Last week the Dow fell 1.6%; S&P fell 1.9%; the Russell 2000 fell 3.3% and the Nasdaq slipped 1.8%; cyclicals fell 3.6%; transports 1.5%; consumers 1.6%; utilities 1.4%; banks 2.3% and broker/dealers 2.8%. High tech fell 1.8%; semis 1.8%; Internets 2.1% and biotechs 2.7%. Gold bullion fell $19.50 and the HUI gold index fell 8.4%.

Two-year T-bill rates fell 10 bps to 0.82% and the 10’s fell 21 bps to 3.30%. Ten-year German bunds fell 8 bps to 3.26%.

Freddie Mac pegged the 30-year fixed rate mortgage off 12 bps at 5.20%. The 15’s fell 8 bps to 4.6% and the 1-year ARMs fell 12 bps to 4.82%.

Fed credit declined $9.5 billion to $1.977 trillion, off $269 billion ytd and up 123% yoy. Fed foreign holdings of Treasury and Agency debt jumped $20.5 billion to a record $2.787 trillion. Custody holdings for foreign central banks rose 20.7% ytd, and were up 18.6% yoy.

M2 narrow money supply fell $36 billion having expanded 9.1% yoy. Total money market fund assets rose $4.4 billion to $3.668 trillion.

This past week the dollar index, the USDX, was unchanged at 80.26.

During the week of the G-8 meeting the US pushed the dollar up. They attempted the same with the stock market unsuccessfully and successfully drove bond yields down and bond values up. They also smashed commodities, especially oil and pressured gold and silver lower. The problem is they cannot continue. They do not have the power to do so. Those suppressed markets will reverse and rise.

The dollar was on the verge of breaking below 79 on the USDX, so the ECB announced they would pour $613 billion into 1-year deposits. This was to encourage bank lending in the eurozone, which gained by only 1.8% in the first half of the year. The US banks had a similar experience.

One thing is for certain and that is that low interest rates encourage carrying long gold and silver positions. That is true for commodities as well, which in the second quarter rose. Oil gained 45%; copper 28% and wheat 20%. Gold and silver were not allowed those gains by our government. While holding interest rates at 1% the ECB now has M3 increasing at a paltry 3.7%. In our mind there is no question that the eurozone is about to slip into severe depression. The 16 economies are being strangled to death.

The Democrats playing politics have made a huge mistake with the stimulus package and we noted that in January. We predicted 90% of the personal stimulus would be used to reduce debt. As it turns out 92% will probably be the number. The consumer did not perform up to the desires of Washington’s elitists. We said in January because of that another $2 trillion package would be needed and discussion began last week. Most of the current package will be spent next year in the election year. Greed has foiled any kind of a recovery this year. If the politicians had not politicized the $787 billion package, GDP would not have been a minus 5.5% in the first quarter. We expected minus 5% for the second quarter and minus 4 for the rest of the year. They missed the boat. U6 unemployment is 20.5%. Had these politicians not been so stupid unemployment, U6, could have been held at 14.8%.

We have a situation socially similar to that of the early 1990s, only this time it is twice as bad. Blue-collar workers know they won’t get their high paying jobs back, because our transnational elitist conglomerates have stolen them. They not only took our jobs, they took our dignity as well, and are hiding their profits offshore depriving our Treasury of badly needed revenue. Unemployment will continue to deteriorate thru to the end of the year and next year will only hold its own. That is going to see the rebirth of the militia movement in America. Such a movement gained momentum in the early nineties, but it faded as the economy improved. This time, improvement is not on the way – only more unemployment and inflation are.

If you surgically remove the birth/death ratio U6 was 20.5% last month as we lost not 467,000 jobs, but in reality 652,000 jobs, and the workweek fell to 33 hours. In little over two years we have lost more than 9 million jobs. We have almost 15 million unemployed, which in great part is the result of free trade, globalization, offshoring and outsourcing over the last 8-1/2 years. Those jobs will never return unless we erect tariffs and start taxing corporate profits that are held offshore. We are doomed to be a third world nation enveloped in a fascist police state and we can assure you that you won’t like it one bit. During the second quarter to make things more binding wages fell 1.6% due to slave labor goods being imported into our country. As we quoted before, even the Centre for Labor Market Studies in Boston says unemployment is 18.2%.

