were working, TARP Inspector General Neil Barofsky issued a scorching 250-page report detailing "staggering" fraud and waste inherent in the program, citing the more than 20 separate criminal investigations involving TARP, while criticizing the program's size as unwieldy and prone to abuse.

The controlled propaganda from D.C., the major TV networks and cable outlets is probably not going to be able to stem the tide of negatives which eventually will flood the secondary news media, on the internet, radio, financial newsletters and magazines. There is simply too much bad news for the mainstream media to blunt all of it. Just this morning, prior to the markets' opening, more bad news from the banking complex overwhelmed the investing community as Morgan Stanley (MS) reported a 1st quarter loss far in excess of analyst expectations. The company posted a loss of 57 cents a share ($177 million), swinging completely around from the profit of $1.41 billion, or $1.26 a share, generated in the first three months of 2008.

Analysts were looking for a loss of 8 cents a share in the quarter. This was a massive miss that everyone should notice, not just the investment community.

As it was, the Dow opened with a loss of just 75 points, with other indices responding in similar ho-hum fashion, no doubt due to excess upside pressure being exerted by the brokerages which control most of the trading. By 10:00 am, the Dow, S&P and NASDAQ had already turned positive and headed higher, begging the question of just how much bad news will it take to make the markets respond in anything close to realism?

While control issues of the media and the markets become more apparent, maybe the Machiavellian nature of this episode in American history will become more apparent with today's apparent suicide of acting chief financial officer of troubled mortgage giant Freddie Mac.

According to reports, 41-year-old David Kellerman was a lifer at Freddie, having worked his way up from his analyst position in 1992 all the way to the executive suite. His death brings into play many questions, because he - of all people - was a man who may have known too much. Did Kellerman kill himself because he was being set up for a fall, or was the suicide another "black op" designed to silence him from going public on matters that might expose key politicians or people on their staffs?

Either case is damning to the government, as they attempt to plug every leak in their quickly-sinking ship of state. Fannie Mae and Freddie Mac are linchpins in the entire financial meltdown that have yet to be adequately exposed. They are both severely undercapitalized and without enormous injections of government money, would be insolvent. Even with the massive funding from the government, they are already deeply underwater.

Also being represented on the national airwaves, Chrysler and GM's dire straits. Both companies continue to inch closer to bankruptcy. In Chrysler's case, such a scenario would mean liquidation. GM might be able to restructure in an orderly proceeding, though tens of thousands of jobs would be lost. Chrysler faces a May 1 deadline to reach a merger agreement with Italian automaker Fiat, itself under severe strain from declining auto sales.

Separately, General Motors announced late Wednesday that they may close some plants for up to 9 weeks this summer to save money. The automaker, once the pride of US industrial might, faces a government-imposed June 1 deadline to craft a workable plan to receive more federal aid. The alternative is bankruptcy, though even those closest to negotiations are unclear as to how such a plan would be structured.

Meanwhile, on Wall Street Wednesday, stocks were up early and down late, as the drumbeat of bad economic news is offset by a smattering of reasonable earnings reports from major firms.

Dow 7,886.57, -82.99 (1.04%)
NASDAQ 1,646.12, +2.27 (0.14%)
S&P 500 843.55, -6.53 (0.77%)
NYSE Composite 5,290.61, -48.98 (0.92%)

Despite the negative slant to the markets on the day, advancers actually outperformed declining issues, 3440-3006. There were 83 reported new lows to 34 new highs. Volume was again on the high side.

NYSE Volume 1,770,590,000
NASDAQ Volume 2,662,538,000

Commodities continued to limp along, dealing with slack demand in many industries. Crude oil for June delivery (new contract) gained just 30 cents, closing at $48.85. Foodstuffs were marginally lower. Precious metals continued to show some strength, with gold higher by $9.80, to $892.50. Silver finished the day in New York up 25 cents, at $12.31.

First time unemployment claims will greet market players on Thursday morning before the open. Experts are hoping for a continuation of last week's slight surprise of lower claims, though overall, unemployment remains abnormally high an a chief concern for millions of Americans and their families. More corporate reports will flow to market, though expectations are now so low that a good number may beat the Street but still be seen as vulnerable investments.

