Dear Extended Family:

Don't be fooled by today's market. The Fed is running a BLUFF as they are out of aces. There is simply no possibility, way or means of being HAWKISH in the face of a meltdown wherein major financial entities of all kinds are simply going too broke to be rescued. These losses are the largest in my life of 66 years. This is the worst financial crisis in modern history and the degree of liquidity that has to injected into the world monetary system is without precedent. Soon the US FEDERAL BUDGET DEFICIT WILL EXPLODE UPWARDS, THE TIC WILL GO NET NEGATIVE AND THE DOLLAR WILL DROP LIKE AN F-16 IN A FREEFALL WITH AFTERBURNERS FLAMING.

I feel compassion for those that did today fall for the Fed Bluff by throwing away gold, throwing away good gold shares and even worse, maybe buying the dollar or covering the short. Today's Fed action in the great scheme of things is a scheme doomed to failure by the reality of the meltdown.

When business is scared to death that things might be falling off a cliff the failure to cut 1/2 to a full point is going to bite the Fed in the ass. As more and more poor business reports come in the dollar will swoon. Gold will rocket and the shares that participated well even to today's morning will be the unquestioned leaders of the pack.

Don't let Ben the poker player BLUFF you out of a pot of gold, your only insurance policy possible which will protect you from the problem that has NO PRACTICAL SOLUTION.

We are on an Express Train to Armageddon in the financial sense. Don't let Ben the Great Fooler, make a fool out of you. Hang tight using fishing lines to buy and Rhino horns to sell if you must trade.

Gold is going to $1050 and onward to $1650.

Regards,
Jim

Dear CIGAs,

Nothing is improving. Nothing is working out. Banks, institutions, insurance companies and internet financial companies are all calling for rescue, selling themselves to anyone with money to keep them afloat.

This is it!

Never before in your lives have there been such problems, yet many of you still sit on the sidelines not understanding or acting defensively.

This is it!

The plan to freeze rates on sub primes will never survive civil litigation. Bondholders do not care about the homeowner. Bondholders would prefer to liquidate the homeowner now rather than waiting five years, or even one day for that matter, and then maybe getting nothing back. When has finance had a heart for those in trouble?

This is it!

The markdowns you have seen cannot be to market as there is no market. There is much more to come.

Today’s Fed action in the great scheme of things is a non-event.

The Humpty Dumpty dollar has fallen off the Wall and all the King’s men can not put the Humpty Dumpty dollar together again.

WaMu Is Retrenching After Taking Hard Hit From Mortgage Crisis
BY VALERIE BAUERLEIN AND ANDREW EDWARDS

Washington Mutual Inc., reeling from continued turmoil in its mortgage business, said it plans to reduce its dividend, cut jobs and sell preferred stock to generate $3.7 billion in capital.

The moves continued a year of bad news for a once-highflying financial institution closely associated with the explosion of retail banking and heavily marketed mortgage loans across the U.S. in recent years.

The announcement also raised the questions of whether Chief Executive Officer Kerry Killinger -- the architect of WaMu's rise from an obscure West Coast savings and loan to a marquee name in banking -- should continue to run .

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UBS's Subprime Hit Deepens Credit Worries
BY CARRICK MOLLENKAMP , EDWARD TAYLOR AND ANITA RAGHAVAN

UBS AG became one of the biggest casualties of the U.S. subprime-mortgage meltdown yesterday, announcing that it would take a $10 billion write-down and sell a chunk of itself to the government investment arm of Singapore and an unnamed Middle Eastern investor.

The disclosures stoked anxiety about potential losses lurking on the books of other banks. That UBS, long known as a conservative lender, could take such a financial hit suggests that the wave of industry write-downs, which so far total about $50 billion, may be far from over.

In recent weeks, UBS began using a more conservative method for…

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Freddie Sees $5.5B-$7.5B More Losses
Freddie Mac Chief Says Business Will 'Get Tougher Before It Gets Better' As Defaults Rise
Tuesday December 11, 12:30 pm ET
By Marcy Gordon, AP Business Writer

WASHINGTON (AP) -- The chief executive of Freddie Mac estimated Tuesday the mortgage finance company will lose an additional $5.5 billion to $7.5 billion over the next few years as the housing crisis worsens and home-loan defaults rise.

The government-sponsored company has already logged about $4.5 billion in projected losses during the first nine months of this year.

"I honestly think it's going to get tougher before it gets better," Richard Syron, the company's chairman and CEO, said in a discussion with financial analysts in New York.

Freddie's shares fell $2.09, or 6 percent, to $32.95 in morning trading.

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Northern Rock nationalization moves closer as Flowers pulls out
By Katherine Griffiths, City Correspondent
Last Updated: 1:58am GMT 07/12/2007

US private equity firm JC Flowers has walked away from the competition to buy Northern Rock.

In letters sent to the stricken bank and to the Treasury this afternoon, Flowers is understood to have said it was not able to construct a deal meeting its own profitability criteria which would also be acceptable to the Government.

The withdrawal of Flowers has alarmed the Government, Whitehall sources said, and will cause Northern Rock's shares to plunge in the morning, as it increases the prospect that Northern Rock will have to be nationalized.

Sir Richard Branson's Virgin group is the most likely buyer for Northern Rock and is pushing ahead with due diligence on the bank.

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