FROM ANGIE RIEDEL...ONE GOOD BLOGGER

Wednesday, October 08, 2008 Vainglorious Pie Hungry? How about a nice hefty serving of double standards slathered with great greasy gobs of hypocrisy sauce? Here you go. Bush today at a press conference in Texas: "A lotta people here in Texas and around the country are not pleased... with the government having to take the steps they took, their question is, I pay my bills, I pay my mortgage, why, wh-why why are you helpin' Wall Street? And the answer is because...uh, had we not done anything...people like the folks behind me would be a lot worse off. We...we'll make sure as time goes on this doesn't happen again in the meantime we gotta solve the problem." Uh huh. So, the people behind you, namely the rich and powerful full time speculators who need more play money to keep the games rolling, they would be a lot worse off if they couldn't get a honkin' sh*t load of free money they didn't have to work for, and since somebody has to pay for it, it should be us. That way, the whole country will be much worse off for a very long time to come and the rich people won't have to suffer so much as a moment of anxiety. They won't feel a thing as the nation tanks and swirls the bowl and jobs disappear by the thousands each month, and people lose the homes they've been paying on for 15 years and stores close. THAT'S not a problem, that's all fine. The rich running out of billions to blow on rich gambling games and bets, THAT'S a problem. FOR ENTIRE ARTICLE: http://www.thinkorbeeaten.blogspot.com/

FROM MINEWEB

Why the fall in the gold price when physical gold remains in huge demand? http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=70932&sn=Detail

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VERMONT ATTORNEY CHARLOTTE DENNETT, RUNNING FOR ATTORNEY GENERAL OF VERMONT, SAYS SHE WILL BRING CHARGES AGAINST GEORGE W. BUSH IF ELECTED

FOR IMMEDIATE RELEASE Tuesday, September 16 Vermont Progressive Party Contact: Morgan Daybell Tel: 802 229 0800 RENOWNED CRIMINAL PROSECUTOR VINCENT BUGLIOSI AND VERMONT ATTORNEY CHARLOTTE DENNETT TO ANNOUNCE INTENTION TO BRING LEGAL PROCEEDINGS AGAINST PRESIDENT BUSH Press conference to be held at: Contois Auditorium in Burlington City Hall on September 18, 2008 at 10:30 a.m. Vincent Bugliosi, the legendary criminal prosecutor and bestselling author of The Prosecution of George W. Bush for Murder, will appear in Burlington with Charlotte Dennett, a Cambridge-based attorney and Progressive Party candidate for Attorney General, on Thursday, September 17 at Burlington City Hall at 10:30 a.m. The two attorneys will announce their intention to commence legal proceedings against George W. Bush in the event that Dennett succeeds in her bid to become the next Attorney General of Vermont. As a Los Angeles District Attorney, Bugliosi successfully prosecuted 105 out of 106 felony jury trials, including 21 murder convictions without a single loss. He is best known for prosecuting Charles Manson, an experience he memorialized in his book Helter Skelter. His most recent book, The Prosecution of George W. Bush for Murder, has become a sensation since its publication this summer. "I have never received such a passionate response as I have to this book," says Bugliosi. "Most Americans are deeply offended that George W. Bush has not been held accountable for his many crimes while in office, the most egregious of which is the murder of 4,000 American soldiers and over 100,000 Iraqi civilians. My book lays out the framework of how he can be brought to justice in any state in this country, a framework which I hope will serve notice to future occupants in the White House." Dennett has been practicing law in Vermont since 1997 and has been an investigative journalist for more than 30 years. “Vermonters deserve an Attorney General who will prosecute those who break the law,” says Dennett. “Vermonters pay a huge amount of money and a disproportionate share of soldiers’ lives in this illegal war. If our elected representatives will not act to hold President Bush accountable, it is up to us to use this final remaining tool.” Paid for by Charlotte Dennett for Attorney General PO Box 281, Montpelier VT 05601

WATCH THIS BRASSCHECK TV VIDEO OF BUGLIOSI TO PUT BUSHCO IN PRISON

Oliver Stone's movie about George Bush "W" hits the movie theaters today. I hear its a humorous and sympathetic portrayal of Bush. Fine. Whatever. After it's over, I hope it focuses everyone's minds on one essential point: After he leaves the White House, Bush's next stop should be a prison cell. This is NOT a pipe dream. The minute he leaves office, his executive immunity evaporates. The legal grounds have already been established for his indictment and arrest, AND there is someone in the State of Vermont ready, willing and legally able to do it. There is nothing more important to the future of the US (and maybe even the world) than for this man to be indicted, tried, convicted and jailed for murder. Details: http://www.brasschecktv.com/page/395.html - Brasscheck P.S. I can't imagine anything more important for the country's future than for Bush & Co. to be brought up on criminal charges for murder. It's doable, it can be done, and it must be done. Please share this e-mail and the page on it with friends and colleagues. If we're going to undo eight years of a national nightmare...reestablish the rule of law and the Constitution...and stop the endless hemorrhaging of our nation's reputation and wealth, this is the place to start. Take a minute to inform yourself, and if you agree, support the effort. Bush belongs in jail and you can help put him there: http://www.brasschecktv.com/page/395.html - Brasscheck P.S. Please share Brasscheck TV e-mails and videos with friends and colleagues. That's how we grow. Thanks. ============================== Brasscheck TV 2380 California St. San Francisco, CA 94115

WATCH BILL MOYERS TONIGHT...PROTECT YOURSELF FROM VOTER FRAUD BY INFORMING YOURSELF IN ADVANCE

This is the blog by Mark Crispin Miller where he reports current and past attempts to manipulate the voting structure, as was done in the last two elections, to alter the outcome of the true vote of the citizens of our country. BE AWARE OF WHAT IS BEING DONE TO YOU... OR PERISH! NEWS FROM THE UNDERGROUND BLOG: http://www.youtube.com/watch?v=DsXm1UtH5d0

THEY REALLY ARE WATCHING YOU

Homeland Security to use photo radar to track drivers nationwide October 16th, 2008 | Homeland Security, New World Order, Police By: D. H. Williams @ 6:48 PM - EST http://www.freedomsphoenix.com/Find-Freedom.htm?At=039803&From=News Those who dream about having Big Brother watch your every move are beginning to realized their vision as technology has caught up with their ideology of top down control of society. A corner piece of this new dystopian society is video surveillance. As roads, bridges and water systems decay and crumble cities and towns all over America are investing public funds to install photo radar devices. These so called photo radar should have another name since they digitally record full motion video 24 hours a day, many with audio. This data is then streamed into centralized data bases that can be access by state, local and federal authorities. Installed under the guise of speed enforcement or enhance safety it won’t be long before they are used for other enforcement activities. I am sure the Department of Homeland Security would have like thousands of these devices in Denver and Minneapolis this year during the Democratic and Republican conventions. After the decision is made and tax money spent local boards and government will send out press releases or set up websites claiming the citizens asked for the cameras to be installed or that there are reports that these camera reduce accidents and of course they will invoke the catchall save the children defense which has become ubiquitous reasoning for all government intervention into our lives. In reality local level governments are motivated by the revenue these cameras generate. On a busy stretch of road it is not uncommon for a single camera to issue over 1000 citations a day. On the national level it is all about creating a surveillance web of control and dominance over the masses. Australian owned company Redflex is looking forward to expanding it’s electronic surveillance grid against American citizens. “We are moving into areas such as homeland security on a national level and on a local level,” Redflex regional director Cherif Elsadek said. “Optical character recognition is our next roll out.” And if you think people are being paranoid or conspiracy theorists when they say this system of cameras will be used to track a single vehicle over long stretches of roads and even from state to state read what else Redflex’s regional director has to say. “Imagine if you had 1500 or 2000 cameras out there that could look out for the partial plate or full plate number across the 21 states where we do business today,” Elsadek said. “This is the next step for our technology.” Perhaps the last defense for the American driver is to use a product to shield their plate from the all seeing eye of the camera lens. Many drivers in towns and cities inundated with this spy technology have been fighting back with a spray called Photblocker, for around $26 you can purchase this product and spray on your license plate, it is undetectable to the human eye but will blur the image so your plate is unrecognizable. Numerous studies have shown that while these devices do indeed take millions a year from drivers pockets they do not reduce accidents. Washington Post writers Del Wilber and Derek Willis have exposed this lie told by pushers of spy technology. In there study they conclusively showed that collision nearly doubled at intersection in the District regardless if those intersections had photo radar or not. There does not appear to be a link between the cameras and the increase in accidents but the evidence proved these devices do not reduce injuries or collisions. “The data are very clear,” said Dick Raub, a traffic consultant and a former senior researcher at Northwestern University’s Center for Public Safety. “They are not performing any better than intersections without cameras.” The next time you roll through an intersection with photo radar, will your tail be exposed?

