The Resourceful Bear Blog

1) God provides His Word in 66 books of the Bible; it is Scripture providing trustworthy revelations and promises for one to place faith in Jesus Christ, and to call on His name, and be saved.
The Genealogy of Jesus is found in 42 families in Matthew 1:1-17 where there are 3 groups of 14 families; and 72 in Luke 3:32-38. Of note there were four gentile harlots: Tamar, a victim of incest; Rahab, a prostitute; Ruth, a Moabitess; and Bathsheba, a victim of rape.

Chuck Missler in Hidden Treasures in the Biblical Text, comments on Genesis Chapter 5, relating that God appointed ten patriarchs whose names herald the role, nature and purpose of Jesus:
Adam ... Man
Seth ... Appointed
Enosh ... Mortal
Kenan ... Sorrow
Mahelalel ... The Blessed God
Jared ... Shall come down
Enoch ... Teaching
Methuselah ... His death shall bring
Lamech ... The despairing
Noah ... Comfort, Rest

Putting all the names in sequence we have: Adam Seth Enosh Kenan Mahelalel Jared Enoch Methuselah Lamech Noah. The hebrew translated into English reads: Man Appointed Mortal Sorrow; The Blessed God Shall come down Teaching His death shall bring The Despairing Comfort.

Jehovah made eight covenants with Abraham.

In Leviticus chapter 23 there are 7 feasts which commemorate the important events of Israel's history and are also prophetic, that is a shadow of what is to come, but the substance is Christ. Colossians 2:16-17:

Passover - Points to His death on the cross so that all who have faith in his sacrifice may be "passed over" during God's judgment.

Unleavened Bread - This followed immediately after the Passover. Throughout the Bible, leaven, that is yeast, is used as a picture for sin. To remove all leaven is representative of removal of all sin through the sacrifice of Jesus.

First Fruit - Jesus is the "first fruit of the resurrection" (1 Corinthians 15:20). He is the first to have died and then risen to eternal life.

Pentecost - Celebrated on the first day of the week (7 Sabbaths + 1 day). The Holy Spirit was first poured out on the gathered disciples on the day of Pentecost.

Trumpets - Started on the first day of the 7th month. Trumpets are used as a alert to herald important announcements. This feast points to the second coming of Jesus. In Revelation chapters 8 and 9 we see the trumpets used by God to prepare the way for the return of His Son to the earth.

Atonement - Celebrated on the 10th day of the 7th month where every sin committed by the children of Israel was to be accounted for and removed by sacrifice. This points to the total removal of sin by the sacrifice of Jesus on the Cross.

Tabernacles - Began on the 15th day of the 7th month. The people lived in booths to remind them of the journey through the wilderness, and of the fact that the Messiah would tabernacle amongst us. People cut branches off trees and celebrated and rejoice before the Lord. This points to a time in the new Kingdom, as recorded in revelation 7:9-17, when there will be a great multitude from every nation who have been through the trial and tribulation, will celebrate before the Lord and thank Him for His salvation. It is also recorded in the book of Zechariah that everyone who is left of all the nations will celebrate this feast from year to year, as they worship the Lord at Jerusalem (Zechariah 14:16 - 19).

Thus the feasts of Israel are pointers to the life and work of Jesus throughout all ages.

Under the Old Covenant, God called for Sabbath, that is a day of rest, which was to be observed on a lunar new moon basis; rather than as now celebrated, on a weekly Saturday observance. God says that the people's Sabbaths, and the calling of assemblies, he cannot endure, as they are iniquity. Isaiah 1:13-14.

2) God chooses the schemer and dreamer Jacob to deal with mankind.
God is sovereign; He foresaw and foreknew all; He looked down the "hall way of time", and chose to work through Jacob not Esau. God said "Jacob I love; but Esau I hated". Romans 9:13

God has two kinds of vessels, the first vessel is found in Romans 9:20-23 and the second vessel in Isaiah 51:20 and I Thessalonians 5:9.

God uses these vessels to do his will. Jesus prayed that the Father's will be done. It is being done 24x7 through the faith of Jesus Christ.

Jacob schemed to usurp his older brother's rights and authority. Genesis. 25:20-26.

The older sells his birth right for a bowl of beans. Genesis 25:27-34

The usurper's mother deceives her husband and conspires to have The Blessing given to the underling, who with deceit, takes away the elder's birth right blessing. Genesis 27:11-39

God reaffirms the covenant made with his grandfather Abraham. Genesis. 28:10-15

Jacob confers blessings and prophesies the Lord's coming through Judah. Genesis 49:8-12

Dan prophesied to bear Lucifer's child to rule mankind Genesis. 49:16-18

The tribe of Dan is excluded from the List of Deliverance of Israel. Revelation 7:4-8

Joseph is assigned to have headship over his brothers. Genesis 49:22-26

3) Joseph reveals that his headship was ordered by God for good so that kindness be given unto them. Genesis 50:19-25

4) Joseph prophesies that God will visit his people. Genesis 50:25

5) Ephraim and Manessah are assigned special blessings.
Ephriam and Manessah are adopted by Jacob Genesis. 41:51-52.

I do have to say that just because God may have blessed the European Union, United Kingdom, Britain and the United States, as part of a blessing to Ephriam and Manessah, He may have done so or allowed this as part of His plan to raise up the European Union. and the US as a world power to acquired by the Sovereign and Seignior for their purposes of world domination. Great means powerful, it means domineering; it does not necessarily mean good and beneficial.

Excerpt from pages 385 to 389 of The "Lost" Ten Tribes of Israel...Found by Steven M. Collins as quoted by Servant News describing the doctrine of British Israelism.

Ephraim’s clans formed the backbone of the tribes which united to form the Parthian Empire, while one of the dominant tribes of the Sacae Scythians was the Massagetae (Manasseh). Even as the term "House of Israel" included the rest of the tribes of Israel who remained associated with Ephraim and Manasseh, the term "Sacae" was also applied to the tribes of Israel which were led by Ephraim and Manasseh (Parthia and Scythia) while in Asia.

When the Scythians and Parthians migrated to Europe, the names "SAChse," or "Saxons," ("Saac’s sons") remained upon them as they settled in the British Isles, but this name also remained on some related tribes who stayed on the mainland (i.e. "Saxony" in Germany and "Alsace" in France).

Jacob prophesied that Manasseh "shall become a people, and he also shall be great," but added that Ephraim’s descendants "shall be greater than [Manasseh], and his seed shall become a multitude of nations." Genesis 48:19

With these words Jacob prophesied that Manasseh and Ephraim would receive the blessing of Genesis 35:11 that the "birthright" promises would eventually include "a nation and a company of nations." Genesis 48:19 specifically foretold the descendants of Ephraim (the younger brother) would become the "multitude of nations" while Manasseh’s descendants would become the single great nation.

The modern nations which descended from an Anglo-Saxon heritage are England, the United States of America, Canada, Australia, and New Zealand. These nations have perfectly fulfilled all prophecies about the birthright tribes of Ephraim and Manasseh.

They easily fulfill the prophecy about large population. When you combine the populations of the above modern nations, they are, by far, the most numerous nations of the modern tribes of Israel. They have uniquely fulfilled the prophecy about becoming "a great nation" and a "company of nations." The single great nation is the United States of America and the Caucasian nations of the British Commonwealth (Great Britain, Canada, Australia, New Zealand) are the prophesied company of nations. Therefore, the "birthright" prophecies identify the United States as Manasseh, and the Caucasian nations of the British Commonwealth are identified as Ephraim.

Since Ephraim was to be the "greater" of the two, and received its birthright blessing first, we should expect that Ephraim would receive its inheritance before Manasseh. History fulfilled that expectation. Great Britain rose to international prominence before the United States, and was a major international power for centuries before being replaced by the United States in the post-World War II period.

At its zenith, the British Empire also ruled over many more nations and a far greater geographic area than the United States ever has. For a time, it was true that "the sun never set on the British Empire "because the British Empire ruled much of the world! At its zenith, it ruled over Great Britain, Ireland, Canada, Australia, New Zealand, South Africa, many Black African nations, Egypt, India, Pakistan, Bangladesh, Sri Lanka, Burma, Singapore, Hong Kong, Malaysia, eastern New Guinea, and any islands in Oceania.

It was without question, the most expansive empire in the history of our planet. According to the 1943 Edition of the Encyclopedia Britannica, the British Empire once ruled 13 million square miles of the earth’s land surface. (And that was before British rule was temporarily extended over Palestine, Jordan and Iraq after World War II!) Britain’s navies also controlled much of the world’s sea surface as well. "Britannia rules the waves" was a common axiom in Britain’s glory days. The British Empire inherited the "birthright" promises of controlling the "gate of its enemies" (strategic "chokepoints" such as the Suez Canal, Gibraltar, and the Cape of Good Hope). British ownership of the Falkland Islands controlled access around Cape Horn between the Atlantic and Pacific Oceans, and its colony in Singapore controlled the strategic Strait of Malacca between the Indian Ocean and the South China Sea.

The United States of America (Manasseh) inherited its "birthright" portion after Ephraim had inherited its dominant portion of the "birthright."

6) Jesus the Messiah is born in Bethlehem and The Work of Christ is finished on the Cross.
Micah 5:2; Matthew 2:1; John 19:30; 1 Corinthians 15:3

7) The Church Age unfolds.
Matthew 13; Ephesians 2; Revelation 2-3 The seven churches in the Book of Revelation are representative of the Church Age. John is speaking of seven actual first century churches and of the churches throughout the Church age. There is a likeness between these churches and the periods of church history: Ephesus (30-100 A.D.)

Smyrna (100-313 A.D.) Roman Persecution of the Church, Revelation 2:8.

Pergamum (313-600 A.D.) Age of Constantine, Revelation 2:12. Thyatira (600-1517 A.D.) Dark Ages, Revelation 2:18.

Sardis (1517-1648 A.D.) Reformation of the Church, Revelation 3:1.

Philadelphia (1648-1900 A.D.) “Great Awakening” Missionary Movement, Revelation 3:7.

Laodicea (1900-present day) Apostasy and Lukewarm Church, Revelation 3:14.

8) The Beast System, Sovereign and Seignior rise to rule mankind.
The Apostle John wrote from prison, on The Isle of Patmos about 90 AD, the Revelation Of Jesus Christ, which foretells those things which must shortly come to pass, meaning a series of events that once they begin, fall quickly into place one right after the other. Revelation Chapter 13 tells of three separate beasts which arise to sovereignly, that is authoritatively rule and direct, mankind's activities.

The Bible Prophecy of Revelation 13:1-4 foretells of a sovereign system which directs all of mankind's activities through seven institutions and ten regions of global governance; the regions replace sovereign nations and their constitutions; and institute principles of global governance.

The world's governments will fail in their banking seignority and their currencies will collapse: regional currencies will arise.

The seven heads symbolize mankind’s seven institutions:
1) Finance, Commerce and Trade,
2) Education
3) Body Politic
4) Military
5) Religion
6) Media
7) Science & Technology

The ten horns symbolize ten regions of global governance. These were called for by the Club of Rome in February 1974. The Club of Rome is the premier think tank comprised of approximately 100 global leaders including scientists, philosophers and political advisors which envisioned totalitarian regional governance and a unifying global ethic --a world consciousness to solve interlocking world problems; and it relates this through published material such as 'Mankind at the Turning Point', and 'The First Global Revolution':

"Therefore we have concentrated out efforts in this report on a number of vital worldwide issues whose mastery we consider essential for man's survival and for an eventual transition into sustainable material and spiritual development of humanity."

"If the human species is to survive, man must develop a sense of identification with future generations and be ready to trade benefits to the next generations for the benefits to himself. If each generation aims at maximum good for itself, Homo Sapiens is as good as doomed."

"In order to achieve balance between regions in global development a more coherent regional outlook must be developed in various parts of the world so that the "preferable solutions" will be arrived at out of necessity rather than out of good will... we are talking about a regional sense of common destiny that will find its expression through appropriate societal, economic concepts and objectives... Such a regional outlook will create a "critical mass" necessary for the practical implementation of new and innovative ways of functioning in cultural, economic, and agricultural areas, especially on the rural level."

One of the ten regions of global governance called for is that of the North American continent; and was announced at Baylor University on March, 23, 2005 by the Continent's leaders, Bush, Fox and Martin.