Sooner or later, the bad news catches up to everyone. While the government and media outlets try to paint a brighter picture than that which exists, issues such as trust and confidence are being severely tested.

Wall Street Smoking Crack

The crack dealers working the area of lower Manhattan must be flush with cash because it appears certain that the brokers, dealers, wheeler-dealers, scam artists, cheats liars, high muckety-muck, junkies, flunkies, lunkheads, losers and lowlives of all stripes are consuming copious amounts of the stuff.

After a multi-week stock market run of between 20 and 25%, depending on your index of choice, a week chock-full of eyebrow-raising economic reports, a failed attempt at worldwide order and financial diplomacy at the G20, and the worst unemployment in 25 years, the masters of the financial universe decided to keep pushing prices higher, despite the aforementioned data and news, and the imminent revelations from corporate quarterly reports beginning next week.

No matter how anyone tries to justify the numbers, a loss of more than 2 million jobs just in the first quarter of this year is not good news. Stocks should have been headed lower, not higher. Watching the indices crawl forward, it seems that the charts must be from some foreign planet, not ours, which is mired amid the throes of a deepening - not improving - financial breakdown.

Apparently, the wizards of Wall Street see things differently. A slowing economy is a fine one to made ludicrous bets into according to their actions. Stimulus, bailouts, Ponzi schemes, a deteriorating housing market and job losses creates the perfect investing climate according to these geniuses. They are smoking some very powerful dope down there.

Stocks traded in tight ranges throughout the session. Today's action could have been due to indecision, consolidation or manipulation, but it was probably a little bit of each. In any case, nothing moved enough to raise anyone's blood pressure much. It was an all-around tough day for day-traders and short timers.

Dow 8,017.59, +39.51 (0.50%)
NASDAQ 1,621.87, +19.24 (1.20%)
S&P 500 842.50 8.12 (0.97%)
NYSE Composite 5,318.75, +51.65 (0.98%)

Stocks finished with their 4th straight week to the upside. That's a pretty nifty record in the middle of economic calamity and hardly believable. Wall Street insiders realize that another precipitous decline in stock values could lead to some very ugly consequences including widespread firings of top banking professionals, prosecutions and jailings of same, social unrest, and a near-complete breakdown of the social contract and economic death. Thus, the rally must continue, or, at least appear to be solid. It's just another sham being played by the monied interests of Wall Street and Washington and being dribbled along by the feigning financial press.

On the day, advancers beat decliners, 4091-2378, though new lows continued their advantage over new highs, 77-16. Volume was moderate.


NYSE Volume 1,484,215,000
NASDAQ Volume 2,140,955,000

To amplify Wall Street's insanity, read on. This hardly warranted mention on the airwaves, unbelievably.

Self-dealing made simple: The same banks which packaged the "toxic" mortgage loans - for which they received government bailout money - are now looking into buying the same assets under Treasury's Private-Public Partnership Investment Plan.

Yes, you read that right. Citigroup, Morgan Stanley, JP Morgan Chase and Goldman Sachs want to be buyers of each other's near-worthless paper, taking advantage of the government's largesse in the form of 14-1 leverage. These same banks would like to buy up each other's bad loans with roughly 15% down, the balance financed by the government, or, read correctly, the badly duped and without recourse US taxpayer.

Not only is this the worst self-dealing ever witnessed on the planet, but it also reeks of the kind of scheme Bernie Madoff recently re-popularized: PONZI. All of this will likely be swept neatly under the rug with help of the duplicitous Treasury Secretary, Fed Chairman Ben Bernanke and the Liar-King, President Barack Obama.

I know I predicted this would happen when I first heard of the proposal, so why should I - or anyone - be shocked? Our government has one purpose now, simply to serve the wishes of their puppet-masters on Wall Street. The whole bunch of them - from the President and congress to the bank CEOs - should be tried on charges of grand larceny and treason, because stealing from the very people you swore to protect and defend is nothing less.

Commodities dithered throughout the day. Oil closed 13 cents lower, at $52.51. Gold fell another $11.60, to $897.30. Silver shed 29 cents to finish the week at $12.74.

And here's a dose of honesty:



Have a nice weekend.