GARY NORTH INTERPRETS BERNANKE'S SPEECH IN REAL LANGUAGE

Gary North's REALITY CHECK Gold's price: http://www.GaryNorth.com/snip/300.htm The Federal debt: http://www.GaryNorth.com/snip/544.htm To subscribe to this letter: http://www.snipurl.com/subscribenow Issue 798 October 17, 2008 LIPSTICK ON BERNANKE'S PIG On October 15, Chairman Ben Bernanke delivered a lecture to the Economic Club of New York, titled, "Stabilizing the Financial Markets and the Economy." I am sure the title resonated to members of the Economic Club of New York, who saw the Dow Jones Industrial Average fall another 733 points before the day was over. He began his speech with these inspiring words: I will focus today on the economic and financial challenges we face and why I believe we are well positioned to move forward. I am reminded of Mort Sahl's comedy album in 1958: "The Future Lies Ahead." Yes, it does. I, for one, have no desire to be well positioned to move backward. The problems now evident in the markets and in the economy are large and complex, but, in my judgment, our government now has the tools it needs to confront and solve them. Does he mean that only now does the government have the tools? Is he saying that for the last sixty years, Keynesian economists, Chairmen of the Federal Reserve System, and Secretaries of the Treasury did not have these tools? They said they did. Were they wrong? The government has always had the tools by which it has dealt with the crisis over the last six weeks: taxation, inflation, and blarney. It would have been polite of Dr. Bernanke to tell us about these "large and complex" problems. He didn't. He gave no indication of a looming crisis so large that it would bring the international capital markets to gridlock, i.e., "frozen." Actually, the capital markets were not frozen. I was offered a 30-year fixed-interest mortgage for 5.7% two weeks ago, with 10% down. Prevailing interest rates revealed no evidence of freezing up, according to free market economist Robert Higgs. http://www.lewrockwell.com/higgs/higgs91.html But without the hoopla about frozen markets, politicians around the world would not have capitulated to an increase of government debt of something in the range of $4 trillion in one month. Our strategy will continue to evolve and be refined as we adapt to new developments and the inevitable setbacks. "Evolve." "Be refined." Translation: "Making this up as we go along." But we will not stand down until we have achieved our goals of repairing and reforming our financial system and restoring prosperity. "Restoring prosperity." Yes. Yet somehow I do not recall that Dr. Bernanke, President Bush, or Henry Paulson ever admitted before that we had lost our prosperity. As I recall -- I am getting older -- they all insisted repeatedly that there was no recession at all. As in all past crises, at the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets. A lack of confidence is a symptom of the crises, but the question arises: What was the basis of this loss of confidence? He avoids the answer: a looming recession in the real economy. The possibility of such a recession was denied by all policy- makers until about six weeks ago. The crisis will end when comprehensive responses by political and financial leaders restore that trust, bringing investors back into the market and allowing the normal business of extending credit to households and firms to resume. This is the Party Line, all over the West: the crisis stems from the financial system. A bailout of the financial system by taxpayers is the only workable solution. No one has suggested that the crisis was engineered by Alan Greenspan's policies of loose money, and the bankers' faith that the government would bail out the system in a crisis -- which is exactly what the government is attempting to do. In that regard, we are, in one respect at least, better off than those who dealt with earlier financial crises: Generally, during past crises, broad-based government engagement came late, usually at a point at which most financial institutions were insolvent or nearly so. What would Dr. Bernanke call the Bear Stearns fire sale in March? What would he call the Office of Thrift Supervision's seizure of Washington Mutual on September 15? What would he call the bankruptcy of Lehman Brothers on September 15? That was the largest bankruptcy in American history, dwarfing Enron: half a trillion dollars. The value of its bonds was recently settled at less than 9 cents on the dollar. Waiting too long to respond has usually led to much greater direct costs of the intervention itself and, more importantly, magnified the painful effects of financial turmoil on households and businesses. That is not the situation we face today. It isn't? It surely looks as though it is. The recession has not played out. That was the message sent by the stock market before the day was over. Fortunately, the Congress and the Administration have acted at a time when the great majority of financial institutions, though stressed by highly volatile and difficult market conditions, remain strong and capable of fulfilling their critical function of providing new credit for our economy. Substitute the words "fiat money" for "new credit," and you have the Federal Reserve's solution. It was Greenspan's solution in the 22% stick market meltdown in October 1987. It was his solution in 1999. It was his solution after 9-11. Each time, it has created asset bubbles. This prompt and decisive action by our political leaders will allow us to restore more normal market functioning much more quickly and at lower ultimate cost than would otherwise have been the case. Moreover, we are seeing not just a national response but a global response to the crisis, commensurate with its global nature. In short, politicians have put taxpayers on the hook for at least $4 trillion in just six weeks. What caused this? Federal Reserve policy under Greenspan? This was never mentioned. It was world confidence in the United States. Large inflows of capital into the United States and other countries stimulated a reaching for yield, an underpricing of risk, excessive leverage, and the development of complex and opaque financial instruments that seemed to work well during the credit boom but have been shown to be fragile under stress. But what was the source of these large inflows of capital? The capital fairy, perhaps? No? Actually, a team of capital fairies. One capital fairy is the People's Bank of China, which inflates at 20% per annum. It buys U.S. Treasury debt. Another is Russia, whose oil exports have blessed the central bank with half a trillion in foreign exchange reserves. But China and Russia are still buying Western governments' debt. So, what happened? Why did the West's financial system go into decline? The Austrian theory of the business cycle tells us. As I have been writing since early 2007, Greenspan's policy of monetary inflation was followed by Bernanke's policy of tight money. The Austrian theory of the business cycle teaches that this reduction in monetary inflation creates a recession. That was why I began predicting recession in 2007. That was why Dr. Kurt Richebacher predicted a monumental financial crisis around the world. He predicted this for six years, 2001 to 2007. He died in August 2007, as the first stage of the crisis revealed itself. The unwinding of these developments, including a sharp deleveraging and a headlong retreat from credit risk, led to highly strained conditions in financial markets and a tightening of credit that has hamstrung economic growth. This is exactly what Richebacher had predicted, based on the Austrian theory of the business cycle. The important thing from the point of view of the men in charge, who did not see this coming and who denied that it was a crisis until the government, without Congress's approval, nationalized the American mortgage market by nationalizing Fannie Mae and Freddy Mac on September 7, is to make it look as though the government has a handle on all this. The Federal Reserve responded to these developments in two broad ways. First, following classic tenets of central banking, the Fed has provided large amounts of liquidity to the financial system to cushion the effects of tight conditions in short-term funding markets. In other words, it returned to Greenspan's policies of fiat money. You can see the chart here: http://www.garynorth.com/public/4139.cfm Second, to reduce the downside risks to growth emanating from the tightening of credit, the Fed, in a series of moves that began last September, has significantly lowered its target for the federal funds rate. The FED lowered its target because the T-bill rate fell to .03% in September, indicating total panic in the capital markets. Banks would not lend to each other, so the FED made fiat money available for them. We will continue to use all the tools at our disposal to improve market functioning and liquidity, to reduce pressures in key credit and funding markets, and to complement the steps the Treasury and foreign governments will be taking to strengthen the financial system. What tools? Inflation and asset swapping. The FED swaps T- bills for bonds that banks and finance agencies hold that have no market, despite their AAA-rating. The banks then tell the regulators that these Treasury assets, borrowed for 30 days (but renewable forever) constitute their capital. "Look at all this rock-solid Treasury paper. We're solvent.!" It is a massive charade that the whole world understands is a charade. On this charade the recovery of the world economy is supposedly secure -- until the FED runs out of Treasury debt to swap. A chart of its reserves is here. http://www.cumber.com/home/Factors.pdf With the exception of Austrian School economists, who reject government interference -- before the crisis and also after -- all other schools of economic opinion abandon their commitment to free market solutions as soon as a credit crisis threatens the stock market. In 1970, Leonard E. Read of the Foundation for Economic Education, wrote an essay, "Sinking in a Sea of Buts." He was referring to this statement, "I believe in the free market, but. . . ." http://www.fff.org/freedom/0990c.asp Dr. Bernanke is a typical but-man. The Federal Reserve believes that, whenever possible, the difficulties experienced by firms in financial distress should be addressed through private-sector arrangements--for example, by raising new equity capital, as many firms have done; by negotiations leading to a merger or acquisition; or by an orderly wind-down. Government assistance should be provided with the greatest reluctance and only when the stability of the financial system, and thus the health of the broader economy, is at risk. I love this: "greatest reluctance." That's what I have observed of the government over the last half century: great reluctance to interfere, to tax, and to inflate. Maybe you noticed that, too. In those cases when financial stability is broadly threatened, however, intervention to protect the public interest is not only justified but must be undertaken forcefully and without hesitation. Translation: "Whenever the solvency of large New York City banks (or Bank of America) is threatened, the Federal Reserve System intervenes. This has been true since 1914." Importantly, the financial rescue legislation, which I will discuss later, will give us better choices. In the future, the Treasury will have greater resources available to prevent the failure of a financial institution when such a failure would pose unacceptable risks to the financial system as a whole. Translation: "Until the Treasury spends the $700 billion, which will not take too long, we have got this under control. When the Treasury burns through the first $700 billion, it will be back to Congress for more. It will get it, because the 2008 elections will be behind us, so Congress will not even pretend to resist." With respect to the Treasury's access to more money, see this. It explains Bernanke's confidence. http://GaryNorth.com/snip/687.htm If the crisis originated with flows of capital coming into our capital markets -- his argument -- and if Asian and Russian central banks were the primary sources of this credit -- my argument -- then what we need is a free market program to block this from ever happening again. The FED has now adopted a policy where the United States, as the world's leading debtor nation (an $800 billion a year balance of payments deficit) will lend newly created dollars to European central banks, so that they can lend to American banks and brokerage houses operating abroad. Indeed, this week we agreed to extend unlimited dollar funding to the European Central Bank, the Bank of England, the Bank of Japan, and the Swiss National Bank. These agreements enable foreign central banks to provide dollars to financial institutions in their jurisdictions, which helps improve the functioning of dollar funding markets globally and relieve pressures on U.S. funding markets. It bears noting that these arrangements carry no risk to the U.S. taxpayer, as our loans are to the foreign central banks themselves, who take responsibility for the extension of dollar credit within their jurisdictions. No risk to the taxpayer? Why, it's the capital fairy again. The FED creates money to lend, which creates worldwide dollar inflation, and the taxpayer does not bear the costs. Isn't central banking creative? The expansion of Federal Reserve lending is helping financial firms cope with reduced access to their usual sources of funding and thus is supporting their lending to nonfinancial firms and households. Nonetheless, the intensification of the financial crisis over the past month or so made clear that a more powerful, comprehensive approach involving the fiscal authorities was needed to address these problems more effectively. On that basis, the Administration, with the support of the Federal Reserve, asked the Congress for a new program aimed at stabilizing our financial markets. Translation: "The FED in September pumped in new money at an annual rate of 132% (adjusted monetary base). This could not go on without destroying the dollar. So, the Treasury got Congress to borrow money to bail out the financial industry. This way, the FED can back off the printing press." Second, the Treasury will use some of the resources provided under the bill to purchase troubled assets from banks and other financial institutions, in most cases using market-based mechanisms. Market-based mechanisms? What market-based mechanisms? We have seen the nationalization of the mortgage market. We have seen an enormous increase in government debt. Mortgage-related assets, including mortgage-backed securities and whole loans, will be the focus of the program, although the law permits flexibility in the types of assets purchased as needed to promote financial stability. "Flexibility in the type of assets purchased" means "anything that large New York City banks want to palm off on the government." Unclogging the markets for mortgage-related assets should put banks and other institutions in a better position to raise capital from the private sector and increase the willingness of counterparties to engage. With time, the provision of equity capital to the banking system and the purchase of troubled assets will help credit flow more freely, thus supporting economic growth. Translation: "When the banks stick taxpayers with toxic debt, private investors will start buying bank stock again . . . especially since the Treasury will also be buying bank stock, as Paulson has announced." These measures will lead to a much stronger financial system over time, but steps are also necessary to address the immediate problem of lack of trust and confidence. Translation: "The economy is still heading into the tank, despite fiat money, asset swaps, and the $700 billion bailout. Lack of trust and confidence are with us still." I would like to stress once again that the taxpayers' interests were very much in our minds and those of the Congress when these programs were designed. Translation: "Ho, ho, ho. And, I might add, ha, ha, ha." In the case of the TARP program, the funds allocated are not simple expenditures, but rather acquisitions of assets or equity positions, which the Treasury will be able to sell or redeem down the road. Indeed, it is possible that taxpayers could turn a profit from the program, although, given the great uncertainties, no assurances can be provided. Taxpayers could turn a profit. "No assurances can be provided." He's got that right! If there is any profit to be turned, Congress will allocate it for more pork. That $700 billion is gone forever. But still the charade goes on. Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away. Economic activity had been decelerating even before the recent intensification of the crisis. Translation: "A recession is coming, and it is going to be a whopper." Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning. Translation: "If Main Street suffers, Main Street will be compelled by Congress to bail out Wall Street . . . again." I have laid out for you today an extraordinary series of actions taken by policymakers throughout our government and around the globe. Americans can be confident that every resource is being brought to bear to address the current crisis: historical understanding, technical expertise, economic analysis, financial insight, and political leadership. Translation: "It is business as usual: inflate, tax, and juggle the books." I am not suggesting the way forward will be easy, but I strongly believe that we now have the tools we need to respond with the necessary force to these challenges. The tools have not changed. The rhetoric has changed. In short, it's lipstick on the pig. Again. Although much work remains and more difficulties surely lie ahead, I remain confident that the American economy, with its great intrinsic vitality and aided by the measures now available, will emerge from this period with renewed vigor. Translation: "Deficits don't matter." CONCLUSION The more things change, the more they stay the same.

