Bank Failure List update February 5, 2010

Reported failed U.S. Banks and Credit
Unions as of February 5, 2010

Please note that the FDIC is often appointed as receiver for
failed banks. These events are structured as bank mergers
and/or consolidations to avoid antitrust hearings.

Credit Union Failures are handled in much the same manner, and
deposits are insured by the National Credit Union Administration
(NCUA), the federal agency that charters, supervises and insures
federal credit unions.

In this structure, take-over banks and credit unions can avoid
U.S. banking and anti-trust laws to take over the entire banking
system.

The actual number of bank and credit union branches
are not accounted for in this list.


======================================
Insolvent Bank/Credit Union Name - Closing Date
======================================

1st American State Bank of Minnesota, Hancock, MN., February 5, 2010
American Marine Bank, Bainbridge Island, WA., January 29, 2010
First Regional Bank, Los Angeles, CA., January 29, 2010
Community Bank and Trust, Cornelia, GA., January 29, 2010
Marshall Bank, N.A., Hallock, MN., January 29, 2010
Florida Community Bank, Immokalee, FL., January 29, 2010
First National Bank of Georgia, Carrollton, GA., January 29, 2010
Columbia River Bank, The Dalles, OR., January 22, 2010
Evergreen Bank, Seattle, WA., January 22, 2010
Charter Bank, Santa Fe, NM., January 22, 2010
Bank of Leeton, Leeton, MO., January 22, 2010
Premier American Bank, Miami, FL., January 22, 2010
Barnes Banking Company, Kaysville, UT., January 15, 2010
St. Stephen State Bank, St. Stephen, MN., January 15, 2010
Town Community Bank & Trust, Antioch, IL., January 15, 2010
Horizon Bank, Bellingham, WA., January 8, 2010
Kern Central Credit Union, Bakersfield, CA., January 8, 2010
First Federal Bank of California, F.S.B., Santa Monica, CA., Dec 18, 2009
Imperial Capital Bank, La Jolla, CA., December 18, 2009
Independent Bankers' Bank, Springfield, IL., December 18, 2009
New South Federal Savings Bank, Irondale, AL., December 18, 2009
Citizens State Bank, New Baltimore, MI., December 18, 2009
Peoples First Community Bank, Panama City, FL., December 18, 2009
RockBridge Commercial Bank, Atlanta, GA., December 18, 2009
SolutionsBank, Overland Park, KS., December 11, 2009
Valley Capital Bank, N.A., Mesa, AZ., December 11, 2009
Republic Federal Bank, N.A., Miami, FL., December 11, 2009
Greater Atlantic Bank, Reston, VA., December 4, 2009
Benchmark Bank,Aurora, IL., December 4, 2009
AmTrust Bank, Cleveland, OH., December 4, 2009
The Tattnall Bank, Reidsville, GA., December 4, 2009
First Security National Bank, Norcross, GA., December 4, 2009
The Buckhead Community Bank, Atlanta, GA., December 4, 2009
Commerce Bank of Southwest Florida, Fort Myers, FL. November 20, 200
Ensign Federal Credit Union, Henderson, NV., November 13, 2009
Pacific Coast National Bank, San Clemente, CA., November 13, 2009
New South Federal Savings Bank, Lending Division, Birmingham, AL., November 13, 2009
Orion Bank, Naples, FL., November 13, 2009
Century Bank, F.S.B. Sarasota, FL., November 13, 2009
United Commercial Bank, San Francisco, CA., November 6, 2009
Gateway Bank of St. Louis, St. Louis, MO., November 6, 2009
Prosperan Bank, Oakdale, MN., November 6, 2009
Home Federal Savings Bank, Detroit, MI., November 6, 2009
United Security Bank, Sparta, GA., November 6, 2009
AME Financial Corp, Alpharetta, GA., November 03, 2009
North Houston Bank, Houston, TX., October 30, 2009
Second Baptist Church Credit Union, Los Angeles, CA., October 29, 2009
Madisonville State Bank, Madisonville, TX., October 30, 2009
Citizens National Bank, Teague, TX., October 30, 2009
Park National Bank, Chicago, IL., October 30, 2009
Pacific National Bank, San Francisco, CA., October 30, 2009
California National Bank, Los Angeles, CA., October 30, 2009
San Diego National Bank, San Diego, CA., October 30, 2009
Community Bank of Lemont, Lemont, IL., October 30, 2009
Bank USA, N.A., Phoenix, AZ., October 30, 2009
Prosperity Federal Credit Union, Rancho Domingue, CA., October 29, 2009
Cumorah Credit Union, Las Vegas, NV., October. 24, 2009
First DuPage Bank, Westmont, IL., October 23, 2009
First Midwest Bank, Itasca, IL., October 23, 2009
Riverview Community Bank, Otsego, MN., October 23, 2009
Bank of Elmwood, Racine, WI., October 23, 2009
Flagship National Bank, Bradenton, FL., October 23, 2009
Hillcrest Bank Florida, Naples, FL., October 23, 2009
American United Bank, Lawrenceville, GA., October 23, 2009
Partners Bank, Naples, FL., October 23, 2009
San Joaquin Bank, Bakersfield, CA., October 16, 2009
Southern Colorado National Bank, Pueblo, CO., October 2, 2009
West Texas Credit Union, El Paso, TX., October 2, 2009
Jennings State Bank, Spring Grove, MN., October 2, 2009
Warren Bank, Warren, MI., October 2, 2009
