Here is an interesting post by Kelsee on another board. So when is the US election?

Notie Girl

DAILY REPORT (9/09/08)

http://www.gold-eagle.com/editorials...

If you listen to the press, we truly live in a much better world now that the government has in effect bailed out the government. Make no mistake about it, Fannie Mae and Freddie Mac are government entities and both they and their shareholders/CEO’s operate above the law. If you and I would have run our companies like that we would be in jail and they would have thrown away the key. The two mortgage giants were able to get away with it for so long, and they still are, because they pay off just about everybody in Washington. For those of you who suffer from long term memory loss, try to remember that they just hired a bunch of folks less than three years ago to put order in their respective houses. I guess that didn’t work out to well, did it? Now the same administration, but this time with Paulson at the wheel, has given the controls over to the Federal Housing Administration (FHA), another government entity. If you can believe the balance sheets, and you can’t, the cost will be close to US $300 billion. Strangely enough that was supposed to be the cost of the CDO debacle, but that’s over a trillion and still counting. Maybe they’ll have better luck this time.

Anyway, yesterday’s announcement was met with great fanfare this morning, as the media played it up for all it was worth. The Dow opened up 300 points, bonds and the dollar were down, and commodities rallied as everyone thought it would be inflationary. That was at 9:30 am. At 1:30 pm the Dow is up 145 points, the NASDAQ is negative, the bonds are only down nine ticks, the dollar is up big time, and commodities are in the toilet. For those of you who think that this bailout marks a turning point in the market, you’re right, but not for the reasons you think. Instead of marking a bottom, I think it highlights the last nail in the coffin. The largest debtor in the world has just assumed a minimum of US $300 billion in debt, owed mostly to foreigners, and he has no income to pay it off. All he can do is enter the number three followed by an amazing amount of zeros in some computer, thereby diluting the wealth of every American by some proportional amount. Nominally there may be more money, but in real terms you have less and that’s been the history of the Federal Reserve. They make sure that each and almost every American has less by devaluing the fiat currency. A dollar today buys 2% of what it did in 1913, thank you Mr. Bernanke.

I do not have a crystal ball, so I do not know how the Dow will finish at 4 pm, but I suspect it will not be up 350 points. The real market is going to look at this deal for what it is, i.e. a fraud perpetrated on the general public, and it will make the necessary discounts. Housing will not rebound any sooner, because very few can or

want to qualify for a loan. What’s more, the $300 billion could have been used for something productive like new schools, hospitals, roads, water and sewer, but instead it’s nothing more than unproductive debt piled upon unproductive debt. Think of it as a bottomless cesspool. The markets are the collective knowledge of everything that everybody knows, and will know for the next nine months, and you won’t fool them for any length of time. That thought must give Paulson many sleepless nights.

In Sunday’s report I mentioned that the Dow could rally as high as resistance at 11,449 (on a closing bases) and I believe that will be the case. The Dow will not begin a new leg up and it will test support at 10,725. Furthermore I remain convinced the Dow will head much lower, maybe as low as 9,005. I continue to look at the other indexes and see that the NASDAQ and S & P seem to be growing weaker, and even the Transports have a few cracks in the armor. The stocks won’t fall alone; the CRB

will head south with it, at least for the foreseeable future. The key was the 200-dma which has acted as good support for years. Commodities are deflating and I believe the process will last for many months before we are ready to begin a new leg up in the bull market. Two of the principal losers will be copper:

and oil:

Both took out critical support at 322.00 and 110.00 respectively, and I believe both will fall substantially as worldwide demand falters. Another important victim will be the grains:

If all of these charts look the same, it’s because the same deflationary force is affecting each on in the same way, and that force is coming from all corners of the world. That’s what few realize, the deflation we are seeing is worldwide. Stocks, commodities, real estate, and income are all going to decline.

[It looks like the Dow is going to close around 11,500 in another Paulson organized narrow rally. We’ve seen these before, and each time he does it, the affect will be less. We saw this with Bernanke last year. Each time he intervened, it was with less effect. Paulson will not be any luckier.]