FROM THE FINANCIAL TIMES

Rush to put private commodities contracts on exchanges By Javier Blas and Jeremy Grant in London Published: October 12 2008 23:34 | Last updated: October 12 2008 23:34 Commodities traders are rushing their private bilateral contracts into exchanges and clearing houses as they race to reduce their counterparty risk amid a deepening financial crisis. The transfer of the opaque over-the-counter deals comes as observers warn that commodities, where trading has ballooned in the past five years, could be the next market hit by counterparty failures. EDITOR’S CHOICE LME Steel derivative contract gains traction - Jan-15 LME seeks profitable billet with steel contracts - Jan-15 Steel industry attacks Brussels plans - Jan-13 Martin Abbott, chief executive at the London Metal Exchange, said the crisis was bringing new business into the LME as traders tried to reduce their risk, with turnover 45 per cent higher in September compared with the same month of 2007. “Business that was already sitting in the OTC market is now been brought into the exchange,” he told the Financial Times in an interview. The LME, the world’s largest base metals exchange, has extended its forward-dated futures in copper and aluminium to 10 years from five as it tries to capture OTC business. Mr Abbott said: “When you look at [today’s] markets, it is utterly sensible to assume that being on exchange, with clearing house . . . must be attractive.” The LME’s move comes as other exchanges are pushing into the OTC clearing business, in part to capitalise on the strong backing that regulators have given to the creation of a central clearing counterparty model for the credit derivative markets. The aim is to reduce the systemic risks inherent when credit derivatives are negotiated bilaterally between traders by having a clearing house guarantee against default. Regulators’ focus is on the $58,000bn credit default swaps market. The commodities OTC market is estimated at $9,000bn, according to the Bank of International Settlements. Counterparty risk and tumbling prices will be key topics at the LME Week, a gathering of the mining and metals industry, which starts today in London.

RECOMMENDED ARTICLE BY Ambrose Evans-Pritchard

Today's first story is from Ambrose Evans-Pritchard from The Telegraph in London. It's a tragedy that if you want the hard news on what's going on inside the USA, you have to look in the foreign media to find it. I remember when it used to be the other way around...but that was decades ago. We've all been warned about the day that trouble showed up in Credit Default Swaps...well, that day has arrived. The headline reads "Fears of Lehman's CDS derivatives haunt markets." It's a 'must read' and the link is: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3211647/Fears-of-Lehmans-CDS-derivatives-haunt-markets.html

SECOND GRAPH FROM CASEY BELOW

KITCO GRAPH REFERRED TO IN CASEY BELOW

MORE FROM TODAY'S CASEY'S RESEARCH EMAIL

And then there's this... From Ed Steer: The peak for gold on Thursday was the opening of trading on the Globex in the Far East with the price around $848, and it hit a low of around $829 shortly after London opened. From there, it vacillated either side of $835 until about 9:30 a.m. in New York...just before the London p.m. fix. Then, one of three things happened: 1) a not-for-profit seller dumped a boat load of gold on the market, 2) the dealers pulled their bids, or 3) someone put on a monster short position. Anyway, the result was the same, an almost vertical line on the Kitco chart. It's a thing of beauty, isn't it? (SEE GRAPH POSTED ABOVE THIS ARTICLE) And the Enforcement Division of the CFTC still hasn't found any sign of price management in either the gold or silver market. But the boyz weren't done. As soon as London closed, the rug got pulled out from under gold again. In a hair under two hours, the gold price got slammed for $56. Silver wasn't immune, and its price pattern 'fell' in lock step with gold. From peak to trough, silver was hit for 92 cents. And as badly as gold and silver were hammered, platinum and palladium were even worse...down 7.44% and 9.47% respectively. And rhodium? From a high of over $10,000/oz. a few months back, it's now down to $1,810/oz! The boyz made sure that there was no safe harbour in the precious metals yesterday...only the stock market. Of course the HUI did not join the party. In Wednesday's trading, gold open interest fell 2,085 contracts. And despite silver's monster drop in price on the same day...silver open interest rose 1,142 contracts. Maybe fresh shorts being put on...or maybe not everything was reported. This week's COT report will be out at 3:30 Eastern time this afternoon. Wednesday's info (and silver's big drop) won't be in the COT report until the 24th...neither will gold's swan dive yesterday. It's just like the boyz to stage huge bear raids on the metals the day after the COT cut-off. And guess what...they've been pulling this stunt for years. The GLD ETF was down 9 tonnes (300,000 oz.) yesterday. The SLV was unchanged...but may not be up to date considering Barclays sloppy reporting practices. My bullion dealer had his biggest silver day ever on Wednesday. As I've mentioned before, I don't know how the bullion banks are going to get out of this...the lower the price goes, the more people buy...and the higher the price goes, the more people buy. If that isn't the ultimate Catch-22 situation, I don't know what is. The news was worse than awful yesterday...U.S. industrial output fell 2.8% in September, the biggest decline since December 1974...and the Philly Fed factory activity index crashed from +3.8 in September to -37.5 in October. This must be why they ramped the Dow and killed the precious metals. The worse the news...the more the boyz hit the precious metals...and the higher the $US goes. Both LIBOR and the Ted Spread have improved...but they're moving lower at glacial speed. I note in a Reuters story that as of the week ending October 15th, daily bank borrowings from the Fed have risen to $438 billion/day. Here is an unbelievable chart of "Fiat Madness" up to October 16, 2008...

COMMENTS FROM THE CASEY RESEARCH DAILY EMAIL

Bill Murphy, writing on LemetropoleCafe.com, offers his view of the situation right now: “Demand for physical gold is astonishing and yet the price goes nowhere. The dichotomy between the ‘real’ gold market and the Comex is widening. “The US Government is petrified of gold rising to any degree because of its importance, in that a sharply rising price will shed light on ‘Dracula’ … or the hideous inflationary forces set in motion by Comrade Paulson’s bailout.” Ominously, Murphy reports the following: “Several months ago we received reports that bullion dealers in the MidEast were making it much more difficult for buyers over there. Unfortunately similar reports are coming my way on a daily basis from all over the world that this trend is picking up speed. It appears governments and bullion banks are not banning gold, just making it very difficult to purchase.” Conspiracy or not, there’s no disputing that there is not much physical gold to be had, as many dealers have stopped even taking orders.

4:47AM PDST GOOD MORNING GOLD BUGS!

TODAY'S REPORTS: Housing starts Consumer sentiment Gold has fallen $27 since midnight pdst with very weak rallies on the way down. One futile debate right now is over deflation vs inflation. We all SHOULD KNOW that inflation is built into the system with the influx of all this new FREE PAPER MONEY just created. INFLATION IS THE INCREASE IN THE MONEY SUPPLY. The slowdown in the economy due to all the losses in equities and collapses of major financial institutions is causing a slowdown in the economy, if not the beginning effects of a total collapse which is all but certain and is in the PROCESS of happening. It doesn't just happen all in one day like we have been told the Crash of 1929 happened. Somethings happen in one day, but the results of those sudden crashes then take time to filter through the system as a heart attack slowly kills the body. DEFLATION IS THE DECREASE IN THE MONEY SUPPLY. We are not suffering deflation. This is a slowdown in the economy due to a lack of consumer activity, and the lack of productive capacity which we shipped out of the country long ago. We have been living on consumer gluttony and cheap credit for many years now....AND IT IS NOW OVER FOR GOOD! We ARE suffering from STAGFLATION...where the economy slows, but the prices of everything keep rising because of the flood of new money in the system. This is almost as bad as deflation where prices fall and no one purchases anything waiting for better prices to use their dollars to buy cheaper goods You should read the Gary North articles I posted and the many links he provides. Gary is one of the smartest, and earliest, providers of good info you can read. He is way out in front of the crowd, and therefore, is not paid attention to soon enough, but he is usually correct in what he says eventually. As I type this, gold is dropping below 790 and approaching yesterday's low at 78670. These are buying opportunities and should be bought as you average your purchases of gold IF gold continues to fall, as there will be a point where it will reverse in a flash as the ultimate low is reached and it becomes obvious that gold is the only thing that will save your life as the economy, and our culture, begins to crumble beneath our feet very rapidly. When the panic begins, it will be much too difficult to get in your supplies. You will only want to hunker down in your home and pray the violence doesn't invade your personal space. As for leaving home to get supplies or go to work (if you still have any), that should be an increasingly dangerous event. You will look back on this period as merely the end of tolerable times, and the beginning of our descent into hell.