Georgian Bank, Atlanta, GA., September 25, 2009
Clearstar Financial Credit Union, Reno, NV., September 25, 2009
Keys Federal Credit Union, Key West, FL., September 25, 2009
Irwin Union Bank, F.S.B., Louisville, KY., September 18, 2009
Irwin Union Bank and Trust Company, Columbus, IN., September 18, 2009
Venture Bank, Lacey, WA., September 11, 2009
Brickwell Community Bank, Woodbury, MN., September 11, 2009
Corus Bank, N.A., Chicago, IL., September 11, 2009
First State Bank, Flagstaff, AZ., September 4, 2009
Platinum Community Bank, Rolling Meadows, IL., September 4, 2009
Vantus Bank, Sioux City, IA., September 4, 2009
InBank, Oak Forest, IL., September 4, 2009
First Bank of Kansas City, Kansas City, MO., September 4, 2009
Affinity Bank, Ventura, CA., August 28, 2009
Mainstreet Bank, Forest Lake, MN., August 28, 2009
Bradford Bank, Baltimore, MD., August 28, 2009
Free Choice Federal Credit Union, Feasterville, PA., August 28, 2009
Guaranty Bank, Austin, TX., August 21, 2009
CapitalSouth Bank, Birmingham, AL., August 21, 2009
First Coweta Bank, Newnan, GA., August 21, 2009
ebank, Atlanta, GA., August 21, 2009
Community Bank of Nevada, Las Vegas, NV., August 14, 2009
Community Bank of Arizona, Phoenix, AZ., August 14, 2009
Union Bank, National Association, Gilbert, AZ., August 14, 2009
Colonial Bank, Montgomery, AL., August 14, 2009
Dwelling House Savings and Loan Association, Pittsburgh, PA., August 14, 2009
Community One FCU Las Vegas, NV., August 12, 2009
Community First Bank, Prineville, OR., August 7, 2009
Community National Bank of Sarasota County, Venice, FL., August 7, 2009
First State Bank, Sarasota, FL, August 7, 2009
Mutual Savings Credit Union, Birmingham, AL., August 6, 2009
Mutual Bank, Harvey, IL July 31, 2009
First BankAmericano, Elizabeth, NJ July 31, 2009
Peoples Community Bank, West Chester, OH July 31, 2009
Integrity Bank, Jupiter, FL July 31, 2009
First State Bank of Altus, Altus, OK July 31, 2009
Security Bank of Jones County, Gray, GA July 24, 2009
Security Bank of Houston County, Perry, GA July 24, 2009
Security Bank of Bibb County, Macon, GA July 24, 2009
Security Bank of North Metro, Woodstock, GA July 24, 2009
Security Bank of North Fulton, Alpharetta, GA July 24, 2009
Security Bank of Gwinnett County, Suwanee, GA July 24, 2009
Waterford Village Bank, Williamsville, NY July 24, 2009
New Hope Community Development Federal Credit Union, Birmingham, AL., July 22, 2009
Temecula Valley Bank, Temecula, CA July 17, 2009
Vineyard Bank, Rancho Cucamonga, CA July 17, 2009
BankFirst, Sioux Falls, SD July 17, 2009
First Piedmont Bank, Winder, GA July 17, 2009
Watts Credit Union, Los Angeles,CA, July 14, 2009
Bank of Wyoming, Thermopolis, WY July 10, 2009
Founders Bank, Worth IL July 2, 2009
Millennium State Bank of Texas, Dallas TX July 2, 2009
First National Bank of Danville, Danville IL July 2, 2009
Elizabeth State Bank, Elizabeth IL July 2, 2009
Rock River Bank, Oregon IL July 2, 2009
First State Bank of Winchester, Winchester IL July 2, 2009
John Warner Bank, Clinton IL July 2, 2009
Mirae Bank, Los Angeles, CA June 26, 2009
Metro Pacific Bank, Irvine, CA June 26, 2009
Horizon Bank, Pine City, MN June 26, 2009
Neighborhood Community Bank, Newnan, GA June 26, 2009
Community Bank of West Georgia, Villa Rica, GA June 26, 2009
First National Bank of Anthony, Anthony, KS June 19, 2009
Cooperative Bank, Wilmington, NC June 19, 2009
Southern Community Bank, Fayetteville, GA June 19, 2009
Bank of Lincolnwood, Lincolnwood, IL June 5, 2009
Citizens National Bank, Macomb, IL May 22 2009
Strategic Capital Bank, Champaign, IL May 22 2009
BankUnited Financial, Coral Gables, FL, May 21, 2009
Rouge Employees Credit Union, Dearborn, MI., May 15, 2009
Westsound Bank, Bremerton, WA May 8, 2009
America West Bank, Layton, UT May 1, 2009
Citizens Community Bank, Ridgewood, NJ May 1, 2009
Silverton Bank, N.A., Atlanta, GA May 1, 2009
Eastern Financial Florida Credit Union, Miramar, FL, April 24, 2009
First Bank of Idaho, Ketchum, ID April 24, 2009
First Bank of Beverly Hills, Calabasas, CA April 24, 2009
Heritage Bank, Farmington Hills, MI April 24, 2009
American Southern Bank, Kennesaw, GA April 24, 2009
Great Basin Bank of Nevada, Elko, NV April 17, 2009
American Sterling Bank, Sugar Creek, MO April 17, 2009
Cooperative Bank, Wilmington, NC., April 10, 2009
New Frontier Bank, Greeley, CO April 10, 2009
Cape Fear Bank, Wilmington, NC April 10, 2009
Omni National Bank, Atlanta, GA March 27, 2009
U.S. Central Federal Credit Union, Lenexa, Kansas, March 20, 2009
TeamBank, National Association, Paola, KS March 20, 2009
Colorado National Bank, Colorado Springs, CO March 20, 2009
Western Corporate Federal Credit Union, San Dimas, CA, March 20, 2009
FirstCity Bank, Stockbridge, GA March 20, 2009
Freedom Bank of Georgia, Commerce, GA March 6, 2009