Image Of The Beast Of Revelation 13:1-4; this is the same beast as Daniel 7:7

Click here for detailed image of The Beast Of Revelation Chapter 13 rising from the sea of humanity.

Revelation 13:5-10 tells of a sovereign leader, that is a monarch, who has sovereign power and authority to rule.

The global leader of Revelation 13:5-10 is knowable: scripture gives the information to identify him:
1) Daniel 8:9 And out of one of them came forth a little horn, which waxed exceeding great, toward the south, and toward the east, and toward the pleasant land: a seemingly innocuous leader comes from the North and West, that is he comes from the European Union to Israel.

2) Daniel 8:11 Yea, he magnified himself even to the prince of the host, and by him the daily sacrifice was taken away, and the place of his sanctuary was cast down: he, being Jewish, gains access to Israeli government and the Jewish Temple, takes away Jewish temple sacrifice, exalts himself to the level of the Messiah, and finally makes himself out to be The Messiah.

3) Daniel 8:23 And in the latter time of their kingdom, when the transgressors are come to the full, a king of fierce countenance, and understanding dark sentences, shall stand up: He, being in the lineage of kings, uses this to claim kingship; and he is amongst the world's leading occultists.

4) Revelation 13:18 Here is wisdom; let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six: he is a man whose gematria when decoded, comes out numerically to be 666.

Revelation 13:11-17 tells of a sovereign banker. He is the seignior, meaning, top dog who takes a cut; in modern day terms, an investment banker, in the line of a Charlie Prince or a Robert Rubin or a Tony Brown. He is also the world religious leader and awesome technocrat; he institutes a global seigniorage wealth and commerce system. Seigniorage means top dog bank note system, and as Elaine Meinel Supkis relates in The History of Seigniorage Wealth comes from the Scottish and Bank of England financial system which was devised to maintain the value of currency.

Photo of Treasury Secretary Robert Rubin, Treasury Secretary, and Alan Greenspan, the Federal Reserve Chairman, at a House Hearing in 1995 Photo by Stephen Crowley of The New York Times from the article The Reckoning Taking Hard New Look At A Greenspan Legacy by Peter S. Goodman who said of Alan Greenspan: "And his views held the greatest sway in debates about the regulation and use of derivatives, exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street.

“What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.

The Resourceful Bear News service relates in article JP Morgan Chase And Its Derivative Position Poses Serious Risk To World Financial Stability that JPM owns over half the derivatives outstanding; the exposure to derivaties is concentrated in the top four US Banks.

The seigniorage system is based upon the "mark" which comes from the Greek word charagma meaning "etching in", or "tattoo upon", or "stamp", or "badge of servitude", which enables one to conduct economic activity, and which authorizes one to receive economic benefits; the mark will be required in order to buy or sell as per David Deschesne writing in A Mark in the Right Hand or in their Forehead, in his explanation of Revelation Chapter 13:16-17. All seigniorage comes and goes through him: all sovereign wealth funds, and banks report to him. Commercial, regional and money center banks are gone. There is no national sovereignty, as sovereign nations and their constitutions are history, as principles of global governance working through regional economic and security pacts or agreements exist; and these serve as the basis for regional currencies. Unified regulation of banking globally serves as the basis for commerce trade and investment.

Elaine Meinel Supkis writes "The Derivatives Beast doesn't want more Japan carry trade loans. He wants real money. And this means getting the major governments of the world to feed him real meat and potatoes: future taxes, the wealth of empires".

I say that the Derivative's Beast can never be satiated. Once there is a total worldwide financial system breakdown, and currencies, other than gold are totally burned out, then the Beast will call for the soul of every man, woman and child.

Then the mark, that is the charagma, of Revelation 13:17, will be introduced by the coming world banker, who is also the chief religious leader, that is the Seignior of Revelation 13:11-17: "And that no man might buy or sell, save he that had the mark, or the authority of the beast, or the currency of his name."

The following news events reveal the fulfillment of Bible prophecy:

In 1913, the 'Federal Reserve Act' was passed, creating the 'Federal Reserve System'.

In 1935, the reverse side of the 'Great Seal of the United States' with the All Seeing Eye of Providence above the pyramid appeared for the first time on the back of the one dollar U.S. dollar bill.

In 1944, the 'Bretton Woods Agreement' was signed, outlining a regime for the post World War II world economy.

In 1945, the United Nations was founded.

In 1954, the Bilderberg Group was founded.

In 1957, the European Economic Community, the European Common Market, was formed, which in 1992 changed its name to the European Union. Currently, the EU has 27 member states, 15 of which use a common currency, the Euro.

In 1963, the 'Codex Alimentarius Commission' was established by the Food and Agriculture Organization and the World Health Organization, later to be backed by the 'World Trade Organization'. Codex Alimentarius, Part 1 of 5, is an attempt to overturn existing US laws in favor of pharma-friendly international trade rules. Codex is a threat to human health, human rights, true democracy and national sovereignty.

In 1973, David Rockefeller organized the 'Trilateral Commission'.

1n 1974, The 'Club of Rome' issued a report entitled the "Regionalized and Adaptive Model of the Global World System," which proposes that the 'world be divided into ten regions'.

In 1995, the United Nations' International Trade Organization's, ITO, General Agreement on Tariffs and Trade, GATT, group was renamed the World Trade Organization, WTO.

In September 2001, it is alleged that al-Qaeda terrorists hijacked airliners and attacked the World Trade Center towers and the Pentagon. A Homeland Security authority is legislated and a War On Terror begun.

The US Government countered the pain of the terrorist attacks and the dotcom bubble bust pumped air into the next bubble, that is the housing bubble. The Bush administration pushed two big tax cuts, and the Federal Reserve, led by Alan Greenspan, slashed interest rates to spur lending and spending.

Low rates kicked the housing market into high gear. Construction of new homes jumped 6 percent in 2002, and prices climbed. By that November, Greenspan noted the trend, telling a private meeting of Fed officials that "our extraordinary housing boom . . . financed by very large increases in mortgage debt, cannot continue indefinitely into the future," according to a transcript.

The Fed nonetheless kept to its goal of encouraging lending and in June 2003 slashed its key rate to its lowest level ever -- 1 percent -- and let it sit there for a year. "Lower interest rates will stimulate demand for anything you want to borrow -- housing included," said Fed scholar John Taylor, an economics professor at Stanford University.

The average rate on a 30-year-fixed mortgage fell to 5.8 percent in 2003, the lowest since at least the 1960s. Greenspan boasted to Congress that "the Federal Reserve's commitment to foster sustainable growth" was helping to fuel the economy, and he noted that homeownership was growing.

There was something very new about this particular housing boom. Much of it was driven by loans made to a new category of borrowers -- those with little savings, low income, checkered credit and even unverified information. Such people did not qualify for the best interest rates; the riskiest of these borrowers were known as "subprime" and Alt-A who obtained pay option ARM mortgages. With interest rates falling nationwide, many subprime loans gave borrowers a low "teaser" rate for the first two or three years, with the monthly payments ballooning after that.

Government-chartered mortgage companies Fannie Mae and Freddie Mac, encouraged by the Bush administration to expand homeownership, also bought more pools of subprime loans.

One member of the Fed watched the developments with increasing trepidation: Edward Gramlich, a former University of Michigan economist who had been nominated to the central bank by President Bill Clinton. Gramlich would later call subprime lending "a great national experiment" in expanding homeownership.

In 2003, Gramlich invited a Chicago housing advocate for a private lunch in his Washington office. Bruce Gottschall, a 30-year industry veteran, took the opportunity to pull out a map of Chicago, showing the Fed governor which communities had been exposed to large numbers of subprime loans. Homes were going into foreclosure. Gottschall said the Fed governor already "seemed to know some of the underlying problems."

On January 31, 2006, Greenspan, widely celebrated for steering the economy through multiple shocks for more than 18 years, steps down from his post as Fed chairman.

Bernanke became Federal Reserve Chief and two weeks into the job, he testified before Congress that it was a "positive" that the nation's homeownership rate had reached nearly 70 percent, in part because of subprime loans.

President Thomas Jefferson said in 1802: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

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

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."

In 2004, the Independent Task Force on North America, a project organized by the Council on Foreign Relations, CFR, proposes the establishment by 2010 of a North American economic and security community, generally referred to as the North American Union, the NAU.

On March 23, 2005, the Security and Prosperity Partnership of North America, the SPP, was announced at Baylor University, effecting an economic, political and investment coup.

Frameworks -- Leader's Agreements, neither treaties nor constitutions, now define and specify working relationships between nations and peoples; The SPP, is one such Framework Agreement.

Presented below is a photo from the Baylor University web site showing Condoleezza Rice And George Bush as they were greeted by Baylor University's Robert B. Sloan Jr. and members of his staff immediately prior to the announcement of the SPP.

Mr. Sloan said: "It is an honor for Baylor University to host the leaders of the United States, Canada and Mexico," and he continued: "Here at Baylor, we want to teach our students to serve. Baylor today had the opportunity to serve on behalf of our country and the world, and it is a tremendous privilege for Baylor to host this trilateral meeting."

The Security And Prosperity Partnership provides state corporate rule to deal with systemic risks -- systemic failures such as debt guarantor insolvencies, and outbreak of pandemic disease, such as avian influenza, as mentioned in the Leader's Joint Statement of March, 31, 2006 in Cancun, Mexico.

The photo below is of President George Bush with Robert J Stevens of Lockheed Martin and other business leaders in a March 2006 Security and Prosperity Partnership "Progress Meeting" held at the Cancun Summit.

Canada's Stephen Harper, spoke before the Economic Club of New York, where he related the need for a continental response to oversee threats to the continent's security and prosperity.

The think tank, Council on Foreign Relations, CFR, has called for Regional monetary integration; Andrew G. Marshall writing in a GlobalResearch.ca article sees this resulting the use of a continental currency, i.e. the Amero.

On October 21, 2008, Craig Torres and Christopher Condon in Bloomberg article 'Fed To Provide Up To $540 Billion To Aid Money Funds' relates: "The Federal Reserve will provide up to $540 billion in loans to help relieve pressure on money-market mutual funds beset by redemptions.

``Short-term debt markets have been under considerable strain in recent weeks'' as it got tougher for funds to meet withdrawal requests, the Fed said today in a statement in Washington. A Fed official said that about $500 billion has flowed since August out of prime money-market funds, which with other money-market mutual funds control $3.45 trillion."

Note that the money provided by the Money Market Investor Funding Facility, MMIFF, is a "loan"; it is not a grant. In reality because most of the money market funds have taken out insurance and many will avail themselves of this "loan", and given that nine banks have been nationalized, and the insurance company AIG has been loaned money, and Freddie Mac and Fannie Mae have been nationalized, this represents an "integration of money market funds" into the US Government.

The nationalizations are a fulfillment of bible prophecy of Revelation Chapter 6:1-2 where the first of four riders of the Apocalypse goes forth globally on a white horse in bloodless economic and political coup conquest.

The loan comes with cost other than interest, that being administrative ownership, that is control, of trillions of dollars by the Federal Reserve. The word, will and way of Ben Bernanke is now sovereign over all money market funds in the United States. Not only is the Federal Reserve the Bank of Banks which was achieved by the provision of dollar swaps, emergency lending, rate reductions, and facilities of TARP and CPFF, it is now the 'Monetary, Credit and Investment Authority' over America through its "loans" to money market funds. This effects a stunning economic and political coup that has replaced Milton Friedman neoliberal laissez faire capitalism with a state-corporate seigniorage wealth system, which controls investment and lending. Seigniorage means top dog bank note system; and comes from the Scottish and Bank of England financial system which was devised to maintain the value of currency as describe in Elaine Meinel Supkis Money Matters Blog article 'The History of Seigniorage Wealth'.

Default on the loan, which is inevitable, means that the wealth of the money market accounts will be not only rented out to but owned by the Federal Reserve.

Americans are enslaved, yes made slaves to the credit default swaps and other derivatives at AIG and Lehman Brothers, this is termed the Derivatives Beast, the housing debt of nationalized Freddie Mac and Fannie Mae, the highly leveraged CDO debt of the TARP facility, and the commercial paper debt of CPFF.

And now they are made slaves to pay back the money market fund loans. Elaine Meinel Supkis in Financial Black Holes relates: "Modern capitalist banking systems create increasing DEBT and not increasing wealth!" And she relates, "The desire is for all systems to be over 100% in debt!"

