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A very volatile day on Wall Street as stocks came in higher from the overnight trade, but then lost their early gains and dipped much lower led by the Bank of America which is rumoured to be in trouble.
Stocks recovered their losses to be almost unchanged, but a late breaking story from Reuters quoted a 'government source' that Goldman Sachs CEO Lloyd Blankfein has retained an attorney, Reid Weingartern, from the White Collar Criminal Defense group at Steptoe and Johnson. Goldman plunged more than 5 percent on the news.
The action may be related to a subpoena received from Justice regarding the Carl Levin report, and possible perjury charges. Lloyd Blankfein is a Harvard Law School graduate himself, and is reputed to have a very smart legal mind. He could be acting out of an excess of caution. It is hard to imagine the Obama Justice Department actually DOING anything to any of the pampered princes of Wall Street.
Once again the markets are near the pivots and key support levels. Most likely a big move is hidden somewhere in the cards.
I like this graphic for several reasons, but especially because it puts everything in proportion with regard to the US' current obligations.
One thing I would like to highlight is the large surplus funds in the Social Security Trust and others. These were 'invested' in a special type of intra-governmental Treasury note.
These funds are not 'gone' anymore than a Treasury bond is 'gone.' It is a sovereign debt holding. If the US defaults on its debt, then it defaults. But let's call it what it is.
The Trust Funds are not the money that the government 'owes to itself.' It is a Trust fund, that is, money held by the government in Trust for others. The Trustees invested it in a special category of Treasury bonds that do not trade on the open market.
So to somehow suggest that Social Security is bankrupt now because the government spent the funds on general obligations is to assert a violation of Trust, a fraud, and a selective default on the sovereign US debt.
And do not think that the world would view it any other way, despite the spin put on it by faux economists, useful idiots, and mainstream propagandists for the money men.
Where would you think they would put a Trust Fund of this size? In a passbook savings deposit account? Federal Reserve Notes? The stock market? It was given to the government to be invested in bonds that were judged to be the least risky form of storing that wealth.
No, the real problem is that the US has malinvested too much of its revenue in too many fruitless and unfunded projects like wars, overseas military bases, and other subsides to oil companies, banks, and multinational corporations. The partnership between the money men, their corporations, and the government has allowed corruption to grow and prosper.
The money men and their cronies directed the peace dividend into their own pockets. And now that hard times have come, they wish to not only keep their gains but multiply them, and visit hardships on the very people whom they have defrauded. Their greed and hypocrisy knows no bounds.
"Adversity makes men; prosperity makes monsters."
Victor Hugo
The US trade deficit and the stagnant real wage are major unaddressed problems, and has been so for the past twenty years. And those are the result of the distortions of fiat money regimes.
Reform and domestic growth is the answer to the US and UK problems, and not further looting and economic pillage of the laboring classes to provide largesse to the money men and paper manipulators.
Detective Gregory: "Is there any other point to which you would wish to draw my attention?"
Holmes: "To the curious incident of the dog in the night-time."
Detective Gregory: "The dog did nothing in the night-time."
Holmes: "That was the curious incident."
Arthur Conan Doyle, The Adventure of Silver Blaze
Gold rallied hard on a short squeeze and then settled back and closed around the 1850 area. Somebody stop me! LOL
Comex Option Expiration Next Week.
AND the Fed meets at Jackson Hole at the Kansas City Fed's annual soiree.
Let's see what happens. That may be very telling with regard to what inning of this game we are in depending on how gold acts here, and to what extent we see a correction, consolidation, or a continuation.
There are rumours of margin increases and an indication from a large US broker in the last document below. They do like to run things up so they can then smack them down, as they did with silver.
Besides, we can't let Venezuela's Chavez have his evil way with things can we?
My forecast was for a run to 1850 on the short cover, and that was exceeded. Now I would look for a very serious attempt at a bear raid, and some sort of correction. If that bear raid fails for whatever reason, this thing will have legs to the upside, but watch for the secondary attacks after expiration.
The key variable is a fresh wave of monetary and global crisis or some announcement of some version of QE3, even if it is just an interest rate program on the longer end.
Unless that is, if we are tottering very close to one of those game changing things that catches us by surprise. Well, everyone except all those who knew it would happen, at least, after it does.