Security Savings Bank, Henderson, NV February 27, 2009
Heritage Community Bank, Glenwood, IL February 27, 2009
Bank of Antigua, Caribbean Island, February 20, 2009
Silver Falls Bank, Silverton, OR February 20, 2009
Center Valley Federal Credit Union, Wheeling, WV., February, 13, 2009
Pinnacle Bank of Oregon, Beaverton, OR February 13, 2009
Corn Belt Bank and Trust Company, Pittsfield, IL February 13, 2009
Riverside Bank of the Gulf Coast, Cape Coral, FL February 13, 2009
Sherman County Bank, Loup City, NE February 13, 2009
County Bank, Merced, CA February 6, 2009
Alliance Bank, Culver City, CA February 6, 2009
FirstBank Financial Services, McDonough, GA February 6, 2009
Ocala National Bank, Ocala, FL January 30, 2009
Suburban Federal Savings Bank, Crofton, MD January 30, 2009
MagnetBank, Salt Lake City, UT January 30, 2009
1st Centennial Bank, Redlands, CA January 23, 2009
Bank of Clark County, Vancouver, WA January 16, 2009
National Bank of Commerce, Berkeley, IL January 16, 2009
Sanderson State Bank, Sanderson, TX December 12, 2008
Haven Trust Bank, Duluth, GA December 12, 2008
West Hartford Credit Union, West Hartford, CT, December 5th, 2008
First Georgia Community Bank, Jackson, GA December 5, 2008
PFF Bank and Trust, Pomona, CA November 21, 2008
Downey Savings and Loan, Newport Beach, CA November 21, 2008
The Community Bank, Loganville, GA November 21, 2008
Security Pacific Bank, Los Angeles, CA November 7, 2008
Franklin Bank, SSB, Houston, TX November 7, 2008
Freedom Bank, Bradenton, FL October 31, 2008
Alpha Bank & Trust, Alpharetta, GA October 24, 2008
High Desert Federal Credit Union, Apple Valley, CA, October 16, 2008
Meridian Bank, Eldred, IL October 10, 2008
Main Street Bank, Northville, MI October 10, 2008
N&W Poca Division Federal Credit Union of Bluefield, West Virginia, October 3, 2008
TEXDOT-WF Credit Union, TX, September 30, 2008
Washington Mutual Bank, Henderson, NV and
Washington Mutual Bank FSB, Park City, UT September 25, 2008
Ameribank, Northfork, WV September 19, 2008
Interfaith Federal Credit Union, East Orange, N.J., September 16, 2008
Silver State Bank, Henderson, NV September 5, 2008
The Valley Credit Union, San Jose, CA, September 3, 2008
Integrity Bank, Alpharetta, GA August 29, 2008
The Columbian Bank and Trust, Topeka, KS August 22, 2008
Port Trust Federal Credit Union, North Charleston, S.C., August 8, 2008
Sterlent Credit Union, Pleasanton, CA, August 8, 2008
First Priority Bank, Bradenton, FL August 1, 2008
New London Security FCU, New London, CT., July 28, 2008
First Heritage Bank, NA, Newport Beach, CA July 25, 2008
First National Bank of Nevada, Reno, NV July 25, 2008
Meriden F.A. Federal Credit Union, Meriden, CT., July 16, 2008
IndyMac Bank, Pasadena, CA July 11, 2008
First Integrity Bank, NA, Staples, MN May 30, 2008
Father Burke Federal Credit Union, Bronx, NY., May 12, 2008
ANB Financial, NA, Bentonville, AR May 9, 2008
Cal State 9 Credit Union, San Jose, CA., May 8, 2008
St. Luke Baptist Federal Credit Union, Laurelton, NY., May 3, 2008
Hume Bank, Hume, MO March 7, 2008
Douglass National Bank, Kansas City, MO January 25, 2008
Miami Valley Bank, Lakeview, OH October 4, 2007
Huron River Credit Union, Ann Arbor, MI., January 19, 2008
Green Tree Federal Credit Union, January 19, 2008
Sharebuilders Federal Credit Union, January 19, 2008
Norlarco Credit Union, Ft. Collins, CO., January 19, 2008
NetBank, Alpharetta, GA September 28, 2007
Metropolitan Savings Bank, Pittsburgh, PA February 2, 2007
Bank of Ephraim, Ephraim, UT June 25, 2004
Reliance Bank, White Plains, NY March 19, 2004
Guaranty National Bank of Tallahassee, Tallahassee, FL March 12, 2004
Dollar Savings Bank, Newark, NJ February 14, 2004
Pulaski Savings Bank, Philadelphia, PA November 14, 2003
The First National Bank of Blanchardville,Blanchardville, WI May 9, 2003
Southern Pacific Bank, Torrance, CA February 7, 2003
The Farmers Bank of Cheneyville, Cheneyville, LA December 17, 2002
The Bank of Alamo, Alamo, TN November 8, 2002
AmTrade International Bank of Georgia, Atlanta, GA September 30, 2002
Universal Federal Savings Bank, Chicago, IL June 27, 2002
Connecticut Bank of Commerce, Stamford, CT June 26, 2002
New Century Bank, Shelby Township, MI March 28, 2002
Net 1st National Bank, Boca Raton, FL March 1, 2002
NextBank, N.A., Phoenix, AZ February 7, 2002
Oakwood Deposit Bank Company, Oakwood, OH February 1, 2002
Bank of Sierra Blanca, Sierra Blanca, TX January 18, 2002
Hamilton Bank, N.A., Miami, FL January 11, 2002
Sinclair National Bank, Gravette, AR September 7, 2001
Superior Bank, FSB, Hinsdale, IL July 27, 2001
The Malta National Bank, Malta, OH May 3, 2001
First Alliance Bank & Trust Company, Manchester, NH February 2, 2001
National State Bank of Metropolis, Metropolis, IL December 14, 2000
Bank of Honolulu, Honolulu, HI October 13, 2000

