The Resourceful Bear Blog

In a cultural, political, and economic sea change, the US Central Bank announced sovietization of lending
Today the US abandoned Milton Friedman's neoliberal laissez faire economic policies, that is free marketplaces, where privatization is the operative principle, to embrace sovietization of lending.

In as much as banks are no longer lending in the commerical paper lending marketplace, due to a lack of trust between lender and debtor, the Federal Reserve has announced a framework agreement and facility to become the sole lender in the commercial lending marketplace.

The Federal Reserve has stepped up to the plate to provide liquidity so companies can meet payroll, cut checks, and continue to issue purchase orders of consumables, services and raw materials.

Thus unfreezing a condition of lending gridlock, that is credit gridlock, has existed since September 11, 2008, when banks found they could not sell stock to raise capital, due to the questionable value of their assets, that is the debt, they hold on their books.

The Federal Reserve today has become provider of liquidity and capital to facilitate ongoing economic activity.

The Federal Reserve's role has expanded to become the Bank of Banks, that is, the nation's bank.

The Federal Reserve will become the United States' monetary authority and capital provider.

US Federal Reserve announces Commercial Paper Funding Facility, CPFF, to purchase U.S. commercial paper
Craig Torres of Bloomberg relates in article Fed to Purchase U.S. Commercial Paper to Ease Crunch that the Federal Reserve will create a special fund to purchase U.S. commercial paper after the credit crunch threatened to cut off a key source of funding for corporations.

The Treasury will make a deposit with the Fed's New York district bank to help set up the new unit. The central bank will also lend to the program at policy makers' target rate for overnight loans between banks. The Fed Board invoked emergency powers to set up the unit, the central bank said in a statement released in Washington.

Today's action follows a slide in the commercial-paper market to a three-year low of $1.6 trillion last week as investors fled even companies with few links to the subprime mortgage crisis. Companies from newspaper firm Gannett Co. to electricity producer Southern Co. have been forced to tap credit lines or forego raising debt because of the market's disruption.

The Fed's action is seen to provide liquidity to end the liquidity run in the commercial paper lending marketplace

The Fed's efforts are aimed at ``stemming the bank-run-like panic,'' said Mark Gertler, a New York University economist and research co-author with Fed Chairman Ben S. Bernanke. ``The immediate threat to the real economy is that large corporations are having difficulty obtaining funds via the commercial paper market.''

Fed officials in a conference call with reporters didn't say how much commercial paper, which hundreds of companies use to finance payrolls and meet other cash needs, it plans to purchase. The officials also declined to specify when the purchases would begin.

The central bank's special purpose vehicle will be big enough to backstop the entire market, one official said on condition of anonymity.

Issuers will be able to sell commercial paper to the Fed up to the average amount they had outstanding in August, an official said.

Policy makers began considering buying commercial paper several weeks ago as the market began to seize up, with borrowers increasingly only able to raise funds on a short timeframe, even just overnight, officials said.

The Fed's unit will buy three-month commercial paper, which should help issuers extend the maturity of their borrowing, an official said.

``While we have continued to fund without disruption, the Fed announcement today is an important development that will help restore confidence in the market and facilitate more lending,'' General Electric Co. spokesman Russell Wilkerson said. ``This is a positive move and we applaud the Fed's decisive action.'' The company is the biggest U.S. commercial paper issuer through its GE Capital finance unit.

Yields to fall

Fed officials anticipate that yields will come down significantly as a result of their initiative.

Yields on top-rated overnight U.S. commercial paper dropped 0.74 percentage point today to 2.94 percent, according to data compiled by Bloomberg. Borrowing for seven days increased 1.25 percentage points to 4 percent.

The Treasury's deposit with the Fed's special purpose vehicle will be substantial, officials said. The funds won't come from the $700 billion rescue plan authorized by Congress last week.

Stocks initially climbed and Treasuries sank after the Fed's announcement, while shares later turned lower. The Standard & Poor's 500 Stock Index was down 0.13 percent at 1,055.50 at 11:49 a.m. in New York. Yields on benchmark 10-year notes climbed to 3.51 percent from 3.45 percent late yesterday.

Today's announcement comes only hours before Bernanke gives his Economic Outlook today,

Today's announcement came hours before Fed Chairman Bernanke speaks on the economic outlook at 1:15 p.m. in Washington. He and Treasury Secretary Henry Paulson held discussions yesterday as stock markets slid and money market rates climbed as the crisis deepened.

The Fed's new unit will buy three-month dollar-denominated commercial paper at a spread over the three-month overnight- indexed swap rate, which is a measure of traders' expectations for the Fed's benchmark rate.

Fed officials on the conference call indicated that they would like the facility to be a backstop, which would suggest the special vehicle's rate would be set at a slight penalty to normal market rates. They declined to answer a specific question as to whether the rate would be set above current rates, or below, which would constitute a subsidy for borrowers.

The initiative is seen as a funding backstop

``The Federal Reserve will consult with market participants regarding appropriate spreads that are consistent with the facility serving as a funding backstop under more normal market conditions,'' the Fed said.

The commercial paper facility is heralded as only temporary

Commercial paper purchased by the vehicle must be rated at least A1/P1/F1, the Fed said. Issuers will pay the unit an upfront fee based on the commercial paper initially sold to the vehicle. The vehicle will cease buying commercial paper on April 30, 2009, unless the Board of Governors agrees to extend it.

The Fed will cap the amount of commercial paper each company may sell to the central bank.

The Fed announced yesterday that it will double previous facilities of TAF, TSLF, PDCF and emergency actions to as much as $900 Billion; and is considering announcing other initiatives as well.

The Fed yesterday said it will double its cash auctions to banks to as much as $900 billion, and telegraphed today's announcement by saying it was looking for other ways to alleviate liquidity strains.

The Fed's move is ``very unusual, very aggressive and a very bold step,'' said Chris Varvares, president of St. Louis- based Macroeconomic Advisers LLC, a forecasting firm. Assuring that corporations can fund their short-term cash needs ``is absolutely essential.''

Emerging Market Bonds Fell
There was not a central bank rescue facility announced for the emerging bond market; EMB fell 2%.

Municipal Bonds Fell
The Federal Reserve did not respond with a facility to Governor Arnold Schwarzenegger's plea for assistance. Nor was there a Federal Reserve facility announced to address the closed municipal bond market for other states such as Massachusetts.

The iShares S&P National Municipal Bond ETF, MUB, fell 2%.

Jeremy R. Cooke of Bloomberg in September 30, 2008 article reports: "U.S. state and local government bonds are headed for their worst quarterly performance in as much as 14 years as a wave of Wall Street consolidation undermines support for the municipal market. Tax-exempt bonds have fallen 3.15 percent since the end of June, according to Merrill Lynch & Co.'s total-return Municipal Master Index. The quarter's decline may exceed the 3.18% drop in the second period of 2004, which was the steepest since the 5.75% decline in the first three months of 1994."

Jeremy R. Cooke of Bloomberg in October 3, 2008 article reports: "U.S. states and municipalities were all but shut out of the tax-exempt bond market for a third week, as borrowers managed to sell less than 15% of a typical week's new fixed-rate issues, data compiled by Bloomberg show ... 'This market has run into trouble again,' T.J. Marta, a fixed-income strategist at RBC Capital Markets ... said ... 'The most recent dislocation will exacerbate the negative developments already taking place for state and local government finances.'"

Michael McDonald in October 2, 2008 Bloomberg article repots: "Massachusetts Governor Deval Patrick said he is seeking budget cuts amid financial market turmoil that forced the state this week to cancel plans to borrow money to fund operations. The governor, citing a $223 million shortfall in tax collections, ordered a spending reduction of 7%. The state this week canceled the sale of commercial paper as investors boycotted the markets."

These reports tell me that the municipal bond market has utterly broken down. This is a silent neutron bomb that is going to cause massive layoffs in state and local governments; these governmental units will basically have to go into shut down mode; except for some low level of law enforcement there will be a swift shut off of services.

US Stocks fell
Stockcharts.com reports that the overall US stock market, VTI, fell 6%.

Kate Gibson of MarketWatch reports that "investors offered only a tepid cheer for the Federal Reserve's latest move to ease frozen credit markets."

Peter Bookvar, equity strategist at Miller Tabak said: "How aggressive are you going to be ahead of earnings season?" .... "We have such frayed nerves; people are afraid to jump in no matter what." Bookvar related of the US and other central banks: "It's going to be raining money for the next couple of months."

After those midday remarks, the yen carry traders, who have been the principal investors in the financial sector since July 14, when they sold oil, USO, commodities, RJI, and gold, GLD, have been looking for a reason or several reasons to sell their investment in the financial sector; and today they found three:
1) a realization that the Fed is the sole provider of credit at least to the corporations; and that the banks are now simply walking dead men.
2) a fear of D-Day, that is this Thursday, when the first batch of credit default swaps are to be settled on the bankruptcy of Lehman Brothers
3) the announcement that Bank of America, BAC, fell 26% after reporting a 68% profit fall, slashing its dividend and saying it will attempt to raise up to $10 billion in common stock.

The yen carry traders sold their investments in the financial sector, which produced these loses: XLF -10; which induced homebuilding ITB -10, and real estate ICF -10, IYR -9, KBE -9, IAI -9, IAT -9.

