The Paulson Manifesto Will Fail Because It Fails American Households

As a trader, I stopped getting disgusted at government manipulation of markets several years ago, didn’t pretend it wasn’t happening, just tried to find when it was coming. I decided to develop an indicator that would tell me when the probability was extremely high that the Master Planners would intervene. That approach has served us well, and that indicator is known as the Plunge Protection Team (PPT) Indicator. It flashed a new “buy” signal Monday, September 15th at the close, rising above positive + 20.00, warning that the decline from August 11th was terminal. The Industrials have risen 565 points since that buy signal. When this measure rises above positive + 20.00, it is usually early, but very right, an early warning indicator telling us to enjoy the decline for a few more trading days but get ready for a spike rally.

The current government market intervention (“manipulation” is probably a more appropriate word) that transpired the past two weeks, reaching crescendo Thursday on a rumor, and Friday on an announcement, is one of the most dramatic since the 1930’s. It really puts into question the notion of U.S. markets being under capitalism, not socialism. The government nationalized Fannie Mae and Freddie Mac last week, announced its intent to nationalize AIG, a component of the Dow 30, this week, and then pulled out all the stops with the Paulson manifesto Friday. Not sure why he didn’t nationalize Lehman Bros, unless it was personal, as he came from competitor Goldman Sachs, and enjoyed watching them declare bankruptcy. Okay, maybe I am a bit cynical — maybe.

Before getting into market performance and the forecast, let’s cover what we know about this historic redefining of the rules of the game that Paulson has placed on the table for Congress to consider next week:

Read moreThe Paulson Manifesto Will Fail Because It Fails American Households

ALMOST ARMAGEDDON – MARKETS WERE 500 TRADES FROM A MELTDOWN

Click image to enlarge. Click image to enlarge.

The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.

Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level – a 22 percent decline! – while the clang of the opening bell was still echoing around the cavernous exchange floor.

According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.

The panicked selling was directly linked to the seizing up of the credit markets – including a $52 billion constriction in commercial paper – and the rumors of additional money market funds “breaking the buck,” or dropping below $1 net asset value.

The Fed’s dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.

Read moreALMOST ARMAGEDDON – MARKETS WERE 500 TRADES FROM A MELTDOWN

Paulson Bailout Plan a Historic Swindle

Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses–many hundreds of billions, maybe much more. What’s not to like if you are a financial titan threatened with extinction?

Read morePaulson Bailout Plan a Historic Swindle

Large Hadron Collider to Be Stalled for 2 Months

The giant Large Hadron Collider, the world’s largest and most expensive scientific experiment, will be shut down for at least two months, scientists at the European Center for Nuclear Research, or CERN, in Geneva said today.

The shutdown casts into doubt the hopes of CERN physicists to achieve high-energy collisions of protons in the machine before the end of the year. “It’s too early to say whether we’ll still be having collisions this year,” James Gillies, head of communications for CERN, said in an e-mail message. The laboratory shuts down to save money on electricity during the winter.

A gala inauguration party scheduled for Oct. 21 will still take place, Dr. Gillies said.

The collider is designed to accelerate the subatomic particles known as protons to energies of 7 trillion electron volts, far surpassing any other accelerator on Earth, and bang them together in search of new particles and forces.

Read moreLarge Hadron Collider to Be Stalled for 2 Months

12th bank failure of the year announced

Regulators close down Ameribank Inc., a West Virginia-based-bank with total assets of $115 million.

NEW YORK (CNNMoney.com) — Ameribank Inc. was shut down on Friday by the Office of the Thrift Supervision, making it the 12th bank this year to go under.

The Northfork, West Virginia bank had total assets of $115 million and total deposits of $102 million, according to a statement on the Federal Deposit Insurance Corporation Web site.

Read more12th bank failure of the year announced

Bomb Explodes at Hotel in Pakistan’s Capital, Killing at Least 40


Flames poured from the Marriott Hotel in Islamabad on Saturday after a massive truck bombing.

ISLAMABAD, Pakistan – A huge truck bomb exploded at the entrance to the Marriott Hotel in Islamabad on Saturday evening, killing at least 40 people and wounding more than 150, the police said.

The blast, one of the worst acts of terrorism in Pakistan’s history, went off just a few hundred yards from the prime minister’s house, where all the leaders of government were dining after the president’s address to Parliament.

Read moreBomb Explodes at Hotel in Pakistan’s Capital, Killing at Least 40

Bush wants OK to spend $700.000.000.000

Bailout proposal sent to Congress seeks authorization to spend as much as $700 billion to buy troubled mortgage-related assets.

NEW YORK (CNNMoney.com) — President Bush has asked Congress for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis.

The legislative proposal – the centerpiece of what would be the most sweeping economic intervention by the government since the Great Depression – was sent by the White House overnight to lawmakers.

Read moreBush wants OK to spend $700.000.000.000

Pat Buchanan: The Party’s Over

The Crash of 2008, which is now wiping out trillions of dollars of our people’s wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another.

The new era will see a more sober and much diminished America. The “Omnipower” and “Indispensable Nation” we heard about in all the hubris and braggadocio following our Cold War victory is history.

Read morePat Buchanan: The Party’s Over