To see the current posted list of failed banks, visit:
http://www.fdic.gov/bank/individual/failed/banklist.html

To check your Bank or Credit Union's rating, visit:
http://bauerfinancial.com/home.html

Interactive State Map from BankInfoSecurity.com
of failed banks and credit unions in the U.S. in 2009:
http://www.bankinfosecurity.com/articles.php?art_id=1681

National Credit Union Administration (NCUA):
http://www.ncua.gov/

Credit Union Times
http://www.cutimes.com/

BankImplode.com
http://bankimplode.com/
http://ml-implode.com/#lists

Bank Failure Outlook Updated October 30, 2009

http://ocnww.blogspot.com/
Update January 22, 2010
Editorial comments by Benjamin Train

Derivative Defaults about to hit
the news again as Gold soars
over $1000 per ounce

Composite article by Benjamin Train
September 5, 2009

Derivative defaults may cause another major bank failure, or another
Stimulus Bill to be drafted by Congress.

Beijing's derivative default stance has rattled World markets for the
last five trading days and caused the precious metals market to drive
the price of gold to $1000 per ounce as traders seek protection.

China has given the green light and authorized the defaulting on
commodity derivative contracts. On September 1, 2009 Reuters
said that the Banks, not the commodities would be at risk if China
followed through.

Another bank was rumored to be close to defaulting. The Reuters
report cited 6 foreign banks that received letters indicating that
the Chinese State Owned Enterprises would be given the green
light to default on their derivatives.

A Derivative is a financial instrument that is derived from some
other underlying asset, index, event, value or condition. Rather than
trade or exchange the underlying itself, derivative traders enter into
an agreement to exchange cash or assets over time based on the
underlying.

An futures contract is an agreement to exchange an underlying asset
at a future date, at a future price. Commercial and investment banks
make up the foundation of the over the counter (OTC) derivatives
market.

Investors use derivatives to protect against risks, such as sudden
changes in price or value of the underlying asset. Others tap
derivatives to take on extra risk, in the hope of extra gains. China
owns billions of these financial instruments.

The Reuters story cited 6 foreign banks, including; Spokespersons at
Goldman Sachs (GS.N) and UBS (UBSN.VX) declined comment, and
media officials at Morgan Stanley (MS.N) and JPMorgan (JPM.N)
were not immediately available for comment. All are major global
providers of commodity risk management.

A Chinese Statesperson was quoted as saying “"If we were among
the banks receiving that letter, we would be very angry.” This time,
the concern may be over Oil. Have you noticed that the price of oil
has declined recently?

China's SOE regulator, the State-owned Assets Supervision and
Administration Commission (SASAC), had told the financial institutions
that SOEs reserved the right to default on contracts, Caijing magazine
quoted an unnamed industry source as saying.”

Yes, we can also expect to have Chinese political figures and US banks
to downplay these facts and story in an effort to avert panic. However,
if the Chinese can prove that these derivatives or the underlying asset
was manipulated in a manner to profit the banks that issued the
products then that may even do more damage than the default
themselves. Gold, a classic hedge against troubled times has broken
out to the upside, China has purchased 50 billion in IMF bonds.

http://www.reuters.com/article/marketsNews/idAFPEK1183220090831?rpc=44



US Economic Risk in the trillions?