The BRICS, EEB, sold off, producing these loses as well EWZ -10, EEB -10, OIH -10, SLX -10,

Among the financial-sector stocks weighing most heavily on the S&P, General Growth Properties, GGP, which fell 41%. The Chicago-based owner of 200 malls nationwide on Monday suspended its common stock dividend and announced the departure of its chief financial officer.

Also weighing on the S&P, Apartment Investment and Management, AIV, fell 27%. The Denver-based company is among the nation's largest owners of apartment complexes, and recently said it expects to take a $3 million to $6 million hit in the third quarter due to hurricane damage to its properties.

The yield curve has exploded higher
The yield curve had been steeping it exploded higher as is seen in interest rates, $TNX:$UST2Y, and in ETFs, TLT:BIL

Peak US Treasuries may be in, as the US Treasuries fell, they should have risen on today's lower stock values.
Today may be the end of the "so called" flight to safety in US Treasuries even if the Fed announces a surprise rate cut or announces even further facilities to provide liquidity.
Stockcharts.com reports SHY at 83.95 ... SHY

Stockcharts.com reports TLT at 99.28 ... TLT

The interest rate on the 30 Year US Government Bond ... $TYX

The interest rate on the 2 Year Treasury bill ... $UST2Y

The interest rate on the 10 Year US Government Note ... $TNX

Those invested in DXKSX found they were invested the wrong way.

We have the 'mother of all lending spreads'.
Unfortunately the US is going to a zero US central bank rate; now stealthily, soon overtly.

Scott Lanman of Bloomberg in article Fed Sets Floor Below Rate Target, Engineering `Stealth' Cut reports that the Federal Reserve may have trimmed borrowing costs yesterday without actually saying so.

The central bank used power granted under last week's financial-rescue legislation to effectively set a floor under its main interest rate that's lower than the 2 percent target set by policy makers last month. The Fed may now pay interest on bank reserves while it floods financial markets with liquidity, pushing down the overnight lending rate by about 0.75 percentage point to 1.25 percent.

``Absolutely, it's a stealth easing,'' said John Ryding, founder and chief economist of RDQ Economics LLC in New York and a former Fed researcher".

As the US Government official rate is moving to zero, the world's interest rate as defined by the Ted Spread remained high today at 3.4; and not only that, there was no lending again today, that is, the markets remain frozen until the Fed's CPFF facility kicks in, so thus the market place interest rate is infinitely high, that is beyond measure.

A Ted Spread's above 2.0 for any extended period of time relates to me that economic heart of society, that is lending, has suffered a cardiac arrest. The failure of the Ted Spread to fall below 2.0 tells me that capitalism and investing is dead and cannot be revived. With a Ted Spread above 2.0, trust between lender and debtor has been destroyed.

The only thing that remains is for authoritarian government to arise, and to enforce framework agreements that have already been declared such as the Security and Prosperity Partnership of North America, the SPP. And to engage in greater collectivization as we see today, with the announcement of CRFF, where through working groups and councils, such as the NACC, and stakeholders appointed by government and industry, the factors of production are overseen, and capital and natural resources expropriated, for the benefit of what might be termed "the homeland."

I find the following suggestion for a lower central bank interest rate "terrifying", as I believe interest rates should be going higher not lower; yes I abhor low interest rates.

John Fraher in Bloomberg reports: "In the U.S., prices manufacturers paid for materials last month plunged the most since at least 1948, with the Institute for Supply Management's index dropping 23.5 points to 53.5 points.

The breakeven rate on U.S. 10-year Treasuries, a measure of price expectations, dropped to 1.4 percent from 2.6 percent in July. Japan is the only country whose bond market implies a lower inflation rate than the U.S. The rate represents the pace of inflation investors expect over the life of the securities.

All this is likely to make the Fed resume rate cuts, says Robert Dye, a senior economist at PNC Financial Services Group in Pittsburgh, Pennsylvania.

``If we're going over a cliff, we're not going to go over a cliff with a 2 percent federal funds rate,'' he says. ``What's the point of holding back?"

My observation is that the spread between the US government central bank interest rate, and the world market interest rate is 'the mother of all lending and interest rate spreads'.

The Fed's action must succeed to prevent a catastrophic 'financial system black out' that is a 'complete financial system shut down'.
Factors why banks are unwilling to lend include:
an awareness of rising unemployment raises the risk the debtor will not repay.
an awareness of the explosive danger that derivative counterparty risk provides to debtors.
an awareness of the risk of their own exposure to default events on credit default swaps.
an awareness of that their own stock value is going to fall rapidly, threatening their capital position, whereby they will have to close.

The hope is that the Fed's actions of being the insurer and provider of commercial paper will be broad enough and implemented quickly enough to prevent an economic shutdown from occurring at a rate faster than it did in the 1929 to 1932 Depression.

Today, the Fed is boldly going where no Fed has gone before. I do have to question, does the Federal Reserve have the legal and constitutional authority to do what it is doing?

I do not favor the US government being the lender of only and last resort. The provision of CPFF is a cultural shift of epic proportion to state corporatism, that is state corporate rule, and it is the nail in the coffin for the AAA rating of US Treasuries as well as the US Dollar.

The government printing presses will simply be printing money, which means that when unemployment increases beyond a certain future level, hyperinflation for food and clothes and shelter will result.

And a catastrophic 'financial system black out' that is a 'complete financial system shut down' may occur anyway, as panic unfolds over today's significant stock market sell off and a growing realization of the failure of the municipal bond lending market.

Gold rose to strong resistance
The chart of the gold ETF, GLD, shows a dragonfly candlestick, after a 3.5% rise to $87.25 ... GLD

Gold rose to close at $884 ... $gold

Peak US Dollar may be in given the nationalization of the commercial paper market
The dollar bullish ETF, UUP, is manifesting bearish at 24.95 ... UUP

The US Dollar, $USD, closed down at $81 ... $USD

Investment application
Because of financial system instability and lack of liquidity, I recommend diversification of investment in gold in four locations immediately: the gold ETF, GLD, directly through streetTRACKS Gold Trust, and not in a brokerage account; two BullionVault, three GoldMoney; and four a limited number of gold coins.

Concluding Observation
It was the repeal of the Glass Steagall Act by Phil Gram and Bill Clinton that got us into this embroglio. And the neoliberal fairy tale economic policies of Milton Friedman encouaged capitalism to have a hedonistic party of greed, which has resulted in a collapse of trust between lender and debtor, resulting in the TARP and CPFF rescues. The result is a fast fall into state corporatism, that is state corporate rule where Americans have been enslaved unto debt.


Major symbols used in this report
MUB, TLT, GLD, UUP, SHY

Canadian Air Force Maj. Brian Martin in a special news release to American Forces Press Service reports that Canada helps Gustav effort through Civil Assistance Plan

PETERSON AIR FORCE BASE, Colo., Sept. 2, 2008 – A civil assistance plan signed six months ago between U.S. Northern Command and Canada Command was used for the first time over the weekend to expedite and coordinate Canadian military support to the U.S. Gulf Coast region in response to Hurricane Gustav.

U.S. and Canadian Forces personnel help an evacuee of Hurricane Gustav to board a Canadian Forces flight at Lake Front Airport in New Orleans, Aug. 31, 2008. As part of the civil assistance plan between the United States and Canada, the Canadian Forces aircraft was brought in to help transport patients to destinations safely outside the hurricane’s path. U.S. Air Force photo by Staff Sgt. Shawn Weismiller

"This was a great first use of the civil assistance plan,” said U.S. Air Force Gen. Victor E. Renuart, NorthCom commander. “Everything went exactly as it was designed to."

After receiving approval from both the governments of Canada and the United States, the Canadian Forces quickly deployed a CC-177 Globemaster III aircraft from 8 Wing Trenton, Ontario, to Lakefront, La. The aircrew and medical team aboard the aircraft flew seven littered and 13 ambulatory patients from New Orleans to Little Rock, Ark., Aug. 31.

“I am proud of our men and women in uniform for answering this call and know that we have the mechanisms in place to respond to these types of requests quickly and effectively,” said Vice Adm. Dean McFadden, commander of Canada Command and former commander of the Canadian task group that deployed to the U.S. Gulf Coast in 2005 to assist with Hurricane Katrina relief efforts.

Signed on Feb. 14, the civil assistance plan formalized the longstanding tradition of military-to-military cooperation that has long existed between both countries, officials said.

(Canadian Air Force Maj. Brian Martin serves in the U.S. Northern Command/North American Aerospace Defense Command Public Affairs Office.

Related Sites

U.S. Northern Command, NORTHCOM

Emergency vehicles carrying evacuees of Hurricane Gustav stage near a Canadian Air Force CC-177 Globemaster III transport jet at Lake Front Airport in New Orleans, Aug. 31, 2008. As part of the civil assistance plan between the United States and Canada, the Canadian Forces aircraft was brought in to help transport patients to destinations safely outside the hurricane’s path. U.S. Air Force photo by Staff Sgt. Shawn Weismiller

Commentary
The Jerome R. Corsi WorldNetDaily article North American Army Created Without OK By Congress communicates that the Military Civil Assistance Plan was a Framework Agreement signed at US Army North headquarters, Fort Sam Houston, Texas, by US Air Force Gen. Gene Renuart, commander of NORAD and US Northern Command, or USNORTHCOM, and by Canadian Air Force Lt. Gen. Marc Dumais, commander of Canada Command on February 14, 2008, Valentines Day, allowing the armed forces from one nation to support the armed forces of the other nation during a domestic civil emergency.