Americans are now totally sold out: their task masters are Ben Bernanke and Hank Paulson their Goldmanite banking stakeholders.

Ms. Supkis' in article 'End The Fed Demonstrations November 22', relates: "The rabbit is out of the magician's hat. The cat is out of the bag. Even the dimmest wits in America are figuring out two things: the bankers are really socialists but are exclusionary socialists. Namely, they want money to be created and handed to them, not to us. They want to use us as collateral. Ask any banker if money can be lent at cheap with no collateral. They will laugh maliciously.

No, to get those cute 1% loans, you need to put up some collateral. And the true collateral here is the US taxpayers and everything they own. Note the top story. All our collective and individual wealth can be suddenly seized. Since the bankers and their buddies own our political system, they will get whatever they need.

The other fact the US public has become dimly aware is, they will NOT be bailed out with this magic money. They will have to pay a price and a steep price. If they ARE bailed out with funny money, this will be extracted in less than five years just like the Bush tax cuts, via inflation of food, fuel and other necessities.

Since there is a lot of propaganda from kindergarden on up poured into brains to convince US citizens that we are NOT an empire, it is hard for voters to understand the profound loss of sovereignty and international muscle the US has suffered during this last 8 years of wild misspending, wild debt accumulation and wild military expansionism."

The bailouts so far total $2.25 Trillion. Mark Landler and Eric Dash Published in October 15, 2008, International Herald Tribune article Drama - And Conflict - Behind The $250 Billion Banking Deal report that the bail outs so far come in at $2.25 trillion!

The bailouts will fail to resolve global financial place instability; the lending gridlock will continue, and liquidity will continue to evaporate from the system. The result will be a world wide financial system breakdown.

The world entered into Kondratieff Winter on 08-08-08. This means death, not growth; and that reality is the ever increasing investment knowledge, ethic and directive, amongst the world's currency, commodity and stock traders, causing disinvestment from commodities, stocks, bonds and currencies.

And the awareness of risk of investment loss increased on September 11, 2008, that is 9-11-2008, there was a cardiac arrest in lending when the banks discovered they could not sell stock to raise capital. Trust between lender and debtor completely broke down, and a lending gridlock, that is, a credit gridlock ensued, and the US Stock markets and the world stock markets fell lower on an unwinding yen carry trade which took commodities lower, and the US Dollar higher.

The lack of trust increased even further as the SEC has thrown the fair value rule, and the accountants have withdrawn the mark-to-market standard of FASB 157, and replaced it with mark-to-fantasy assumptions of management.

Without trust the worldwide financial system can only breakdown.

The inevitable financial collapse when it does occur will be a fulfillment of bible prophecy of Revelation 13:1-4; specifically Revelation 13:3.

Evidence suggests that there will be a declaration of martial law in response to the coming financial system breakdown:
Sen. Warner Supports Domestic Use of Military by David Swanson of GlobalResearch.ca

Top International Military Officials Meet In Adirondacks

The Soon Coming Martial Law Will Be Managed By NORTHCOM'S JTF-CS

How Near Is Martial Law

Bush Paves The Way For Martial Law

Army Combat Team To Train For Homeland Scenarios Under NorthCom

NORTHCOM Gives Approval For Canadian Armed Forces To Provide Gustav Disaster Relief Services In Louisiana

Soon Coming Enforcement Of The Security and Prosperity Partnership Places Ones Investments At Risk

9) The Persecution of The Saints and The Campaign of Armageddon.
An end time persecution is coming to God's children. Revelation 12:12-17

God promises sanctuary to a small number of saints in Revelation Chapter 12:14. It will be a place where the Sovereign and his armies will be unable to penetrate; a select few will find safety there for 42 months, that is for three and one half years; whereas the rest of God's children will be ruthlessly and successfully hunted down by the coming world king.

If anyone is destined for captivity, to captivity he goes; if anyone kills with the sword, with the sword he must be killed. Here is the perseverance and the faith of the saints. Revelation 13:10

In order to find God's deliverance, one should watch and pray always that one might be accounted worthy to escape all things that are coming, and stand before the Son of Man. Luke 21:36

One's fate is all a matter of the Election of Grace.

The Sovereign rules with a strong hand; but it being a multi-polar world, is opposed by forces from the North, East, and South. Isaiah 63:1-6; Daniel 11:40-43; Joel 3:1-2, 9-17; Zechariah 12:8-14; Revelation 14:14-20; 16:12-16; 19:11-21

The prophet Daniel wrote that the EU US World Governor, the Sovereign, will meet his doom on plain of Megiddo: "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, and Revelation 16:12-16

10) The Second Coming of Christ
Isaiah 63:1-6; Ezekiel 20:33-44; Daniel 2:44-45; Psalms 2:7-9; 96:13; 98:9; Matthew 24:29-30; Romans 11:26-27; 2 Thessalonians 1:7-10; Revelation 19:11-16

Christ, accompanied by the Church, will at this time set up the promised Davidic Kingdom on earth, replacing and bringing to an end, forever, the “Times of the Gentiles,” with its corrupt political rule (Daniel 2:44).

11) Satan Bound and Confined
Revelation chapter 20 gives a clear picture of the binding of Satan in the abyss. Because of his banishment war on earth will cease, righteousness and peace will cover the earth with the reign of Christ as King over all the nations.

12) The Judgment of the Nation Israel and The Judgment of the Gentiles
The Judgment of the Nation of Israel
Ezekiel 20:34-38; Zechariah 13:1-2; Malachi 3:2-5.

The Judgment of the Gentiles
Zechariah 14:1-9; Matthew 25:31-46

13) Resurrection of Tribulation Saints and the Old Testament Saints and The 1000 Year Rule and Reign of Jesus Christ.
Isaiah 26:19-21; Daniel 12:1-3; John 5:28-29; 2 Corinthians 15:23; Revelation 20:4-6
This resurrection occurs at Christ’s Second Advent to earth (1 Corinthians 15:23). It entails all the Old Testament saints and those believers who, during the Tribulation Period, lost their lives because of their faith (Revelation 20:4-5). They will join the Church and reign with Christ on earth during His glorious Millennial rule.

Isaiah 65:19-25; Jeremiah 30:19-20; Ezekiel 36:33-38; Zechariah 8:20-23; 14:16-21; Revelation 20:1-7
The Millennial reign of Jesus Christ, a future 1000 year period when the earth is placed under His direct rule, is a time when peace and righteousness will reign here on earth. Christ will rule over the nations of the earth with “a rod of iron” (Revelation 19:15) and “nation will not lift up sword against nation and never again will they learn war” (Isaiah 2:4). Christ, the Son of David, will reign over His Kingdom from His father David’s throne in Jerusalem, fulfilling the Davidic covenant through which Israel was promised a Throne, King and Kingdom, forever (2 Samuel 7:4-16).

14) Marriage Supper of the Lamb .. The Wedding Feast
Matthew 8:11; Luke 13:28-29; Luke 22:16-18, 29-30; Revelation 19:7-9; 2 Corinthians 11:2; Revelation 19:7-9
We have seen that the “Marriage of the Lamb” is an event that has reference only to the Church and takes place in Heaven. The “Marriage Supper” of the Lamb is an event that takes place on earth after the Second Advent of Christ. Though the two events are closely related, they are separate events, just as the wedding ceremony and the wedding reception of our day are separate events. Those who are invited to attend the marriage supper on earth are all the Old Testament saints and the Tribulation saints, both mortal and resurrected, after Christ’s Second Coming. There are New Testament passages that speak of Christ eating and banqueting in the kingdom which may be references to the celebration related to the Marriage Supper of the Lamb. These passages imply that the celebration of the marriage supper begins in the millennial kingdom: Matthew 8:11; Luke 13:28-29; Luke 22:16-18, 29-30.

15) The Loosing of Satan and The Last Revolt
Revelation 20:7-10
Satan must be loosed for a little while from his thousand-year imprisonment (Revelation 20:7-10). This must complete the grounds for divine judgment against this great fallen angel. Those who had been left over from the Battle of Armageddon who lived in the peace and glory of the Kingdom are deceived, and they go on rebellion only to be destroyed by Christ.

16) The Doom of Satan
Revelation 12:7-12, 20:1-3, 20:10-15
Satan has already been judged at the cross (John 16:11). He is to be banished from accessing Heaven, where he accuses Believers before God, being thrown down to the earth during the time of the Tribulation (Revelation 12:7-12). After the tribulation he is imprisoned, bound and cast into the abyss for the duration of the Millennium (Revelation 20:1-3). The final doom which ends Satan’s career is when he is cast into the never ending torment of the Lake of Fire and Brimstone, where the Sovereign and the Seginior-False Prophet are consigned, along with all who have not believed the Word of God throughout the history of the earth.(Revelation 20:10-15).

17) The Passing of The Present Earth and Heaven
Isaiah 65:17; 66:22; Hebrews 1:10-12; 2 Peter 3:3-13; Revelation 20:11; 21:1
This present earth is to be purified after the final rebellion which closes the Millennium. The earth is to be purified through burning, because the earth has become polluted with sin.

18) The Great White Throne Judgment
Revelation 20:12-15; 21:8; 22:10-15
All unbelievers throughout the history of the earth will face a final judgment. They are to be raised from the dead after the Millennial period and will be judged according to their works, then to be committed to the Lake of Fire, which is the second death.

19) The Creation of a New Heaven and a New Earth
Isaiah 65:17-19; 2 Peter 3:13-14; Revelation 21:1 - 22:5
The New Heavens and the New Earth will be formed after this present Earth burns up and is purified. This is the LAST and final part of God’s eternal plan for mankind. All the redeemed, saved, of all the ages will be there! This will be the ultimate in glory, reigning forever with Christ in a New Heaven and a New Earth.

Special Topics
The Third Jewish Temple
Daniel 9:27; Matthew 24:15; 2 Thessalonians 2:3-4; Revelation 11:1-2

The One-World Government that is the Beast System (Revelation 13:1-4), with its Beast Ruler (Revelation 13:5-10), and Beast Banker, False Religious Leader and Prophet (Revelation 13:11-17), all tied together by the Derivatives Beast.
Daniel 7:23

The Ten Kingdoms
Daniel 7:24

The Apostasy
2 Thessalonians 2:3

The Revelation of the Antichrist
Daniel 7:24; 2 Thessalonians 2:1-3

The Seven Year Covenant
Daniel 9:27; Isaiah 28:14-22

Peace and False Security
1 Thessalonians 5:1-3

The Tribulation
Jeremiah 30:7-10; Daniel 2; 9:24-27; 11:40-43; 12:1;2 Thessalonians 2:4; Revelation 6-19

The First Half of the Tribulation
Matthew 24:4-14; Mark 13:4-13; Luke 21:8-19

The Gog and Magog Invasion of Israel
Ezekiel 38-39

The Great Tribulation
Daniel 7:25; Matthew 24:15-28; Mark 13:14-23; Luke 21:20-24

Keywords
new world order, newworldorder, greatsealoftheunitedstates, sealoftheunitedstates, antichrist, clubofrome, last days, end times, nwo, king of the north, kingofthenorth, bear of the north,

It was a hey day for all, except the yen carry traders, as the US Dollar, US Stocks, world stocks, debt, and gold rose on the massive support of the US Dollar by the Federal Reserve. Joe Bel Bruno of the Associated Press wrote that Wall Street moved higher on hopes of credit recovery. Hope is all that can be expected.

The ongoing five cay Yahoo Finance chart of UUP, HYG, LQD, MUB, CMF, and SPY, shows a "pop" came to debt instruments, as the US Dollar, US stocks and world stocks rose as the US Federal Reserve provided Dollar support ... The rise seen here in the chart of UUP, HYG, LQD, MUB, CMF, and SPY is likely capitalism's finale rally.

Eddy Elfenbein documents today's fall in The Ted Spread to 3.27; it closed down at 2.83.

Mike Mish Sheldon relates: 'Armageddon in Corporate Bonds'; and I say 'Ditto In Municipal Bonds'.

Gold, $GOLD, rose $2 to close at $790.

The gold ETF, GLD, rose to $78.50

Oil, USO, rose to $61.80

The US Dollar, $USD, rose to a new high at 83.07 ... $USD

The chart of the dollar bull ETF, UUP, suggests that a top is being made in the US Dollar ... UUP.

US stocks, VTI, closed up, in a pennant formation, to close at 49; prices usually fall from such patterns ... VTI

World stocks, EFA, closed up in similar fashion to close at 47.35.