Some lawmakers are complaining about one figure in the chief
watchdog's report for the government's bail-out TARP funds.
Barofsky's report, which assigns an eye-popping value of $23.7
trillion as the sum total of dozens of federal programs supporting
companies, industries and consumers affected by the economic
meltdown.

The $23.7 trillion number is a "staggering figure," said Rep.
Darrell Issa, R-Calif., the ranking minority member of the House
Oversight panel.

The aggregate figure includes bank debt backed by the Federal
Deposit Insurance Corp. Taxpayers are on the hook if the banks can't
make good on the debt, but so far taxpayers haven't lost a dime and
have in fact made billions in fees paid to the program, said industry
analyst Jaret Seiberg, who generally supports transparency and
disclosure of risk.

"You can start raising questions about lots of different components,
but that's throwing lighter fluid on an already politically-charged fight
to produce nothing of substance," said Seiberg of Concept Capital's
Washington Research Group.

Find this complete article at:
http://money.cnn.com/2009/07/20/news/economy/TARP_report


TARP Inspector Urges Treasury to Track Banks' Aid More Closely

Bloomberg -

By Rebecca Christie July 19 (Bloomberg) -- Treasury Secretary
Timothy Geithner should press banks for more information on
how they use the more than $200 billion the government has
pumped into US financial institutions ...

Revised Bank Failure Outlook
160 to 280 Banks will close this year,
1400 More Banks to Fail by 2012

By Benjamin Train
Written June 26, 2009

After further due diligence, I believe the U.S. financial
system and the Federal Reserve will delay plans to close
up to 1,450 banks until 2012. I also expect we will see that
over 2,000 banks, credit unions and savings and loans will
be taken over or closed by 2014. The Federal reserve and
large national banks are well on their way to consolidate and
centralize wealth, as well as, the entire financial system here
in the U.S.

Public TARP funds have proven helpful in making it possible to
temporarily fortify REIT's, credit vehicles and other
commercial loan securities, as well as commercial bank
funding sources, and suspend the eminent closure of a large
number of smaller community banks, and credit unions that are
facing devaluation of commercial real estate assets by bank
regulators.


"There are still too many banks in the United States,"
said JPMorgan Chase CEO, Jamie Dimon to Calyon
Securities analyst Mike Mayo in a webcast call
on Monday, May 4th.

JPMorgan last year purchased Bear Stearns at
a fire-sale price and snapped up the assets of
failed Seattle thrift Washington Mutual Inc.
who is now suing JPMorgan Chase & Co.

In the Delaware federal bankruptcy court suit
Washington Mutual, Inc., filed last Monday against
JPMorgan Chase. Just in case it wasn't inflammatory
enough to accuse the bank of misappropriating $4 billion
that the bankrupt parent company of Washington Mutual
Bank had on deposit at WaMu when JPMorgan purchased
the savings bank for $1.9 billion.

Quinn Emanuel filed a motion
claiming that JPMorgan engineered a deliberate scheme
to undermine WaMu so it could purchase WaMu's assets
on the cheap. Quinn Emanuel represents Washington Mutual,
Inc., WaMu's parent company.

The second-largest bank is busy absorbing
these acquisitions, Dimon said, but added that
regulators may still look to JPMorgan to
"do something" in terms of acquisitions.

Acquisitions of retail banks in emerging markets
remain JPMorgan Chase’s biggest “strategic issue”
but the US group is also open to buying smaller
lenders in its home market, Jamie Dimon said on Monday.

As the U.S. banking sector continues to further
consolidate, regulators may encourage JPMorgan
to take-over additional U.S. assets, including
stronger community banks.

JPMorgan is also looking to grow outside of the
United States by expanding existing businesses
in countries like Brazil, China, India and
Russia, he said.

Consumer businesses in the United States remain
under stress and the credit card business in
particular is suffering, according to Dimon,
who added that he expects these businesses to
shrink over the next two years.

Commercial Property Values Continue to Fall

Commercial property values fell 21.5
percent through February from their
October 2007 peak, according to Moody’s
Investors Service. Properties bought in
2006 are now worth on average 11 percent
less than their original price, and those
bought in 2007 are worth almost 20 percent
less, Moody’s said.

Commercial mortgage delinquencies in the
U.S. climbed to the highest level in at
least 11 years in April as scarce credit
made it difficult for landlords to refinance
loans, according to property research
firm Trepp LLC.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aES8UegfUvkU

"Unemployment and home prices (are) driving
losses way beyond what we expected, even
(with) unemployment like this," he said.

Discussing the broader economic outlook, however,
Dimon said the pace of decline has slowed.

"I don't know if I call it bottoming out,
but kind of a crawling along the bottom here,
maybe a little bit better," he said.

JPMorgan posted a better-than-expected
first-quarter profit in April, largely helped
by trading gains and a surge in underwriting
revenue at its investment banking unit, and
Dimon warned in a call with analysts last month
that those conditions were unlikely to continue
into the second quarter.