The document providing military integration was not submitted to Congress for approval, nor did Congress pass any law or treaty specifically authorizing this military agreement to combine the operations of the armed forces of the United States and Canada for civil security and humanitarian assistance in the event of a wide range of domestic civil disturbances ranging from violent storms, to health epidemics, to civil riots, to financial breakdowns, or terrorist attacks.

The article entitled North American Army Created relates: "The military Civil Assistance Plan can be seen as a further incremental step being taken toward creating a North American armed forces available to be deployed in domestic North American emergency situations".

"This document is a unique, bilateral military plan to align our respective national military plans to respond quickly to the other nation's requests for military support of civil authorities," Renuart said in a statement published on the USNORTHCOM website.

The statement on the USNORTHCOM website emphasizes the plan recognizes the role of each nation's lead federal agency for emergency preparedness, which in the United States is the Department of Homeland Security and in Canada is Public Safety Canada.

The statement notes the newly signed plan was designed to facilitate the military-to-military support of civil authorities once government authorities have agreed on an appropriate response.

U.S. Northern Command, NORTHCOM, was established on October 1, 2002, by Defense Secretary Donald Rumsfeld, as a military command tasked with anticipating and conducting homeland defense and civil support operations where U.S. armed forces are used in domestic emergencies.

On October 2, 2002 Deputy Defense Secretary Paul Wolfowitz called the activation of U.S. Northern Command "historic" and said the new command is charged with "the momentous responsibility to help deter and defend against attacks on America's home soil."

Introduction
The quotes of Bill Gross of Pimco on September 5, 2008, document a clear and immediate call for the bail out of Freddie Mac, FRE and Fannie Mae, FNM, These quotes call for the Fed to use its recently granted authority by Congress to nationalize the US housing and home lending organizations. The result will be a tight integration of government and enterprise into a combine of state corporate rule.

Mr. Gross said: If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury ... [A] systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time. Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami.

Debt will be turning lower in value
Mr. Gross' call will have the effect of turning debt lower; I provide charts of the following for historical record.
the US Treasuries ETF, TLT,
the zero coupon interest mutual bond fund, BTTRX,
the corporate mutual bond fund PBDAX,
the long term US Government bond fund PLGBX,
the aggregate debt, AGG,
the futures marketplace US Treasuries, $USB, will all be turning lower.

The bond marketplace will declare a defacto interest rate hike: the interest rate on the 30 year government bond, $TYX, and the interest on the 10 year government bond, $TNX, will be going up.

DXKLX Direxion 10 Year Note Bull 2.5 Fund will be going down

DXKSX Direxion 10 Year Note Bear 2.5 Fund will be going up

Stocks will rise in value
Stocks, especially the homebuilding, financials, and banks will move higher.

The stock value of Freddie Mac, FRE, and Fannie Mae, FNM, will fall in value.

The call of Bill Gross for the immediate bail out of Freddie Mac and Fannie Mae
Bill Gross of Pimco in September 5, 2008 article There's a Bull Market Somewhere? relates:

For the past several months our PIMCO Investment Committee blackboard has continued to display the following lesson plan:

What Happens During Delevering

1) Risk spreads, liquidity spreads, volatility, term premiums – they all go up.

2) Delevering slows/stops when assets have been liquidated and/or sufficient capital has been raised to produce an equilibrium.

3) The raising of sufficient capital now depends on the entrance of new balance sheets. Absent that, prices of almost all assets will go down.

It is the debt liquidation that potentially turns a stagnant/recessionary economy into something much worse.

In the housing market for instance, it is one thing to observe a 15% national decline in home prices. It is much more serious however, when margin calls in the form of monthly mortgage payments (many of which are in-creasing due to adjustable or option-related contractual provisions) lead to foreclosures, which in turn cause a debt liquidation. The bank in this case, takes possession of the home and dumps it back on the market, lowering the price even further, which leads to more foreclosures, which leads to …

This rarely observed systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time. Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami.

Central bankers, of course, adopting the cloak and demeanor of firefighters or perhaps lifeguards, have been hard at work over the past 12 months to contain the damage. And the private market, in its attempt to anticipate a bear market bottom and snap up “bargains,” has been constructive as well. Over $400 billion in bank- and finance-related capital has been raised during the past year, a decent amount of it, by the way, having been bought by yours truly and my associates at PIMCO. Too bad for us and for everyone else who bought too soon. There are few of these deals now priced at par or above, which is bondspeak for “they are all underwater.” We, as well as our SWF and central bank counterparts, are reluctant to make additional commitments.

Step 2 on our delevering blackboard therefore has stalled and is inevitably morphing towards Step 3. Assets are still being liquidated but there is an increasing reluctance on the part of the private market to risk any more of its own capital. Liquidity is drying up; risk appetites are anorexic; asset prices, despite a temporarily resurgent stock market, are mainly going down; now even oil and commodity prices are drowning. There may be a Jim Cramer bull market somewhere, but it’s primarily a mirage unless and until we get the entrance of new balance sheets, and a new source of liquidity willing to support asset prices.

New balance sheets? Is this now some Deloitte & Touche metaphor? Hardly. What I mean, what our blackboard and our Investment Committee point out is that to ultimately stop this asset/debt deflation, a fresh and substantial new source of buying power is required. This became all too obvious as the Treasury’s attempt to entice additional capital into Freddie and Fannie came up empty. Yet this same dilemma is and will continue to confront all highly levered institutions in the throes of asset liquidation. Without a new balance sheet, their only resort is to sell assets, which in many cases leads to further price declines, or ultimately debt liquidation/default.

If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury – not only to Freddie and Fannie but to Mom and Pop on Main Street U.S.A., via subsidized home loans issued by the FHA and other government institutions. A 21st century housing-related version of the RTC such as advocated by Larry Summers amongst others could be another example of the government wallet or balance sheet that is required during rare periods when the private sector is unable or unwilling to step forward.

The bill for our collective speculative profligacy, obvious in the deflating asset markets, can be paid now or it can be paid later. Those aspiring for a perfect 800 on the Wall Street policy exam would conclude that the tab will be less if paid up front, than if swept under a rug of moral umbrage intent on seeking retribution for any and all of those responsible. Now that the Fed has spent 12 months proving that it “knows something…knows something,” it is time for the Treasury to do likewise.

Commentary
This blog continually communicates that state corporatism is continually on the rise. In order to keep things stable, industry and government leaders have been continually work together continentally and globally to integrate commerce, industry and trade with the government.

Example include
a) The announcement of the framework agreement of the Security and Prosperity Partnership of North America, the SPP at Baylor University
b) The announcement of the framework agreement to create a western world EU US Government at the EU US Summit of 2007.
c) The Federal Reserve's announcment of assistance for the buyout of Bear Stearns by JP Morgan
d) The Federal Reserve's announcement of framework agreements of TAF, TSLF and PDCF on March 18, 2008.
e) The granting by Congress to the Federal Reserve and the Treasury to lend to and capitalized the two GSEs Freddie Mac, FRE, and Fannie Mae, FNM.

And this blog continually communicates that the Liquidation Thesis is being applied: government services and payments, service sector jobs, public and private debt of all types, and unfunded retiree benefits are being contnually liquidated, that is done away with.

The call of Mr. Gross has moved up the action date for required Federal Reserve action to nationalize the GSEs; his call will be forcing the Fed's hand to acquire, that is seize, the GSEs this weekend.

Public and private debt is going to get a haircut, that is a writedown by Mr. Gross' call.

A run on the US Treasuries will get under way soon.

Financial Application
I am short the financial sector via a long position is SKF; Market action is going to go against me in the short term; I plan to keep the SKF as I see a financial collapse coming soon.

Suggested Reading
1) ... US Considering Government Takeover of Fannie and Freddie Jesse reports 9:00 PM Friday August 5, 2008

2) ... US Is Stiffing China One Trillion Dollars! Elaine Meinel Supkis brings back Libra ... She previously remarked Gold is LIBRA. Gold, when used as a restrictor, a curb, a control, is not part of the Cave of Death anymore. Instead, it becomes a GUARDIAN at the Gates of Death! In other words, a goddess or a Watcher. Its function is to protect OTHER WEALTH. The things that are 'real'. Like labor, rice, oil, wheat, land, trade, ships and armies. Hoarding gold doesn't work. It has to be harnessed in the role of regulator, not be a commodity that is just as uncertain as all other things. The chaos, the total chaos we see today is a dynamic of running a system with NO CONTROLS. NO BALANCE. Libra hates this.

3) ... Takeover Of Housing Giants 'Critical', Associated Press reports. President Bush said Sunday Septembe 7th, 2008, that the historic federal government takeover of mortgage giants Fannie Mae and Freddie Mac is needed to keep them from failing, a risk he called "unacceptable" for an economy battered by housing and credit crises. Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing," Bush said in a statement released Sunday afternoon. "Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth."

Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie. The executives and board of directors of both institutions are being replaced.

In a statement, the president called the moves temporary until the appropriate role for the companies can be determined.

He said they must be reformed so that "they not pose similar risks to our economy or the financial system again."

Treasury Secretary Henry Paulson said the actions were being taken because the failure of either of the mortgage companies "would cause great turmoil in our financial markets here at home and around the globe." The huge potential liabilities facing each company could cost taxpayers tens of billions of dollars. But Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.