Follow Through or Not, Upside Looks Better for Now

Stocks crossed back and forth across the break even line en route to a marginally higher finish, which is good news for those bullish on stocks. The fear was that after Tuesday's outsize gains, profit taking and a resumption of negative attitudes would sink the markets and send investors back into their six-month-long funk.

But, despite a strong sell-off at the close, all indices remained in positive territory, with the NASDAQ, loaded with tech stocks, faring the best of all. A couple of key levels were tested and both were beaten back by vigorous selling: 7000 on the Dow, and 730 on the S&P. The former is more psychological than anything else, the latter considered a key support/resistance area. In both instances, the earlier attempt, right around 10:00 am, was stronger than the final surge in the last hour of trading. It will take more than just positive vibes to exceed these levels. Maybe Ken Lewis can offer encouragement in Bank of America to get the lift needed.

Dow 6,930.40, +3.91 (0.06%)
NASDAQ 1,371.64, +13.36 (0.98%)
S&P 500 721.36, +1.76 (0.24%)
NYSE Composite 4,505.38, +6.00 (0.13%)

Market internals were a bit more positive than the smallish headline numbers would indicate. Advancers were solidly ahead of declining issues, 3876-2886. New lows maintained their advantage over new highs, but the number is shrinking fast. There were 245 new lows to just 9 new highs, but it is conceivable that these numbers could converge and even reverse within the next 5-7 sessions as options expiration approaches on March 20, a triple witching day.

With a two day winning streak under its belt, markets may be a bit bolder as investors snap up bargains and traders view profitable short-term opportunities. In the options markets, there are quite a load of heavy bets on selected stocks and index options far ahead of where stocks now sit. A gambling man - which anyone with any skin in this market no doubt is - would be leaning for more upside at this juncture, with the caveat that all bets are off if the Dow hits 7500-7800 or past March 20, whichever comes first.

Volume was strong once again, keeping with the current tone. There are plenty of trades being made, and unless there's a serious falloff in the next few sessions, another vigorous rally could ensue as shorts would be forced to cover quickly, forcing shares even higher. The market is clearly in the hands of day-traders and short-timers, who will trade relentlessly in search of minor gains. This market is for singles hitters instead of home run bashers, but the cumulative effect could produce a fairly solid bounce. Even some downward motion would be good for traders who have triggers set at lower levels. The area around 6830-6850 on the Dow has emerged as a fairly strong support level which, as yet, remains untouched.

NYSE Volume 1,745,479,000
NASDAQ Volume 2,228,163,000

Commodities were mixed again. Crude oil for April delivery fell $3.38, to $42.33. Gold rebounded off recent selling, picking up $14.80, to finish at $910.70. Silver remained in our target buying range, up 26 cents, to $12.80. The majority of the consumables, including foodstuffs and energy, were lower, reflecting the continuum of demand destruction, which continues on a strong scale. Deflation has become locked into the global economy, and, separate from the banking and housing crises, is contributing to severe price pressure in just about every business activity in the good-producing sectors. This pressure will help keep unemployment high, as companies are loathe to hire when business is slow and prices are down.

A couple of anecdotes which may or may not be of much importance. First, the tent city growing on the outskirts of Sacramento, California is a national disgrace, considering how much money has been thrown at banks as well as at social welfare programs such as food stamps and unemployment insurance. Just about everybody is being propped up except for these people - primarily lower-middle class workers - who have fallen through the cracks. Some of the Billion$ in the TARP program should be made available to help these people.

Second, listening to Treasury Secretary Timothy Geithner speak - without saying anything - is becoming an exercise in frustration. Geithner was the only guest on PBS's Charlie Rose last night. The hour-long interview was pure tedium. Geithner, not as adept as "the Maestro," Alan Greenspan, at complete obfuscation and dithering, clearly has taken some lessons. Listen yourself, the next time he speaks and see whether or not his words actually have substance. The chances are about 99-1 that they will not, and therein lies one of the largest problems facing the world economy today. We are being led by a fellow is too smart for his own good. Eventually, he'll actually be pinned down on an issue and that's when the mask comes off. He doesn't really have any fresh ideas or plans for fixing the banks or the economy. He is reading from a script in his mind which was memorized weeks ago and he's yet to help the condition which with we are faced.