When Mayo asked him on Monday about April's
trading performance, he declined comment.

Bank regulators will be publishing their results
of the U.S. largest banks 19 banks this week.

The regulators' focus could spell trouble for
local regional banks and Credit Unions subject
to the test criteria. Their portfolios have
more individual loans and fewer of the big pools
of securitized loans that Wall Street giants
specialize in.

The methodology "certainly penalizes those banks
that are more involved in traditional banking,
which frankly have been performing better in recent
months," said Wayne Abernathy, a former Treasury
Department official now with the American Bankers
Association.

The government's "stress tests" of 19 large U.S.
banks also takes a harsher view of loans than of
other troubled assets including commercial real
estate portfolios, REITs and underwritten loans.

According to a Federal Reserve document obtained
by The Associated Press. That approach favors a
few Wall Street banks while potentially
threatening the smaller regional community banks
and Credit Unions.

The test assumes that the banks' individual loans
will lose up to 20 percent of their value. Many
analysts are expecting a much more significant
decline in commercial real estate portfolios over
the next six months, as retailers abandon shopping
malls in droves and file bankruptcy liquidations.

A Treasury Department spokesman referred all
questions regarding these issues to the the
Federal Reserve, a foreign Corporation. A spokesman
for the Federal Reserve would not comment.

Further Bank Consolidations Ahead - JPMorgan CEO

http://ocnww.blogspot.com/Monday,May 4, 2009, Update July 18, 2009
Editorial comments by Benjamin Train

Excerpts from Original Reuters article
By Elinor Comlay. Editing by Gunna Dickson and Gerald E. McCormick


"There are still too many banks in the United States,"
said JPMorgan Chase CEO, Jamie Dimon to Calyon
Securities analyst Mike Mayo in a webcast call
on Monday, May 4th.

JPMorgan last year purchased Bear Stearns at
a fire-sale price and snapped up the assets of
failed Seattle thrift Washington Mutual Inc.
who is now suing JPMorgan Chase & Co.

In the Delaware federal bankruptcy court suit
Washington Mutual, Inc., filed last Monday against
JPMorgan Chase. Just in case it wasn't inflammatory
enough to accuse the bank of misappropriating $4 billion
that the bankrupt parent company of Washington Mutual
Bank had on deposit at WaMu when JPMorgan purchased
the savings bank for $1.9 billion.

On Friday, Quinn Emanuel filed a motion
claiming that JPMorgan engineered a deliberate scheme
to undermine WaMu so it could purchase WaMu's assets
on the cheap. Quinn Emanuel represents Washington Mutual,
Inc., WaMu's parent company.

The second-largest bank is busy absorbing
these acquisitions, Dimon said, but added that
regulators may still look to JPMorgan to
"do something" in terms of acquisitions.

Acquisitions of retail banks in emerging markets
remain JPMorgan Chase’s biggest “strategic issue”
but the US group is also open to buying smaller
lenders in its home market, Jamie Dimon said on Monday.

As the U.S. banking sector continues to further
consolidate, regulators may encourage JPMorgan
to take-over additional U.S. assets, including
stronger community banks.

JPMorgan is also looking to grow outside of the
United States by expanding existing businesses
in countries like Brazil, China, India and
Russia, he said.

Consumer businesses in the United States remain
under stress and the credit card business in
particular is suffering, according to Dimon,
who added that he expects these businesses to
shrink over the next two years.

Commercial Property Values Fall

Commercial property values fell 21.5
percent through February from their
October 2007 peak, according to Moody’s
Investors Service. Properties bought in
2006 are now worth on average 11 percent
less than their original price, and those
bought in 2007 are worth almost 20 percent
less, Moody’s said.

Commercial mortgage delinquencies in the
U.S. climbed to the highest level in at
least 11 years in April as scarce credit
made it difficult for landlords to refinance
loans, according to property research
firm Trepp LLC.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aES8UegfUvkU

"Unemployment and home prices (are) driving
losses way beyond what we expected, even
(with) unemployment like this," he said.

Discussing the broader economic outlook, however,
Dimon said the pace of decline has slowed.

"I don't know if I call it bottoming out,
but kind of a crawling along the bottom here,
maybe a little bit better," he said.

JPMorgan posted a better-than-expected
first-quarter profit in April, largely helped
by trading gains and a surge in underwriting
revenue at its investment banking unit, and
Dimon warned in a call with analysts last month
that those conditions were unlikely to continue
into the second quarter.

When Mayo asked him on Monday about April's
trading performance, he declined comment.

Bank regulators will be publishing their results
of the U.S. largest banks 19 banks this week.

The regulators' focus could spell trouble for
local regional banks and Credit Unions subject
to the test criteria. Their portfolios have
more individual loans and fewer of the big pools
of securitized loans that Wall Street giants
specialize in.

The methodology "certainly penalizes those banks
that are more involved in traditional banking,
which frankly have been performing better in recent
months," said Wayne Abernathy, a former Treasury
Department official now with the American Bankers
Association.

The government's "stress tests" of 19 large U.S.
banks also takes a harsher view of loans than of
other troubled assets including commercial real
estate portfolios, REITs and underwritten loans.