US Treasury Bond, TLT, rose to 94.62

World currencies, DBV, rose 2.75% in a pennant pattern to close at 22.

The S&P, SPY, and the Dow, DIA, rose more than the Nasdaq 100, QQQQ, and the Russell 2000, IWM:
SPY 6%
DIA 6%
QQQQ 3%
IWM 4%

The chart of the Russell 2000, IWM, shows the death of capitalism quite well. The Russell 2000 is comprised of small US companies highly dependent on a functional financial, banking and credit system. Unfortunately the lending system had a cardiac arrest on September 11, 2008 when the banks found they could not sell stock to obtain capital; in consequence lending ceased across the board. While the Federal Reserve and world central banks have provided liquidity facilities in the extreme, and even provided full dollar funding to the markets, trust between lender and debtor has expired and cannot be and will not be enjoyed again. The stock and bond markets are going to fall desperately.

Notice the fall off of value in the Russell 2000 beginning on September 11, 2008, that is 9-11-2008, and then a short sell covering rally and a crescendo fall, that is waterfall, lower; and now a rise in a pennant pattern. Prices are usually resolved down from such patterns ... IWM

Risers of the day included:
Metal and mining manufacturing 15%
Energy producers XLE 10%
Utilities VPU 8%
Energy services OIH 11%
Steel SLX 11%
Brazil EWZ 9%
China FXI 8%
Russia 8%
BRICS EEB 7%

A major part of today's rally was simply a rally to get the oil stocks back up to the edge of a massive head and shoulders pattern that goes back to April 2006. Take for example, Exxon Mobil, XOM: it has moved back up to 75 so it can fall once again ... XOM

Despite the central banks moving towards extending 0% interest, the bond markets have declared a defacto interest rate hike. For example, the interest rate on the 10 year US Government note, $TNX, has been rising. It is going up from 38 ... $TNX

The joy on Wall Street and on many investment blogs was simply capitalism's death rattle -- a gurgling or rattle-like noise produced shortly before or after death by the accumulation of excessive respiratory secretions in the throat.

Financial services, IYF, rose 2%, and Real estate, IYR, rose 1% ... Chart of IYR shows the bearish dragonfly candlestick

The yen carry trade, EUR/JPY, FXE:FXY, termed the Armageddon Trade for its recent damage to global wealth and liquidity recently, fell 0.10%; and the yen, FXY, fell 0.25%. The chart of FXE:FXY shows the Armageddon Fall in the Armageddon Trade, the term applied to the ability of the yen carry trade to cause a total wipe out of stock, commodity and currency values. This chart is the chart of the century. The chart of the once lucratively rewarding energy service providers, OIH, shows three black crows as the yen carry trade, better termed, the euro carry trade unwound; the fall is always more dramatic than the rise ... OIH ... FXE:FXY

The Euro, FXE, fell 0.4%.

The British Pound, FBX, fell 0.8%.

The Canadian Dollar, FXC, fell 0.3%.

World currencies, DBV, rose in a pennant pattern to close at 22 ... DBV

The ongoing five day Yahoo Finance chart of USD/CHF compared to USD/EUR, USD/JPY, UUP, and GLD, shows all the currency pairs taking the US Dollar higher; surprisingly liquidity flowed into gold, despite the rise in the US Dollar. I attribute gold's rise to the rise in the metal and mining manufacturing stocks, XME, 15% rise ... Chart of currency trades shows gold to be surprisingly up

The chart of gold relative to stocks, GLD:VTI, provides clear, cogent, and convincing evidence of both the value of gold and the investment demand for gold ... GLD:VTI

I hope for those still invested in the stock markets that they went short at the end of the day.

The suretors, that is the debt guarantors, were especially good candidates to go short; these included Ambac, ABK, Radian Group, RDN, and MBIA, MBI as these had hoped to get Federal Reserve funding. They are now set to fall greatly ... ABK ... RDN ... MBI

The risk of loss of investment principle is at the highest level ever, despite assurances from central banks globally that monies in banks is guaranteed; given the fall of stock and bond market value I believe that is coming, their statements of surety are going to be severely tested.

If one has wealth, it is best to put it far, far away from the current financial system, safe and sound in a guarded vault, like BullionVault and GoldMoney, with an account personally at streetTracks Gold Trust, and in physical possession of gold coins.

This especially being the case, as I cite the horrific experience of clients of Lehman Brothers whose accounts were frozen and now have to come up with money to secure their position.

Tom Cahill of Bloomberg on October 15, 2008 reports that "Lehman Brothers ... hedge-fund clients may have to pay more collateral on $65 billion of assets frozen when the investment bank went bankrupt a month ago. Lehman’s London-based prime brokerage has about 3,500 active clients including hedge funds that own about $45 billion in securities, Steven Pearson, the partner at PricewaterhouseCoopers responsible for unraveling the unit, said ... They hold an additional $20 billion in short positions, or bets that prices will fall. While investors are largely unable to access their Lehman accounts, the value of the securities continues to fluctuate along with the markets. The clients may be required to put up more collateral if the value of those securities drops, a process known as a margin cal ... ‘Who is the holder of the risk of the securities? The hedge funds. If the value of the securities fell, they have to meet margin calls.’ Lehman’s bankruptcy, the world’s biggest, has rocked hedge funds that relied on the firm to provide loans, clear trades and handle administrative tasks."

Jesse in chart article is suggesting support for gold will come in at $740 before it soars again to $930 and beyond.

Elaine Meinel Supkis provides appropriate social commentary; "As the US tumbles into a bad, bad recession, we are having an election. And there is virtually no discussion about what is really wrong. Indeed, the main focus in this election isn't war or our trade deficit or yawning budget deficit, it is nearly all about race. To the fury of many who want otherwise. But then, from day one in the US, it has been all about race and slavery which were embedded within our Constitution and excised very painfully and often, extremely violently. I will discuss this history later. First, the economic news. After central banks nationalized the G7 banking systems, they managed to sort of restart the old status quo. This is bad".

Julie Creswell and Ben White of the New York Times in article 'The Guys From Government Sachs' document the bloodless political and economic coup effected by Hank Paulson to overthrow the neoliberal laissez faire capitalism established by University of Chicago professor Milton Friedman.

The Secretary of the US Treasury has appointed Wall Street Goldman Sachs investment bankers as stakeholders in state capitalism, that is state corporatism, to be taskmasters enslaving Americans and the world to debt.

"This summer, when the Treasury secretary, Henry M. Paulson Jr., sought help navigating the Wall Street meltdown, he turned to his old firm, Goldman Sachs, snagging a handful of former bankers and other experts in corporate restructurings.

In September, after the government bailed out the American International Group, the faltering insurance giant, for $85 billion, Mr. Paulson helped select a director from Goldman’s own board to lead A.I.G.

And earlier this month, when Mr. Paulson needed someone to oversee the government’s proposed $700 billion bailout fund, he again recruited someone with a Goldman pedigree, giving the post to a 35-year-old former investment banker who, before coming to the Treasury Department, had little background in housing finance.

Indeed, Goldman’s presence in the department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.

The power and influence that Goldman wields at the nexus of politics and finance is no accident. Long regarded as the savviest and most admired firm among the ranks — now decimated — of Wall Street investment banks, it has a history and culture of encouraging its partners to take leadership roles in public service.

It is a widely held view within the bank that no matter how much money you pile up, you are not a true Goldman star until you make your mark in the political sphere. While Goldman sees this as little more than giving back to the financial world, outside executives and analysts wonder about potential conflicts of interest presented by the firm’s unique perch.

They note that decisions that Mr. Paulson and other Goldman alumni make at Treasury directly affect the firm’s own fortunes. They also question why Goldman, which with other firms may have helped fuel the financial crisis through the use of exotic securities, has such a strong hand in trying to resolve the problem.

The very scale of the financial calamity and the historic government response to it have spawned a host of other questions about Goldman’s role.

Analysts wonder why Mr. Paulson hasn’t hired more individuals from other banks to limit the appearance that the Treasury Department has become a de facto Goldman division. Others ask whose interests Mr. Paulson and his coterie of former Goldman executives have in mind: those overseeing tottering financial services firms, or average homeowners squeezed by the crisis?

Still others question whether Goldman alumni leading the federal bailout have the breadth and depth of experience needed to tackle financial problems of such complexity — and whether Mr. Paulson has cast his net widely enough to ensure that innovative responses are pursued.

“He’s brought on people who have the same life experiences and ideologies as he does,” said William K. Black, an associate professor of law and economics at the University of Missouri and counsel to the Federal Home Loan Bank Board during the savings and loan crisis of the 1980s. “These people were trained by Paulson, evaluated by Paulson so their mind-set is not just shaped in generalized group think — it’s specific Paulson group think

There are people at Goldman Sachs making no money, living at hotels, trying to save the financial world,” said Jes Staley, the head of JPMorgan Chase’s asset management division. “To indict Goldman Sachs for the people helping out Washington is wrong.”

Mr. Paulson himself landed atop Treasury because of a Goldman tie. Joshua B. Bolten, a former Goldman executive and President Bush’s chief of staff, helped recruit him to the post in 2006.

Neel T. Kashkari arrived in Washington in 2006 after spending two years as a low-level technology investment banker for Goldman in San Francisco, where he advised start-up computer security companies.

The A-team includes Dan Jester, a former strategic officer for Goldman who has been involved in most of Treasury’s recent initiatives, especially the government takeover of the mortgage giants Fannie Mae and Freddie Mac. Mr. Jester has also been central to the effort to inject capital into banks, a list that includes Goldman.

Another central player is Steve Shafran, who grew close to Mr. Paulson in the 1990s while working in Goldman’s private equity business in Asia. Initially focused on student loan problems, Mr. Shafran quickly became involved in Treasury’s initiative to guarantee money market funds, among other things.

Other prominent former Goldman executives now at Treasury include Kendrick R. Wilson III, a seasoned adviser to chief executives of the nation’s biggest banks. Mr. Wilson, an unpaid adviser, mainly spends his time working his ample contact list of bank chiefs to apprise them of possible Treasury plans and gauge reaction.

Another Goldman veteran, Edward C. Forst, served briefly as an adviser to Mr. Paulson on setting up the bailout fund but has since left to return to his post as executive vice president of Harvard. Robert K. Steel, a former vice chairman at Goldman, was tapped to look at ways to shore up Fannie Mae and Freddie Mac. Mr. Steel left Treasury to become chief executive of Wachovia this summer before the government took over the entities.

Treasury officials acknowledge that former Goldman executives have played an enormous role in responding to the current crisis. But they also note that many other top Treasury Department officials with no ties to Goldman are doing significant work, often without notice. This group includes David G. Nason, a senior adviser to Mr. Paulson and a former Securities and Exchange Commission official.

Robert F. Hoyt, general counsel at Treasury, has also worked around the clock in recent weeks to make sure the department’s unprecedented moves pass legal muster. Michele Davis is a Capitol Hill veteran and Treasury policy director. None of them are Goldmanites.

Timothy F. Geithner, the president of the Federal Reserve Bank of New York, told him no, according to a former Lehman executive who requested anonymity because of continuing investigations of the firm’s demise. Its options exhausted, Lehman filed for bankruptcy in mid-September.

Mr. Geithner, 47, played a pivotal role in the decision to let Lehman die and to bail out A.I.G. A 20-year public servant, he has never worked in the financial sector. Some analysts say that has left him reliant on Wall Street chiefs to guide his thinking and that Goldman alumni have figured prominently in his ascent.

After working at the New York consulting firm Kissinger Associates, Mr. Geithner landed at the Treasury Department in 1988, eventually catching the eye of Robert E. Rubin, Goldman’s former co-chairman. Mr. Rubin, who became Treasury secretary in 1995, kept Mr. Geithner at his side through several international meltdowns, including the Russian credit crisis in the late 1990s.

Mr. Rubin, now senior counselor at Citigroup, declined to comment.

A few years later, in 2003, Mr. Geithner was named president of the New York Fed. Leading the search committee was Pete G. Peterson, the former head of Lehman Brothers and the senior chairman of the private equity firm Blackstone. Among those on an outside advisory committee were the former Fed chairman Paul A. Volcker; the former A.I.G. chief executive Maurice R. Greenberg; and John C. Whitehead, a former co-chairman of Goldman.