4) ... Statement of James Lockhart director of the Office of Federal Housing Enterprise Oversight, OFHEO, who will head the Federal Housing Finance Agency, FHFA, being created to oversee mortgage backers Fannie Mae, FNM, and Freddie Mac, FRE. (This individual should not be rewarded he should immediately be fired)

5) .... Bailout Nation Continues - Fannie/Freddie now Owned by You Trader Mark relates:

Personally, I feel a lot of disgust and shame in a way of the way our country conducts itself, allowing these things to go on despite warnings, so people along the line can line their pockets.

Wall Street will most likely celebrate as they have once again offloaded risk from them to you. I also feel perturbed because 90%+ of Americans probably have no idea this is happening or it's "too complicated" to understand since you cannot explain it in under 20 seconds. So their ignorance of the issue is being taken advantage of. Just my take. If they understood, perhaps more would actually be outraged at this.

The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars, but Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious. (My take on this is that it is not tens of billions but hundreds of billions; and there are any number of systemic risk events, which are just as "serious"; and the impact on the US Treasuries is to turn them down forever .... Richard)

The Treasury Department said it will immediately be issued $1 billion in senior preferred stock, paying 10 percent interest, from each company, but eventually could be required to put up as much as $100 billion for each over time if the funds are needed to keep the companies afloat as losses mount. The government also will receive warrants representing ownership stakes of 79.9 percent in each. (And you know when a government institution estimates one cost, that by the time we get there it is usually 2-3x higher. So figure $200 billion x 2-3 times = $400 billion to $600 billion cost to you.)

At both Fannie and Freddie, so-called Alt-A loans, a category between prime and subprime, accounted for roughly 50% of credit losses in the second quarter, even though such loans accounted for only about 10% of the companies' business. Alt-A mortgages include loans made with less than full documentation of borrowers' income or assets. (Yes, how true, and James Lockhart should be arrested for incompetence, not rewarded with a new job).

After the Treasury Department's announcement, credit rating agency Standard & Poor's downgraded Fannie and Freddie's preserved stock to junk-bond status, but reaffirmed the U.S. government's triple-A rating. (yes, I bet a gun is not to their head to never drop that AAA ratings, just like a gun was to their head not to drop the AAA rating on MBIA or Ambak despite total junk status in "reality").

The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans." (translation - there is about $36 BILLION on banks balance sheet of PREFERRED shares - since the banks are in so much trouble we cannot let that fall or it will cause even more pain in our financial system = more of your tax dollars to make sure banks making private party investments are made whole. Repeat, your tax dollars will be used to make sure banks investments in Fannie and Freddie preferred is whole - enjoy). (Those at smaller institutions who invested in Fannie and Freddie should be immediately removed from their jobs).

Mr. Syron (CEO Fannie) may walk away with an exit package that could total as much as $15 million, says David Schmidt, a senior consultant at James F. Reda & Associates LLC, a compensation consulting concern in New York. That includes a pension and deferred compensation, about $3.7 million in severance pay, and a possible payment of $8.8 million to compensate for forfeiting certain equity grants.

Mr. Mudd's (CEO Freddie) exit package, including stock he already owns, could total $14 million, Mr. Schmidt estimates. That includes $5 million in pension and deferred compensation, $4.2 million in severance pay and $3.4 million of restricted stock, based on Friday's closing price.
The great transfer of wealth from the many to the few continues in America - a trend accelerated each year over the past 3 decades. I recommend getting your child into Harvard/Yale - making the right connections with the kids of the "right people", get them employed at the "right" level at public companies or in government, and make sure they get into the "few" slots and not live like the slovenly masses of the current & future. Because this is what our Banana Republic full of nanny state bailouts for the upper 0.5% and corporations has come to, along with keeping the sheep blind with government reports that are useless representations of reality, along with bubbles that come along every 6-7 years to keep the masses "content" that there is a way for them to get rich fast too. Before they lose big time and transfer more wealth to the "right people". If I'm not making myself clear, I'm disgusted with everything I've seen the past year.

6) ... Thank Hank Trader Tim Knight: "The news looming over all of us now is the government's takeover of Fannie Mae and Freddie Mac. It is reported this would be the largest bailout in the nation's history. As an American, this saddens me. It saddens me to see the government of our country turn its back on true capitalism and whore the nation's treasury for the sake of their friends. This is not how a free market behaves. Free markets - - true free markets - - are natural, healthy, and self-cleansing. Sometimes the cleansing process is painful. But what Hank Paulson and Ben Bernanke are doing is destroying the country's future for the short-term benefit of ingratiating themselves to their small body of constituents.

Having said that, as a bear, I couldn't be happier with this news. As readers here know, last week was sensational for me. But I got out of my index puts since I felt they had done their duty, and I wanted to see indexes fight their way back to their failure levels before re-entering those positions. But what would create such an opportunity? What new reason would the bulls be given to buy? Well, my friends, the reason is here. Straight from God in heaven above. Another bailout. Another white horse. Thanks, Hank. I'm not the patient sort, and this is going to let me reload without the bother of waiting around.

7) ... Paulson's Statement On Freddie And Fannie With A Nearly Simultaneous Translation
by Jesse

8) ... Paulson Rolls The Dice At Taxpayer Expense
by Mike Mish Sheldon

9) ... Jim Rogers' Reaction to the Bailout of Fannie and Freddie

10) Eddy Elfenbein provides his take on Nouriel Roubini

In fulfillment of Bible prophecy of the Revelation 13:1-4, a Beast System has arisen to dominate mankind: a major component of the world system is the trans-Atlantic EU US Western World Government which was announced in Washington DC on April 30, 2007 by President Bush at the 2007 EU US Summit.

A confrontation between the trans-Atlantic EU US Western World Government, and Iran, is imminent over its nuclear ambitions, and will manifest as a military strike on Iran, by the EU US naval armada currently residing in the Persian Gulf.

The Beast System is totalitarian and sovereign in nature; and rules over three other world governments, the East, the North. and the South, prophecied to come a final world conflagration, know as the Battle of Armageddon, of Revelation 16:16, to be located on the expansive plain of Mageddo.

The prophet Daniel wrote that the EU US World Governor, the Sovereign, will meet his doom at Mageddo: "But rumors from the East and from the North will disturb him, and he will go out with great wrath to destroy and annihilate many. "He will pitch the tents of his royal pavilion between the seas and the beautiful Holy Mountain; yet he will come to his end, and no one will help him. (Daniel 11:44-45)

I. An Early Morning Financial Market Report For Friday August 29, 2008

A. Dollar And Gold Traded Volatily As The Battle Unfolds For Rulership As The World's Currency
Charts from Kitco.com showed high volatility in gold, $GOLD, and the US Dollar, $USD today.

The Yahoo Finance 5 day chart of the gold ETF, GLD, and the Dollar ETF, UUP showed gold up and the Dollar down in early moring trading; but by the end of the day, the situation reversed as the Euro, FXE, fell throught the day ... GLD UUP at end of day shows UUP up 0.04% and GLD down 0.6% ... FXE fell throughout the day.

Of note: August was a very good month for the dollar with the currency seeing its strongest 1 month rally in more than 15 years.

Mr. Danish in FXDD article USDJPY Breaks Supports behind Japanese Economic Stimulus Package provides a handy chart of the USD/JPY.

The struggle between the US Dollar, $USD, DX, will soon be over with gold, $GOLD, rising supreme and the dollar vanquished

INO.com provides the ongoing US Dollar Index, DX, Dow and Gold, $GOLD, Chart page.

B. USD/JPY Fell Trading To Trade Around First Support Level Of 108.95
FXStreet reports that the USD/JPY fell to 108.7. The dramatic news here is that the dollar carry trade is unwinding.

PFGlobal provides an ongoing chart of the USD/JPY; it shows that the USD/JPY has fallen to the edge of its channel.

James Chen in article FXStreet article USD/JPY Update - Key 108.50 Level provides this chart of the USD/JPY.

My-Zue presents the article Action Forex Market Overview Aug 30 08 Yen Could Dominate in a Week of Central Banks and Key US Data which relates: "The Japanese yen was the biggest winner last week as seen with yen crosses topping the top movers chart. While most of the moves were done on Friday following the 170pts fall in Dow, such declines did have the significance of indicating that yen is regathering strength for medium term rally. As discussed before, most yen crosses should have topped out in Jul, except USD/JPY. The pair has been steady due to dollar's strength but upside momentum was seen diminishing after making at high at 110.66. Outlook is mixed in the pair for the moment with possibility of a reversal. And if the last defense is taken down and USD/JPY does reverse, further massive buying could be seen in the yen which pushes other yen crosses further lower. This will probably be the main focus in September."

Marketiva ocvers the USD/JPY and provides this hourly chart of USD/JPY trading on Friday August 29, 2008 as well as the daily chart which shows 'Peak Dollar' on August 15, 2008, and Friday's breakdown and fall through a 'broadening top pattern' at 109; one can see how the USD/JPY took the US Dollar Rally up both in the Dollar itself and in stocks on July 15, 2008.

The effects of today's fall in the USD/JPY are limited -- oil and gold are stabilizing, as well as the US Dollar. These are in a struggle of their life for supremacy and sovereignty as the global ruling currency.

Ye Xie and Gavin Finch of Bloomberg report that Dollar Falls Against Yen as Personal Spending Slows in July

C. The Dollar Rally Is Over
Although the Dollar is trading higher, the Dollar Rally in stocks is over as the financial sector, IYF, having risen to 50 day support is falling sharply; and as is seen in the ratio of US Stocks to World Stocks, VTI:VEU and VTI:EFA, turning lower on August 15, 2008.