According to a Federal Reserve document obtained
by The Associated Press. That approach favors a
few Wall Street banks while potentially
threatening the smaller regional community banks
and Credit Unions.

The test assumes that the banks' individual loans
will lose up to 20 percent of their value. Many
analysts are expecting a much more significant
decline in commercial real estate portfolios over
the next six months, as retailers abandon shopping
malls in droves and file bankruptcy liquidations.

A Treasury Department spokesman referred all
questions regarding these issues to the the
Federal Reserve, a foreign Corporation. A spokesman
for the Federal Reserve would not comment.


To see the current posted list of failed banks, visit:
http://www.fdic.gov/bank/individual/failed/banklist.html

1,600 More Banks Expected to Fail in 2009

January 31, 2009

By Benjamin Train
President, Online Consultancy Network

As goes January so goes the year. January ended with grim
news on jobs, stocks, shipping, banking, retail, services,
airlines, bankruptcies and more. Companies across various
sectors announced more than 100,000 job cuts last week
alone.

The stock market decline, that started over a year ago,
picked up some steam in January 2009 to end the month with
the Worst January in recorded history for the Dow, and the
S&P 500, according to Stock Trader's Almanac data.

The Dow lost 8.8% and the S&P 500 lost 8.6% in the month.
The Nasdaq's loss of 6.4% was eclipsed by last January's
loss of 9.9%. That 2008 loss was the worst in the tech
average's history, going back to its inception in 1971.

Treasuries purchases will depend on risk:

"Future purchases of US Treasuries by China will depend on
its need to protect the value of its foreign investments and
a stable yuan," said Chinese Premier Wen Jiabao

The Baltic Dry Index is at the lowest point since I have
been monitoring it, for the last 16 years. Harbors are
filling up with surplus ships. Harbor Masters are rejecting
ships as Harbors fill with surplus ships. Trading volumes in
the last quarter of 2008 were down in both the dry and wet
markets. Baltic Exchange members are at the heart of world
trade, arranging for the ocean transportation of industrial
bulk commodities from producer to end user.
Visit http://www.balticexchange.com/

The International Air Transport Association (IATA) released
international scheduled traffic results for both December
2008.

In the month of December global international cargo traffic
plummeted by 22.6% compared to December 2007. The same
comparison for international passenger traffic showed a 4.6%
drop. The international load factor stood at 73.8%.“The
22.6% free fall in global cargo is unprecedented and
shocking. There is no clearer description of the slowdown in
world trade."said Giovanni Bisignani, IATA’s Director
General and CEO.

The number of containerships laid up is growing daily.
According to French maritime consultant AXS-Alphaliner, 255

ships, equivalent to 675,000 teu in capacity (5.5% of the
global containership fleet), were laid up as of January 19
this year. It projects that the volume of container ships on
standby will jump to the equivalent of 750,000 teu in early
February this year, accounting for 6% of the entire global
boxship fleet.


Oil and Energy shares on the Rise:

Crude-oil futures were up Friday, $1.53 at $42.96, while
gold futures gained $17.70 to $922.80. The dollar was firmer
overall against major counterparts, but gains were capped as
investors embraced more risk, shaving off some safe-haven
flows into the U.S. currency.


Gold Hits 16-Week High, Nears Key Resistance:

Spot gold rallied to a three-and-a-half month high Friday on
a mix of safe haven demand and short-covering.
The rally took gold closer to a key resistance at $930 a
troy ounce, which it may challenge later next week.
Despite gold's strength Friday, traders were skeptical the
metal could close above $930/oz, the high of last October.

"Technically it's overdone but sentiment is carrying it at
the moment," said a London-based trader.


Cities Taking a Plunge:

Property tax revenue plummets with home values, dragging
U.S. Cities and Counties into massive budget shortfalls.
Many major U.S. Cities and States are set to fail, as their
economies implode.

Commercial real estate defaults rose in December and are set
to move into double digits as major lease holders vacate US
shopping centers in droves. As retail store closures and
bankruptcies continue, Cities, Counties and States that rely
on tax income, will fail to meet their budgets and
obligations. Continued layoffs, existing retirement
programs, and worker benefits are in the cross-hairs.

Below is a partial list of stores that informed the SEC of
closing plans between October 2008 and January 2009.


Ann Taylor- 117 stores nationwide
Lane Bryant
Eddie Bauer to close stores 27 stores and more after January
Fashion Bug
Circuit City stores
Catherine's to close 150 store nationwide
Cache will close all stores
Talbots closing down all stores
J. Jill closing all stores
GAP closing 85 stores
Footlocker closing 140 stores more to close after January
Wickes Furniture closing down
Levitz closing down remaining stores
Bombay closing remaining stores
Zales closing down 82 stores and 105 after January.
Whitehall closing all stores
Piercing Pagoda closing all stores
Disney closing 98 stores and will close more after January.
Home Depot closing 15 stores
Macys to close 9 stores after January
Linens and Things closing all stores
Movie Galley Closing all stores
Pacific Sunware closing stores
Pep Boys Closing 33 stores
Sprint/ Nextel closing 133 stores
JC Penney closing a number of stores after January
Ethan Allen closing down 12 stores.
Wilson Leather closing down all stores
Sharper Image closing down all stores
K B Toys closing 356 stores
Loews to close down some stores
Dillard's to close some stores.
Gottschalks Stores Filing Banruptcy


1,600 more Banks May Fail in 2009:

Analysts said the economic reports confirmed weak housing
and a struggling economy. Many forecasters are looking ahead
to next Friday's January jobless data with much trepidation.
"There's a continuing drumbeat of layoff announcements every
day. Everyone is bracing for a bad one," said Jack
Ablin, chief investment officer at Harris Private Bank.