RON PAUL

Capitalism Without Capital? By Ron Paul October 16, 2008 "Lew Rockwell" -- It has been long understood that our federal government is going deeper into debt, consistently raising the debt ceiling and demonstrating no fiscal restraint. In recent years, debt ceiling increases have been placed in “must pass” legislation as a means to guarantee that Republicans as well as Democrats would vote for them when Congress was under Republican control. We also know our nation’s “negative savings rate” reflects the habits of private citizens, showing those habits to be not tremendously different than the habits of the public sector. Yet, the signs of decline are becoming ever more apparent. So apparent, in fact, that it seems unlikely that bailouts or other gimmicks will have even short-term success. More inflation, and creating moral hazard by bailing out egregious offenders, is a recipe for disaster. These activities can seem to provide some short-term relief, but it seems we are now at a significant crisis point, where monetary policy gimmicks don’t provide the band-aids they did in the past. Not only is our nation on the verge of bankruptcy, but so are its people and private institutions. We are now repeatedly hearing about businesses “needing to access the credit market to make payroll.” This is an unmistakable sign of more dire consequences ahead for the economy. If businesses must borrow just to make payroll, this is evidence of a severe undercapitalization that cannot be sustained, even for the short run. Couple these facts with items such as the explosion of the “payday loan” industry and the unmasking of the false sense of economic well-being is nearly complete. These payday loan companies use preferred access to easy credit to inject cash into the hands of the working poor. They are nearly always set up in lower-income neighborhoods. These people, who are struggling to buy food and pay rent, get addicted to the credit drug. Their standard of living is only further depressed by the interest payments on these loans that make them profitable to their providers. Thus, the recipients are left even less capable of paying for items such as food and housing in the long run, without using this credit again and again. These people are often the very ones being paid by businesses who “borrow to make payroll.” This is the dark underbelly of the fiat money, borrow-and-spend economy this nation has been building. As the government takes over more and more functions of the economy many see the rise of socialism as an antidote to this failure of “capitalism.” However, the fact remains that our economy has been increasingly running on debt, not capital. Capitalism does not exist without capital and debt is not, has never been and will never be a form of capital. Only now are we seeing the more dire implications of an economy without capital. Dr. Ron Paul is a Republican member of Congress from Texas.

FROM FFF.ORG THE FUTURE OF FREEDOM FOUNDATION

Thursday, October 16, 2008 Why Not Full Federal Ownership of Everything? by Jacob G. Hornberger I’ve got a fantastic idea! It will almost certainly appeal to two large segments of American society — those who thirst for security and those who thirst for political control. My hunch is that both John McCain and Barack Obama and their supporters will immediately embrace my idea as soon as they hear about it. Here’s my idea. Instead of partially nationalizing the banks, let’s have the federal government do a complete nationalization. Yes, that’s right — let’s have the federal government take over and own all the banks and investment houses. Now, you’re probably thinking: Hey, that would be great because the federal government would now be the owner of all the bank’s loans and mortgages, which would mean no more foreclosures. After all, unlike private bankers federal officials love people. The last thing they’re going to do is repossess people’s cars or foreclose on their homes, especially given that congressional elections are every two years. But my idea involves something much bigger and grander! How about having the federal government take ownership of everyone’s homes too — and then simply let people stay in the homes for free? Just think — no more mortgage payments and no more rent! Is that an awesome idea or what? In fact, why limit federal ownership to banks and homes? Why not go all the way and have the government take over everyone’s businesses? Just think — no more worrying about making a profit, pleasing those nasty consumers, or being exploited by employers. Everyone would be working for the federal government, which is devoted to serving the people. No more wasteful middlemen, speculators, price-gougers, and profiteers. Just think of the benefits my idea would bring to healthcare. As the nation’s sole owner and employer, the federal government would own all the hospitals and clinics, and all the doctors would be working for the government, just like everyone else. Healthcare would be made free for everyone. The federal government would take over all the schools, both public and private. Just think — no more multitudes of local school districts with their own separate taxes, textbooks, and curricula. Instead, one big federal school district with uniform standards and even uniforms. Think how much money could be saved! And education would be free for everyone, including college students. Don’t forget: All the teachers, like everyone else, would now be federal employees. The anti-immigration crowd should be ecstatic over my idea, especially those who argue that America is one giant national home with a door that federal officials can legitimately lock to keep out foreigners. Oh, did I mention that people’s income would finally be equalized, since everyone would be working for the same employer? Just think — no more exorbitant pay for CEOs, no more excess profits (corporations, including oil companies, will be owned by the federal government too), and no more obscene severance packages. In fact, no more taxes with my idea because everyone will be working for the government, with salaries set by the government. I’ll bet the anti-tax crowd will come aboard when they hear that! No more wild swings in the stock market because they’ll only be one owner of all the stock — the federal government. No more greed and no more waste. No more losses and no more profits. Admission to movies, museums, opera houses, amusement parks, concerts, and other recreational activities would be free. Everyone would be guaranteed a pension for life along with free medical care. People would be free to retire at 50. Just think: My idea would finally bring peace, security, harmony, and happiness to the American people. No more worries, no more concerns. We would finally be a national family — with one owner and one employer, with our federal officials constantly watching over us and taking care of us. Now, I’m sure that there will be some naysayers out there, especially those kooky libertarians who will raise their silly notions about freedom. But hey, what greater freedom than freedom from want, from worry, and from stress. And keep in mind that everyone will be able to access unlimited goods and services for free. What greater freedom than that? The skeptics will undoubtedly say that I’m too idealistic and that it’s not possible to create this heaven on earth. But they’re wrong. My idea is possible to achieve. Just ask the people of Cuba, North Korea, and China. Let’s get moving! Jacob Hornberger is founder and president of The Future of Freedom Foundation.