The fall in the financial sector has caused the Russell 2000, IWM, $RUT, to fall, causing a doji candlestick to form at 73.83 which is immediately below strong resistance at 74.00. Support lower for the Russell is found at 73.40, 73.00, 72.00, 70.75, 70.11.

The chart of the Russell 2000 Value share compared to the growh shares, IWN:IWO, shows a dark cloud cover candlestick, suggesting that the value shares, IWN, are now going to start to fall faster than the growth shares, IWO.

Of all the indices, the Nasdaq, QQQQ, $COMPQ, is off the most, that is 2.2%, being taken down by the Nasdaq 100, QTEC, which is off 2.9%.

Semicondutors, SMH, are off 3%.

Google, GOOG, is off 2%.

Just as a rising USD/JPY was benefecial for the dollar driven stocks of the Nasdaq; a falling USD/JPY is now going to be bearish for rimm, adbe, csco, ctsh, orcl, intc, aapl, mcd, hd.

And vice-versa as well; falling Nasdaq stock prices are going to pull the US Dollar down

Losses for these lynchpin stocks are as follows:
RIMM -4%
ADBE -3%
CSCO -2.5%
CTSH -2.5%
ORCL -4%
INTC -3%
AAPL -2%
MCD -1%
HD -.5%

D. The EUR/USD Moves Down Below Pivot Level 1.4729
FXStreet reports that the EUR/USD fell to 1.470. The EUR/USD has its biggest monthly fall ever, this August.

This action came as the yen carry trade unwound as described below; ActionForex provides charts of the EUR/USD in article EUR/USD Weekly Outlook Aug 30 08.

E. The EUR/JPY Moved Down Below 1.60
FXStreet reports that the EUR/JPY to 159.38. The dramatic news here is that the yen carry trade is unwinding which is powerfully seen in the Yahoo Finance 5 day chart of FXE and FXY. Had not the USD/JPY fallen, gold and oil would have fallen significantly.

ActionForex provides charts of the EUR/JPY in article EUR/JPY Weekly Outlook Aug 30 08.

The HUI Indexed precious metal mining shares, GDX, are disconnecting from the price of gold, and are falling lower with the metal and mining shares, XME, the Brics, EEB, the emerging markets, EEM, and China, FXI, as the latter falling the most as it had risen the most up to 50 day moving average.

I have continually documented that the gold shares have been falling relative to physical gold ever since early November 2007 2007; and today is no exception: GDX is down 0.7 while GLD is up 0.5%. The Yahoo Finance ongoing 1 year chart of GDX compared to gold shows the disconnect quite well. The Yahoo Finance six month chart of GDX relative to gold shows the disconnect picked up steam in mid-March 2008 as the Fed announced facilities of TAF, TSLF and PDCF ... One year GDX GLD .... Six month GDX GLD

The Yahoo Finance 3 month ongoing chart of the energy service providers, OIH, compared to gold, GLD, shows that the yen carry traders began to sell their deep investments, that is investments made long ago in the energy service companies, in mid June 2008, as risk aversion grew to decreased invesment opportunities, caused by dwindling growth world wide, and as the announcements of the May 19, 2008 Bank of Japan meeting were released, and carried by news services such as CEP News on Forex websites such as ActionForex.

The unwinding yen carry trade has induced the British shares to fall significantly lower as Lukanyo Mnyanda and Andrew MacAskill of Bloomberg report Pound Set for Monthly Loss as Confidence Holds Near Record Low.

Part of the reason why the yen carry trade unwound today is that Aaron Pan and Tracy Withers of Bloomberg are reporting that Australia, New Zealand Dollars Log Monthly Drop on Rate Outlook.

The unwinding yen carry trade also induced the other commodity currencies Swiss Krona, FXS, and the Canadian Dollar, FXC, to fall.

II. End Of The Day Comments
We are on the verge of an epic investment shift: gold is soon going to arise as the defacto world currency and means of garnering and accumulating wealth.

The struggle between the US Dollar, $USD, DX, will soon be over with gold, $GOLD, rising supreme and the dollar vanquished.

The Yahoo Finance 5 day ongoing chart of the Euro, FXE, compared to the Yen, FXY shows how the yen carry trade unwound this week.

Even though the USD/JPY unwound some as well, the lower Euro, FXE, that came via the unwinding yen carry trade, kept the US Dollar high as is seen in the chart of the Yahoo Finance 5 day ongoing chart of UUP vs GLD. And gold rose 1% on the week, as lack of supply at coin dealers and jewelrs maintained price up.

The Yahoo Finance 3 month ongoing chart of the energy service providers, OIH, compared to gold, GLD, is most helful in understanding the dramatic shift that is about to take place ... 3 month OIH compared to GLD

July 25, 2008 definitely marked 'Peak Currencies', this is seen in the fall of both Gold, GLD, and the natural resource stock leader OIH, falling lower seen in the chart.

August 15, 2008, through today August 29,2008, for all practical purposes has marked 'Peak Dollar' as gold rose from its 'spiked down' bottom as seen in the chart. The word 'spiked' comes from the volleyball terminology like in volley "spike down".

Note the trajectory in gold since August 15, 2008 -- is up.

Note the trajector in the energy service shares -- is topping out and turning down.

The bottom line here is that, wealth can no longer be garnered in investing long the markets, long the US Dollar, and certainly not in any of the commodity currencies such as FXE, FXA, FXS, FXC.

The US Dollar, $USD, closed the week up 0.65% in a doji at 77.31.

The Dollar ETF, UUP, finished the week up 0.63% in a doji at 23.94.

Gold, $gold, closed the week up 0.20% in a doji at $835.20.

The gold ETF, GLD, finished the week up 0.78% in a gravestone doji at 81.71.

Oil, USO, closed the week up 0.36% in a gravestone doji suggesting a fall lower.

The Russell 2000, $RUT, finished the week 0.26% higher in a long legged doji at 739.50

The DOW, $INDU, finished the week 0.72% lower.

The S&P, $SPX, fininshed the week lower 0.73% lower.

The Nasdaq, $compq, finished the week 1.95% lower. Jack Chan of JC's Buy and Sell Signals, gave his sell signal on the Nasdaq, QQQQ, several days ago.

The homebuilding stocks have been at the forefront of the Dollar Rally, that began July 15, 2008. Thier ETF, XHB, manifested a doji at 19.73 after having hitting resistance of 20 and falling lower. Here is the MSN comparsion chart of mth, kbh, spf, ctx, bzh, hov, len.

The weekly chart of XHB shows a 3.9% rise to 50 day moving average on falling volume: this implies a completion of rally.

The trucking group, was the worst performer, falling 7%, led by its single member, Ryder System, R. A brokerage analyst downgraded the trucking sector, predicting that freight volumes in the peak shipping season through November might be weaker than expected because of the soft US economy.

The transportation sector, ITY, like the industrial sector, IYJ, like the overall US stock turned down on August 11, 2008 -- days before Peak Dollar on August 15, 2008.

III. Fiat Wealth Will Be Destroyed By The "Saws Of Liquidity" ... Gold Will Arise As The Defining Measure And Means Of Wealth
The US Central Bank lowering of interest rates and provision of the Facilities Of TAF, TSLF and PDCF, was one of two well springs of wealth. It ran dry on May 19, 2008 as the TAF rally ended.

The other well spring of wealth has been been the Bank of Japan 0.5% interest to fund interest rate differential currency investing, in first the BRICS, and then in the emerging markets, and then most recently in the US beginning on July 15, 2008, as the yen carry traders sold oil, USO, and the metal manufacturing stocks, XME, and the gold stocks, GDX, to take profit and invest in the financial sector. They have been selling their interest in the US stocks on August 15, August 22, and today August 29, 2008, as can be seen in the fanning of the US stock ETF, VTI.

Risk aversion to investing long is rising due to level two assets and level three assets at banks, the announced liquificiation and capitalization of Freddie Mac, FRE, and Fannie Mae, FNM, rising inflation, decreased growth opportunities, and reducing corporate profits: this effectively has shut off the other well spring of wealth.

Now the falling currency pairs, USD/JPY, EUR/USD, and EUR/JPY will act to delever all forms of fiat wealth lower; these will act like saws on wood cutting and destroying wealth.

However in the process, the hidden jem of wealth, gold, burried away in the wood, will emerge as that which economically sustains.

Even though stocks sold off, US Treasuries, TLT, did not pick up the slack, they fininshed the week in a a doji, much like the previous dojis in mid December in 2007, and in mid March 2008, suggesting that the bond market place is once again going to call market place interest rates higher, such as the interest rate on the 30 year US Government bond, $TYX, even though the Federal Reserve is keeping its rate at 2%. The US Government bonds are most likely going lower very soon. Here is Jack Chan's, JC's Buy and Sell Signals, chart of TLT.

When trading resumes Tuesday, September 2, 2008, I fully expect the financial sector to lead the US stock market lower next week.

Given the projected fall in wealth, clearly a investment in gold is the way to go to preserve and possibly garner wealth. An insight of caution comes from Here is Jack Chan's, JC's Buy and Sell Signals, chart of the gold ETF, GLD as well as USO, both of which are currently influenced by the same currency trading dynamics.

