The money of the kings

G old is the money of Monarchs,


S ilver is the money of gentlemen,


B arter is the money of peasants,

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D ebt is the money of slaves



In this week post you will find information about:

Economy: The house of cards to implode, Roubini contradicts, Marc Faber, Pensions Funds in trouble, Stephen Roach, Doug Casey, British economy and finally something about the Latin American economies

Commercial Real Estate: prices are falling

Market data: shadow stats

Gold: just looks great, stormed back after the manipulators had to push the price down due to option expiry and treasury auctions

Banks and Banksters: Citi, Goldman, JPM, and others.

Equity: There is no new liquidity only volume (a very interesting interview).DJ above 9,000. How far will this move go? Is 10,000 a possibility?


Bonds: Auction was a failure (demand was mainly from the primary dealers)

Oil: a manipulated market too?


Let's start with the overview over last week from www.prudentbear.com
For the week, the S&P500 added 0.8% (up 9.3% y-t-d), and the Dow gained 0.9% (up 4.5% y-t-d). The Morgan Stanley Cyclicals surged 5.5% (up 43.7%), and the Transports added 0.9% (up 4.5%). The Morgan Stanley Consumer index slipped 0.3% (up 6.1%), and the Utilities declined 2.4% (down 1.7%). The Banks jumped 8.4% (down 8.8%), and the Broker/Dealers rose 3.7% (up 40.7%). The S&P 400 Mid-Caps increased 1.0% (up 16.7%), and the small cap Russell 2000 gained 1.5% (up 11.5%). The Nasdaq100 added 0.3% (up 32.3%), while the Morgan Stanley High Tech index dipped 0.2% (up 44.7%). The Semiconductors increased 0.3% (up 42.2%), while the InteractiveWeek Internet index fell 1.3% (up 50.4%). The Biotechs added 0.7% (up 34.5%). With Bullion gaining $2.10, the HUI gold index slipped 0.2% (up 19.2%)


Well dear reader a reader of the musings mentioned to me that the I.O.U. California is handing out is debt and nothing else. Well the money of slaves. Yup, absolutely correct. I feel sorry for all the folks in California who get I.O.U. for the services provided to the government.

Lately there is more and more information about market manipulation popping up. I expect that we will hear a lot more from whistle blowers over the coming months. The information we possibly will hear from these whistle blowers might seem like conspiracy but my guess is that it is the truth and nothing else than the truth. Markets have been manipulated for a long time. Governments are fully committed to manage expectations via the media controlled by them or particular groups with a particular interest. They want us to believe that everything is fine, although the real situation is far away from being fine. Of course the information from the whistle blowers will not be found in the main stream media but there are several excellent internet sites reporting such information. Well let’s go to the overview of the economy.



Economy

Despite the happy hype out of Washington, Wall Street and the media, the U.S. economic and systemic solvency crises show no signs of abating. The green shoots will not grow. The house of cards is rather close to implode. The fact is that the actual recession has been longer and deeper than previously reported and is the most severe recession since the shutdown of war production after WWII.



Following information about the economy

Roubini contradicts the Bloomberg Headlines touting his bullish call.
http://www.nakedcapitalism.com/2009/07/roubini-denies-he-said-recession-will.html

"It has been widely reported today that I have stated that the recession will be over "this year" and that I have "improved" my economic outlook. Despite those reports - however – my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.
"I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If as I predicted the recession is over by year end, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end.
"Indeed, last year I argued that this will be a long and deep and protracted U-shaped recession that would last 24 months. Meanwhile, the consensus argued that this would be a short and shallow V-shaped 8 months long recession (like those in 1990-91 and 2001). That debate is over today as we are in the 19th month of a severe recession; so the V is out of the window and we are in a deep U-shaped recession. If that recession were to be over by year end – as I have consistently predicted – it would have lasted 24 months and thus been three times longer than the previous two and five times deeper – in terms of cumulative GDP contraction – than the previous two. So, there is nothing new in my remarks today about the recession being over at the end of this year.
"I have also consistently argued – including in my remarks today - that while the consensus predicts that the US economy will go back close to potential growth by next year, I see instead a shallow, below-par and below-trend recovery where growth will average about 1% in the next couple of years when potential is probably closer to 2.75%.
"I have also consistently argued that there is a risk of a double-dip W-shaped recession toward the end of 2010, as a tough policy dilemma will emerge next year: on one side, early exit from monetary and fiscal easing would tip the economy into a new recession as the recovery is anemic and deflationary pressures are dominant. On the other side, maintaining large budget deficits and continued monetization of such deficits would eventually increase long term interest rates (because of concerns about medium term fiscal sustainability and because of an increase in expected inflation) and thus would lead to a crowding out of private demand.

