GO GATA!
The Muppets on Planet Wall Street were strutting their feathers this morning on CNBC … led by unabashed stock market bull, loudmouth Jim Cramer and one of the pouting Pimco gang … as General Paulson made Everything Fine again.
Or is it? Actually, how can it be?…
*The S&P rallied 30 handles as soon as the Fannie/Freddie news was announced? Huh? Was there ever a more a major telegraphed event in market history? There couldn’t have been ONE person on Wall Street that did not comprehend the US Government was going to step in here. So why should the DOW rally 350 points this morning when everyone knew what was coming?
Simple: the PPT and Counterparty Risk Management Group made it so right from the get-go so the "message of the markets" would be what a plus this is. Remember the CRMG crew:
It consists of major players in the investment banking/hedge fund community in New York, including Goldman Sachs., Citigroup, JPMorgan Chase, and Deutsche Bank (all defendants in GATA’s Reg Howe’s suit against The Gold Cartel in 2001). There are a number of other participants such as the famed hedge fund of Paul Tudor Jones and TIAA-CREF, the huge pension fund for teachers, whose former chairman was just appointed to take over Fannie Mae.
On July 27, 2005, E. Gerald Corrigan, former President and CEO of the Federal Reserve Bank of New York, and now a Managing Director of Goldman Sachs, wrote:
The Report of the
Counterparty Risk Management
Policy Group II
Addressing it to:
Mr. Henry M. Paulson, Jr.
Chairman and Chief Executive Officer
Goldman, Sachs & Co.
(all roads always lead back to Goldman Sachs) 
CRMPG: "since we know that financial disturbances and even financial shocks will occur in the future, and we know that no approaches to risk management or official supervision are fail-safe, we also know that we must preserve and strengthen the institutional arrangements whereby, at the point of crisis, industry groups and industry leaders, as well as supervisors, are prepared to work together in order to serve the larger and shared goal of financial stability."
*The dollar initially weakened after "the news," but then made a U-turn and went up. The euro was last down .0060. Huh? What could be worse for the dollar than the government having to risk up to a trillion dollars in a bailout? Their guarantee is unending.
No matter, Paulson was going to make black white, and set that agenda too. At least for the short term.
Oh yes, we are not alone when it comes to "getting it" re the dollar…
"But... That's the lot we've been thrown by the markets... The dollar is strong, and getting stronger everyday... And no, I'm not singing the great song by Chicago! This dollar strength has all been orchestrated by the U.S. Gov't... And that's fine... It's legal... Too bad they didn't let us all in on it so we could book profits and look to buy at cheaper levels, eh?" ... Chuck Butler, President, EverBank World Markets,
*Gold took off, as it should, rising close to $820 … faded … took off again, but then The Gold Cartel calmed it down, as totally expected … right back in the crapper … as the dollar SOARED. There is no reason to even be chagrined, as today’s action was ORDAINED. The clue again was silver, which had a 500 pound gorilla sitting on it as soon as the Comex opened.
*US interest rates rose quite a bit, as they should have, BUT THEN came back down … at least that is the way it is this morning. The yield on the 10 yr T note rose to 3.8% plus, only to fall back to 3.7o%.
At least there was some Muppet grumbling about the loss of the free market system in the US, but it was muted. We in the Planet GATA camp know it all to well, for it is light years beyond this Fannie/Freddie stuff.
The bottom line is all is not well. It is TERRIBLE as highlighted by Jim Rogers…
"Indeed, the U.S. financial debacle is now so ingrained - and a so-called "Super Crash" so likely - that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away - if it ever is, Rogers said."
The good news, if there is any today, is you can see how gold wants to fly, yet the US Government won’t let it. They NEVER do after important negative US financial market news. However, as stated here almost on a weekly basis, the big picture outlook for both gold and silver could not be brighter as the reasons to own both metals continue to go off the charts.
I fully expect gold and silver to accelerate and makes new contract highs before the end of the year and then to go bonkers next year.
The gold open interest went up 346 contracts to 383,410 and the silver OI rose 346 contracts to 116,669.