I envision gold rising in value in relation to oil -- I envision GLD:USO rising from 0.84.

I envision gold and oil stabilizing.

I envision energy service stocks, OIH, falling, just in the same manner, that gold stocks disconnected from the price of oil; a hint of such being seen in the comparative chart of GLD, USO and OIH from August 15, 2008, throught August 29, 2008.

Here is Jack Chan's, JC's Buy and Sell Signals, chart of the energy services ETF, OIH; I believe it will deteriorate quickly compared to gold, GLD.

Prieur du Plessis writing in Safehaven.com article
Words from the (Investment) Wise for the Week That Was (August 25 - 31, 2008) relates: "West Texas Intermediate crude, $WTIC, traded between $115.0 and $118.76 a barrel last week before closing 0.8% up at $115.46 on Friday. The gain was relatively small given the impending arrival of Hurricane Gustav and concerns about the geopolitical situation with Russia, but word from the Department of Energy that it would release strategic oil stocks to combat any disruption kept oil prices in check. (The Gulf of Mexico is responsible for 25% of US crude oil production and 15% of US natural gas production.)

IV. We Have Passed Out Of The Age of Prosperity That Came Via Financialization And Securitization
The Commodity Futures Modernization Act, along with the repeal of the Glass-Steagall Act, set in motion the events that are now battering the financial system; this is desribed in the article 'How Phil Gramm and the Wall Street Investment Banks Helped to Destroy the US Financial System'.

Eddy Elfenbein writing in article August 29, 2008, Ouch! documents how rapidly the power and wealth of investment capitalism has gone toxic: "The $14bn in losses for 2007 and the first two quarters of 2008 equal half of Merrill’s profits since the beginning of the ­decade."

The Summit Of International Bankers in Jackson Hole Wyoming proved fruitless to provide financial stability. Krishna Guha of Financial Times in article Bankers Caught Between Hope And Despair reports that "More than a year into the credit crisis, the world's top central bankers admit they are still in the dark as to what its ultimate impact on the global economy will be. By the same token they are unsure to what extent weakening growth will help to ease high inflation. There is enormous uncertainty about where we stand at the moment,' Stanley Fischer, governor of the Bank of Israel, said at the close of the Federal Reserve's annual retreat in Jackson Hole, Wyoming. His comments came as US Treasury officials worked through the weekend on options for Fannie Mae and Freddie Mac, the troubled mortgage groups, amid expectations an announcement could come this week. "Mr Fischer told central bankers from 43 nations 'we are in the midst of the worst financial crisis since World War II'. But it was still not clear how big an event it would turn out to be. So far, he said, 'in real economy terms we are not looking at anything exceptional'. But the crisis was entering a 'second round' in which economic and financial weakness could feed on each other. Other current and former central bankers shared this view. Alan Blinder, a former Fed vice-chairman, said: 'It is amazing a year later how much is still unresolved.'

Asha Bangalore of Northern Trust in article Consumer spending - strong likelihood of decline in Q3 reports that "Nominal consumer spending increased 0.2% in July, following a 0.6% gain in June. However, inflation adjusted consumer spending fell 0.4% in July after a 0.1% decline in June. Consumer spending will have to advance in leaps and bounds in August and September for a flat reading in the third quarter. In other words, a decline in third quarter consumer spending is nearly certain. Assuming our forecast is accurate, this would be the first quarterly decline in consumer spending since fourth quarter of 1991."

BCA Research reports: "Our investment spending model forecasts that capex growth will drop to zero by the end of the year. Sticky corporate bond yields, and a further slowing in final demand at home and abroad, will cause companies to defer expansion plans: expect more weakness ahead."

BeSpoke Investment Group in article Credit Sreads Continue To Get Worse reports: "FDIC Chairman Sheila Bair commented in a press conference this afternoon that she expects the credit markets to continue to worsen, and judging by the recent action in credit spreads, the market seems to agree. According to Merrill Lynch data, interest rates on investment grade corporate bonds are currently not only at higher levels than they were at the Bear Stearns low, but they are also at their highest levels ever. As of yesterday's close, investment grade corporate bonds were yielding 312 basis points more than Treasuries, which is a 118% increase over year ago levels."

V. Today The World Transitioned Into Kondratieff Winter
If there ever was a trasitional day, an epic day, a watershed day; today was the day that introduced Kondratieff Winter as marked by
1) the fall of Dell stock value on announcemnet of decreased growth and profits.
2) the breakout of the bear market semiconductor ETF SSG and Nasdaq ETF QID.
3) the fall of both the world stocks, VEU, and the US Stocks, VTI,
4) http://my.opera.com/richardinbellingham/blog/ssg-and-qid-have-been-in-breakout-for-two-weeks

We have likely reached 'Peak US Treasuries', with evidence coming from
1) the gravestone doji in the zero coupon bond mutual fund BTTRX,
2) the gravestone doji in the US Treasuies in the futures market place, $USB.
3) The breakout of the Proshares Bear Market ETFs, SSG and QID.

I find the chart of US Treasuries, TLT Daily and TLT Weekly frightening. Most consider government bonds to be the life boat of safety; I do not. I shuddder when I think of the cataclysmic fall that is coming, and the social impact that the fall will have on people living in America.

In as much as I have written the Liquidation Thesis, which holds that government services and payments, service sector jobs, public and private debt of all types, and unfunded retiree benefits are going to be liquidated, that is done away with, I've already done my weeping and mourning.

Kondratieff Winter has a political component as well as an economic component; and commentary by DrKrbyLuv in Elaine Meinel Supkis article 'One Year Of Bad Banking Continues', provides some insight into the dynamic of political chaos.

A systemic risk event or events will quickly unfold, which will be the cornerstone of Kondratieff Winter producing a finanical system meltdown.

Numerous systemic risk potentialities abound. One is that of credit drought progressing to becomer credit gridlock where corporations cannot obtain cash to refund long term debt as it comes due. Carrick Mollenkamp of the Wall Street Journal reports: "U.S. and European banks, already burdened by losses and concerns about their financial health, face a new challenge: paying off hundreds of billions of dollars of debt coming due. At issue are so-called floating-rate notes -- securities used heavily by banks in 2006 to borrow money. A big chunk of those notes, which typically mature in two years, will come due over the next year or so ... That's forcing banks to sell assets, compete heavily for deposits and issue expensive new debt. The crunch will begin next month, when some $95 billion in floating-rate notes mature. J.P. Morgan Chase ... Analyst Alex Roever estimates that financial institutions will have to pay off at least $787 billion in floating-rate notes and other medium-term obligations before the end of 2009. That's about 43% more than they had to redeem in the previous 16 months. The problem highlights how the pain of the credit crunch, now entering its second year, won't end soon for banks or the broader economy ... As banks scramble to pay the floating-rate notes, they could see profit margins shrink as wary investors demand higher interest rates for new borrowings. They're also likely to become less willing to make new loans to consumers and companies, aggravating economic downturns in both the U.S. and Europe."

Pierre Paulden of Bloomberg reports: "Merrill Lynch & Co., Wachovia Corp., Lehman Brothers Holdings Inc. and the rest of the U.S. finance industry are about to find out how expensive credit has become. Banks, securities firms and lenders have a record $871 billion of bonds maturing through 2009, according to JPMorgan Chase & Co., just as yields are at their most punitive compared with Treasuries. The increase in yields may cost them as much as $23 billion more in annual interest versus a year ago based on Merrill Lynch index data. Higher refinancing expenses will restrict the ability of banks to borrow in the capital markets and lend, further cutting off credit to consumers and businesses and curbing what is already the slowest growing economy since 2001. S&P said last week that it had a 'negative' outlook on almost half of the 50 highest-rated financial institutions in the U.S. as of June 30, the highest proportion in 15 years. 'The gears of capitalism are grinding to a halt,' said Mirko Mikelic, senior bond fund manager at ... Fifth Third Asset Management ... 'There is a tremendous concern over the banking sector and a scramble right now for capital.'"

Another systemic risk event that could easily eplode are issues surrounding the two GSE's. Financial Times relates that in article Fannie And Freddie Doubts Grow reports that "Shares in Fannie Mae and Freddie Mac fell on Friday amid concerns foreign investors were reassessing their exposure to the troubled US mortgage financiers' bonds and guaranteed securities". "Bill O'Donnell, analyst at UBS said: 'If this recent theme of cooling passions for GSE's debt becomes a longer-term trend, then it could be problematic for the GSEs given that the central banks have taken ... roughly 30% to 60% of new GSE issuance in recent months and years." "The US Treasury was granted powers last month to extend its credit lines to Fannie and Freddie and to invest in their debt and equity." The weekly charts show Fannie Mae, FNM, fell 14%, and Freddie Mac, FRE, fell 15%.

Times Online in article Buffett Predicts game Over For Fannie And Freddie relates: "For Fannie May and Freddie Mac the game is over. The Sage of Omaha has spoken. "Warren Buffett, the world's richest man, said it was no longer feasible for America's two biggest mortgage finance companies to exist independently. He went on to forecast that the US economy would remain in the doldrums for at least five months. "Fannie and Freddie, which underpin America's mortgage market by buying home loans and packaging them into bonds, did not have any net worth, Mr Buffett told CNBC. Both face losses of tens of billions of dollars on the bonds. Analysts said they look increasingly likely to need a cash injection from the Government and Mr Buffett said they were too big to fail, predicting: 'You will see some action fairly soon."