The board of the New York Fed is led by Stephen Friedman, a former chairman of Goldman. He is a “Class C” director, meaning that he was appointed by the board to represent the public.

During his tenure, Mr. Geithner has turned to Goldman in filling important positions or to handle special projects. He hired a former Goldman economist, William C. Dudley, to oversee the New York Fed unit that buys and sells government securities. He also tapped E. Gerald Corrigan, a well-regarded Goldman managing director and former New York Fed president, to reconvene a group to analyze risk on Wall Street.

Some people say that all of these Goldman ties to the New York Fed are simply too close for comfort. “It’s grotesque,” said Christopher Whalen, a managing partner at Institutional Risk Analytics and a critic of the Fed. “And it’s done without apology.”

But when bankruptcy loomed for A.I.G. — a collapse regulators feared would take down the entire financial system — federal officials found themselves once again turning to someone who had a Goldman connection. Once the government decided to grant A.I.G., the largest insurance company, an $85 billion lifeline (which has since grown to about $122 billion) to prevent a collapse, regulators, including Mr. Paulson and Mr. Geithner, wanted new executive blood at the top.

They picked Edward M. Liddy, the former C.E.O. of the insurer Allstate. Mr. Liddy had been a Goldman director since 2003 — he resigned after taking the A.I.G. job — and was chairman of the audit committee. (Another former Goldman executive, Suzanne Nora Johnson, was named to the A.I.G. board this summer.)

Like many Wall Street firms, Goldman also had financial ties to A.I.G. It was the insurer’s largest trading partner, with exposure to $20 billion in credit derivatives, and could have faced losses had A.I.G. collapsed. Goldman has said repeatedly that its exposure to A.I.G. was “immaterial” and that the $20 billion was hedged so completely that it would have insulated the firm from significant losses.

As the financial crisis has taken on a more global cast in recent weeks, Mr. Paulson has sat across the table from former Goldman colleagues, including Robert B. Zoellick, now president of the World Bank; Mario Draghi, president of the international group of regulators called the Financial Stability Forum; and Mark J. Carney, the governor of the Bank of Canada."

I am glad the New York Times is telling us the truth about the ruling elites from Goldman Sachs. But note, that they confuse readers by praising these bankers. This is a prime example of Orwellian disinformation where left is right and down is up, bad becomes good, and error becomes policy. God's Word reassures me greatly that He is Sovereign throughout all of this, and that He has two kinds of vessels, the first vessel is found in Romans 9:20-23 and the second vessel in Isaiah 51:20 and I Thessalonians 5:9.

Elaine Meinel Supkis provides the charts from the Federal Reserve which document how much the insolvent banks are borrowing to stay alive. The FRED GRAPH documents the banks have no reserves, and are borrowing to recapitalize their balance sheets to protect them as long as they can from being wiped out by exposure to settlement on credit default swaps and other derivatives. This chart shows capitalization after the banks discovered they could not sell stock to obtain capital.

Here are the charts of the money center banks, KBE, and regional banks, IAT; the yen carry traders sold out of their interest already, leaving others holding the bag in these toxic walking dead men. Both charts show today's bearish dragonfly candlesticks ... KBE ... IAT

The US Government will be carrying out state corporate rule through the CPFF lending facility at the nine banks it acquired. Lending which use to come from the commercial lending marketplace, will now be coming from the Federal Reserve, that is the Banks of Banks, and flowing to corporations deemed essential for the purposes of the security and prosperity needs of the North American homeland, that is combined Canada, Mexico, and America, that, is CanMexAmerica.

Eddy Elfenbein in article 'October 20, 2008 CEO Pay at the Nine Government-Owned Banks' presents the CEO pay of the nine banks which have been nationalized.

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

Credit Markets Are Drying Up And Short Term Funds Used To Pay Payrolls Are Not Available
Runs on funds are causing the death of the short term funds used by organizations to meet payroll and pay bills, as the value of short term commercial debt diminishes and the value of other debt is unknown and cannot be sold. The underlying issue here is a "crisis of confidence" which comes from the FASB accounting rules being so lax, that "fair value" can not be ascertained on the asset values, that is the value of debts, in the funds portfolios.

The current situation is that the fair value accounting rules have been suspended by the SEC.

This is something that John McCain applauds as is documented in the Newsday article McCain Says Mark To Market Suspended

Companies and funds are buying only Treasury Bills and Paper as is seen in the Capstone Report which focuses on how the Liquidity Meltdown Crisis affects colleges:

"An investment fund that serves about 1,000 colleges and private schools partially froze withdrawals this week amid the credit crunch, forcing colleges to develop new plans to pay bills.

Wachovia Bank, trustee for the $9.3 billion Short Term Fund offered by Commonfund, said Monday it was terminating the fund and establishing a process to ensure the orderly liquidation and distribution of the fund's assets. Wachovia initially told investors Monday that they could only withdraw 10 percent of their money, but that figure was increased to 34 percent by Wednesday and 37 percent by Thursday, October 2, 2008.

Commonfund, a Wilton, Conn.-based nonprofit that advises colleges and schools on money management, also said Thursday it put a 30 percent limit on withdrawals from its Intermediate Term Fund after investors in the Short Term Fund tried to withdraw money from that fund, said Keith Luke, managing director of Commonfund.

About 200 colleges and universities have about $1 billion in the intermediate fund, which is used for long-term needs, such as equipment plant purchases, he said.

"We just didn't have the liquidity in the fund to do that," Luke said. "We will relax that as soon as market conditions permit."

Partially freezing the Short Term Fund as officials prepare for liquidation prevents a run on money and protects investors, said Laura Fay, a Wachovia spokeswoman.

"It was not something we took lightly," Fay said. "In this environment, we felt this was the best way to proceed."

Some colleges are securing lines of credit because of the restriction on accessing money from the short-term account, according to Matthew Hamill, senior vice president of the National Association of College and University Business Officers. That means borrowing costs that effectively reduce their rate of return in the original investment, he said.

Hamill said he does not expect the issue to affect students and their families and noted that the crisis has eased somewhat with a greater percentage of cash allowed to be withdrawn.

"I think most institutions are feeling far more confident in the short run the fund will be there for what its needs are," Hamill said. "The remaining question on everyone's mind is exactly when the remaining balance in the account will be available."

The fund provides returns slightly above U.S. Treasury bills. About 85 percent of the fund was invested in high-quality commercial paper from blue chip companies, while the rest is in securities backed by mortgages and other assets, Luke said.

Amid the housing industry slump and turmoil affecting banks and credit markets, such investments have become increasingly unpopular as investors seek safer options like Treasury bills.

Commonfund said recently volatile markets have hurt the 15 percent to 20 percent of the Short Term Fund's portfolio held in mortgage- and asset-backed securities.

There have been no defaults in the fund's portfolio so far, Luke said.

"Credit markets have frozen, which has made trading of even the highest quality short term financial assets impossible at virtually any reasonable price," Commonfund wrote in a letter to clients Wednesday. "In light of these markets, we believe that the trustee feared that a sudden increase in redemptions could force a liquidation of securities in a frozen market and decided to take pre-emptive action."

Commonfund said it pledged $50 million of its corporate reserves in April to back the fund.

Fay said Wachovia's decision was not affected by last week's announced $2.1 billion deal for Citigroup to buy Wachovia's banking operations.

Wachovia's decision to slowly liquidate the fund is designed to prevent a rush by investors. When a fund sees such a rush, fund managers must sell assets — typically at a loss when it must be done quickly, and especially amid the recent market turmoil.

A slow liquidation helps protect investor returns and ensure each investor would be treated equally.

A rescue package approved by the Senate late Wednesday would let the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. If successful, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.

By the end of the year, investors in the Short Term Fund will be able to withdraw at least 57 percent of their money, Luke said. Asked if investors will ultimately get all their money back, Luke said, "We certainly expect that."

Commonfund is working with the colleges and schools to help them find alternative sources of financing, Luke said.

"We feel terrible for them," Luke said. "We want to help them. We're working very hard to do so."

Bethany College — a Lutheran school in Lindsborg, Kan., with 600 students and a $12 million budget — has $700,000 invested in the fund.

"Obviously we weren't planning on withdrawing all at once," said Aubrey Streit, a spokeswoman. "We're just re-evaluating our plan for how we will work with the cash flow over the course of the next academic year."

Bethany College is not in a state of panic, Streit said, but she noted that the investment was a significant part of its budget.

"It wasn't something we expected," Streit said. "It really makes it real to see the financial impact coming here."

Grinnell College in Iowa had about $4.8 million in the fund, but was able to withdraw 34 percent, said Russell Osgood, the college's president. With a $1.5 billion endowment, he was not worried.

AP business writer Mark Jewell in Boston contributed to this report. Source: AP News

One Response to “Liquidity crisis for colleges?”
Christopherson Says: October 2nd, 2008 at 7:14 pm
I’ve already heard from numerous sources that UA will be a lot harder to be accepted into now that they’re at an all time high of 27,000+ students. I imagine the economy crisis is only playing into the university officials’ plan.

The Bailout Bill Has Gone Back To The House Providing Tax Breaks, An Increase In FDIC Insurance, And A Restatement Encouraging Suspending Fair Value Accounting Provided
James Rowley and Nicholas Johnston Bailout Bill Sent Back to House After Senate Passage (Update2) report that "The Senate also sweetened the (bailout) measure for Republicans by authorizing the government's purchase of troubled assets with a $149 billion package of tax breaks. They would spare 24 million households from a $62 billion alternative minimum tax and extend $17 billion in benefits to companies that produce alternative energy.

And added to the rescue plan this week is a temporary increase in the limit on federal deposit insurance to $250,000 from $100,000 aimed at discouraging people from pulling their money out of banks.

The Senate bill also reiterates the U.S. Securities and Exchange Commission's authority to suspend an accounting rule that bankers and other corporate executives say exacerbates their troubles; as indicated in the Elizabeth Williamsonand Kara Scannell Wall Street Journal article Momentum Gathers to Ease Mark-to-Market Accounting Rule

The so-called fair-value standard requires companies to review assets and report losses if their values decline. Lawmakers, the American Bankers Association and companies including American International Group Inc. have urged the SEC to suspend or ease the rule, saying it forces firms to report deeper losses than needed on assets such as subprime mortgages.

Jesse Westbrook of Bloomberg in SEC, FASB Resist Calls to Suspend Fair-Value Rules (Update2) reports that "The U.S. Securities and Exchange Commission probably will resist calls to suspend the fair-value accounting rules that some members of Congress blame for exacerbating the global financial crisis, people familiar with the matter said.

The SEC and Financial Accounting Standards Board today issued ``clarifications'' on how banks should interpret existing rules requiring them to review assets each quarter and report losses if values decline. A moratorium isn't being considered, said the people, who declined to be identified because the plan hasn't been completed.

Congressmen, banking lobbyists and companies including American International Group Inc. have urged the SEC to suspend fair-value accounting, saying it forces firms to report losses they never expect to incur. Federal Reserve Chairman Ben S. Bernanke and other proponents say removing the rule would erode confidence that firms are owning up to losses.

``In the past couple of weeks, fair-value accounting has been under attack,'' JPMorgan Chase & Co. analyst Dane Mott wrote in a report today. ``Blaming fair-value accounting for the credit crisis is a lot like going to a doctor for a diagnosis and then blaming him for telling you that you are sick.''

SEC spokesman John Nester declined to comment. FASB spokesman Neal McGarity didn't return a phone call seeking comment.

House Rejection

Representative Todd Tiahrt, a Kansas Republican, said the House probably would have approved a $700 billion bailout of financial companies yesterday had the legislation included a suspension of fair value accounting. The House rejected the measure 228-205.

It would have passed ``easily'' if the rules had been suspended, Tiahrt, who opposed the legislation, said today in a Bloomberg Television interview.

Bernanke said in Sept. 23 testimony before the Senate Banking Committee that if regulators repeal the rules, ``nobody knows what the true mark-to-market price is.''

Fair value rules require companies to determine how much assets are worth based on what they could expect to sell them for on the open market.

``Suspending the mark-to-market prices is the most irresponsible thing to do,'' said Diane Garnick, who helps oversee more than $500 billion as an investment strategist at Invesco Ltd. in New York. ``Accounting does not make corporate earnings or balance sheets more volatile. Accounting just increases the transparency of volatility in earnings.''