Investors are more sophisticated than the average man or woman on the street and they are not amused by either Geithner, the President or the congress. They will trade this bounce for a while longer, but until there are actual facts to support a real rally, this is nothing but a short term bump in the road. The government is pushing on a string with the economy and the American public (outside the obvious government sector) is not going to take it much longer.

Treasury's Stress Test is Not a Plan at All

Editor's Note: I've had to break today's market coverage into two parts due to a need to provide some clarity on what the administration is planning to do with the nearly-insolvent banking sector. This entry will cover that issue, while the usual post - after 4:00 pm - will cover the day's market activity.

We've been hearing about Treasury Secretary Tim Geithner's "stress test" for the nation's largest banks in shrouded tones for over a week. Finally, late yesterday, some details of the plan emerged - in an exclusive interview with Jim Lehrer on the PBS Newshour - and elsewhere.

What the stress test will entail is having the banks examine their ability to function under a variety of very broad circumstances - first, a "moderate" scenario, in which unemployment

This commentary, by Adam S. Posen, Dep. Director, Peterson Institute for International Economics, lays out some guidelines which the Obama administration is conveniently avoiding.

And here's Paul Krugman opining in the New York Times that nationalization - in other words, having the federal government take over some banks, clean them up and resell the new, functioning, properly-capitalized entities to private investors.

Geithner and the Obama administration isn't listening, despite Krugman having won the Nobel Prize for Economics and other, similarly spot-on economists and commentators urging the government to make the appropriate hard choices, as opposed to the current piecemeal approach which hasn't - and isn't likely to - work.

The assumptions in the stress testing offers banks to look at two different sets of scenarios, a baseline and an extreme, or worst case outlook.

Under the baseline scenario, unemployment is at 8.4% in 2009 and 8.8% in 2010, housing prices decline by 14% in 2009 and another 4% in 2010, and the nation's Gross Domestic Product (GDP) falls by 2.0% in 2009 and rises by 2.1% in 2010.

In the worst case set-up, the assumptions are that unemployment reaches 8.9% in 2009 and 10.3 in 2010, housing prices fall 22% in 2009 and another 7% in 2010, and the nation's GDP falls by 3.3% in 2009 and gains 0.5% in 2010.

The banks will have about six weeks to report back to Geithner with either a confirmation that they're "OK" or a request for more funding from the government. That it will take six weeks to complete what is essentially nothing more than the testing of a theoretical set of circumstances against real world assets and liabilities suggests that the entire plan is nothing more than a politically-motivated cover-up for the banking giants which actually control the government.

This Bloomberg article suggests that the "worst case" scenarios laid out by the government are not severe enough, and that the banks will not not then be looking at what possibly lies ahead for the US economy.

The assessments may indeed be less severe than what's ahead, though the housing price assumptions appear somewhat on the money. Suppose GDP falls by 5% this year and another 2% next? What if unemployment hits 10.2% this year? Then the stress tests won't be testing the banks for reality and the entire plan will fail, meaning we will be sunk into a deeper recession for a longer time by supporting zombie banks which are at the heart of the problem.

In Geithner's interview with Lehrer, a the Treasury Secretary voiced a number of interesting comments, including, on the solvency of the banks involved:

"These banks now have very substantial amounts of capital relative to what you would have seen in the US economy going into previous recessions."

In other words, Geithner seems to be wanting to tell us that the banks are sound, despite what's been reported concerning trillions of dollars worth of bad loans, even more toxic credit default swaps and continuing credit-creation issues.

Geithner would have us believe that all of these pre-existing conditions have suddenly, magically, vanished. It's not a believable scenario.

On "nationalization", Geithner opined, "it's the wrong strategy for the country and an unnecessary strategy." Again, Geithner would have us believe that what's always worked for smaller, insolvent institutions, that being take-over by FDIC, recapitalization and an eventual return to a functioning entity on the other side, is not acceptable for the largest banks in the nation.

This is the kind of thinking which inspires skepticism in the banking system and the government's remedies. This approach would allow the likes of John Mack, Lloyd Blankfien, Vikram Pandit and Kenneth Lewis to continue to run their failed institutions - the same ones which caused the crisis in the first place - with only a limited amount of scrutiny and accountability.