Faber - "The US Government is largely deranged"; "The Chinese should dump their Treasuries"

Marc Faber on inflationary pressures, large fiscal deficits, and monetization
http://link.brightcove.com/services/player/bcpid14599856001?bctid=29605992001

More from Faber
“You cannot create prosperity through money printing and debt growth,” says Marc Faber. Furthermore he says that government fiscal and monetary intervention, “can postpone, but not prevent crisis… and further “I believe next year’s economy will face even larger deficits. Their deficit is attempting to stimulate credit growth. Unless real credit growth returns, they will have to put more and more money into the system to maintain the status quo. All polices target consumption. That is a mistake.”


The two biggest state pension funds in the U.S. have lost $100 billion, and they’re about to lose more. Yesterday CalPERS and the California State Teachers’ Retirement System revealed annual fiscal year losses of $56.2 and $43.4 billion, respectively. That’s about a quarter of the value of both portfolios.
CalPERS and California state teachers have it especially bad… unemployment in that state is higher than most, which will limit money flowing into the funds. And just yesterday, Gov. Schwarzenegger announced all kinds of plans to bridge the budget gap that will be detrimental to the funds.
But what really bothers us… both funds, and most around the country, are still counting on La-La Land returns for the foreseeable future. CalPERS, for example, needs a 7.75% annual return for the next two years or it will have to ask the government and municipalities to hike contributions in order to pay for new retirees. That’s no problem, as the fund said in a statement yesterday that its "long-term 20-year investment return remained positive at 7.75%.” Heh… so of course, it’s reasonable to assume the next 20 will be just as pleasant.


Stephen Roach of Morgan Stanley "sorry to break the news, but the financial crisis is not over...plenty of more write-offs of bad paper still to come...the American consumer is dead in the water..."
http://zerohedge.blogspot.com/2009/07/morgan-sta
nleys-stephen-roach-rude.html

U.S. Economy: Another Crack Opening Up?
You see plenty of reports nowadays suggesting that financial Armageddon has been avoided. Meanwhile, "experts" in Washington and on Wall Street congratulate each other on their apparent success in preventing the crisis flood waters from breaching the financial system’s levee walls.
In reality, all they’ve really done is plugged some of the initial gaps with funny money-filled sandbags — just as a raft of other holes are beginning to open up. That’s the thing about bursting credit bubbles: every time you think you’ve turned back the tide, more red ink suddenly starts flowing through the cracks.
http://seekingalpha.com/article/151049-u-s-economy-another-crack-opening-up


Doug Casey from Casey Research about the economy
As the Obama administration has taken over the car industry, the banking industry, and the insurance industry, some experts now believe that American style capitalism is dead. Doug Casey, a free market capitalist and founder and chairman of Casey Research, is one of them.
“Unfortunately, the idea of America has died and it’s been replaced by another political entity called the United States, which in essence is no different from the 200 other countries spread across the globe,” he says.
http://moneynews.newsmax.com/streettalk/doug_casey/2009/07/29/241521.html


The economy is not only in deep trouble in the US but in many other countries too
British economic collapse rivals Great Depression
The collapse in Britain's economy now rivals the worst days of the Great Depression, it has emerged.
http://www.telegraph.co.uk/finance/financetopics/recession/5901961/British-economic-collapse-rivals-Great-Depression.html

