The Federal Reserve – Draining the Swamp Hank Paulson went on national television today, Oct. 12, 2008 and made the claim that the Treasury / Fed is doing everything in their power, utilizing the TARP, to “ease” consumer’s access to credit. I’m saying that Hank Paulson is LYING SNAKE.  The Treasury / Fed combo has done EVERYTHING IN THEIR POWER to shut the credit spigots. They injected capital into the balance sheets of their cohorts – the banks and their Wall Street friends – and at the same time, as of Oct. 3rd, 2008, the Fed began PAYING banks interest on reserves held at the Fed.  Formerly, or prior to Oct. 3, 2008, it was mandatory that banks hold reserves at the Fed but they paid no interest on them.  The ONLY purpose of such an action was to stymie the banks from creating more money / credit – by putting those reserves to work. [more.....signup] [open pdf....members]

An Undisclosed Act of Treason  For those of you who are unfamiliar with the work of John Williams of Shadow Government Statistics fame; this missive should prove to be quite an eye opener.  For those who are familiar with Williams’ work – this is nothing more than logical extension[s] and conclusions.  Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies.  So, let’s just say the man knows of what he speaks. [more.....signup] [open pdf....members]

Clarity: Shrouded In Double-Speak  Today, we’re going to begin with the cliche, “the more things change – the more things seem to stay the same”.   It was back on Oct. 3rd, 2008 that Rep. Brad Sherman [D-Ca] reported from the floor of the House [C SPAN] the disingenuous nature of the [then] proposed Bail-Out Bill by revealing that dissenting voices had been “threatened” of imminent, dire consequences if the bill was not passed in its proposed form [see link:  http://www.youtube.com/watch?v=gnbNm6hoBXc] [more.....signup] [open pdf....members]

J.P. Morgan – Loving Their Handiwork The following research paper was compiled as the basis for a radio interview with Patrick Timpone at One Radio Network. Morgan is the quintessential leviathan in the Interest Rate arena through their obscenely sized Medium-Term Interest Rate Swap book which stood at 59 Trillion at June 30, 2008. The interest rate swap book, due to its sheer size, overwhelms the bond complex by creating artificial demand for government securities.  This interest rate suppressive activity began in earnest back in the 1990’s and has kept market rates of interest at artificially low levels.  The FUNDAMENTAL [and ongoing] MISPRICING of CAPITAL – for many years – has led to a myriad of economic excesses like the Dot Com boom, subsequent housing boom and the financial asset boom itself. [more.....signup] [open pdf....members]

Fudging, Fundamentals and the Electoral Cycle Anyone who’s paying attention has probably noticed that commodities prices have been, shall we say, volatile? Most economists worth their salt will generally proffer opinions on the sometimes erratic moves in the prices of commodities based on their views of inflation, deflation or possibly even their perceptions regarding where we are in the business cycle? If we take a stroll down memory lane and unearth a few comments of gold market impresario, Doug Casey, from a 2002 essay titled, Gold During Inflation, Deflation and Chaos, they tell quite a story: [more.....signup] [open pdf....members]

Plumbing the Depths:  Conclusions and Action Plan  Although we’ve experienced a stiff round of short term asset deflation, I remain firmly in the reflationary / hyperinflation camp.  The Congressional Budget Office [CBO] is calling for a fiscal deficit of 438 billion for 2008 – up from 161 billion in 2007.  Non-government types are now suggesting that FY 09 shortfalls will likely top 1 Trillion: [more.....signup] [open pdf....members]

Plumbing the Depths of Depravity First, for a bit of historical context, a little bit of fact-finding pertaining to Henry Paulson complements of my friend, Jesse: “I didn't know he was a member of the Nixon White House as his first 'real job.' In 1970, fresh from the Masters program of the Harvard Business School, Paulson entered the Nixon administration, working first as staff assistant to the assistant secretary of defense. In 1972-73, Paulson worked as office assistant to John Erlichman, assistant to the president for domestic affairs. Erlichman was one of the key figures involved in organizing President Richard Nixon’s notorious "plumbers" unit that carried out illegal covert operations against the president’s political opponents, including espionage, blackmail, and revenge. Ehlichman resigned in 1973, and in 1975 he was convicted of obstruction of justice, perjury, and conspiracy, and was imprisoned for 18 months. Utilizing his connections, Paulson went to work for Goldman Sachs in 1974. In a 2007 feature, the British newspaper the Guardian wrote, "Not only was he well connected enough to get the job [in the Nixon White House], but well connected enough to resign in the thick of the Watergate scandal without ever getting caught up in the fallout. He went straight to Goldman back home in Illinois." [more.....signup] [open pdf....members]