A CLASSIC BY BILL BONNER IN THE DAILY RECKONING

The Daily Reckoning PRESENTS: It’s been quite some time since we’ve run what we call a ‘Classique’ – an essay that we have run before, but one whose idea stands the test of time. And so, today we look back and consider the quickly deteriorating economic situation the United States has found itself in – one which some may say began under one man’s direction. But we’ll let him speak for himself. Take it away, Maestro... I, GREENSPAN by Bill Bonner I, Alan Aurifericus Nefarious Greenspan, Chairman of the Federal Reserve Bank, holder of the Medal of Freedom, Knight of the British Empire, member of the French Legion of Honor, known to my peers as the “greatest central banker who ever lived,” (I will not trouble you with all my titles. I will not mention, for example, that I was the winner of the prestigious Enron Prize for distinguished public service, awarded on November 1, 2001, just days after Enron began to collapse in a heap of corruption charges) am about to give you the strange history of my later years. For I will dispense with childhood...even with young adulthood, and those dreary sessions with that terminally dreary woman, Ayn Rand, who couldn’t write a compelling sentence if her life depended on it. I’ll also dispense with my own dreary years at the Council of Economic Advisors, and pass directly to the time I spent as the most powerful man in the world. For here are my real titles: Emperor of the world’s most powerful money, despot of the world’s largest and most dynamic economy, and architect of the most audacious financial system this sorry globe has ever seen. Yes, I, Alan Greenspan, ruled the financial world. But who ruled Alan Greenspan? Ah...I will come to that, and tell you how, while presiding over the biggest boom ever I became caught in what I may call the “golden predicament” from which I have never since become disentangled. This is not by any means the first thing I have written. I have written much over the years. But it was all written for a purpose, which only a few were able to discern. Most readers foolishly saw the cluttered mind of a dithering economist or the clumsy, stuttering pen of a professional bureaucrat. Many listening to my wandering speeches and twisting sentences thought that English was not my first language. They thought they detected a faint accent, like that of Henry Kissinger or Michael Caine. They mocked me as “incomprehensible” or “indecipherable.” They watched what they thought was an obsequious bureaucrat squirm. They had no idea what I was really up to and what I can only now reveal. But they admired me, too. I knew it. Because they saw in me a kind of genius...a Bernoulli of banking...a Newton of numbers...a Leibnitz of lucre...a Copernicus of currency. My mind worked at such a high pitch, they believed, that my thoughts were inaudible to most humans. They counted on me to keep the great empire’s economy trundling forward. Little (actually nothing) did they know of my real thoughts and designs. But now, all has changed. Now, I can write clearly and speak the truth. For now I am leaving my post. There is no further need for me to dissemble; no further need for me to pretend to kow-tow before Congressional committees; no further need to hide the real facts from my employers and the American people. Now, I swear by the gods, what I write comes from my own hand, and not from some overpaid, anonymous flack. Some are born in crisis, some create crisis, and others have crisis thrust upon them. Let me begin at the beginning. Scarcely had I settled into to the big chair at the Fed when a crisis was thrust upon me. And it is true, I responded in the conventional manner. There is no manual for central bankers, but there is a code of behavior. Faced with a financial crisis of any sort, a central banker’s first duty is to run to the monetary valves and open them. This I did in 1987. I was new to the job and probably didn’t open them enough. The U.S. economy lagged its rivals in Europe for several years. My old boss, George Bush, the elder, lost his bid for re-election in 1992 and blamed it on me. I resolved never to make that mistake again. Faced with a slew of challenges, shocks, uncertainties, crises and elections...ever thereafter, I made sure that every valve, throttle, level, switch and sluice gate was wide open. But it was on December 5, 1996, that I had my first epiphany. That was the year that I made my celebrated remark about stock prices. I wondered aloud if they did not reflect a kind of “irrational exuberance.” In truth, whether they did or did not, I do not know. But what I came to realize was this: 1) People, especially my employers, actually wanted prices that were irrationally exuberant. And 2) they could become far more irrationally exuberant if we put our minds to it. I was 70 years old at the time. I had weaseled (why not be honest about it?) my way to the top post by knowing the right people and by making myself generally agreeable, and helpful, and by not saying anything anyone could disagree with. That was the original reason for what the press called “Greenspan speak.” My private thoughts remained mine alone. All the public and the politicians got was gobbledygook, but for good reason. They would not have wanted to hear what I really thought. So, I did not tell them. For I knew well and good what generally happened when politicians and central bankers got their hands on soft money and a compliant central banker. I was not born yesterday. They use their control of the money to cheat people. It is as simple as that. (I explained this early on in my career; fortunately, no one bothered to read what I wrote. Otherwise, I never would have gotten the job.) If central banking were an honest métier, there would be no reason to have it at all. Private banks could do the job better. But people are ready to believe anything. Somehow, they think that a collection of rich financiers and power-mad politicians got together to create and run a central bank for the benefit of the people! Well, I’ve got news: it doesn’t work that way. Money is only valuable when it is rare. It is like stock in a company. The shareholder is happy to hold a few shares. But imagine how he would feel if the company issued a few million more shares. His own ownership of the valuable thing is diluted. He would be cheated. Likewise, an honest banker cannot dilute his depositors’ money. He cannot create real money “out of thin air,” as if he were issuing new share certificates, without cheating his clients. But that is exactly what central bankers do. They issue a certain amount of currency. Then, they issue more and more of it. So, the people who got it and saved it lose a little bit of the value each year. In effect, the value is lost by the savers holders and captured by the people who control the currency. It is really a very simple swindle. Who but an octogenarian Fed chief, on his way out the door, would have the courage to say so? People today act as if they had invented money themselves. But money, central banking, and currency debasing have been around a long time. In 64 A.D., Nero decreed that the number of aureus coins minted from a pound of gold would increase from 41 to 45 (each coin would be about 10% less valuable). The silver denarius, meanwhile, lost 99.98% in the five centuries before the sacking of Rome. Paper sheds value even faster. The dollar has lost 95% of its purchasing power since the Fed was set up to protect it in 1913. A successful central banker, in the age of compliant paper money, is one who is able to control the rate of ruin so that the rubes don’t catch on. A little bit of inflation, they believe, is actually healthy. Haven’t the economists told them so? Issuing a little bit more money each year makes people feel richer...so they spend more; they hire more people; they build more houses. Everybody is happy. Everyone feels richer. What an elegant fraud! It’s almost a perfect crime, because no one objects as long as it is done right. (My replacement at the Fed, Ben Bernanke, specializes in controlling the rate at which central bankers can steal from dollar holders without getting caught. He says that if necessary, he’ll “drop money from helicopters” should the currency fail to lose value fast enough. I predict that there will be a lot of people who will want to drop him from a helicopter...for reasons I will explain here.) I return to my narrative. After I made my remark about “irrational exuberance,” I was called into Congress. The politicians who confronted me were the usual oafs and know-nothings. They made it clear that if I wanted to hold onto my job, I would have to stop worrying whether asset prices were too high; instead, I would need to do all I could to goose them up! It was on that very day, I recall it well, that what I had previously seen only in foggy theory came out into the clear, bright daylight of applied central banking. No one wants honest money. No one. The politicians, bankers, investors, voters, and householders – anyone with a voice in the matter wants “easy” money. It is just too delicious to resist. (I wondered what kind of a central banker would stand against them; he would need a backbone of titanium like Paul Volcker, and a head as thick and hard as a vault.) Debtors want a little inflation to lighten their burdens and put a wind to their backs. Creditors want inflation to swell their asset values. Politicians want to be re-elected. Businessmen want customers with money to throw around. Is there anyone who doesn’t appreciate a little inflation? And yet, of course, I always knew the answer. Easy money only works by defrauding people into thinking they have more money than they really do. Easy come; easy go. They get it; they spend it. Before you know it, you have a boom. But people soon adjust their expectations. Prices rise to catch up to new money. Debt levels increase, and with them come heavier debt service costs. The magic fades. What can a central banker do? He can do the right thing. He can “take the punch bowl away,” as my predecessors used to say. But this is where the trouble begins. Take away the punch bowl, and they begin punching you! I recall they burned Paul Volcker in effigy on the Capital steps when he did it. They would have burned him alive if they could have gotten their hands on him. Why should I, Greenspan, suffer such a fate? No, it was not for me. This was the “golden predicament” I faced. Yes, I knew well that the nation would be better off if the punch bowl were removed, but I knew that I would be removed too, if I did it. And I knew, also, that it would be just a matter of time until the pressure for easy money would overwhelm any resistance a Fed chairman could put up. No pure paper money system has ever lasted. People can never resist the temptation to make the money easier and easier...until it is so wobbly and woozy it falls on its face. It’s better that it falls sooner rather than later. It’s better that the lesson is taught now, rather than 10 years from now. It’s better that the lean times come on the next man’s watch, not on mine! That’s what I owe to old Ayn; she taught me who rules Greenspan – Greenspan! Ayn taught me the number one rule: Look out for Numero Uno. I remember it so clearly. I was sitting in a House committee hearing room. My tormentors kept asking questions. I kept giving the kind of answers for which I later became famous...answers that didn’t say anything. And I thought to myself: if these lardheads want easy money, I’ll give them easy money. I’ll give them the easiest money the planet has ever seen! I’ll give it to them good and hard! And so, I did. Since I joined the Fed, outstanding home-mortgage debt has jumped from $1.8 trillion to $8.2 trillion. Total consumer debt went from $2.7 trillion to $11 trillion. Household debt has quadrupled. And government debt, too, exploded. The feds owed less than $2 trillion in the second Reagan administration, a figure that had been almost constant for the previous 40 years. But under my direction, the red ink has overflowed like the Nile in flood – to over $7 trillion. During the two terms of George W. Bush alone, the feds have borrowed more money from foreign governments and banks than all other American administrations put together, from 1776 to 2000. And more debt will be added in the eight Bush years than in the previous two hundred. The trade deficit, too, more than tripled since I’ve been at the Fed, from 150.7 to 756.8 billion, and will reach $830 billion in 2006. When I came to power, the United States was still a creditor. Now, it is a debtor, with more than $11 trillion worth of U.S. assets in foreign hands, a more than 500% increase since 1987. Who can argue with such a record? Who can compete with it? Who would want to? But that is the smooth, perverse pleasure a cynical old man takes in his achievements. I have practically ruined the nation, and I know it. If you distributed the cost of the federal government’s programs, promises, and pledges to the voters, along with the nation’s private debt, the typical household, and the nation itself, would be broke. And yet, almost everywhere I go, I am revered as a maestro...saluted as if I were a war hero. It is as if I had won World War II all by myself. The same numbskulls that wanted easy money 10 years ago, now praise me for causing what they call “The Great Moderation,” as if there were anything moderate about America’s borrowing binge. Others say that my real legacy is that I finally “made central banking work.” Yes, I made it work...just like it’s supposed to work, giving the people enough rope so they could hang themselves. That’s what they’ve done. Now, they dangle from a long rope of mortgages, deficits and credit cards. And I am delighted. Soon, people will be able to see how central banking really works. And poor Ben Bernanke will get the blame for it. He and his stupid helicopters...he almost deserves it. Regards, Bill Bonner The Daily Reckoning

THE DAILY RECKONING THURSDAY 10/16/08

Nobody wants a financial meltdown; everyone agrees that rapid and forceful state intervention is necessary. Once again, here at The Daily Reckoning , we are like a man showing up at a wedding in a coonskin cap. We’re not dressed for the occasion. Meltdown? What’s wrong with a meltdown? Why shouldn’t bankers fear to lend? Why shouldn’t prices go to what willing buyers and sellers will accept? Why should Wall Street be bailed out? Why shouldn’t investors take the losses they deserve? Why shouldn’t house prices fall rapidly? Why shouldn’t the mistakes of the past five years be corrected quickly, in other words?

PAUL CRAIG ROBERTS LATEST ARTICLE

Additional Thoughts on the Bailout "We hang the petty thieves and appoint the great ones to public office" - Aesop By Paul Craig Roberts October 16, 2008 http://www.informationclearinghouse.info/article21034.htm If, as the government tells us, the crisis stems from subprime mortgage defaults reducing the interest payments to the holders of mortgage backed securities, thus driving down their values and threatening the solvency of the institutions that hold them, why isn’t the bailout money used to address the problem at its source? If the bailout money was used to refinance troubled mortgages and to pay off foreclosed mortgages, the mortgage backed securities would be made whole, and it would be unnecessary to pour huge sums of public money into banks. Instead, the bailout money is being used to inject capital into financial institutions and to purchase from them troubled financial instruments. It is a strange solution that does not address the problem. As the US economy sinks deeper into recession, the mortgage defaults will rise. Thus, the problem will intensify, necessitating the purchase of yet more troubled instruments.