Latin American economy
Well dear reader I am just back from a 4 weeks trip to Latin America. In the many place I visited, the slowdown in the economy can already be felt. In most places however the slowdown is still at the beginning. Many people I have talked to are cautious and some are still very optimistic about their local economy. However there are some clear signs that show me that the countries I visited will enter into a recession soon. First of all we have to acknowledge that the Latin American countries historically speaking, suffered most during world recessions and the actual world recession has not yet ended. Why did Latin American countries suffer more? Well the most important factor is that most countries are commodities producer and therefore their economy depends heavily on high commodity prices. Of course I did hear from some people I met, that their economies are still doing well although the world recession has started already some months ago. Well that is correct but we have to keep in the mind that the commodity producers are the ones that will feel or see lower demand with some time lag. First the consumers will consume less which then will be felt by the retailers, then by the wholesalers later the transport companies, then by the product producers and finally by the commodity producers. The demand reduction and the respective decrease in the order book is in my opinion, already felt by the product producers and soon will get to the commodity producers. According to Enrico Orlandini who says he sees the Lima port from his office, lately there have been only a handful ships anchoring in the port in order to load goods. Unlike a couple of months ago when the ships had to wait days anchoring outside of the port in able to get their spot at the port. Well that certainly means that there is less demand for commodities and that will be felt by their economies very soon.
Second, a lot of people that lived outside of Latin America earning nice salaries which part of it has been sent back to their families, lost their jobs and are returning to their countries. The job market in these countries does not have much possibilities for these returnees. In El Salvador I was told that for the first time there is more money sent from El Salvador to family members living outside of El Salvador while for years the money sent from abroad was one of the most important positive factors for the local economy. All countries report a substantial decrease in money inflow. Thirdly, the crime situation is slowly increasing, some of the people I met are seriously worried. Fourth, the political environment in many countries visited or in the neighboring counties is shaky and the serious political crisis’s will most probably rather increase than decrease. Well Latin Americas recent history is full of political upheavals. My guess is that there will be no change soon in that respect.

Well of course, dear readers from Latin America, I wish, as always when I write about a situation that rather looks like deteriorating that I am completely wrong. Anyway, enjoy the good times while they last.


Well dear reader, reading the above I cannot see how the green shoots that are supposedly sprouting do even exist. I simply do not see it. However I still see a lot of complacency. Many people see that stock markets are better that a couple of months ago and the constant press statements that all is fine now makes them believe that in fact things are much better than previously feared. Maybe it’s not the time to get too complacent.



Although it seems that many are complacent and in some even way be asleep, some have woken up and start in an increasing way to express their disgust
http://www.fourwinds10.com/siterun_data/peace_freedom/patriots_and_protesters/news.php?q=1247249620


Commercial Real Estate

Commercial Real Estate is falling. That does not come as a surprise indeed. The only surprise might have been that it took that long until it really go to the point where observers accept the problem. If you intend to buy commercial real estate, maybe taking your time might be the way to go.



Commercial real estate prices in freefall
Commercial real estate values around the country have dropped 35 percent from their peak in October 2007, according to Moody’s REAL Commercial Property Price Indices.
The decline appears to be accelerating as the index dropped more than 15 percent during April and May. Transactional volume also fell along with value, which is showing signs of effects from distressed sales.
http://boston.bizjournals.com/boston/stories/2009/07/20/daily45.html


Market Data

Well dear reader, I mentioned a couple of times that one should take the official numbers with caution. www.shadowstats.com offers a service of market data that certainly is a lot more accurate than the official “lies”. John Williams from shadowstats mentioned the following in his last monthly update
Quote
With the systemic solvency crisis remaining a threat to national security, almost anything remains possible in the arena of data and market manipulations. Data manipulation is an extremely inexpensive and effective policy tool, but its use presumably depends to a certain degree on perceived financial-market vulnerability. Absent manipulation, and against market expectations that once again seem to be firming on recovery hopes, most near-term economic reporting should tend to surprise the markets on the downside. With inflationary expectations still in the basement, inflation reporting should begin to surprise expectations on the upside, going forward.
Unquote
I would see he definitely hit the nail on the head