I have to ask the question: "If these organizations do not have any net worth, why, just why in the world should they be allowed to keep issuing debt"? Perhaps the answer is like Elaine Meinel Supkis relates: The Purpose Of Modern Capitalist Banking Systems Is To Create Increasing Debt And Not Increasing Wealth.

Another systemic risk is that US automakers will simply run out of money, and lacking access to credit, or sought after government loans to retool to the extent of $50 Billion as CNN News reports, go out of Business.

As a systmeic risk event unfolds, the US Dollar will tumble lower with all currencies; and authoritarian state corporate rule rising to enforce civil security laws such as the Security and Prosperity Partnership of North America, the SPP.

Two current example of authoritarian rule include the Glenn Greenwakd Salon article Police Preemptively Raid GOP Convention Protesters and the Sean Rayment Telegraph.co.uk report that Elite British SAS Force Has Taken 3,500 al-Qaeda Terrorists Off The Streets In Baghdad In The Last Two Years.

Society will become pyramidal with a few ruling elite at the top, government and industry stakeholders overseeing the factors of production, as well as commerce, finance and trade, and a pauperized mass of humanity at the bottom .

VI. Kondratieff Winter Will Be Experienced Globally
Marcus Gee writing in Globe and Mail article Warning Signs From The Centre Of The Boom reports of economic downturn in China:

"The ruling Communist Party is worried enough that Premier Wen Jiabao and other leading officials toured coastal export industries last month. Mr. Wen professed himself “very concerned about the difficulties they are up against.” Since then, the Politburo has met to underline its support for “steady and fast” economic growth, a shift from the previous emphasis on reining in the excesses of the economy.

After fretting for the past five years or so about how to keep the economy from overheating, Beijing is now faced with the novel problem of how to keep it from cooling. “If you're sitting in Beijing, you're saying, ‘We've already lost two percentage points of economic growth. How much more are we going to lose?'” said Nicholas Lardy, a senior fellow at the Peterson Institute of International Economics in Washington.

“That's a big turning point for the Chinese economy. That means questions of profitability, questions of unemployment, questions of social stability.”

In the textile industry, which employs 25 million workers, increasing wages and the rise of the Chinese currency, the yuan, have raised costs and made it more expensive for other countries to buy Chinese-made clothing. Energy costs are up too, and a new law forcing companies to provide social benefits to workers has increased labour costs for employers. As a result, hundreds of companies have moved their production to cheaper countries such as Cambodia and Bangladesh.

China's problems stem in part from its very success at turning itself into the world colossus in low-cost global manufacturing, an export dynamo whose rapid growth has been fuelled by cheap labour, energy, capital and a willingness to accept narrow profit margins.

It's a condition that Vitaliy Katsenelson labels “late-stage growth obesity.”

The director of research with Investment Management Associates in Denver, he coined the expression to describe what happens when economies and corporations expand at such a rapid clip they fall victim to inefficiencies that worsen as time goes on, particularly in a case like China's, where tight government control over the banking system, rampant crony capitalism and continuing corruption mean that capital is not always allocated on the basis of merit or need.

As a result, growth may be high, but its quality is low, which makes it even more likely that decisions on asset allocation will be poor.

He cites the famous case of the vast Dongguan South China Mall, named The Mall Of Misfortune, by Michael Donohue of TheNational, which was opened with much fanfare in Dongguan in 2005. Although larger than the West Edmonton Mall, it draws no more traffic than a typical small Canadian strip plaza and most of the 1,500 stores are vacant. It is the world's leading example of a 'Dead Mall'.

China's worst short-term problems lie in manufacturing, the engine of its spectacular growth.

As any Canadian producer can attest, manufacturing can be a volatile activity, prone to booms and busts. But the Chinese have enjoyed nothing but growth for 30 years, leaving industry with rising fixed costs, lots of excess capacity and workers they can't easily shed when demand finally declines.

As it becomes harder to meet payments on debt (the primary source of capital) and maintain payrolls, all those millions of people who were encouraged to migrate from farms to urban factory jobs will find their meagre livelihoods threatened.

“This is when you discover how dysfunctional this economy was,” Mr. Katsenelson says.

“It's a highly vulnerable country,” agrees George Friedman, chief executive of Stratfor, an Austin, Tex.-based company that provides global intelligence to clients. “With energy prices rising dramatically as a [cost] component, the ability of the Chinese economy to keep functioning the way it used to is in severe doubt.”

To begin with, China's financial system is not as solid as it looks. According to Mr. Friedman, the government's conservative estimate on the level of Chinese loans on which no principal or interest is being collected is $600-billion (U.S.). Stratfor's research places the actual figure at closer to $1.1-trillion, held by commercial banks as well as so-called asset management corporations, government entities set up to buy debts.

“Japan went south when non-performing loans got to about 20 per cent of GDP. South Korea, about 25 per cent,” Mr. Friedman says. “These guys [Chinese] are conservatively at 40 per cent of GDP. And then they get hit by commodity prices. So for China, it's the perfect storm.”

And inflation isn't licked yet. Though it has indeed moderated after a worrying runup earlier in the year, falling to 6.3 per cent in July from 7.1 per cent in June, a rate of 6 or 7 per cent is far above the average for the past decade of 1.3 per cent a year. And while the consumer price index is down, producer prices – which are what affect companies – rose 10 per cent last month.

VII. Kondratieff Winter Means An EU US Iran War, Fighting Terrorists, And Eventually The Outbreak Of World War III
EU US Iran War: A confrontation between the trans-Atlantic EU US Western World Government and Iran, is imminent over its nuclear ambitions, and will manifest as a military strike on Iran, by the naval armada currently residing in the Persian Gulf.

Fighting Terrorists: Umberto Pascali writing in GlobalResearch.ca article Obama's Running Mate Presents The Strategic Plan For The Next Administration quotes Joe Biden as saying at the Democratic Convention in Denver on August 27, 2008: "The fact of the matter is, al-Qaida and the Taliban - the people who have actually attacked us on 9/11 - they've regrouped in the mountains between Afghanistan and Pakistan and are plotting new attacks. And the Chairman of the Joint Chiefs of Staff has echoed Barack's call for more troops and John McCain was wrong and Barack Obama was right. Should we trust John McCain's judgment? When he rejects, when he rejected talking with Iran and asked what is there to talk about? Or Barack Obama, who said we must talk and must make clear to Iran that it must change?"

World War III: F. William Engdahl writing in GlobalResearch.ca article Missile Defense: Washington And Poland Jst Moved The World Closer To War writes that "The signing on August 14 of an agreement between the governments of the United States and Poland to deploy on Polish soil US ‘interceptor missiles’ is the most dangerous move towards nuclear war the world has seen since the 1962 Cuba Missile crisis. Far from a defensive move to protect European NATO states from a Russian nuclear attack, as military strategists have pointed out, the US missiles in Poland pose a total existential threat to the future existence of the Russian nation. The Russian Government has repeatedly warned of this since US plans were first unveiled in early 2007. Now, despite repeated diplomatic attempts by Russia to come to an agreement with Washington, the Bush Administration, in the wake of a humiliating US defeat in Georgia, has pressured the Government of Poland to finally sign the pact. The consequences could be unthinkable for Europe and the planet.

The preliminary deal to place elements of the US global missile defense shield was signed by Polish Deputy Foreign Minister Andrzej Kremer and US chief negotiator John Rood on August 14. Under the terms, Washington plans to place 10 interceptor missiles in Poland coupled with a radar system in the Czech Republic, which it ludicrously claims are intended to counter possible attacks from what it calls "rogue states," including Iran.

To get the agreement Washington agreed to reinforce Poland's air defenses. The deal is still to be approved by the two countries' governments and Poland's parliament. Polish Prime Minister Donald Tusk said in televised remarks that "the events in the Caucasus show clearly that such security guarantees are indispensable." The US-Polish missile talks had been dragging for months before recent hostilities in Georgia.

The Bush White House Press spoksperson, Dona Perino stated, officially, "We believe that missile defense is a substantial contribution to NATO's collective security." Officials say the interceptor base in Poland will be opened by 2012. The Czech Republic signed a deal to host a US radar on July 8.

The signing now insures an escalation of tensions between Russia and NATO and a new Cold War arms race in full force. It is important for readers to understand, as I detail painstakingly in my book, to be released this autumn, Full Spectrum Dominance: The National Security State and the Spread of Democracy, the ability of one of two opposing sides to put anti-missile missiles to within 90 miles of the territory of the other in even a primitive first-generation anti-missile missile array gives that side virtual victory in a nuclear balance of power and forces the other to consider unconditional surrender or to pre-emptively react by launching its nuclear strike before 2012. Senior Russian lawmakers said on Friday the agreement would damage security in Europe, and reiterated that Russia would now have to take steps to ensure its security".

Mike Whitney writes in GlobalResearch.ca article Nuclear Chicken in Poland: Putin Can't Afford to Back Down that: "If the Bush administration proceeds with its plan to deploy its Missile Defense System in Poland, Russian Prime Minister Putin will be forced to remove it militarily. He has no other option. The proposed system integrates the the entire US nuclear arsenal into one operational-unit a mere 115 miles from the Russian border. It's no different than Khrushchev's plan to deploy nuclear missiles in Cuba in the 1960s.