Dis-Information Specialists Ply Their Trade  Tim Gardiner, president and CEO, Mitsui & Co. Precious Metals Inc. appeared on Canada’s Business News Network [BNN] and – in a ridiculous attempt to explain the recent demolishing of the gold price - made the claim that demand for gold was down and, “the only reason for physical shortages of gold products at retail was ‘logistical’ and due to a shortage of ‘blanks’ from which the coins are stamped”. [more.....signup] [open pdf....members]

Derivatives Disclosure Like it or not we hear the term “derivatives” bandied about in the mainstream financial press these days with increasing regularity. In recent times it has come to be a term that, when mentioned in conjunction with a particular financial institution, can cause loss of confidence or worse – maybe a herd like run on deposits [or policies] on the offending institution. To help clear up some of the confusion, today’s market wrap will deal with Derivatives:  where they came from and how they’ve morphed into the reviled bank-killers they are known as today. [more.....signup] [open pdf....members]

Bear Stearns: Murdered at the Golden Gates Much has already been written about the untimely demise of investment bank Bear Stearns.  Most, if not all, that has been written to date – deals with issues related to equities / expiring options – or the share price. Recently, new information has come to light which allows us to forensically examine the demise of Bear Stearns from a completely different angle – GOLD. [more.....signup] [open pdf....members]

If Pigs Could Fly Interesting times we live in, eh?  Our global financial markets have metamorphosed more in the past fortnight than they did in the previous 14 years.  Here’s a recap as to why, paying specific attention to the build-up of DERIVATIVES – and their unraveling which is causing so many of the dislocations that are now manifesting themselves: The great unwinding we are now witnessing had its roots in myth – The Strong Dollar Policy.  This myth was a conceptual concoction of former Treasury Secretary Robert Rubin and his protege Lawrence Summers [with an academic “assist” to Barsky and the Harvard Economics Department]: [more.....signup] [open pdf....members]

The Invisible Hand and the Pox Known as Usury First, from Wikipedia, a little background on usury: Usury (pronounced /?ju???ri/, comes from the Medieval Latin usuria, "interest" or "excessive interest", from the Latin usura "interest") originally meant the charging of interest on loans.  After countries legislated to limit the rate of interest on loans, usury came to mean the interest above the lawful rate. In common usage today, the word means the charging of unreasonable or relatively high rates of interest….. ….But one must always consider that usury, in historical context, has always been inextricably linked to economic abuses, mostly of the masses and of the poor; but sometimes of the financier and royalty, as bankrupt royalty has led to many a demise, thus frowning upon lending at interest or for a euphemistic "just profit". The main moral argument is that usury creates excessive profit and gain without "labor" which is deemed "work" in the Biblical context. Profits from usury do not arise from any substantial labor or work but from mere avarice, greed, trickery and manipulation. In addition, usury creates a divide between people due to obsession for monetary gain. Most importantly, usury commodifies biological time for profit, which is linked to life, considered sacred, God-given and divine, leading to excessive worrying about money instead of God, thus subjugating a God-given sanctity of life to man-made artificial notions of material wealth….. I began this paper with a broad definition of usury to explicitly point out, in an historical context; it has always been inextricably linked to ECONOMIC ABUSE. Today is no different. [more.....signup] [open pdf....members]

Monday, Sept. 29th Subscriber Only Commentary At the time of writing, the Paulson Plan Bail-Out Bill has just been defeated on the floor of the U.S. House of Congress – overwhelmingly defeated [counter-intuitively I would suggest] by Republicans. Blather emanating from Hank Paulson over the past week has included his disingenuous claims that he “never realized” the extent of the regulatory problems or “over leverage” facing markets. As former Chairman of Goldman Sachs, no-one in the world was better positioned to have fore-knowledge and fully comprehend the “casino state” of our Capital Markets. [more.....signup] [open pdf....members]

The Backgrounder This report has been prepared as a more-in-depth follow up to Monday’s public article, Treachery Abounds, to fill in some blanks and provide subscribers with a fuller understanding and honest assessment of what they are confronting. Regarding Recent Dollar and Interest Rate Rallies Today, the U.S. Treasury released July TIC data.  Here’s a snippet: [more.....signup] [open pdf....members]

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