One Trillion Dollar
Please have a look at the video on the following link and keep in mind that outstanding derivatives (the official ones) are more than 600 trillions

>

http://www.youtube.com/watch?v=at3MNu8BRwQ



Gold

Well dear reader you might have wondered why gold and silver prices fell that much past week. Well gold had to be pushed down by the manipulators because on one side there was August option expiry and a massive Treasury auction. Both were crucial for the US and having a higher gold price would have cost them too much. Well we are above the 950 level and might touch in August the 1,000 level. Once we should have cleared the USD 1,000 we should move rapidly towards 1,300 or even 1,400. I hope you are ready for the next move.



Well dear reader I mentioned many times in my previous posts that I would avoid investing in GLD and SLV for various reasons. Following an excellent essay giving us a couple of more reasons for not being invested in the mentioned ETF’s. The essay was posted
at Seeking Alpha, J.S. Kim, proprietor of the SmartKnowledgeU investment advisory service (http://www.smartknowledgeu.com/). Kim brilliantly skewers the gold and silver exchange-traded funds as likely frauds, perpetrators of a system of fractional-reserve gold and silver banking that is built on conflict of interest. Kim quotes the research of silver market analyst Ted Butler and GATA board member Adrian Douglas.

Kim writes:

"That physical gold held for the GLD may be held in unallocated gold accounts where gold is not segregated from the custodian's assets may mean that multiple entities have claims on the same gold bars. In theory, the gold held in the custodian's vaults may be used for delivery against shorts they hold in the futures markets if necessary even though GLD shareholders have a claim on this gold."

Kim's commentary is headlined "Are GLD and SLV Legitimate Investment Vehicles?" and you can find it at Seeking Alpha here:

http://seekingalpha.com/article/149209-are-gld-and-slv-legitimate-investment-vehicles?

John Williams from shadowstats.com made the following comment regarding gold and silver prices adjusted to inflation in his last monthly update. When you read the statement, please keep in mind that 6,000 years of history shows us that gold and silver over time adapts to inflation. Therefore I am convinced that we will see prices adapted to real inflation (not the official one) soon. Keep also in mind that the more time it takes the gold price to adapt to inflation the higher the price has to go because we will not see negative inflation soon, although for the time being the inflation numbers have come down a bit (now approximately 6% vs previously up to almost 14%)
Quote
Inflation-Adjusted Historic Gold and Silver
Highs. Even with the March 17, 2008 historic high of $1,011.25, the prior all-time high of $850.00 (London afternoon fix, per kitco.com) of January 21, 1980 still has not been hit in terms of inflation adjusted dollars. Based on inflation through June 2009, the 1980 gold price peak would be $2,357 per troy ounce, using not-seasonally-adjusted-CPI adjusted dollars, and would be $7,095 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.
In like manner, the all-time high price for silver in January 1980 of $49.45 (London afternoon fix, per silver institute.org) has not been hit since, including in terms of inflation-adjusted dollars.
Based on inflation through June 2009, the 1980 silver price peak would be $137 per troy ounce, using not-seasonally-adjusted-CPI-adjusted dollars, and would be $413 per troy ounce in terms of SGSAlternate- CPI-adjusted dollars.
Unquote
Once again, dear reader, I have no doubt at all that we will see the prices Williams mentions and to be clear I mean the SGS-Alternate-CPI-adjusted prices not the once calculated using the official CPI numbers.
I hope you are well positioned.


Banks and Banksters

A further nationalization of much of the U.S. banking industry still remains a likely outcome (or maybe I should say an highly possible outcome) of the ongoing systemic solvency crisis.