The reason militias will gain major traction is that the workers now know their jobs are gone forever, which leaves them in desperation. The feeling already out there is worse than it was in the 1930s. Like in the 1930s savings are being depleted and real estate is still falling and people are becoming destitute. This social condition is one of destitution. The cushion people once had is gone.

You saw the riots in Europe earlier this year. Unemployment is almost 19% in Spain and 37% among the young, many of whom have university degrees. Latvia is close to 16% and Germany is looking at a 35% increase in unemployment between now and the end of 2010.

Social justice is absent in our country and in other countries. The rich are getting richer and the poor, poorer caused mainly by globalization. If workers do not get justice there will be violence worldwide. You can take that to the bank, if it is still there.

Goldman Sachs is in big trouble, but the media refuses to dig and get the same story the alternative media has dug up. As usual the SEC is looking in a different direction, as far away from the real action as possible.

The latest allegation is front-running their own client orders, never mind everyone else’s. As we reported earlier they are using a government created program. A good question is are they front-running for both themselves and the government, which might make it semi-legal? Of course nothing ca be semi legal. It is either legal or it isn’t. Goldman has been confronted on the issue and refuses to answer detailed questions, just saying, “your suggestion that we monitor our website to facilitate front-running is untrue and offensive.” Unfortunately, this confirms our worst suspicions. If we were using the Goldman 360 portal for trading we’d stop until we at least investigate to make sure we were not being cheated. Where may we ask is the SEC? Camping out on the moon most likely. This episode is just beginning. This is another example of cross corruption and arrogance by both our government and Goldman.

Democrats want to prevent the use of non-public information to enable investment decisions. The bill’s sponsors are Rep. Brian Baird (D-WA) and Louise Slaughter (D-NY). They propose lawmakers and their staffs would be prohibited from trading in stocks, bonds and commodities markets based on insider knowledge gleaned from their everyday duties on Capital Hill. It would also prohibit transfer of such information to other parties, who would then use the information for trading purposes.

Insider dealing is going on, but it is not easy to detect. Washington is a town that trades on information and so the likelihood that it is happening is almost a certainty. This has probably been quite evident during the government bailouts of the past two years.

Public opinion of elected representatives is low enough as it is, so the mere appearance of abuse of power at this critical stage could lead to further erosion of public trust.

The SEC has jurisdiction over trades of non-public information gotten through corporate channels, but not through government channels. That is quite a gaping loophole. There are studies that indicate that elected representatives do considerably better in the market than the average public investor.

The question is will Congress police itself and the answer is in all probability no. Just like campaign contributions and lobbying should end, but they won’t end. Representatives and senators don’t want to lose their gravy train for reelection. These people go to Washington to get rich. Nothing is going to change. Most of Congress are bought and paid for.

We hope people are starting to realize that the privately owned Federal Reserve runs our country, not our branches of government. The new proposal to give the Fed new powers is the worst possible thing that could be happening to our country. It is a total centralization of banking and financial power.

All financial services would be overseen by the same characters that we see each day that evolve through the revolving door from Wall Street to Washington. The Fed would supervise all firms that are involved in finance based on the premise that they could be a treat to the stability of the financial system. There would be another new czar to supervise all federally chartered banks. All current regulatory loopholes would be closed so that the Fed would have total control of all financial firms. In addition, all hedge fund and private equity advisors would come under Fed control. This is nothing less than total financial control of our lives. It leaves government as an afterthought.

As the Fed wraps this up in the US the same is being done in Europe and worldwide, so it can be harmonized. We would become part of an international structure called the Financial Stability Board, which you have seen pushed hard in England and France.

The FSB will have a tight grip on matters financial worldwide and in that endeavor will in part relieve us of our sovereignty. This move is similar to the imposition of a world currency or a world penal system where you would be imprisoned for disagreeing with the new world order. The FSB rules are to control the world financial system under one head and make it easier to implement a world currency. This will be a total restructuring of the financial system. Central banks will control everything financial worldwide and answer to a central committee at the FSB.

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-- Posted Wednesday, 15 July 2009 | Digg This Article