`Unrealistic Prices'

Anne Canfield, executive vice president of the Consumer Mortgage Coalition, counters that businesses have been forced to ``mark down their assets to unrealistic fire-sale prices,'' because trading has dried up. Canfield, whose group represents mortgage lenders, urged the SEC to suspend fair-value rules ``immediately'' in a Sept. 29 letter to the agency.

The SEC and FASB, in today's statement, encouraged companies to rely more on their own judgments, such as expected cash flows, in determining the current value of assets that aren't trading. The regulators also said price quotes provided by brokers when markets are frozen may not be the most reliable way to determine how much securities are worth.

Norwalk, Connecticut-based FASB, which writes U.S. accounting rules, is preparing ``additional interpretive guidance on fair-value measurements'' to be released this week, the SEC said. FASB will discuss fair-value accounting at its board meeting tomorrow.

Bankers Association

The American Bankers Association, a trade group representing lenders that has lobbied the SEC over fair value accounting, praised the agency's clarifications, saying they will ``help auditors more accurately price assets,'' according to a statement released today.

The collapse of the subprime-mortgage market has contributed to more than $500 billion of losses and writedowns at global financial companies. Treasury Secretary Henry Paulson is seeking authority from Congress to ease the crisis by buying mortgage-securities and other assets from banks.

U.S. Senate leaders and President George W. Bush vowed today to revive the $700 billion financial-rescue plan after the House rejected the legislation.

House Plans Second Vote On $700 Billion Bailout
Friday October 3, 6:40 am ET, Julie Hirschfeld Davis of the Associated Press writes that converts in the House are "reluctantly embracing" $700 billion bailout ahead of today's make-or-break 2nd vote.

Black lawmakers said personal calls from Democratic presidential nominee Barack Obama helped switch them from "no" to "yes," as Republicans and Democrats alike said appeals from credit-starved small businessmen and the Senate's addition of $110 billion in tax breaks and other sweeteners had persuaded them to drop their opposition.

Rep. John Lewis, D-Ga., told a closed-door meeting of House Democrats that he would support the bill after speaking with Obama about it.

Congressional leaders "worked over" wayward colleagues wherever they could find them.

Rep. Bobby Rush, D-Ill., also said Obama was asking him to reconsider his vote. "I'm seriously listening," Rush said

The Investment Application
The SEC has stated that the fair value accounting rules have been suspended. And the bailout legislation is likely to be passed with a statement to the SEC that it suspend fair value accounting, which is redundant given that it has already suspended the rules.

Yet, the suspension of fair value is modern day Enron accounting, and is obscuring the true market value of their assets in fund values and in debt instruments, intensifying the credit crisis day-by-day. Liquidity is freezing up. This means there is no liquidity to grease the wheels of the economy.

There is coming ever increasing credit gridlock where companies will be unable to meet payroll and pay debt as it comes due, as the funds they rely on do not honor redemptions.

When the legislation passes, and is signed into law by the President, then the US government will be stuck with buying assets that are market to fantasy. And I can assure you that the Federal Reserve is going to be buying assets primarily from chrony organizations, such as JP Morgan and Morgan Stanley, and from only those organizations which if they fail would hurt JPM and MS.

What this means is that the assets, that is the debts, on the books of massive numbers of banks and others, will really be reinforced as worthless.

The passage of the legislation will mean a write down of commercial debt instruments across the board with the longer out, getting a greater marketplace haircut.

Debt ETFs, such as LQD, HYG, CFT and EMB will continue to loose value; and the principal value of the tax free municipal bond mutual funds like USSTX, will continue to fall, as interest rates rise. And the municipal bond ETFs such as MUB and TFI will continually go lower as well.

The suspension of fair value accounting means an ever increasing flight of capital out of the municipal bond market, and thus will soon cause a shut out of municipalities from the credit markets.

The suspension of fair value accounting means companies will find no buyers of corporate debt; and thus, a closure of lending markets.

We are quickly moving from a situation where the US Treasury Notes and Paper is desirable, to a situation where only the US Government Debt will be honored, that is bought and sold!

In other words, only US government debt will be held as valuable, because fair value accounting rules have been suspended by both the SEC and by congressional mandate.

I relate that while Regional Banks, IAT, are currently up 22% since the US Dollar stock rally began, July 14, 2008, when the yen carry traders, sold oil, USO, and commodities, RJI, to go long the banks, the facility of TARP provided under the Emergency Economic Stabilization Act of 2008, that is EESA, is unlikely to be of much help to most regional banks. The authority and facilities given to the Federal Reserve Chairman by the Paulson-Bush-Pelosi bailout legislation provide a rescue of derivative laden and threatend JPMorgan, Citigroup, Bank of America and Morgan Stanley, and not of the community and smaller banks.

If one is invested in these, it's best to sell out now of all Regional Banks, as they will be falling in value once the legislation is passed.

The 3 month on going Yahoo Finance chart of IAT, compared to ITB, and IYR, shows the 22% rise. Here is the chart showing the 22%.

Yes, pull out as my perspective is much the same as that of Joshua Crown in The Accounting Rule You Should Care About where he relates: A change of course!

Tuesday afternoon, the SEC and FASB seemed to change course on the rule, as they published new guidance to firms. The two organizations said when the market for a security disappears, it is now allowable to arrive at a value using "estimates that incorporate current market participant expectations of future cash flows, and include appropriate risk premiums, is acceptable."

In plain English, banks may not be forced to take huge writedowns on investments that lost all their value. But the guidance is just that: guidance. The SEC and FASB suggested that more concrete rule changes could come later.

While the possible end of mark-to-market might please critics of the rule, it doesn't satisfy everybody.

Some financial experts argue that even though banks and Wall Street firms may be able to make their balance sheets look better if the rule changes, these companies will be less attractive to investors because there isn't as much information about their true financial condition.

"The garbage is on the books and no one wants to admit the original error of purchasing this class of assets," said Barry Ritholtz, CEO of Fusion IQ, a research firm.

Ritholtz said mark-to-market accounting forces banks to honestly disclose what they own and how much those investments are worth. Changing the rule would make it tougher to come up with a bank's real value.

"I would advise our clients and the investing public that owning any financials that failed to disclose their holdings accurately is no longer an investment. It is pure speculation, with more in common to spinning a roulette wheel," he said.

Gold Is The Safe Haven
I believe a run on stock brokerages is coming soon; and I suggest that one take one's money out of brokerage accounts, and that one buy gold, even though gold can easily fall from its current $840 to $825, $800 or $775, with a falling EURJPY.

And the gold ETF, GLD, could very easily fall to $77.50.

While bank accounts will have higher FDIC limits, I want something that is tangible, that I can secure, that I can personally own and have a large degee of personal control over.

I recommend diversification of investment in gold in four locations immediately because of financial system instability and lack of liquidity: 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.

I am simply a blogger who communicates what I see as an investment demand for gold; I suggest that one consult with a licensed investment professional before making any investment decisions.

Helpful Interactive Charts For Gold
The Yahoo Finance ongoing chart of GLD relative to the EUR/JPY and the USD/JPY, provides fascinating insights into the interplay of gold and the two major currency pairs.

Gold, $GOLD.

The gold ETF, GLD.

The US Dollar, $USD.

US Treasuries, TLT

The Ten Year US Government Note, $TNX

The on going monthly MSN Finance chart of the gold ETF, compared to world stocks, EFA, and US Stocks, VTI, and US Treasuries, TLT

The ongoing five day Yahoo Finance chart of gold, GLD, relative to the US Dollar ETF, UUP, and the Euro, FXE, and oil, USO

The on going five day Yahoo Finance chart of the gold ETF, GLD, compared to FXE, EFA, and EEB

The on going five day Yahoo Finance chart of the gold ETF, GLD, compared to IWM, and SPY

The on going five day Yahoo Finance chart of the gold ETF, GLD, compared to FXE, USO, and RJI

The ongoing ten day MSN Finance chart of EUM, compared to TWM, SDK, and SFK

The the ongoing five day Yahoo Finance chart of EUM, compared to TWM, SDK, and SFK

The ongoing five day Yahoo Finance chart of the yen, compared to gold and the world's major currencies

Gold relative to world stocks: GLD:EFA

Gold relative to US Stocks: GLD:VTI

Gold relative to the euro: GLD:FXE

Gold relative to world currencies: GLD:DBV

Gold relative to oil: GLD:USO

Suggested Reading And Things To Reflect On
LIBOR Rates Pushing World To Hyper-inflation? Is disregard for fair value rules of accounting going to create massive hyperinflation?

The Ted Spread as of the writing of this article it has gone into uncharted territory at 3.83, that may be a new high; this is like throwing a wrench into a working machine; all I can relate is that the global financial system is going to come to a screeching break down very, very soon.

KeNo's Housing And Economic Portal provides a section of various state, municipality and small businesses being hurt by the credit crunch.

The SEC May Get New Authority Over Fair Value Accounting Two little noticed provisions are Sections 132 and 133, which represent a significant and potentially far-reaching intrusion by Congress into the process by which accounting principles are formulated and implemented. Section 132 gives the SEC the authority to “suspend … Statement Number 157 of the Financial Accounting Standards Board, FASB.

Stop Enronization Of Banking The current bailout legislation does not instill or create trust in wall street and banking.

Goldman Is Getting The Best Of The Credit Crisis Goldman Sachs opponents have been vanquished and bad bets wiped away. Given that its charter has been changed to the status of a bank holding company, it will be the last bank standing.

Introduction
Today is the darkest day in American history as Congress has reached an accord with the President approving his financial bailout plan.

The Federal Reserve Rises To Become The Western World's "Bank Of Banks"
With President Bush's financial system bailout, actually a derivatives bailout, the United States Central Bank, has effectively gone to a central bank 0% interest rate, and in fact something entirely new: it immediately introduces a negative central bank interest rate until the liquidity it provides is all used up.

Yet unlike the 0.5% lending rate at the central bank of Japan, which is currently accessed by investors to go short the USD/JPY and short the EUR/JPY, as well to finance short selling of world stock market, EFA, in addition to US markets, VTI, it temporarily stabilizes, in particular it stabilizes financial institutions, which prevents their collapse and postpones default events on credit default swaps; but debases the US Dollar, and has served to start a run on US Treasuries, as is seen in the fall of TLT, as well as the rise in the rate of interest on the US Government Note, $TNX; which stimulated a rise in its 250% inverse investment, DXKSX ... $TNX and DXKSX

Definitely, as Alabama Senator Richard Shelby relates, the financial system bailout is the mother of all bailouts.

The financial system rescue is a sweeping, unprecedented, epic, landmark, watershed change; it is a sea change of economic history: it puts the nail in the coffin for capitalism and traditional investing; and is pure state corporatism, where government together with corporations, primarily bank holding companies, rule over the institution of commerce, finance trade, and investment; and it introduces the Federal Reserve with its interlocking arrangements with other central banks, as the western world banking authority, a prelude to the rise of a global banking authority, that is a global financial authority, and a Seignior who will be in charge of banking, finance, commerce, trade and investment worldwide.

Abigail Moses in September 22, 2008 Bloomberg article reports: "Collateralized debt obligations backed by mortgages will have to be unwound to qualify for the Federal Reserve-backed plan to accept troubled assets from banks, according to Royal Bank of Scotland Group Plc analysts. 'The only way that CDO investors can take advantage is to unwind the entire structure and put the underlying assets to the Fed,' ... analysts led by Gregorios Venizelos wrote ... 'The Fed plan makes liquidation potentially the best option.'"

The Federal Reserve will now replace investment banking in securitization of CDOs; it has the authority to buy "any asset, anywhere", that is debt, that troubles the stability of the world's financial system.

Pierre Paulden and Jody Shenn in September 22, 2008 Bloomberg article report: "The government is likely to buy the assets at above the prices financial firms could sell to private-sector buyers strategists Akiva Dickstein, Roger Lehman and Kamal Abdullah wrote." And those prices are market to fantasy, so the government will be paying an unbelievable price for the debt it acquires.

The Federal Reserve's authority now transcends sovereign nations and constitutions such as the United States Constitution.

There Is Definitely A Changed Financial Landscape
Doug Noland relates in Safehaven.com article Changed Financial Landscape in Safehaven.com article: "Today's finance-related economic headwinds are Cat-4 (and gaining) Hurricane Systemic Credit Seizure, compared to last year's Tropical Storm Subprime. Federal Reserve-dictated interest rates are extremely low - and the Fed and global central bankers have injected unfathomable amounts of liquidity - yet Credit Conditions have turned the tightest they've been in decades.