Following dear reader a very interesting read:
The Great American Bubble Machine
From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine



Five Firms Hold 80% of Derivatives Risk, Fitch Report Finds
Concentrated, in fact, among a mere handful of financial-services giants. About 80% of the derivative assets and liabilities carried on the balance sheets of 100 companies reviewed by Fitch were held by five banks: JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley. Those five banks also account for more than 96% of the companies' exposure to credit derivatives.
http://www.cfo.com/article.cfm/14113089/c_14113574?f=home_todayinfinance

Morgan Stanley sets aside 72% of revenue to pay bonuses
Morgan Stanley is setting aside a huge sum to pay out bonuses despite posting its third consecutive quarterly loss and admitting it is disappointed with key departments
http://www.guardian.co.uk/business/2009/jul/22/morgan-stanley-to-pay-big-bonuses

Do some banks have privileges others do not have? How could one consider such an idea? That sound like conspiracy, doesn’t it? Well maybe not, please read the information on the following link
The Goldman VaR Exemption Question Escalates
http://www.zerohedge.com/article/goldman-var-exemption-question-escalates


Wall Street jacks up pay after bailouts
Lawmakers warn against return to pre-crisis levels
Wall Street's biggest banks are setting aside billions of dollars more to pay their executives and other employees just months after these firms were rescued with a taxpayer bailout, renewing questions about compensation practices in the aftermath of the financial crisis.
The recent outcry over bonuses at bailed-out firms prompted public alarm and promises of reform from financial leaders, who acknowledged that pay and bonuses should not reward risky short-term business decisions -- such as those that contributed to the meltdown -- but instead longer-term financial performance.
http://www.madison.com/tct/news/stories/459370

Regarding the above topic following
Jim Sinclair’s from www.jsmineset.com commentary
Setting aside $74 billion for bonuses and raises while even the official US unemployment figures put approximately one out of every ten people out of work is looking for real trouble.
This illustrates the rank madness of the sociopath financial industry when the final cost of bailing out the super-rich is going to be $17 trillion to some official estimate of $27 trillion tax payer dollars. This is the stuff history says revolutions were made of.

And revolution we will see in the US in less than 12 months (my comment)

In the last few months we have seen a huge bailout of the financial sector, especially the big ones. The taxpayer had to pay and billions moved to these banks. Of course these bankers never liked that their bonuses were cut, correctly I may say. Notwithstanding that now the results some can show (as mentioned out of the pocket of the taxpayer) look nice (although the real situation is still a complete mess), even those institutions that still show a miserably result (and that with all the taxpayers help) these institutions start to pay again bonuses like crazy. Incredible indeed. They still hold billions of bad assets in their books but never mind bonuses have to be paid out. Wow. With this behavior those scrupulous guys will enforce the revolution that will happen sooner or later. The taxpayer might still be asleep but is awakening slowly and once he gets aware of what happened he or she will be even more angry.



Well dear reader lately we saw many information about JPM, Goldman and HSBC. Some of these information pieces can be found below. What do these pieces of information, including the information piece about GLD and SLV tell me? Well it tells me that these banks have a serious conflict of interest and as I believe use certain advantages to their benefit (some argue that this is done in an illegal way). Although I believe that these banks are not as solid as many believe, my guess is that they will be bailed out at any price, which of course will get very expensive for taxpayers and USD holders. So dear reader, one could say: “well as there is some interest from the governments to keep these banks alive, it might be safe to make business with them”. Yes it might be safe however I am not really convinced that it is a good idea to do business with them. First of all, all the big banks that have this huge exposure to derivatives hold in my opinion a very high risk of disappearing soon. Knowing that the before mentioned banks have huge exposure to the derivatives I personally would avoid doing business with them. Secondly it seems that these banks are in the front row regarding management or manipulation of markets and the top management of these banks is certainly doing everything to enrich themselves (at the cost of other market participants and maybe as well at the cost of their clients). Should a client of these institutions trust them in the sense that they will do everything to their clients benefit? Even if they would do so, is it really something I want to participate? Well I certainly do not want to participate in such actions, actions that in my opinion invoke in a serious moral issue. Well of course that is a topic that one can have a different view. However there is certainly some businesses I would not do with these banks at all. For example chose them to store my physical gold or silver. Why? Because that to me, is like letting the fox or wolf guard the hen’s house. Why so? Well if the ETF’s like GLD and SLV are, what I believe, only in part covered by physical, their customers physical would come in handy in case governments or themselves want or need to get their hands on the physical, which of course is possible threat.