LATEST MIKE WHITNEY ARTICLE

The End of Friedmanite Economics "We are in the midst of a major historic turning point, equivalent to the emergence of neoliberalism under Thatcher and Reagan" (interview with economist Robert Pollin) By Mike Whitney October 16, 2008 "Information Clearinghouse" http://www.informationclearinghouse.info/article21029.htm

GARY NORTH ARTICLE ON SILVER AND TED BUTLER

Ted Butler Never Had a Clue About Silver, Beginning in 2000. Here Are 5 Charts That Prove This -- A Warning to His Disciples, Who Have Lost Half Their Money So Far. Gary North Printer-Friendly Format September 12, 2008 http://www.garynorth.com/public/3996.cfm

A Tale from Weimar Germany by Roland Watson

From the article referenced today on JSMINESET.COM without a link to the article. Here is the link to the COMPLETE ARTICLE with pictures and graphs: http://www.24hgold.com/viewarticle.aspx?langue=en&articleid=127582_A_Tale_From_Weimar_Germany_The_Silver_Analyst_Panics__Manias_and_Crashes&contributor=Panics%2C+Manias+and+Crashes&lastpublishingyear= Or just GOOGLE the title: A Tale from Weimar Germany by Roland Watson This will also lead you to Roland Watson's blog: THE SILVER ANALYST http://silveranalyst.blogspot.com/

GT's EMAIL TO JOHN REGAN, COPY TO JIM SINCLAIR

10/16/08 John, I understand your frustration and there is some justification to your comments. I am a full time gold trader of over 35 years. I have followed Jim Sinclair since 2003 and agree with him completely on his BASIC concepts of what will happen to gold and the economies of the World. I have, however, lost a great deal of my funds putting my trust in Mr. Sinclair's undying faith in gold in the short term. He has the valid excuse of warning us all about MARGIN, in which he is completely justified. Unfortunately, most people don't have the funds to put into CASH GOLD, as they wouldn't amount to much at all, and any appreciation gained would merely allow those assets to keep up with the current cost of needed goods and services. Gold worth $2000 hasn't made a profit if a local pay phone call costs $100 for three minutes. Thus, they are attracted to the concept of margin and the potential profits they might make before THE END of the world arrives, without giving proper understanding to the potential LOSSES that they might suffer. But those with very little to lose are always eager to "get a break" and take the chance to escape the doldrums of the life of the minimally wealthy. While it must have felt good to send your email to Mr. Sinclair, he obviously doesn't truly get your frustration about his failure to address the day to day details of the gold market or he wouldn't have posted your email address on his website. He NEVER said he would address short term moves in the market...another out for him. His putting your EMAIL ADDRESS on his website is nothing less than a MALICIOUS tactic to cause you the grief of being inundated by emails from those who would like to criticize you for your comment. The bright side of the situation is that you will also now have the email addresses of many people who may agree with you and the ability to reach out to many people of like minds. He is a feisty Irishman who loves to get even, as he has so often expressed. Mr. Sinclair has always been noticeably absent in his comments when the gold market goes through a very negative experience like today's drop, which has aggravated me to no end, as I have always been a faithful disciple of Jim Sinclair. He has caused himself unnecessary grief by accepting phone calls from individuals who, no doubt, don't have the sense God gave a goat. He should have instead had pre-written responses to the repeatedly asked questions about specific subjects and had them archived on a knowledge base on his website, thus relieving himself of the obviously taxing duty of having to deal with individuals on the phone and wasting enormous amounts of his time and energy each day in a futile activity. I spoke to Jim several years ago when he called me to respond to an email I sent. He started talking about a very complicated subject (bonds) without finding out first what my level of comprehension was. I attempted to bring the conversation to a more personal level, as he had just lost his wife Barbara in a car accident in India, and I knew he was compensating for his grief by throwing himself into his work. I attempted to explain to him my qualifications and my willingness to help him in any way I could. This was back in 2003. He listened a bit, but then excused himself saying "someone was at the front door"! Bullshit. I didn't appreciated being blown off that way, as I was being sincere and am not a phony in any way. Anyway, it left a bad taste. He also attacked me once on his website in 2003 about an email I sent to him which was without a doubt poorly written and could have been, and was, mis-perceived by Mr. Sinclair. He has a tendency to respond without taking the time to cool off his temper. I sent him a detailed and very intelligent fax explaining my background in communications and offered many suggestions to him to improve his dissemination of the information which he obviously thought was important enough to create a website to share, at great personal expense. I never got a response. Jim suffers from a bit of "self-importance" from his successes in trading gold and tries to compensate for being grammatically and punctuationally challenged by using big words and references, which he doesn't define or explain, and trying to sound too "high falootin" in his use of words and complicated phrasing. He really needs a proofreader/editor, which I would gladly offer to do for him. True intelligence takes into consideration the fact that the recipient of your "intelligence" has to be able to comprehend it. Otherwise it is just so many words thrown against a wall. I hope you aren't being inundated by nasty emails, but I'm afraid that Jim wanted you to get a taste of what he probably gets every day. But he voluntarily exposed himself to that abuse... You didn't, as I'm sure you felt your email would be received as a CONFIDENTIAL communication. Sincerely, GOLDTRADER

JIM SINCLAIR'S RESPONSE TO JOHN REGAN'S EMAIL TO HIM

Posted On: Thursday, October 16, 2008, 9:58:00 PM EST Jim's Mailbox Author: Jim Sinclair On Oct 16, 2008, at 3:23 PM, John Regan wrote: jregan100@gmail.com GT sez: WHY DID SINCLAIR PUBLISH THIS PERSON'S EMAIL ADDRESS?) FOR VENGEANCE?" Mr. Sinclair, I hope that you are pleased with yourself for having ruined everyone who has been a trusting reader of your website for the past 5 years. Look at the XAU!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! What the hell are you writing about?????????????????????? Do you have a clue???????????? NO ,you don't. Again I ask you to close down your website----you promised that you would if gold did not shine in 2008; not only hasn't it shined, there is nothing more tarnished on Wall Street other than your reputation. **More to follow

LATEST BOB CHAPMAN ARTICLE 10/16/08 DON'T FAIL TO READ THIS ONE FOLKS...BOB'S ON A RANT AND YOU WILL LOVE IT!

Liquidity Injection Wont Cure Wall Street Disease Posted: October 15 2008 http://theinternationalforecaster.com/International_Forecaster_Weekly/Liquidity_Injection_Wont_Cure_Wall_Street_Disease A disaster of epic proportions on Wall Street, More band aids for the economy, a round of hyperinflation is coming, the credit default swap counterparty liability monster is about to be set loose, current remedy for the markets is like aspirin for a fatal disease, Get out and stay out of the markets

TREASURY INTERNATIONAL CAPITAL (TIC) REPORT

Treasury International Capital (TIC) Data for August Treasury International Capital (TIC) data for August 2008 are released today and posted on the U.S. Treasury website (www.treas.gov/tic). The next release, which will report on data for September, is scheduled for November 18, 2008. Net foreign purchases of long-term securities were $14.0 billion. Net foreign purchases of long-term U.S. securities were negative $8.8 billion. Of this, net purchases by private foreign investors were $1.5 billion, and net purchases by foreign official institutions were negative $10.2 billion. U.S. residents sold a net $22.7 billion of long-term foreign securities. Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $0.9 billion. Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $7.6 billion. Foreign holdings of Treasury bills increased $20.6 billion. Banks' own net dollar-denominated liabilities to foreign residents declined $8.9 billion. Monthly net TIC flows were negative $0.4 billion. Of this, net foreign private flows were $3.5 billion, and net foreign official flows were negative $3.9 billion.

5:25AM PDST GOOD MORNING GOLD BUGS!

TODAY'S REPORTS: Jobless claims Consumer price index Core CPI Industrial production Philly Fed Home builders' index Not up to speed yet, but gold made a new low at midnight pdst and retested it at 4am pdst. Trading is moving very cautiously, but up. more shortly...

FBI: Justifiable homicides at highest in more than a decade

FBI: Justifiable homicides at highest in more than a decade By Kevin Johnson, USA TODAY The number of justifiable homicides committed by police and private citizens has been rising in the past two years to their highest levels in more than a decade, reflecting a shoot-first philosophy in dealing with crime, say law enforcement analysts. http://www.usatoday.com/news/nation/2008-10-14-justifiable_N.htm

IT'S ABOUT TIME!

Steering Committee To Seek Prosecution of Bush For War Crimes By Sherwood Ross 15/10/08 "Yubanet" -- - Oct. 14, 2008 - Massachusetts law school Dean Lawrence Velvel will chair a Steering Committee to pursue the prosecution for war crimes of President Bush and culpable high-ranking aides after they leave office Jan. 20th. http://www.informationclearinghouse.info/article21022.htm

JIM SINCLAIR WILL BE AVAILABLE UNTIL GOLD HITS $1650, THEN YOU ARE ON YOUR OWN

Posted On: Wednesday, October 15, 2008, 9:28:00 PM EST Upcoming Events In The World Of Gold Author: Jim Sinclair Dear Friends, There is one simple but extremely dangerous error being made by the man who is the world's greatest expert on the time period and economics of the Great Depression, Dr. Bernanke, Chairman of the Federal Reserve. The Chairman is an expert on the history and consequences of that period. He is being guided by this deep knowledge, yet is totally oblivious to the consequences of the alternative actions he is taking to not make the same errors as the 30s. This is all in his attempt to prevent his president from going down in history along with other failed economic leaders. The unprecedented creation of infinite dollars for the purpose of flooding the world's entire financial system is causing the birth an inflation of types unknown in a modern economy. The test case for the CONSEQUENCES of present united central bank actions is the history of the Weimar Republic, but this time it is on a planetary basis. CONSEQUENCES cannot be avoided by any means. They are economic equal and opposing forces. That is simple fact. In an attempt to avoid what the Chairman see as consequences of incorrect central bank action in the 1929 - 1933 period, he is creating new and infinitely more dangerous, longer lasting, society changing, politically provocative new sets of unexpected economic CONSEQUENCES. The only number that might compare to the nominal value of all OTC derivatives is a count of all the individual plankton in all the oceans of the world and then only maybe. The world will never be the same because of the greed of these 29 year olds and the old goat bosses who sat at the long desk of the board of directors while looking the other way. Upcoming events: As a result of "This is it and It is NOW": 1. US exchanges will be closed. There is a chance all world exchanges will close down. Only gold and currencies which are planetary markets will continue to trade. 2. Retirement programs will not pay off. 3. Medicare and Medicaid will at best buy you a bandage or pay for 1/4 of a visit to a free clinic. 4. Social security, due to the massive upcoming inflation, will provide no security for any society. 5. Money Market Funds will not pay off. 6. A CD is a gift, but not to you. 7. Unified central bank action has a short life. 8. Central banks will soon revert to the strategy of everyone for themselves. 9. 401Ks not self directed are headed for the toilet forever. 10. Exchange Traded Funds will not return the assets upon which it is based to you. 11. Sliver will demonstrate the fact that it is more industrial a metal than precious. 12. Silver is not a currency because it is simply too HEAVY to settle debts or to be universally fungible. 13. Silver performs best when there is reasonable industrial demand and distrust of currency. When this happens rounding up the gang and their money will have a lot to do with which party is elected. 14. Credit card companies are going to have to be bailed out. 15. GE Capital is a nuclear capable entity that has the capacity to take down the good old toaster and refrigerator manufacturer - SIGMA ZERO. 16. GE Capital is a huge OTC derivative dealer but somehow I do not recall that fact being discussed. 17. Gold is the only Honest Money because it has no liability attached to it. 18. Gold coins are the best way to own gold for the average investor. 19. When you select a junior gold, I would look for the highest quality, most bashed, highest short positioned, with real assets and real people devoid of pussy management. The situation is best if it is based in another country than the country you live in while doing business in a third and trading in multiple areas. The benefit is obvious. 20. Nobody ever did or will ever trade items as insurance. That is a form of madness. 21. At $1650 I will take my leave, having been with you to the point I promised. 22. The only place you will find me then is at my place of business on the ground or the web. There is no question that gold will trade at or above $1650 by January 14th, 2011.