This would allow the same excesses in the securitization of loans and largely unsupervised lending and investing activity to continue, while failing to address the toxic loans and swaps at the root of the problem.

There will be no accountability for what's already occurred, no civil or criminal charges brought against the bank and finance executives whose institutions already have benefited from taxpayer capital infusions. The same executives who nearly brought the world's financial system to its knees will remain at the controls of their now-defunct banks.

Naturally, the banks have lined the coffers of both the Obama administration and all members of congress with campaign contributions, so there will be no opposition from any government official - elected or otherwise - to this plan whatsoever.

The stress test and Geithner financial band-aid plan should be recognized for exactly what it is: further denial of the root of the crisis and a sure recipe for disaster.

Stress and Confusion on Wall Street

Is this Wall Street's week of reckoning?

Monday, stocks slid near 12-year lows. Tuesday's snap back rally offered some relief, but it was back to selling for most of the session on Wednesday. There isn't a trader alive who can tell where stocks will go Thursday and Friday.

Paramount among the issues yet to be resolved is the fate of the nation's 19 or 20 largest banks (The press and the government can't even agree on a number, that's how confused the condition is.) as the government commits them to various and sundry "stress tests."

According to what's been gleaned from two days of congressional testimony by Fed Chairman Ben Bernanke and the infrequent mutterings from Treasury Secretary Tim Geithner, government authorities will go into banks this week armed with accountants, number-crunchers and statistical models in an attempt to determine the general health of these mega-banks (over $100 billion in assets; are there any left?) and their ability to function normally under severe economic conditions.

Once these stress tests are completed, the government then should have a clearer understanding of what's needed to fix them, or whether they should be taken over by regulators, broken up, forced into bankruptcy or left alone. All of this has left Wall Street in a very confused condition, and the very thing the market appreciates least is uncertainty.

Stocks took on water early on, retracing most of Monday's decline by the noon hour. After that, there were a number of rallies, all of which eventually failed, despite stocks peeking into positive for about half an hour near the close. By 3:40 pm, however, the charade was over, and stocks sold off in a decided fashion.

Dow 7,270.89, -80.05 (1.09%)
Nasdaq 1,425.43, -16.40 (1.14%)
S&P 500 764.90, -8.24 (1.07%)
NYSE Composite 4,753.17, -68.57 (1.42%)

Other factors entered into the decision-making of investors, not the least of which was the report from the National Association of Realtors on January Existing Home Sales, which showed continuing deterioration in the real estate market with both the number of sales and the median price falling - a continuation of trends which have persisted for 14 months.

Granted, the general economy is not pretty, but the global economy is still standing. The questions posed by investors are precisely how well the economy is functioning and how well it will be in the near future. Nobody has yet offered solid answers to those important queries, and that's exactly what's causing investors to flee from stocks.

When the government does finally provide some further clarity, it should cause some soothing, though prospects will still remain mostly uncertain. It's what the government actually plans to do with the banks that will have the most impact, though the field is pretty well split on that judgment as well.

So, get used to wild trading swings, directionless markets, interpretations of news and then interpretations of the interpretations, punditry, thin analysis, politics and more nonsense about how to "fix" things than the market can bear.

Eventually, there will be resolution, but most humans being impatient when it comes to their financial futures, the waiting part is the hardest. And we are waiting. Get ready for at least six to nine more months of this before the market finds a floor (nice word for bottom), washes out the weak hands and moves ahead. Unless the government stimuli are completely worthless, at some point the market will simply revert back to fundamentals and investing can revert to something approaching normalcy.

For now, however, US and world markets are about as far removed from normal as they can be.

On the day, losers outdid gainers, 4193-2341, while new lows finished ahead of new highs, 489-13. Volume was on the high end, owing to the frenetic nature of the trading.

NYSE Volume 1,800,731,000
Nasdaq Volume 2,404,619,000

Oil priced higher by $2.54 a barrel, closing at $42.50. Gold continued to suffer from profit-taking, losing $3.30, to $966.20. Silver presented itself as a buy, losing 12 cents, to $13.91. Other commodities finished mixed, in keeping with the overall tone of the day, which was confused.