Early last year, at a press conference that was censored in the United States, Vladimir Putin explained his concerns about Bush's plan:

“Once the missile defense system is put in place it will work automatically with the entire nuclear capability of the United States. It will be an integral part of the US nuclear capability....And, for the first time in history---and I want to emphasize this---there will be elements of the US nuclear capability on the European continent. It simply changes the whole configuration of international security…..Of course, we have to respond to that.”

Nuclear weapons specialist, Francis A. Boyle, says the Bush administration's plans represent the “longstanding US policy of nuclear first-strike against Russia." In Boyle’s article “US Missiles in Europe: Beyond Deterrence to First Strike Threat” he states:

“By means of a US first strike about 99%+ of Russian nuclear forces would be taken out. Namely, the United States Government believes that with the deployment of a facially successful first strike capability, they can move beyond deterrence and into "compellence."… This has been analyzed ad nauseam in the professional literature. But especially by one of Harvard's premier warmongers in chief, Thomas Schelling --winner of the Nobel Prize in Economics granted by the Bank of Sweden-- who developed the term "compellence" and distinguished it from "deterrence." …The USG is breaking out of a "deterrence" posture and moving into a "compellence" posture. (Global Research 6-6-07)

Bush's real goal is to force Moscow to conform to Washington’s diktats or face the prospect of first-strike nuclear annihilation. Putin must respond".

VIII. As Kondratieff Winter Rushes In, Public Sentiment Swells Calling For A Change
Michael Charmichael writin in Huffington Post article Obama Obliterates McCain:

In Denver, Barack Obama faced his toughest challenge to date. In one crucial week, Obama desperately needed to halt his slide in a spate of recent polls. Facing the serious threat of popular momentum toward his opponent, Barack Obama delivered in the clutch and produced a Democratic National Convention that did much more than merely accomplish its mission.

Obama's ringing acceptance speech thrilled the enormous throng at Invesco Field. Turning the tables on McCain, Obama reversed the polarity of the presidential campaign. Obama's spellbinding oratory came not a moment too soon, but it will certainly catapult him upward in the polls with a renewed momentum that will obliterate the faltering surge of John McCain.

Delivering a historic acceptance speech that can only be compared with FDR and JFK, Obama clearly established his vision for America's future in the heart and mind of Middle America.

Against the backdrop of a convention that started cautiously but gradually found its balance and steadily built its narrative of suspense toward the dramatic climax in Invesco Field, Obama calmly yet passionately defined himself and his prescription for America in radical juxtaposition to the record of George Bush and the agenda of John McCain.

Seventy thousand of the faithful gathered in the massive arena to experience their personal epiphany at the epicenter of the Obama phenomenon. Never before in American history have so many people witnessed such an extraordinary political convention.

On the forty-fifth anniversary of Dr. Martin Luther King Jr.'s iconic "I have a dream" speech at the Lincoln Memorial, Barack Obama recaptured the moment when America pivoted from the age of Jim Crow to embrace Civil Rights. In captivating his audience, Obama painted a far broader spectrum of hope for positive change than even the redoubtable Dr. King.

Moving decisively into the process of change at the heart of his vision, Obama exploded every minute particle of the now totally shattered case for John McCain. Pointing to the multifaceted crisis confronting America -- from homelessness to massive unemployment and crushing poverty to the collapse of the mortgage industry then expanding his palette from the unjust war in Iraq to the collapse of confidence on Wall Street -- Obama demolished George Bush's America and his heir apparent, John McCain.

The tides of public momentum are massive and elemental energies. The collision between Barack Obama and John McCain is stirring primeval forces now building waves and crests and currents that ripple and crash against the shoals of time".

IX. Many If Not Most Professionals Take A Position 180 Degrees Different Than I Do And Write Bullishly
In many of my most recent articles I have made reference to the bullish position of the professionals who express the consensus of the marketplace today: the US Dollar and the US Stock Markets are going up.

Jay DeVincentis writing in Safehaven.com relates "Friday is day 38 in our Up Cycle.

The Stock Barometer signals follow 5, 8, 13, 21 and sometimes 34 day Fibonacci cycles that balance with 'normal' market cycles. Knowing where you are in the current market cycle is important in deciding how long you expect to maintain a position.

Potential Cycle Reversal Dates

2008 Potential Reversal Dates: 12/31, 1/11, 2/1, 2/13, 3/6, 4/5, 4/22, 5/23, 6/6, 6/27, 7/13, 9/2. We publish these dates up to 2 months in advance.

With 9/2 only two trading days away, we're within the window for a turn and I believe that turn will be higher."

Bill McLaren writing in Safehaven.com relates "The objective for this move up remains the 3//8 retracement of the entire bear campaign around the 1340 price level. Once the index moves above 1313 it becomes at risk of reversing but the probability of the 3/8 retracement is very strong. The index closed on the high and that could have been a temporary exhaustion but the 1340 level looks reachable. There are a number of Dow 30 stocks that have obvious multiple higher low basing patterns that should rotate out of those bases and bring about the continuation of the rally".

LiveMemories relates "Looking at various charts, I am getting more and more convinced that the worse of this bear market is now behind us ... The good ol' US Dollar seems to be the only bullish trade in town these days. I love this chart. It is a picture perfect bullish chart. While it does indeed look like the dollar is extended here, it can easily get a lot more extended ... The home builders index, XHB, is working on building a nice base here ... This may not be "THE" bottom in XHB. I am willing to bet it is".

The BeSpoke Investment Group takes note of the fact that 64% of stocks in the S&P 500 are currently trading above their 50-day moving averages: "As shown in the chart below, the reading has been creeping higher and higher since mid-July, and looks to be on its way to the 80% to 85% levels seen twice over the last year. Readings above 50% are signs of a healthy market, and it hasn't been above 50% for much of 2008."

J Clinton Hill relates "Hillbent’s advice is to stop shooting, lay down your arms, and prepare for the impending bull market".

Jacob Oubina, Currency Strategist at ActionForex relates "The USD will continue to strengthen. There are a plethora of top-tier US indicators due up in the week ahead. ISM manufacturing and construction spending kick things off on Tuesday. Factory orders and the Fed's Beige Book are due up on Wednesday. We will provide a detailed report on what to expect from the Beige Book next week. ADP employment, productivity and the usual weekly jobless claims data are due on Thursday while Friday closes out the week with the all-important NFP employment report (which) will likely be a case in point (to test the strength of the US Dollar). We will be watching closely to see if the USD is able to shrug off another expected job loss, which would be another indication of the long-term nature of the current USD recovery. Should the USD react more negatively, we'll take it as an indication that consolidation is ongoing".

Corey Rosenbloom, a Chartered Market Technician Candidate, remaks on the US Dollar: "I cannot underscore how powerful and meaningful this recent momentum impulse was and what it means for the US Dollar Index. This is one of the strongest upward surges in the index in years (both on the daily and weekly chart) and the assumption is that it is powerfully bullish for the Dollar. New momentum highs often precede new price highs.

The trend of the Dollar Index is now positively confirmed as “up” (after making a higher low, higher high, and then taking out that high) and then breaking solidly above moving average resistance.

In terms of the moving averages, the 20, 50, and 200 day moving averages are officially in the “most bullish orientation possible” in terms of the 20 being above the 50, with both above the 200. One cannot ignore this development - these moving averages now serve as expected price support.

The downtrend has ended and now we’re into a new environment - be sure to pay attention to all the intermarket relationships and economic realities that will come from this new development".

INO.Com relates of the USD/JPY: The September Dollar closed higher on Friday as it consolidates above the 75% retracement level of the 2007-2008 decline crossing at 77.20 with ongoing INO chart of the US Dollar Index, DX, seen here. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are diverging and turning neutral hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 76.33 are needed to confirm that a short-term top has been posted. If September extends this summer's rally, the 87% retracement level of the 2007-2008 decline crossing at 78.14 is the next upside target. First resistance is Tuesday's high crossing at 77.71. Second resistance is the 87% retracement level crossing at 78.14. First support is the reaction low crossing at 76.17. Second support is the 20-day moving average crossing at 76.33.

Chris Perruna relates "I was witness to the USD gaining some strength over the past few weeks while traveling. The large chart shows that this is the first true buy signal in more than 3 years (2005)'.

I feel it necessary to present my biography: I have no credentials or financial licenses whatsover; I am a low income blogger who communicates an observable and ongoing investment demand for gold and the 'Liquidation Thesis'. As a matter of course any investor should seek advice from a licensed investment professional before making any investment decision.

X. Get ready for some real excitement .... posssibly some shock and awe
DailyFX writes: "Interest rate expectations will play a pivotal role in the overall health of the carry trade next week as four G10 central banks are scheduled to deliver monetary policy decisions. It’s this high level of event risk on the horizon that shines a bright spotlight on the precarious position the popular Forex strategy".

XI. Investment Application
I recommend that one be invested 1/3 long SKF in a trust account, and 2/3 invested in gold at BullionVault and GoldMoney.

XII. Keywords and symbols used in this report
GLD, UUP, IYM, FXE, FXA, FXS, FXC, IYM, QQQQ, QTEC, SMH, EEM, USO, FXI, EEB, EEM, GDX, OIH, XME, VTI, TLT, VEU,

goog, rimm, adbe, csco, ctsh, orcl, intc, aapl, mcd, hd, fre, fnm

$GOLD, $USD, DX, $RUT, $COMPQ, USD/JPY, EUR/USD, EUR/JPY, FXE:FXY, IWN:IWO, $TYX

deadmall, deadmalls