Found on www.lemetropolecafe.com
Citigroup's reported profits are pure fiction
Citi benefits from a one-time non-recurring gain on the sale of Smith Barney and it turns liar loans into liar profits. Citigroup reported $4.3 billion in net income today. If you strip out the one-time gain of $6.7 billion from the sale of Smith Barney AND if you strip out the $1 billion of subprime asset mark-ups they took in the 2nd quarter, Citigroup actually LOST $3.4 billion. The sale of Smith Barney is a non-recurring event and should be classified as "extra-ordinary one-time gain" that is reported separately from operating income. The mark-up of sub-prime assets speaks for itself: pure accounting fraud, under old GAAP accounting rules. I am willing to bet that when Citi files its 10Q, we'll find out from its cash flow statement that Citi's operations actually consumed billions in capital.

Goldman or Government Sachs
On the following link you can find some interesting information about Goldman
http://www.huffingtonpost.com/news/goldman-sachs



Equity

There is no new liquidity but high volume trading.
The liquidity is gone. Volumes are created through computer programs. Please see the interesting video on the following link
http://www.brasschecktv.com/page/671.html



Well dear reader, although I still believe that the actual rally is nothing more than a bear market rally and although I thought that 9,000 will be the level where the Dow and the markets will start to head down again, it seems that for the moment being the market will stay above 9,000 and might even go up to 10,000. It seems that all the recent news pieces with the clear intention to manage expectations show results. It seems that some really believe that there are green shoots growing (although Stephen Roach Head for Asia for Morgan Stanley clearly does not agree on that, see above) and it seems that some investors even believe that some of the company quarterly reports showing profits, show that the economy is on the upside. If one looks into the details of the reports one can see that there is in fact not much indication that these results are a) because the company did so well last quarter or b) that these profits are sustainable. The results look in most cases well because of some kind of government help and not because the company did a tremendous job. The PE ration for the Dow is high at approximately 50 and dividend yields remain very low. The market is still expensive. Well although I still believe that we will see much lower prices, I have to admit, that for the moment being it does not seem that we will head down immediately. Furthermore we have to keep in mind that all these trillions of newly printed monies will sooner or later have a hyperinflationary effect. As soon as that happens, the stock markets will head much higher. This of course does not mean at all that there is more value in the market. Higher stock prices do not automatically mean that one can buy more with the value of the stocks.


Bonds

High demand from foreign Central Banks to buy US Treasuries. Well dear reader reading the previous sentence which is the conclusion of the last reported numbers on the US Treasury auction, once could really wonder how fast the Chinese change their mind. Just a few days ago it seemed that foreign Central Banks were buying less and less US Treasury and now it seems that the trend reversed. Has the trend really reversed or is it again a kind of the spin masters magical and manipulated statistics? Well dear reader it really seems that once again the statistics were changed in a way that the situation looks much better than reality. Following a comment from one of the contributors to www.lemetropolecafe.com
Quote
"GX Clarke with some very useful perspectives on the most recent attempted tweak by the Treasury to make it appear like there are more bidders than there actually are.
What exactly is an indirect bidder?
This question used to be fairly easy to answer. An indirect bidder was one that did not trade with Primary dealers and dealt directly with the Fed at auctions. That's the kind of quirky funny twist on language that would draw the ire of a George Carlin, "So an IN-direct bidder Bids Directly. Hmmmm."
But that question is no longer easy to answer. In a recent rule change the Treasury tweaked the definition of an indirect bidder to include "guaranteed bid's" received by primary dealers. Basically, this is placement of bonds at a pre-specified level. These types of bids are not new. They just used to count as Primary Dealer bids. This change, as subtle as the letter "b" in the word subtle, has dramatically affected the perception of recent auctions as indirect bidders have been sky high of late. Just yesterday, for example, am $8 billion 20 year TIIS that came with a 1 bps tail might have been described as a ho-hum auction had it not been for the 47.8% indirect bidder participation that made it look, feel and smell more warm and fuzzy. Under the old definition one might assume that half the issue went overseas to be tucked away by FCB's. We are not so sure you can say that anymore. In fact, comparing old indirect bidder levels to new ones might be obsolete all together as we now need to grow a new database.
Making bonds appear in greater demand overseas than they might actually be is, of course, awfully convenient for a Treasury department forced to fund a $2 trillion deficit amidst growing concerns from the likes of China, Japan, and Russia (to name a few) that current debt levels as a percentage of GDP are unsustainable. So when the 3 year auctioned on 7/07 attracted 54% indirect bidder participation versus and average of roughly 40% the five auctions prior, what exactly does it mean. "

