Inmates are Running the Asylum!

It is becoming quite clear that the inmates are running the asylum.  The outgoing administration is showing signs of panicking and the incoming administration is licking its chops and dying to get in their and exploit the financial crisis to their advantage.  The inmates are running the asylum, if not now, they will be after January 20th!

This morning the DOW is trading down 108 at 8,634, the NAS is down 35 at 1,561 and gold is up $2.70 at $859.60.  Gold is performing fairly well in the midst of this maelstrom, staying comfortably in the $820 to $880 trading range.  The gold stocks are moving down and new opportunities are being presented in that arena.

More and more information, or lack there of, is coming out regarding  bailout number one as we are rapidly stampeded into bailout number two.  This is getting curiouser and curiouser.

Treasury’s Oversight of Bailout Is Faulted

By David Barstow

Published: January 9, 2009

In a report scheduled to be released Friday, the Congressional panel overseeing the $700 billion Federal bailout has expressed growing concern about the effectiveness and execution of the rescue plan.

A draft of the report obtained by The New York Times criticized the Treasury Department for its shifting explanations about the underlying purpose of the bailout, its failure to answer many of the panel’s questions and its failure to require financial institutions receiving bailout money to fully account for how they are using the public’s money.

The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence, the draft of the report said.  “For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore,” it said.

The 45-page report also asserted that the Treasury, in defiance of what the panel claimed was Congress’s clear intent when it passed the bailout bill in October, had taken no steps to use any of this money to alleviate the foreclosure crisis.

The Treasury declined to comment on the panel’s latest findings, with the bailout, known as the Troubled Asset Relief Program, or TARP. We can’t comment on a report that’s not been shared with us, said Brookly McLaughlin, a spokeswoman for the Treasury.

But in testimony to Congress and elsewhere, Neel T. Kashkarii, the Treasury official overseeing the bailout, has repeatedly asserted that the rescue plan is in fact working as intended. While cautioning that its full effect will take time to register, he has argued that the rescue plan has already begun to reduce foreclosures while also providing crucial stability and liquidity to the financial system.

The most important evidence that our strategy is working is that Treasury’s actions, in combination with other actions, stemmed a series of financial institution failures, Mr. Kashkari wrote last week in a letter to the Congressional oversight panel.

According to a running tally by The Times, the Treasury has already committed $359 billion of the $700 billion to banks, credit card companies, automakers and insurance companies, among others. The oversight panel’s latest assessments are likely to fuel the debate over how to spend the remainder of the bailout money.

Yet they also come as members of Congress are discussing how to fashion a huge new stimulus bill that President-elect Barack Obama has said he hopes to sign soon after Inauguration Day, Jan. 20. Officials from the Obama transition team have said that the cost of the stimulus package could well exceed the $700 billion bailout.

This is pure insanity with more on the way. TARP was supposed to strengthen lender’s books so that they could lend, thereby increasing the flow of credit.  Instead they took the money and either dumped it into treasuries or used it to buy up their competitors.  Now the credit system is locked up and working people can’t qualify for any credit. The same banks that loaned taxpayer dollars are now socking it to the taxpayers with increased rates and late fees if a payment is late.  Thank you US Congress.  Where is the outrage?  If all of the $700 billion went to paying off mortgages in the US instead of bailing out Wall Street incompetence, there would be no home mortgages left.  Imagine what a boost to the economy that would be.

All that glitters ... Investors are pouring billions into gold to fend off the financial crisis.

Gold Down Under!

THE global financial crisis has sparked a new gold rush.

Worried investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth.

Demand has now reached such unprecedented levels that the Perth Mint, Australia’s biggest wholesaler of gold coins and bars, has been forced to ration its sales.

Perth Mint’s bullion sales rose 194 per cent in the December quarter compared with the corresponding period in 2007, while silver bullion sales were up 140 per cent.

The mint has suspended sales of all gold bars and all bullion coins – except its 1oz “Kangaroo” gold bullion coin.

On Monday, after a three-month suspension, it will expand its range of bullion coins for sale but the restrictions remain in place for minted gold bullion bars so the mint can sell some gold to as many customers as possible.

“We are working three shifts a day, six days a week, and still can’t keep up with demand,” Perth Mint CEO Ed Harbuz said. “I’ve never known anything like this in the precious metals market.

“We would be working Sundays too but we are having difficulty getting enough staff.”

Non-minted gold in the form of cast bars produced by Perth Mint’s local refinery can still be bought, although customers who want the bigger bars often have to wait several weeks.

One customer recently bought $500,000 worth of bullion and wanted it delivered so he could hold it personally.

“For very big orders we normally keep the gold in our depository for security reasons,” Mr Harbuz said.

It is getting harder and harder to keep confidence in the fiat currency system due to the ineptness of the current crop of political leaders (using the term “leaders” extremely loosely).  It seems that Washington, including both sides of the aisle, never learned that when you are in a hole it is best to stop digging.  Gold will survive this idiocy and preserve the wealth of those that are smart enough to prepare for the coming meltdown.

Protect yourself, because the inmates are running the asylum!

Till next time, good luck and good trading!

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