If you are in this market, you are on your own. I continue to only buy silver sporadically, on dips, and, despite mentioning that one could not be faulted for venturing into equities at this juncture, I am in no way advising anybody to do so. It's still a very dangerous, still bottomless, environment.

Geithner's Wall Street Cram-Down

It was pretty evident that Wall Street didn't like what Treasury Secretary Timothy Geithner was telling them when he began outlining the details of TARP II, the $350 billion Obama administration's side of the original $700 billion plan approved in October of 2008.

Stocks were already trading lower when Geithner stepped to the mic, but they really tanked as he drilled out scant details of the government's plan. The Dow was down about 45 points when he started speaking at 11:00 am. By the time he was finished, just a half hour later, the blue chip index was off nearly 300. Matters proceeded to become materially worse from there. The Dow was down more than 400 points before a last-gasp rally trimmed the losses by about 40 points in the final 15 minutes.

Dow 7,888.88, -381.99 (4.62%)
NASDAQ 1,524.73, -66.83 (4.20%)
S&P 500 827.17, -42.72 (4.91%)
NYSE Composite 5,214.34, -265.54 (4.85%)

Some of the more vocal Wall Street banking crowd are complaining that Geithner's plan - which reportedly has provisions for the assumption of some of the banks' toxic assets by private investors - is short on specifics.

The truth of the matter is that it likely opens the banks in question to too much public scrutiny, as evidenced by the government's new web site, financialstability.gov.

For a glimpse of what's ahead for the Bailout Bunch, the site currently links to Treasury's own Emergency Economic Stabilization Act web site. drilling down just a page reveals, under "Systemically Significantly Failing Institutions" we find reams of info on Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, JP Morgan Chase, Wells Fargo & Co., Bank of New York Mellon, State Street, Merrill Lynch, AIG, plus Chrysler, General Motors and GMAC.

How appropriate and sweetly ironic that these banks and businesses are grouped under such a heading. Most, if not all, are already insolvent. Bloggers and economists should have a field day with all the fresh light shining on these cheaters, liars and scoundrels. There's a wealth of information there, much of it which will almost surely facilitate the demise of these failed firms.

Could the government actually be forcing the banks to confess to their excess and the extent of their failures? It sure looks that way, and, if so, it's a great step forward. Wall Street fails to see it that way, but, clue to the clueless, Wall Street isn't America and the fate of 300 million Americans is not inexorably tied to the ups and downs of the Dow Jones Industrials.

Main Street may finally be catching a break as the banks are forced to come clean, which means that a good number of them will be forced into bankruptcy and/or liquidation, the key step in ridding the market of malinvestments and failed institutions.

Could it be that Secretary Geithner, under the thumb of President Obama, has finally gotten religion and intends to actually correct the mess that he was already a party to? Could be. Obama's sincerity and forthrightness was on display just last night at his first press conference when he left the door a bit ajar in his response to a reporter's question about investigating former administration officials.

His response to a question about Senator Patrick Leahy's calling for a "truth commission" was decidedly grey-area, as the President said much to the affect that while he preferred to "look forward" he would not block investigative efforts. Between those comments and the Geithner cram-down on Wall Street, maybe real healing in America can begin.

This writer honestly hasn't felt this good about a serious market tumble since the dot-com bust, the key being Geithner's fairly obvious signal that the rules have changed and the hand-outs and free rides are now relics of the past.

Advancing issues were absolutely overwhelmed by decliners in the broadest selling since November. Losers led gainers, 5405-1145, a nearly 5-1 edge. New lows continued to strengthen ahead of new highs, 203-19. A major part of the story was volume, which was very strong, indicating that this bust was the real deal.

NYSE Volume 1,757,078,000
NASDAQ Volume 2,473,252,000

Financial stocks took a beating, especially the most egregious offenders. Bank of America (BAC) lost 1.33 to close at 5.56 (-19.30%). There was false hope recently as BofA rallied from below $4 to above $6, a level at which major funds could still participate. It now looks to fall below $5 again, signaling a continuance of the classic death spiral.