The Lehman bankruptcy marked a major inflection point in the confidence of contemporary "money." It was a decisive blow against trust in various money market instruments - the very foundation of our monetary system. "Money" has now tightened significantly for virtually all players that had previously enjoyed cheap short-term financings." (Financings which were used to invest long, Richard)

The Lehman bankruptcy also marked a major inflection point in confidence for the various "daisy chain" players involved in intermediating risky loans into contemporary "money." The market was convinced Lehman was "too big to fail." Its failure inflicted thousands of market participants with losses - from Primary Reserve Money Fund investors caught with short-term Lehman paper to holders of Lehman's long-term bonds. Investors all over the world were impacted.

The hedge fund community suffered mightily. The status of hundreds of billions of derivatives and counterparty obligations was suddenly up in the air or in the hands of the bankruptcy court. And, importantly, huge losses were suffered in the Credit Default Swap marketplace - the marrow of one of history's most spectacular speculative manias. (This created a Liquidity Meltdown, Richard)

Trying to add a bit of simplicity to the Complexity of a Credit Market Breakdown, I'll say the Lehman collapse marked a critical inflection point in at least five major respects: First, the Crisis of Confidence jumped the "firebreak" from risk assets to contemporary "money," shattering trust in various facets of contemporary finance that was forged over decades. Second, it required the marketplace to reexamine exposures to various direct and indirect counterparty risks, a terminal blow for derivatives markets. Third, it pushed the Credit default swap marketplace into full-fledged dislocation and instigated a long-overdue regulator onslaught. Fourth, it decisively burst the "leveraged speculating community"/hedge fund Bubble. This has ushered in another round of problematic de-leveraging and accelerated the reversal of "Ponzi Finance" dynamics. Fifth, it instilled global fear with respect to the risks of participating in the inter-bank lending market with American institutions.

Basically, the Lehman collapse marked the end of "Wall Street" risk intermediation as a significant component of system financial intermediation. Going forward, Credit growth will be chiefly generated by the banking system, supported by various forms of government backing (Fed, FDIC, Washington bailouts/recapitalizations, etc.), the government-operated GSEs, and various forms of federal government debt issuance.

Importantly, this new financial structure will ensure minimal risky lending as well as significantly reduced risk-taking. And from a global perspective, I believe newfound fears of lending to the American financial sector marks the beginning of the end of our economy's capacity for trading new financial claims for imports of energy and goods.

Over time the Changed Financial Landscape will have a profound impact on the underlying economic structure. Our economy will have no alternative than to get by on less Credit, less risk intermediation, and fewer imports.

In the near-term, the effects will be a rapid and pronounced slowdown of our economy's "output."

And while we'll only know over time, I'd bet this new financial structure will allocate much less finance to entrepreneurial activities, productive endeavors and the asset markets - while at the same time providing ample (government-directed) purchasing power to ensure stubborn consumer price inflation."

The Fact That Derivatives Are At The Heart Of The Mess Has Not Been Revealed Or Discussed
I do not hear any mention made of the fact by anyone that derivatives are at the heart of mess that confronts investors, America and the world.

Until there is an admission that the counter party risk on the credit default swap derivatives are at the basis of the issue at hand, and until the position of interest rate swap derivatives are revealed, and that the lion share of these contracts are owned by Goldman Sachs, Merrill Lynch and AIG, there will never ever be a successful resolution of the current problem; it will only fester until the whole world becomes infected again by liquidity duress.

The rescue legislation is a not a rescue; rather, it is a bailout of banks and other financial organizations, and the cost of the endeavor starts at $350 to $700 Billion and is likely over time to go up.

The Derivative Positions Of Financial Organizations Is At The Heart Of The Current Crisis
The Federal Reserve gave AIG an $85 Billion loan; the reality is that for all practical purposes AIG was nationalized by the Federal Reserve, as its disorderly failure would intensify the current financial storm and greatly complicate the government's efforts to manage it. The company is such a big player in insuring risk for institutions around the world that its failure would have shaken the global financial system to the ground.

Oil Drum reports: "In all, AIG wrote some $79 billion in insurance on CDOs backed mainly by subprime mortgages—selling insurance to financial firms like Merrill, UBS and Calyon. But AIG did much more than just issue credit default swaps on the worst of the CDOs. The total value of AIG’s credit default swap portfolio is $527 billion, according to a regulatory filing. In downgrading AIG on September 15, Standard & Poor’s said: “The primary source of the strain comes from credit default swaps covering multi-sector collateralized debt obligations, with mortgage exposure as well as insurance company holdings of residential mortgage-backed securities."

Oil Drum also relates Merrill Lynch's AIG problem: "Even after selling off some $30.6 billion in ailing CDOs to private equity firm Lone Star Funds in August at a steep discount, Merrill still has $19.9 billion in mortgage-backed CDOs in its portfolio. Merrill has marked down the value of those CDOs to $8.8 billion—a more than 50% haircut. In a recent regulatory filing, Merrill said it was adequately protected against suffering any sizeable losses on those remaining CDOs because it had purchased $6 billion worth of insurance, or credit default swaps, from “highly-rated non-monoline counterparties.’’ It’s widely believed that the bulk of that insurance was purchased from AIG, which was a prime seller of credit default swaps on CDOs up until the beginning of 2006."

A unified action by banks settled counter party exposure to Lehman Brothers credit default swaps and other derivatives; this was a large part of the cause of the Liquidity Meltdown of September 17, 2008. The September 15, 2008 Google News AFP article Lehman Bankruptcy Shakes World Financial System reports that banks world wide have provided 70 Billion to settle counterparty exposure to derivatives, most likely credit default swaps, arising from the bankruptcy of Lehman Brothers, LEH: "A consortium of 10 global commercial and investment banks announced plans to provide 70 billion dollars to help offset a credit squeeze". In a joint statement the banks relate they have 'initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.' "They also said they would work together 'to help facilitate an orderly resolution' of the derivatives exposures between Lehman Brothers and its counterparties."

President Bush's financial bailout is a derivatives bailout plain and simple.

Need For A Global Monetary Authority Was Expressed And Verbalized This Week
Shannon D. Harrington, Caroline Salas and Pierre Paulden in September 24, 2008 Bloomberg article report: "The $62 trillion market for credit- default swaps, created to protect banks from loan losses, helped fuel a near-meltdown in the financial system and now may be regulated for the first time. The derivatives precipitated plunges in the shares and debt of Wall Street firms, accelerating the collapse of Lehman Brothers Holdings Inc. and the U.S. takeover of American International Group Inc., the biggest U.S. insurer. Now, regulators want to bring oversight to a part of the credit market that may be more susceptible to manipulation than selling stocks short ... Banks 'are suffering the consequences of their own actions,' said Thomas Priore, CEO of Institutional Credit Partners ... a hedge fund with $13 billion in assets. 'They created a mechanism through default swaps to reflect a view on credit that has taken on a life of its own.' The swaps became one-way bets on the demise of financial institutions as traders hedged the risk that their partners might implode, said Gary Kelly, a strategist at broker Tradition Asiel Securities Inc."

EuroIntelligence provides the Jeffrey Garten, FT article We Need A New Global Monetary Authority, which relates that the IMF and the G7 have both proved irrelevant to the crisis, yet this crisis is truly global. The growth of global assets far outstrips the growth of global GDP, and most of the large financial companies operate worldwide. He advocates a global monetary authority, by which he does not mean a central bank, but a global capital markets regulator that would also act as a bankruptcy court.

Wikipedia Profile of Jeffrey E. Garten relates that he was Undersecretary of Commerce for International Trade under the Clinton administration and former Dean of the Yale School of Management. Before this, Garten served on the White House Council on International Economic Policy under the Nixon administration and on the policy planning staffs of Secretaries of State Henry Kissinger and Cyrus Vance of the Ford and Carter administrations. He is the author of five books and currently holds the position of Juan Trippe Professor in the Practice of International Trade, Finance, and Business at the Yale School of Management, a position without tenure.

Garten has worked on Wall Street as a managing director of Lehman Brothers and the Blackstone Group. At Lehman, he specialized in debt restructuring in Latin America. He also directed and expanded the Asian investment banking business for that firm. At Blackstone he worked in the financial advisory and mergers and acquisitions arena. From 1995 to 2005, Garten was dean of the Yale School of Management. During his tenure, the school retained its #19 rank in Businessweek's rankings.

And EuroIntelligence also provides the John Thornhill FT article Sarkozy Sets Out Bigger State Role As Current Institutions Are Ill-Equipped To Deal With Crisis which reports the speech given by Nicolas Sarkozy in Toulon, in which he said, among others, that the crisis highly deficiencies in the EU’s institutional arrangements; and said that the EU would not be in a position to deal as swiftly with the crisis as the US would. He also made the same point about the Bretton Woods institutions, (those of the neoliberal Milton Friedman), saying that we cannot manage the 21st century economy with 20th century institutions.

The World Will Become More Multipolar
Andrea Thomas in September 26, 2008 Wall Street Journal article relates: "The Wall Street financial crisis will reconfigure the world economy and the U.S. will fade as the world's dominant economic force, German Finance Minister Peer Steinbruck said in German parliament Thursday. 'The U.S. will lose its status as the superpower of the global financial system, not abruptly but it will erode,' Mr. Steinbruck said. 'The global financial system will become more multipolar.'"

Japan, China, and Russia have tremendous Forex reserves built up by trade; so definitely there is coming a multipolar world of four powers: The North comprised of Russia, the East comprised of China and Japan, the South Comprised of South America and Africa, to balance the West comprised of Europe and North America.

The GCC states and the UNASUR nations have announced common markets; each is likely to develop a common regional currency.

Patrick Markey of Reuters in September 27, 2008 article, Russia Slams Failure Of U.S. Unipolar Policies, reports from the United nations that Russian Foreign Minister Sergei Lavrov Saturday said U.S. "unipolar" policies had failed in Iraq and Afghanistan and helped provoke the recent conflict in Georgia.

Russia's invasion of Georgia last month has brought relations with the United States to their lowest point since the end of the Cold War.

In a strongly worded speech to the U.N. General Assembly, Lavrov called the U.S.-led war in Iraq a "painful blow" to global anti-terrorism efforts and questioned the NATO-led force fighting the Taliban in Afghanistan.

He described U.S. foreign policy as "unipolar" meaning that Washington regarded itself as the world's sole superpower, able to act without regard to the views of others.

"The illusion of a unipolar world confused many," Lavrov said. "In exchange for total loyalty they expected to receive a carte blanche to resolve all their problems."

Washington and European allies condemned Russia when it invaded Georgia after Tbilisi tried to re-establish control over the breakaway region of South Ossetia, which has now declared independence along with another enclave, Abkhazia.

Russia has said it responded to Georgian aggression.

A resurgent Moscow has also irked Washington by refusing to agree to increase pressure on Iran over its nuclear program and reaching out to Venezuelan President Hugo Chavez.

It has ordered an upgrade of its nuclear deterrent with a new space defense system and a fleet of submarines and sent two bomber jets to Venezuela in what analysts said was saber-rattling in Washington's backyard.

Municipalities And States That Depended Upon Financial Services Will Quickly Be Going Into The Dark Ages Both Culturally And Financially
Budget cuts in New York City and New York State will be beyond austere; the budget cuts will be unbelievable as these governments have relied upon tax revenues from many financial organization's former awesome profits; the cultural shock will be terrific and brutal.

Caroline Binham and Elisa Martinuzzi in September 25, 2008 Bloomberg article report: "London is turning against the $450 billion hedge-fund industry that helped make the city a contender for the title of world financial capital. As Lehman Brothers Holdings Inc. filed for bankruptcy and HBOS Plc was pushed into a government-brokered takeover, U.K. regulators and lawmakers found a culprit: the estimated 980 hedge funds that reside in Britain ... Harbinger Capital Partners Fund chief Philip Falcone was singled out by the Daily Mirror. The tabloid used a front-page story on Sept. 18 to brand him a 'greedy pig' for short selling, or making bets that Edinburgh-based HBOS would lose market value."