ARTICLE RECOMMENDED BY JIM SINCLAIR

How we got here The current financial crisis stems from the decision to divorce our currencies from a reliable standard of value Reuven Brenner, Financial Post Published: Wednesday, October 01, 2008 http://www.financialpost.com/related/links/story.html?id=851901

DAN NORCINI EXPLAINS THE DIFFERENCE IN PRICE BETWEEN CASH GOLD AND PAPER GOLD

Posted On: Wednesday, October 15, 2008, 1:51:00 PM EST Hourly Action In Gold From Trader Dan Author: Dan Norcini Dear CIGAs, It was more of the same type of price action that we have been seeing in gold for some time now. The market is torn between continued deleveraging from speculative players on account of redemption requests from clients moving to cash versus safe haven buying. It has been interesting reading the comments about this market in the financial press of late. The majority of gold pundits for the most part seems to be reading the same talking points which as usual are utterly and completely wrong. To hear them say it, gold as a safe haven is finished, over, kaput, pushing up daisies, swimming with the fishes, surfing its last wave, worm food, ad infinitum, ad nauseaum. What these mindless robots seem unable to grasp is that the Comex is NOT the gold market. It is a paper market which has been the recipient of large speculative buys by commodity index funds. These funds take large positions in an entire gamut of commodities based on the weightings of those particular commodities in the various commodity indices that they use as a benchmark. In some cases it might be the Goldman Sachs commodity index. In others it is the Reuters/Jefferies CRB index; it still others it is the Dow Jones Commodity Index. That means they buy gold, silver, crude oil, corn, wheat, nat gas, sugar... etc... in the same percentage terms as they are weighted in those indices. For example, if the weighting in one of these indices for gold happens to be 5%, then for every million dollars of client money invested, they are required to buy $50,000 worth of gold futures contracts at the Comex. When these funds get redemption requests from clients, who now want out of the commodity sector, they are forced to sell FUTURES across the board to generate the cash needed to send back to their clients. That is why, for the most part, the entire commodity complex is sinking whether it is corn or soybeans or wheat or platinum, etc. If $20 million of cash is required to meet client redemption requests, then $20 million of commodity futures must be sold REGARDLESS OF THE FUNDAMENTALS IN THAT PARTICULAR MARKET. In other words, it is FORCED liquidation on account of redemption requests. That has NOTHING TO DO with the real physical gold market where demand remains at unprecedented levels, levels so high that it is producing serious shortages of bullion for would-be buyers. This is what is producing the increasing dichotomy between the Comex and the real gold market. I would go as far as saying that we are for all practical purposes seeing a BLACK MARKET in gold beginning to develop. Having said all that, it should still be noted however that while every single commodity futures market is in the red today on account of this forced selling, GOLD IS STILL RELATIVELY STABLE! Hey, you dimwitted pundits who keep pooh-poohing the yellow metal’s safe haven status because it is not trading at $1000, take note. Even in spite of the forced liquidation, gold is hanging in there precisely because there are enough buyers to offset a great deal of this continued forced liquidation. And this is in the arena of the futures market. In the real world, gold is fetching $1000 an ounce out there in some instances. Premiums for one ounce gold bullion coins are running anywhere from $65 - $100 above the quoted spot price and certainly above the phony price quoted on the Comex. Last year at this time you could buy all the one ounce gold bullion coins you wanted for $20 - $30 over the spot price. Meanwhile back in Fairy Tale land at the Comex, open interest registered a bit of an increase in yesterday’s session moving up nearly 2,500 contracts. I suspect that come this Friday, when we review the Commitments of Traders report, we are going to see increases in the fund SHORT category with a sharp drop in the fund long category alongside of short covering by the bullion banks who have been using the forced selling to cover their shorts in order to capture their paper profits allowing them to hit the metal on the next rally and do the same thing all over again. To put things in perspective about this open interest decline – we are down to levels last seen in November 2006. Let’s state this in terms that perhaps convey what I have been trying to say for some time now. NEARLY ALL OF THE SPECULATIVE INTEREST THAT HAS BEEN DRIVING PAPER GOLD HIGHER FOR THE LAST TWO YEARS HAS NOW DISAPPEARED due to this forced liquidation. This is incredible when you think about it a bit. So much deleveraging in gold has already occurred, that nearly all the buyers from the last two years are gone from this market. And yet, in spite of this, gold is still sitting above the $800 level. Back in November 2006, front month gold closed at the price of $646.90. Today, we are nearly $200 higher than that and yet nearly all of the speculative long side interest going back to that date is gone. Someone is buying gold because they see value in it and that buying has been sufficient to hold the price relatively firm compared to nearly every other commodity out there. What can be said about gold cannot be said about any other single commodity out there. If you doubt this, pull up the continuous price charts of corn or soybeans or platinum or copper, etc., and just look at them. Look at the chart of crude oil. Look also at the gold/crude oil ratio which has shot up strongly in favor of gold. (By the way, this alone is the reason why many of the gold mining outfits with quality mines, good management and good balance sheets are going to show some strong profits and continue to be sold down to levels that are extremely undervalued). Gold is even outperforming even longer dated Treasuries right now. To sum up, as the equity markets fall off the cliff thumbing their noses at the monetary authorities, expect further risk aversion to occur which means further forced liquidation in commodities. Watch the Euro/Yen cross and the Yen itself to get a sense of when the bulk of this will abate. The Yen as well as the Swiss Franc are benefiting from the unwinding of carry trades and will tend to be the stronger currencies out there ( along with the US Dollar) as long as the risk aversion play is in vogue.

FROM JSMINESET.COM

How we got here The current financial crisis stems from the decision to divorce our currencies from a reliable standard of value Reuven Brenner , Financial Post Published: Wednesday, October 01, 2008 Gold is hovering again around $900, commodity prices are on the rise, and the U. S. dollar is back to its downward trend of the last few years. This isn't a surprise. The $700-billion bail-out plan is mum about the dollar -- a big mistake (reflected in the immediate currency/gold price movements), since the Fed's mismanagement of the dollar as a reserve currency contributed to the present mess. The signals were all there for the Fed to see. Yet academic fads blinded it. How did we get here? More important: how to get out? Take a deep breath. Abruptly, in 1971, the world moved from fixed to floating exchange rates without in-depth debate. Under a fixed exchange rate anchored in gold, 5% interest in London or 5% in NY reflects the same returns. Money, whether the dollar or the pound, anchors pricing. Coca Cola knows that in pricing its beverages and selling them around the world, or in issuing U. S. dollar denominated debt, it faces no exchange rate risk. The company is neither inadvertently drawn in the exchange rate business nor does it need to hedge and pay fees to avoid being in that business. This is not the case with floating exchange rates. Every global business -no matter what it sells or buys and how it finances itself -- is in the currency business. Unless companies buy complex derivatives to insure that they stay in their own lines of business, currency fluctuations cause volatility in their costs and revenues. Financing companies becomes more expensive, resulting in a contraction of the non-financial sector and a large expansion of the financial one compared to a world adhering to anchored fixed exchange rates. The fact that national aggregates count the financial sector's expansion as increased well-being just shows how meaningless such measures are. The expansion measures the cost of adapting to bad monetary policy, which could have been avoided. It has been a mistake to say that floating means "laissez-faire" for currencies. The main role of money is to be a trusted anchor for pricing. People's holding of cash as a "store of value" has always been insignificant. As to a medium of exchange: it fulfills this function properly only when people trust its stability. When the dollar plunges in terms of other currencies by 40% to 60% within few years, and when street vendors in emerging countries refuse dollar bills or accept it at deep discounts, as now happens, it becomes less of a medium of exchange. True, the dollar remains the reserve currency of choice because other countries mismanage their currency too. But relying on the mistakes of strangers is not a good policy. People want to understand that a promise to be paid 5% on U. S. Treasury represents 5% in their own currency too-- rather than, suddenly, minus 10%. When this happens, everyone speaks the same standard monetary language. When this is not the case, then it is gobbledygook to discuss what's "real" and what's not; what's floating and what not; and what clauses one must add to contracts to be reasonably protected. http://www.financialpost.com/related/links/story.html?id=851901

WATCH THIS VIDEO

From Casey Research: "Here's a video that's worth watching. Somehow Martin Hennecke, senior manager of private clients at Tyche Group in Hong Kong, got invited back on CNBC the other day to talk about gold even though he mentioned manipulation of the gold price by central banks when CNBC last had him on the air a month ago. Hennecke mentions it again, and you can watch him at the CNBC Internet site." LINK: http://www.cnbc.com/id/27159117

FROM CASEY RESEARCH'S DAILY EMAIL (FREE)

From Ed Steer: Yesterday's gold activity in world-wide trading on the Globex amounted to almost nothing. Volume was even lighter on Tuesday (which was a regular work day) than on Monday (which was a holiday). There wasn't much to read into the price activity. What little price excitement there was in either metal, got squashed moments after the Comex opened when the silver price went vertical. However, the open interest numbers yesterday are well worth noting. I would think that these numbers represent Monday's trading and most of Friday's as well...as the o.i. numbers for Friday that were in my report on Tuesday morning...simply made no sense. With Monday being a holiday, the open interest numbers that were available probably didn't represent all the trading that went on. These most likely do. Gold o.i. fell another 11,463 contracts and silver o.i. contracted a further 4,056 contracts. It's been many moons since the o.i. has been at these levels in either metal. We are at the bottom of the barrel, and Friday's COT numbers will be worth printing off and saving for posterity...which is exactly what I'm going to do. In gold news, the ECB reported that two of its captive banks had sold 7.59 tonnes of gold last week. And once again there were rumblings that the IMF's gold has been surreptitiously put into play....plus rumours of a non-signatory to the Central Bank Gold Agreement selling gold. If I had a dollar for every time I've heard the story about IMF gold sales, I wouldn't have to worry about what the price of gold and silver did, as I could retire on that alone. I also note that (despite the price trashing) GLD added 100,000 ounces on Friday. Above is a graph that was in Bill Murphy's MIDAS commentary over at lemetropolecafe.com yesterday. It's data from the Office of the Comptroller of the Currency showing which American banks hold all the precious metals derivatives as of June 30/08. I get quite a few enquiries as to the identities of the '2 or 3' US banks that are holding the biggest gold and silver short positions on the Comex. This graph should tell you all you need to know. Both are market-making members of the LBMA as well.