Ironically, this stock looks very much like Countrywide did in January of 2008, after Bank of America had assumed most of the company's assets. Countrywide eventually was fully assumed by Bank of America. Much of the same bad debt which killed that company are now crushing CEO Ken Lewis' company. Bank of America has been insolvent for quite some time and it will be interesting to watch the continuing saga of what was once America's largest banking interest.

Citigroup (C), another of the walking dead, was hammered 0.60, to 3.35 (-15.19). This company's future may be numbered in weeks rather than months.

Goldman Sachs (GS) was hard hit, dropping 7.49, to 90.40 (-7.65%). Morgan Stanley (MS)lost 2.82, to 20.79 (-11.95). JP Morgan Chase fell 2.66, to 24.62 (-9.75).

Commodities were mostly mixed with oil down substantially, losing 2.01, closing at $37.55, a three-week low. The metals were moving in the opposite directed, hurriedly. Gold shot up 21.40, to $914.20. Silver gained 30 cents, to 13.13.

The precious metals prices are signaling another flight to safety. Clearly, equities are not the place to be now, as they haven't been for the past 18 months, and they still won't be for some time even though today's decline could be interpreted as the beginning of the recovery. The dollar was up sharply against other currencies.

While our own corrupt bankers and wheedlers express themselves with outcries of fear and panic, smart money is on the greenback and gold, a combination that may not seem plausible at first, though it's better understood when seen in the light of a basic turnover of power. It's clear that the Obama administration is not going to tolerate much less than complete transparency. THAT is a very positive development.

Silver remains my #1 investment. On the other hand, opportunities may begin to emerge in black market tobacco and stinging race and sports fixers, the ultimate revenge play.

Today's losses were surely not the last, as the Dow closed at its lowest level since November 20 of last year and is also the first close since then below 7900. Wall Street is in serious jeopardy of breaking apart at the seams. Another precipitous move lower could be in the cards as the market must retest 7550 on the Dow, though that move actually seems a foregone conclusion after today.

It was a poor day for Wall Street, but a darned good one for the United States of America.

Wall Street to Washington, DC: A Road Paved with Fraud

I took this past weekend to catch up on some reading and focus my thoughts on the economy, the stock market and government.

Then I watched the Super Bowl, which worked out well enough for me. Though the Cardinals did not win, as I predicted, the Steelers did not cover the spread, which I also predicted, and, since covering the line is all that matters to gamblers, I retain my status as a near-genius football picker. Like anything else in our crazy world, we are judged most by our last effort. In the NFL prognostication business, that last effort each season happens to be the Super Bowl, so I'm good to go until August.

One final note on the game: Arizona nearly killed itself throughout the entire contest and, without the numerous mistakes and crippling penalties, they would have won easily. But, no excuses. All hail the Pittsburgh Steelers.

So, getting back to my laser-like focus on the economy, stock market and government, I can say one thing that applies to them all: They stink. Our economy is so deeply in debt that radical changes are needed for it to ever be fixed and workable. The government is simply too corrupt, too inept and too rooted in old, failed ideologies to make the necessary changes. As for the stock market, well, that's just a rigged craps table. You can place all the bets you like, but chances are you're going to lose because the game is rigged from the inside, for the insiders.

Monday was no exception to the rigging of Wall Street. At 3:00 pm, all indices were at or near the lows of the day. By the close, the losses were pared and the NASDAQ actually finished with a decent gain, that owing to the flawed thinking that tech firms would benefit from the new plans being shuffled about by the Obama administration and the Democratic congress.

Dow 7,936.75, -64.11 (0.80%)
NASDAQ 1,494.43, +18.01 (1.22%)
S&P 500 825.43, -0.45 (0.05%)
NYSE Composite 5,166.47, -29.32 (0.56%)

The pols, however, are a sideshow. Whatever they compose in "stimulus" legislation, it won't help stem the rising tide of defaults and bankruptcies (everything from individuals to banks, to cities, counties and states), nor will they correct the essential flaw in our system: government at all levels which is too corrupt, too large and too endeared to their own hold on power. Americans face some dim prospects in the near future. There is either going to be a prolonged economic disaster (caused by Wall Street and the federal government) or riots and overthrow of the government, or martial law.

None of those are palatable, but, believe it or not, the one in the middle (riots and revolution) is probably the best solution.