The World Is Hooked On Debt And President Bush's Derivative Bailout Plan Enslaves America And The World Unto Debt
Bei Hu in September 22, 2008 Bloomberg article reports: "Treasury Secretary Henry Paulson's $700 billion plan to buy devalued assets from financial companies is 'a joke' because it doesn't go far enough to calm markets, said Kenichi Ohmae, president of Business Breakthrough Inc. Ohmae, nicknamed 'Mr. Strategy' during his 23 years as a McKinsey & Co. partner, called for a $5 trillion 'international facility' to be made available to financial institutions. The system could be modeled on one used by Sweden during its banking crisis in the early 1990s, he said. 'This is a liquidity crisis. The liquidity has to be so big that people won't get panicky.'"

I have never been a fan of the neoliberal Milton Friedman who raised the question "free to choose"; but I am sure he would say "the current crisis and challenge is no excuse to impose state control on the markets". He might say it's laissez unfair. Wikipedia relates a quote from Capitalism And Freedom: "A governmentally established agency--The Federal Reserve System--had been assigned responsibility for monetary policy. In 1930 and 1931, it exercised this responsibility so ineptly as to convert what otherwise would have been a moderate contraction into a major catastrophe."

Elaine Meinel Supkis writing in Financial Black Holes relates that "modern capitalist banking systems create increasing DEBT and not increasing wealth!"

And, I add that the purpose of the modern day banking system is to subject Americans and the world unto debt. The bailout legislation being developed by Congress adds debt unto debt; it creates debt out of debt. Since the legislation authorize securitization of existing CDOs by the United States government, it turns the government into an investment banker!

Congressional legislation and President Bush's signature assigns this debt to American citizens, and to humanity at large: we are now slaves unto debt that was created by Wall Street under the repeal of the Glass Steagall Act.

The financial bailout is really the enactment of slavery of Americans unto government and banking lords.

Not only are Americans enslaved, but also, any nation whose bank that swaps out its debt for new US Treasuries, enslaves its people to the rule of the Federal Reserve Chairman and is indebted to the him.

I perceive at least two items in the legislation are unconstitutional.

So we have rule by men, rather than the rule of law. Perhaps one might enjoy my article America's Founding Fathers Were For Liberty, Independence And Freedom.

The bailout legislation is the capstone of self-serving, empire building and debt addicting legislation that goes back to the time when the neoliberal Milton Friedman proposed the US go off the gold standard for a floating currency exchange system. As Eddie Griffin, Member BASG, relates, the bailout puts an end to fairy tale laissez faire capitalism. It privatizes profits to an elite few and socializes risks and losses to the public at large. The legislation provides for nationalization of banking and debt.

The bailout had to be approved, as the world's financial system is on the precipice of a breakdown due to a liquidity drought, and desperately needs calming and an injection of liquidity, and the bailout enables massive stop-gap spending legislation to be sent to the President for his signature. Even many of the conservative Republicans are going to vote for the bailout.

Charles Babington of the Associated Press reports that the presidential nominees came behind the outlines of the bailout.

"This is something that all of us will swallow hard and go forward with," said Sen. John McCain, R-Ariz. "The option of doing nothing is simply not an acceptable option."

Sen. Barack Obama, D-Ill., sought credit for taxpayer safeguards added to the initial proposal from the Bush administration. "I was pushing very hard and involved in shaping those provisions," he said.

The Financial Bailout Establishes A Pyramidal Society Of Overlords And Serfs
It brings back serfdom that Joseph J. Ellis wrote about in the article American Sphinx: The Contradictions of Thomas Jefferson

And it brings back a feudal system that Jonathan Shaw writes in Harvard Magazine article Who Built the Pyramids? where he relates: Egyptian society was organized somewhat like a feudal system, in which almost everyone owed service to a lord.

The days of the Sphinx have returned. The article The Great Sphinx relates: In a depression to the south of Chephren's pyramid sits a creature with a human head and a lion's body. The name 'sphinx' which means 'strangler' was first given by the Greeks to a fabulous creature which had the head of a woman and the body of a lion and the wings of a bird. The sphinx appears to have started in Egypt in the form of a sun god. The Egyptian sphinx is usually a head of a king wearing his headdress and the body of a lion . There are, however, sphinxes with ram heads that are associated with the god Amun.

While The President's Bailout Will Temporarily Rescue Financial Organizations, The Dollar And US Treasury Bonds Will Be Destroyed
President Bush's bailout is one of financial organizations; and is an awesome example of crony capitalism, that will debase the US Dollar, $USD, and destroy the value of US Government Bonds as the interest rate on 30 year US Treasuries, $TYX, and the 10 Year US Government Note, $TNX, rise.

Matthew Benjamin in September 23, 2008, Bloomberg article report: "Treasury Secretary Henry Paulson's $700 billion proposal to stabilize the banking system may push the national debt to the highest level since 1954, threatening an erosion of foreign appetite for U.S. bonds. The plan, which asks Congress for funds to buy devalued securities from financial institutions, would drive the debt above 70% of gross domestic product and the annual budget gap to an all-time high, possibly exceeding $1 trillion next year, economists estimated. 'This is sobering, absolutely sobering, even to someone who doesn't drink,' said Stan Collender, a former analyst for the House and Senate budget committees."

A run on US Government Bonds has already started, and is already seen the chart of the government bond ETF, TLT, and the zero coupon mutual bond fund BTTRX falling ... TLT and BTTRX.

Bo Nielsen and Anchalee Worrachate in September 22, 2005 Bloomberg article report: "Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue. The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond ... While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates. 'As we get to the other side of this, the dollar will get crushed,' said John Taylor, chairman of ... International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund firm, which manages about $15 billion."

Suggested Reading
Elaine Meinel Supkis September 28, 2008 article Bank Bail Bill Blesses Goddess Of Inflation provides introduction: "Everyone is now trying analyze the latest futile debt spending spree of the desperate US as we try to restore the deadly status quo that can't be saved. The nice thing about bankruptcy is, it clears impossible debts and allows a restart. But it pays to pay back everyone, somehow. There is a method of going broke but still repaying that we don't want to try because this means killing the present totally unbalanced global trade and of course, stopping the US imperial projects dead in their tracks. The world is using us and we are the fools who let this happen."

And she relates in response to the September 27, 2008, David M. Herzenhor and Carl Mulse New York Times article, Breakthrough Reached in Negotiations on Bailout: "I wish I was in on those negotiations. The GOP didn't withdraw support due to being against pouring billions into Wall Street. They were against it because the Democrats didn't want to add even more tax cuts to Paulson's Ring of Power proposal. I saw this plain as day at the hearings. All of the GOP Congressmen came into the chambers and about ten of them testified. Each one wanted capital gains tax cuts. Then all but 5 of them left the chambers when Paulson and Bernanke went it. I wrote in my notes, 'The GOP wants ONLY the tax cut, they don't care about the rest. It is a game.''

This game is clear: they want to pass off to the Democrats, the dirty job of supporting super-rich bankers or all those poor, little people will die out there in Americaland. The US public is very much against bailing out the super rich. The anger about all this will be directed towards the Democrats now even though the Democrats shot down the biggest Xmas gift ever for the rich, that 0% capital gains tax deal.

This blatant gift giving to the wealthy was totally ignored by the media. This is why I am very, very grateful so many readers gave me the money to not only go down to DC but to have a fine camera which I could use to record reality through my own lens. This is why, when we are forced to look at the world through the media filter, we get a dim picture. I saw many reporters there and they were utterly bored during the first half of the hearings because it was Congressmen arguing with each other. They just wanted an official tidbit from the Sphinx and his jinxed sidekick, Gollum.

There is no rescue plan, by the way, that will save and uphold equity values set during the previous bubble. There are ONLY two choices: the Goddess of Inflation gets to eat everything or the goddess of Depression dines. There is no third option! That is it."

Ms Supkis continues with the historical facts: "We went into a mild recession after the foolish Dot Com bubble broke. This would have cleared out a lot of junk. Instead, we decided to turn our entire economy into junk. For on the eve of the housing bubble, before Greenspan dropped interest rates to 1%, for the first time in 30 years, the government was in the green, not in the red! WOW.

This was greeted by the Supreme Court and the media as a great disaster. Mr. Tax Cutter Supreme was installed in the White House via judicial coup. He instantly began to cut taxes and the second, much more fatal bubble began to form as the Fed and the President conspired to create a gargantuan mountain of debt. I have pointed out in the past, when the interest rate is below the rate of inflation, absolutely everyone wants to get this money so everyone and everything runs in the red and goes deep into debt. This Santa Claus goodies situation is irresistible. This continues until the value of everything sopping up this free borrowing is so overvalued, no one can afford to buy them even at 0% interest.

And she provides insight into what I call Real Inflation, which is something that the Austrian Economists, that is those of the Mises persuasion continually deny: "This is all so sad. The bill passed by Congress and the GOP President is a last-ditch attempt at supporting unsupportable equity values. The hope is, this will cause raging inflation and the price/value reset that is going on will stop and we will have the power to force higher wages so both line up again. Woe to everyone, if the wage part fails! If wages don't go up, this will certainly increase the misery of the public. And since the US has killed labor unions, the chances of this working is around 0%. Wages will lag. Commodity prices will soar just like they did last year when billions were suddenly poured into the systems. And nothing will be fixed at all except we will all be in even more misery.

The proof of this is very simple: last Fall, the Congress and government began working on a bill that would 'Put money into people's pockets, fast,' in order to 'restart' the economy. It took several months to engineer this Xmas gift. I got my check the same week world energy prices hit their peak and food inflation was raging.

Afterwards, I figured out how much more I spent on food and fuel this last year compared to the year before and it came out to over $600. So my net gain was $0. This was true of all Americans. This inflationary rescue scheme merely fed inflation. Some foolish Americans spent this on goodies but this simply made their situation worse when inflation really took off after everyone got their checks in the mail".

And she references the BBC September 28, 2008 article Huge new Prime number Discovered to illustrate the underlying cause of the current world economic crisis: "This neat news story clearly shows us how magical numbers are. The goddess of Inflation is laughing. She is capable of running a paper fiat currency far beyond 13 million digits. Using the hyper-magical concept of 'zero'. Buried within this infinity of zeros added to the number one are unique numbers like the one these professors calculated via their computer banks. The goddess of Inflation has infinite computers that run all the time. She can outrun us when she wishes. Her son, Derivatives Beast sailed from $1 billion 30 years ago to a quadzillion dollars, most of it in the last four years. And it would have grown to infinity except the bankers ceased feeding this creature three weeks ago. This is the cause of the present stage of the panic, by the way. The $700 billion is NOT so we feed Main Street as the corrupt politicians are bellowing. Nor even Wall Street".

Investment Application
Austrian Economist Mike Mish Sheldon is still lost in grieving and can't provide any constructive investment suggestions; he keeps telling his readers to fax, fax, and fax Congress.

Trader Tim Knight in article Done Deal? provides this helpful graphic and relates: "The consensus seems to be that a watered-down version of the $700 billion boondoggle is being drafted and will be sent to the House for a vote on Monday. So much for the will of the public!

The big question, of course, is what will happen to the market? Will it Plunge at once? I doubt it; this is the "good news" people have been waiting for ... Enter a new bull market? pfft! ha! ... Soar, like it did September 18th and 19th, and then resume the fall, this time without the benefit of a huge new government program looming as a great new hope? This is what I'm thinking will happen. Many has tsk-tsk'd me for getting into my index puts too early. They may be right. But I've still got ample cash to increase my position at better prices, and I will view any surge as yet another shorting opportunity. There are few things one may count on in life, but on this one point I can assure you: Monday will be interesting.

I am concerned that brokerage accounts are not a safe place to hold money or investments. I know brokerage accounts are insured, but the concern comes from a massive liquidity meltdown, where if most all brokerages have a liquidity run or a liquidity drain, then the insurance would be overwhelmed.

Herb Greenburg in MarketWatch article How To Keep Your Investments Safe recommends a trust account for investments.

I recommend gold and gold alone, as an investment, and that one retain as much personal control over that as possible.

Despite the downside risk of a lower price of gold from its current $880 to $850, $820, $800, and even $775, with a falling Euro, I believe that gold relative to world stocks, GLD:EFA, and gold relative to US Stocks, GLD:VTI, will maintain value and soon rise considerably more than it has recently.

I suggest that to protect against the risk of loss of investment principal, both from market downturn and from brokerage shutdown, that one be invested in "physical gold" in four locations: 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.

The financial markets have been severely stressed of late, and not even the 'mother of all bailouts' may be able to prevent a severe breakdown, with the result of economic and cultural chaos a possibility.