5:35AM PDST GOOD MORNING GOLD BUGS!

TODAY'S REPORTS: Retail sales Retail sales ex-autos Producer price index Core PPI Empire state Inventories Beige Book The reports are out and having effect on the markets. The CNBC jabberwockies are babbling that maybe the increasingly bad reports that are, and should be, coming in from now on will have more effect on the markets than the LIBOR rate. Then some say no, LIBOR will be the trigger. Who knows?...these markets are in such turmoil you could have a safer gamble pitching pennies against a wall. Gold is getting hit after the reports and I don't see any major reason why it should be going up against all the manipulative pressures until we start seeing businesses start to fail going into the holiday season. How much are you going to spend on Christmans this year?

PAUL CRAIG ROBERTS

Does the bailout pass the smell test? By Paul Craig Roberts http://www.informationclearinghouse.info/article21014.htm 14/10/08 "Information Clearinghouse" - -- The explanation that has been given for the financial crisis does not match up with the solution that has been devised. Moreover, the windows into the crisis offered by the authorities are opaque rather than transparent. The only clarity we have is that the crisis is resulting in financial concentration and that the bailout constitutes a massive raid by financial crooks on both taxpayers and central bank reserves in the US and Europe. The public monies that are being directed to private financial institutions are huge. According to news reports, Germany is devoting $540 billion to shoring up German banks, England is devoting $73 billion, and France has pledged over $400 billion. The US now has four separate bailouts underway, $800 billion for banks, $200 billion for Fannie Mae and Freddie Mac, $85 billion for the insurer AIG, and $25 billion for the US auto industry. These figures add to more than $2.1 trillion. Some of these public monies are for purchasing troubled paper assets. Others are to be directly injected into the banks as public supplied capital for private financial institutions, an ironic outcome for the free market ideology that resulted in the deregulation of the US financial system. According to news reports, in England the entire $73 billion is being poured into banks as publicly supplied new capital. In Germany $135 billion is for recapitalizing troubled banks. In the US Treasury Secretary Paulson is talking about using bailout money to purchase non-voting bank shares. How is it possible that a financial crisis of such magnitude hit with such suddenness and urgency, catching finance ministries and central banks unaware? If the problem is what the public has been told, namely that defaulting subprime mortgages are reducing the income flows through to the holders of the mortgage backed securities, why isn’t the bailout money being used to refinance the defaulting mortgages and to pay off the foreclosed mortgages? That would restore the value of the mortgage backed securities, and it would not be necessary to pour huge amounts of taxpayers’ money into recapitalizing banks and purchasing their bad assets. There is not an unmanageable number of defaulting mortgages. According to the US Treasury estimate, 90-93% of the mortgages are good. How does a 7% or 10% default rate on US mortgages translate into a systemic worldwide financial crisis? The popping of the US real estate bubble could not produce worldwide systemic financial crisis without the mark-to-market rule, short-sellers, and a great deal of hype and orchestration. Why did Secretary Paulson let Lehman Bros. fail when every other firm is bailed out? Did Lehman’s failure, by unwinding its own large portfolio, push hedge funds and banks into panic selloffs that spread the crisis at home and abroad? The US Congress held no hearings on the crisis and consulted no independent experts. Congress responded dumbly to the financial crisis, just as it did following 9/11 when the Bush regime handed it the PATRIOT Act and the Afghan invasion. To secure Congress’ acquiescence to the Paulson bailout, the Bush regime used threats of meltdown and martial law to panic Congress into turning over vast amounts of money for which accountability is lacking. The hype behind the Paulson bailout is the financial version of the mushroom cloud evocation used by the Bush regime to panic Congress into accepting the US invasion of Iraq. Is yet another hidden agenda at work? It is unclear how the bailout will play out. The monies for the US bailout will have to be borrowed abroad or printed. If foreign central banks need their dollar reserves in order to bail out their own banks that are polluted with toxic US financial instruments, the US Treasury might not have an easy time in the debt market. Moreover, the interest expense on an additional borrowed $700 billion will raise the US current account deficit and burden US taxpayers with higher interest payments. If the money has to be printed, inflation and dollar devaluation will depress living standards for most Americans. If the US economy sinks deeper into recession, lost jobs and rising interest rates on troubled mortgages will result in more defaults and foreclosures, thus further impairing mortgage backed securities and requiring Congress to put more burdens on hard-pressed US taxpayers in behalf of the banks. The authorities have blamed subprime mortgages for the crisis. Why then does their solution fail to address the problem of the mortgages? Instead, the solution directs public money into an increasingly concentrated private financial sector, the management of which is not only vastly overpaid, but also has escaped accountability for the financial chicanery that, allegedly, threatens systemic financial meltdown unless bailed out by the taxpayers. Perhaps my nose is too sensitive, but this bailout doesn’t pass the smell test.

FROM PAT BUCHANAN

Liquidating the Empire By Patrick j. Buchanan 14/10/08 "Information Clearinghouse" --- “Liquidate labor, liquidate stocks, liquidate the farmers.” So Treasury Secretary Andrew Mellon advised Herbert Hoover in the Great Crash of ‘29. Hoover did. And the nation liquidated him — and the Republicans. In the Crash of 2008, 40 percent of stock value has vanished, almost $9 trillion. Some $5 trillion in real estate value has disappeared. A recession looms with sweeping layoffs, unemployment compensation surging, and social welfare benefits soaring. America’s first trillion-dollar deficit is at hand. In Fiscal Year 2008 the deficit was $438 billion. With tax revenue sinking, we will add to this year’s deficit the $200 to $300 billion needed to wipe the rotten paper off the books of Fannie and Freddie, the $700 billion (plus the $100 billion in add-ons and pork) for the Wall Street bailout, the $85 billion to bail out AIG, and $37 billion more now needed, the $25 billion for GM, Chrysler and Ford, and the hundreds of billions Hank Paulson will need to buy corporate paper and bail out banks to stop the panic. As Americans save nothing, where are the feds going to get the money? Is the Fed going to print it and destroy the dollar and credit rating of the United States? Because the nations whose vaults are full of dollars and U.S. debt — China, Japan, Saudi Arabia, the Gulf Arabs — are reluctant to lend us more. Sovereign wealth funds that plunged billions into U.S. banks have already been burned. Uncle Sam’s VISA card is about to be stamped “Canceled.” The budget is going to have to go under the knife. But what gets cut? Social Security and Medicare are surely exempt. Seniors have already taken a huge hit in their 401(k)s. And as the Democrats are crafting another $150 billion stimulus package for the working poor and middle class, Medicaid and food stamps are untouchable. Interest on the debt cannot be cut. It is going up. Will a Democratic Congress slash unemployment benefits, welfare, education, student loans, veterans benefits — in a recession? No way. Yet, that is almost the entire U.S. budget — except for defense, the wars in Afghanistan and Iraq, and foreign aid. And this is where the axe will eventually fall. It is the American Empire that is going to be liquidated. Retrenchment has begun with Bush’s backing away from confrontations with Axis-of-Evil charter members Iran and North Korea over their nuclear programs, and will likely continue with a negotiated peace in Afghanistan. Gen. Petraeus and Secretary Gates are already talking “reconciliation” with the Taliban. We no longer live in Eisenhower or Reagan’s America. Even the post-Cold War world of George H. W. Bush, where America was a global hegemon, is history. In both relative and real terms, the U.S.A. is a diminished power. Where Ike spent 9 percent of GDP on defense, Reagan 6 percent, we spend 4 percent. Yet we have two wars bleeding us and many more nations to defend, with commitments in the Baltic, Eastern Europe, and the Balkans we did not have in the Cold War. As U.S. weapons systems are many times more expensive today, we have fewer strategic aircraft and Navy ships than Ike or Reagan commanded. Our active-duty Army and Marine Corps consist of 700,000 troops, 15 percent women, and a far higher percentage of them support rather than combat troops. With so few legions, we cannot police the world, and we cannot afford more. Yet, we have a host of newly hostile nations we did not have in 1989. U.S. interests in Latin America are being challenged not only by Cuba, but Venezuela, Bolivia, Ecuador, Nicaragua and Honduras. Brazil, Argentina and Chile go their own way. Russia is reasserting hegemony in the Caucasus, testing new ICBMs, running bomber probes up to U.S. air space. China, growing at 10 percent as we head into recession, is bristling over U.S. military sales to Taiwan. Iran remains defiant. Pakistan is rife with anti-Americanism and al-Qaida sentiment. The American Empire has become a vast extravagance. With U.S. markets crashing and wealth vanishing, what are we doing with 750 bases and troops in over 100 countries? With a recession of unknown depth and duration looming, why keep borrowing billions from rich Arabs to defend rich Europeans, or billions from China and Japan to hand out in Millennium Challenge Grants to Tanzania and Burkina Faso? America needs a bottom-up review of all strategic commitments dating to a Cold War now over for 20 years. Is it essential to keep 30,000 troops in a South Korea with twice the population and 40 times the wealth of the North? Why are McCain and Obama offering NATO memberships, i.e., war guarantees against Russia, to a Georgia run by a hothead like Mikheil Saakashvili, and a Ukraine, millions of whose people prefer their kinship to Russia to an alliance with us? We must put “country first,” says John McCain. Right you are, Senator. Time to look out for America first This article was first published at http://buchanan.org