One of the comments to the Zerohedge post is worth reading:
"Pete,
All primary dealers of treasury bonds have a contractual obligation to be the buyer of last resort in bond auctions.
They have to place a minimum bid and even that bid is pre-determined.
To include this in the foreign purchasing ledger is corrupt to an unthinkable degree.
This is easily one of the biggest scams in history, we are talking about the collapse of our country under Bernanke's bailout and they drop their pants and take a crap right on the data and act like nothing happened."
The Treasury offering of just a few weeks ago are still dramatically underwater despite today's unsurprising recovery. We can now assume the Primary Dealers will have boatloads of securities to dump on the market over the coming weeks at a "loss" (which of course will be backed by the govt).
Unquote
http://www.zerohedge.com/article/gx-clarke-defines-indirect-bidder



Derivatives

The derivatives market is about as ugly as it gets, and puts a new edge on 'too big to fail, to big to exist."
http://jessescrossroadscafe.blogspot.com/2009/07/next-crisis-on-deck-or-on-far-horizon.html

Well dear reader, I have been writing about a coming major derivative failure. The derivative market is still some 600+ trillion USD. Approximately 80% of it is pure speculation, a kind of huge casino. Less than 20% are derivatives that are connected to real businesses such as a sugar or coffee producer selling its future production. I think it is naive to think that all the counterparties of these derivatives will be able to fulfill their contractual obligations. There is not sufficient money to do so and most do not have any savings anyway. There are countless situations that could trigger a derivative failure or with other words that could trigger an event whereas the party that should pay simply will not do so for whatever reason (most probably because there is no money to do so). Just to mention a couple of such possible events; there are many credit default swaps written on the California debt, California being basically broken might have its impact on these CDS, derivatives written on GM (the bad GM), the huge short position on gold and silver by just two banks and so on. There are in fact many landmines that could blow up at anytime in the derivative market.


Recommendation from John Williams

I continue to argue that investors should be looking at the long-term and at preserving their wealth and assets in what eventually will become a hyperinflationary great depression. With severe economic, inflation and currency displacements ahead in the United States, those who can ride out the turmoil eventually should see tremendous investment opportunities. As to preserving capital and assets for someone in a U.S. dollar denominated environment, holding some assets in physical gold (and some silver), and holding some assets outside the dollar (i.e. the Swiss franc, Canadian dollar, Australian dollar) in high-quality, liquid assets, remain the best long range hedges against all the real risks facing investors and the system.
I certainly agree with Williams on this.


Oil

Well dear reader, the word manipulation is a word that can be found in an increasing way in the financial press. Can the oil market be manipulated too? Approximately 2 years ago I was writing about manipulation going on in the oil market. Although the oil market is much bigger than for example the gold and silver market and therefore manipulation is more difficult, there is without doubt manipulation going on as well. Well in fact it seems that there are no markets that are not manipulated. More on the market manipulation in the oil market on the following link
http://seekingalpha.com/article/151480-the-abcs-of-oil-manipulation

some more about commodities and especially oil
http://www.brasschecktv.com/page/674.html