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mick silver
20th November 2008, 11:48
A major challenge looms large on the immediate horizon. The USEconomy must be reflated in order to avoid collapse. Debts have become a crippling factor. Liquidation of speculative trades coincides with economic retreat, and hedge funds are under attack by their creditors (largely Wall Street firms) while major companies shed workers by the tens of thousands. When asked about economic prospects, a standard answer lately of mine has been to observe important signals not of recession but of potential disintegration. Almost all of the economic data, almost all of the Fed regional reports, almost all of the consumer sentiment indexes, almost all of the jobs data, almost all of the housing foreclosure data, is negative. The most dangerous and disgusting aspect of the current rescue initiatives is that almost all Dept Treasury and USFed actions are not revealed via any disclosure at all, nothing. Despite demands for transparency, nothing is shared on detail. Corruption and fraud usually thrive in such an environment.

Many clownish elite economists seem to miss the point, when they overlook how bank insolvency is much more the issue than liquidity. Big banks not only have doubts as to their own solvency, but they dislike the credit standing of many of their borrowers. So the challenge will be to reflate the economy even as desired, to proceed with money flowing into its credit centers, and to exploit how current loans can be paid back with cheaper future money. Gold will thrive in this environment, since a climax of a disaster, or a climax of produced price inflation will benefit gold enormously. Both scenarios are very favorable to gold and silver prices. Besides, a default at the COMEX for both gold and silver seem highly likely, with cracks forming in December, and outright highly publicized defaults suffered in 1Q2008.

LENDERS NOT LENDING

Put aside for now the fact that the big TARP bailout is not to be used to place vast sums of money into the banking system to neutralize the deeply impaired asset backed bonds. Paulson has a better use for the first $125 billion tranche of Congressional funds from the Troubled Assets Relief Program. He enabled executive bonuses for the big banks that make up the Federal Reserve banking system, by purchasing their preferred stock. Almost 90% of doled money to banks equaled the magnitude of executive bonuses, how bizarre! Was that his plan? In fact, the Fed bank system has been privileged, while their competitors have been denied. Most of the $125B went precisely to the Fed member banks, the elite, as others were denied. THIS IS THE VAST CONSOLIDATION MENTIONED IN MY PAST WORK. The crisis is being used to eliminate competitors in a coordinated planned manner, in direct alignment with the Fascist Business Model (along with lack of transparency). Efficiency is not the goal, but preservation of power. Imagine being a troubled bank not in the system, under solvency strain. Your elite competitors put your bank in the dust from official channels. The consolidation continues unabated.

The USFed itself has
http://www.321gold.com/editorials/willie/willie112008.html