Clean slate. Put all the fraudsters and criminals from Wall Street to Washington behind bars or at least, out of positions of power. Being that the government has all the money and guns, it's probably going to be easier for most Americans to simply submit to martial law (this should occur by September) or leave the country (Get those passports now!).

The imbecility of the American public cannot be underestimated. They continue to elect leaders from the same two entrenched, powerful parties, and expect different results. When the newly-elected get to their appointed positions of power, they have become members of the club. They are no longer Democrats and Republicans, they are all elitists, taking their orders from the oligarchs (CEOs) behind the various Wall Street fraud schemes.

That the entire house of cards is collapsing upon them at once is a very large problem, one which neither the Wall Streeters or the federal (or state) government operatives seem to be able to right. They're screwed, and because of that, the American people is about to be screwed even more.

Already, Californians are getting IOUs instead of tax refund checks. The Governor and the legislature wants to raise taxes and fees to fill the burgeoning budget gap. Higher taxes and fees are also being bandied about in state houses from New York to Wisconsin, Florida to Arkansas, Massachusetts to Michigan. The states are facing monumental budget shortfalls and instead of cutting pay to overpaid civil servants, they're opting for more blood (tax revenue) from constituents.

From the federal level on down, government has the equation all wrong. They're facing shortfalls because there isn't enough revenue, because people are out of work, or out of their homes, or both. Raising taxes on the rest of the population isn't going to repair that condition. In fact, their higher tax solutions will only serve to infuriate the masses even more.

Backing up my contention that the market is rigged (a small loss today instead of a big one) are the internals, which worsened considerably today. Declining issues outnumbered advancers, 3408-3126. The number of new lows expanded to 357, while the new highs contracted to 17. These are unmistakable signs of a worsening condition. The indices are heading back to the November 20 lows, likely to exceed them by a long shot on the downside.

NYSE Volume 1,326,851,000
NASDAQ Volume 2,014,289,000

The commodity markets, much less prone to outright manipulation, showed continuing signs of deflationary strain. Oil futures fell $1.60, to $40.08. Gold was overtaken by profit-takers, losing $21.20, to $907.20. Silver also fell, by 15 cents, to $12.42.

Buy silver, food and bullets.

This morning, I undertook a small test of the value of stocks as investments. I'll spare you the math, but I decided to look at what a basket of 10 stocks, purchased in February, 1999, would look like today. My selections were household names, all of which paid dividends: Intel (INTC), IBM (IBM), General Electric (GE), ExxonMobil (XON), FedEx (FDX), Bank of America (BAC), Caterpillar (CAT), McDonald's (MCD), Wal-Mart (WMT) and Coca-Cola (KO). In my example, I purchased $10,000 of each stock, for a total investment of $100,000.

The results, considering that I didn't pick all outright losers (In fact, 6 of the 10 were higher today than in 1999.), was an eye-opener. Before all taxes and fees, the $100,000 invested in 1999 would have been worth just $2347 less today. Adding in dividends, that number became positive, to the tune of a total return of $27,953. Not bad. right?

Not good, is my response. A simple fixed investment retuning 4% annually would have produced a profit of $48,024 before tax considerations. My takeaway on this is simple: Wall Street is a major fraud, built on high risk. Your money would be much better off in a simple savings account with a fair rate of interest. Therein lies the major disconnect of our age: the difference between saving and investing. Most individuals are not investors, just as most investors are not savers. Over the last 40-50 years, we've been fed a steady diet that investing was the key to prosperity, when the truth - all along - was that saving was the real key.

Americans can now focus on saving, thrift and intelligent consumerism, rather than engage in the highly-leveraged, risk-ridden world of Wall Street. Let the rich take the risk. The rest of us can prosper well enough without them.

And for the government, how can be be confident in a leadership that allows tax cheats to take over some of the most critical and demanding jobs in government? I'm talking about Tim Geithner and Tom Daschle, each of whom evaded taxes knowingly and yet will be confirmed as Secretaries of Treasury and Health and Human Services, respectively. Geithner's already been seated. Daschle has widespread support, including President Obama himself.

Our institutions have been corrupted beyond any hope for a reasonable repair. Our economy is a black hole and Americans will need new leaders and renewed resolve to get through this period with our nation intact. God save us all.