Last week at the G-20 meeting in London, President Obama made a rather astonishing statement. He conceded that the global financial crisis in which we remain embroiled was made in America and exported to the rest of the world.

"It is true...that the crisis began in the US. I take responsibility, even if I wasn't even president at the time," he said.

The delegates of the G-20 were reportedly stunned. Apparently an admission of guilt from the United States is not something they are accustomed to hearing. The statement was widely reported overseas, but got little coverage here in America.

So now that we sort of officially own the problem, the onus seems to fall largely on us to solve the problem. Perhaps rightfully so, although arguably there is plenty of blame to go around.

Nonetheless, the take-away from the G-20 was that the global economic powers had reached a historic compromise: A balance of further stimulus and regulation that would bring an end to the crisis and prevent such a thing from ever happening again. The delegates were serious, they exuded confidence, giving the impression that they understood the problem and had a grip on it.

In the end there was a plethora of positive sound bites and smiling photo-ops. Investors latched on to this newfound sense that things might actually be getting better. Stocks added to their recent gains and risk aversion fell along with demand for safe-havens like gold.

In reality, the final G-20 communiqué conveyed the same message we've heard time and time again over the past year. Governments -- and by extension the taxpayers -- will have to come up with even more money, another $1.1 trillion, to ward-off economic catastrophe.

Reports have suggested that Greece is on the verge of bankruptcy. Eastern Europe and other emerging economies remain in dire straits. Dubai may be facing total economic collapse. Does anyone really think another trillion is enough?

And what of the United States, where the crisis was spawned? Have things really improved here, despite commitment of a whopping $12 trillion in various bailouts, liquidity schemes and guarantees?

As a point of reference, the entire 2008 GDP of the United States was $14.2 trillion. Meanwhile, Lawrence Summers, Director of the White House National Economic Council acknowledged in a speech last month that, "On a global basis, $50 trillion in global wealth has been erased over the last 18 months."

Those are all astounding numbers and yet I worry that people are becoming numb to them. A trillion dollars is one thousand billion dollars, and yet if you hear a trillion bandied about endlessly, the reality of how much that really is starts to get lost.

What might it mean if our government ends up throwing more than a years worth of GDP at the crisis? I would suspect at a minimum we're in for some serious inflation down the road. And that is exactly what the United States and other countries want, simply because they view the alternative -- deflation -- as a far worse outcome.

So the stock market has liked Treasury Secretary Geithner's new Public Private Investment Partnership (PPIP) and it liked the FASB's relaxed mark-to-market rules. Stocks also liked the G-20 outcome. However, I have considerable doubt about the sustainability of this rally given the absence of true fundamental underpinnings.

Sure the new mark-to-market rules might prevent some banks from taking massive writedowns like we've seen over the past year. However, accounting trickery aside, they've still got a lot of junk on their books

As for PPIP: if anyone can tell me with a straight face how the government providing non-recourse loans to incentivize private investors to buy repackaged and re-leveraged assets that have already been deemed 'toxic' makes sense, I'm all ears.

One article this week entitled PPIP is Financially Flawed, Intellectually Dishonest contends the plan is simply a "very expensive non-solution." The author went on to say PPIP was "a more complex, subsidized shell game meant to hide the same problem."

In a Barron's article on the same topic, James Keller tries to make sense of the pricing mechanism for these troubled assets. He quips that the maximum price of a bond is "whatever the stupidest investor is willing to pay for it," and goes on to say, "The American taxpayer is once again being cast in the role of stupidest investor."

We taxpayers as a group periodically don't seem so bright. We sure mustered a lot of outrage about the $165 million in AIG bonuses and yet concerns over TARP at $700 billion, and PPIP at $1,000 billion (that's $1 trillion folks) were tepid at best.

AIG ultimately received three federal bailouts totaling $173 billion, about $50 billion of which flowed back to financial institutions that had bought credit default swaps (CDS) from the firm. We're talking real money in these instances. The $165 million was a mere bag of shells.

It would seem to me that Treasury, the Fed, and even Congress are all doing a fine job of baffling and confusing we taxpayers. They channel our outrage toward AIG and the banks, when in fact Treasury, the Fed and Congress all facilitated the actions by these companies that ultimately led to the mess we're in.

Bill Moyers recently interviewed William K. Black, who was a top regulator during the S&L crisis of the 1980s. Since then, Mr. Black has held a number of senior regulatory roles. He offers some rather stunning insights, from a regulator's perspective, into the government's reaction to the financial meltdown.

Black's central premise is that the current economic crisis is driven by fraud on a massive scale. He believes that calculated dishonesty is at the heart of most large corporate failures and scandal and he makes his point quite effectively.

Black points out how our own government is complicit, through both actions and inactions. He reminds us that, "the Reagan Administration's central priority, at all times, during the Savings and Loan crisis, was covering up the losses."

Sadly, despite President Obama's pledge of transparency, Treasury Secretary Geithner, like Paulson before him has chosen to follow a similar path.

"Geithner is publicly saying that it's going to take $2 trillion...taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine."

Black wonders if we've lost our capability of outrage, "or whether the cover up has been so successful that people just don't have the facts to react to it." Or, as previously surmised, our outrage is being rerouted to the point where we're tripping over gold eagles to express outrage over pennies.

Over the past 18-months I have had a number of conversations with Mike Kosares, President of Centennial Precious Metals, where he said he thought the financial crisis was as much a moral crisis as anything else. Black agrees, citing a "fundamental lack of integrity."

As Mike walked out of my office yesterday he said, "As long as you enable the problem, it's going to continue." How true. And yet enabling is exactly what our government continues to do by giving trillions of dollars to the very firms that caused the crisis. On top of that, those firms largely have the same management teams in place.

Back on 03-Nov-08 Jonathan Kosares and I did a USAGOLD VideoBrief on election eve. This was an early effort at video, so please forgive the production quality.

Jonathan and I speculated on what a new administration might bring to the financial crisis. We surmised that little was likely to change, no matter who got elected, as both candidates lacked the political will and capital to do what was really necessary to address the crisis.

In that regard we were spot-on. It has indeed been the 'same old, same old' thus far. With that in mind, the recent pullback in gold may be an ideal opportunity to bolster your safe-haven holdings of the yellow metal.

USAGOLD