Last week, Federal Regulators moved to guarantee $80 billion
more in uninsured deposits at the powerful institutions and
clearing houses that service the nation's credit unions.

As banks scramble to feverishly dump foreclosed homes at
deep discounts, values are going down from 50% percent to
75% percent, bank loan portfolios are about to take another
major blow, from failures in the commercial real estate
sector.

This will cause bank regulators to further sharply de-value
the banks assets and push bank closures throughout the U.S.
and beyond. Utah's MagnetBank became the fourth bank failure
of the year on Friday, and the Federal Deposit Insurance
Corp. was forced to directly refund depositors after being
unable to find another institution willing to take over its
operations.

Fewer banks failed in 2008 than expected despite the
catastrophic failures of major U.S. thrifts like IndyMac and
Washington Mutual, the American Banker reported. But the
banks that have yet to fail, will do so this year as
commercial asset valuations plunge.
www.americanbanker.com/topic.html?id=20071004HFB2JIZR

To help give you some idea what I am writing about here,
consider the fact that the entire "home mortgage crises" was
based on $1.5 trillion dollars. The commercial real estate
bubble represents $25 trillion U.S. dollars. Admittedly,
that is not even close to the emerging markets bubble of $80
trillion, and of course the $100 trillion in debt backed
derivatives that continues to be backed by AIG, U.S.
taxpayers and others.

I further expect that the Federal Deposit Insurance Corp.
(FDIC) to become insolvent this year. Many bank officials
agree with me. The FDIC has boosted its Key Staff by 140
ahead of expected bank failures this year. According to the
Huffington Post the FDIC may borrow money from the
Treasury for the expected bank failures ahead.

And, if you think this will be over any time soon, read
today's New York Times: Geithner Sets Limits on Bank
Lobbying, but according to the Wall Street Journal,
Geithner's new Chief of Staff is Former Bank Lobbyist. Get
the idea?

I really hope that you are not listening to all the hype,
mis-information and lies being told to you by the major
media. This financial collapse is not a surprise. It has
been planned for many years. We wrote about it and explained
what you had to do to be ready for it over 7 years ago. This
current financial meltdown is not a result of "reckless
deregulation and lack of oversight". It was engineered.

I am expecting February to be announced as the worst
economic month in recorded history, and 2009 the worst years
in America. I anticipate more than 1,600 bank closures and
and a "Bank Holiday" to be announced in 2009. I hope I am
wrong.

It's "a continuing disaster" for the nation's families,
declared President Barack Obama last week, making what has
become an increasingly urgent daily sales pitch for his $819
billion stimulus package.

For those of you unfamiliar with the former Illinois
attorneys background, may I suggest you look into the
sub-prime financial engineering, Countrywide Bank, and many

of the recipients of the Freddie & Fannie in the form of
sweetheart deals, including the ACORN Housing Corporation
and community organizations involved with him.

I am not suggesting he was one of the engineers, but that he
may know more than you are hearing. Perhaps members of the
Trilateral Commission, David Rockefeller and the Bank of New
York executives may know more.

“You can’t bail out everyone, yet economic recovery is not
possible unless certain critical asset sectors are not only
reliquefied but rejuvenated in price,” wrote Bill Gross,
co-chief investment officer of Pacific Investment Management
Co., the world’s biggest bond fund. Does this statement
sound like the commercial bond market is a good place in
invest your future retirement savings? I'll let you think
about that one for a while.

$3.6 trillion and counting. Fortune Magazine is reporting
that the Bank bailout could cost $4 trillion dollars. Banks
don't have enough capital to fix their problems, that is why
they are not lending into the public or private credit
sectors, which means "the Obama administration may need a
lot more money to clean up the financial mess." "Citigroup,
Bank of America, Wells Fargo, etc are gigantic black holes
that will suck in every dollar available." according to Mike
"Mish" Shedlock a registered investment adviser
representative for Sitka Pacific Capital Management, and he
is right in every way.

For the record, the "Bad Bank" formation being launched in
Germany and "discussed" here in the U.S. media is not a good
idea for Americans. Do not, under any circumstance let your
State, or Federal representatives sell you that black hole.

It will take what is left of America with it.

Get Involved The State of the Union's Finances:
A Citizen's Guide:
http://www.pgpf.org/getinvolved/

If you would like to learn a bit more about our economy, may
I suggest you read:
http://www.theworldiscurved.com/

"The World Is Curved" is an essential read for those who
wish to understand the workings, politics, and distresses of
the global financial system. David Smick has done an
outstanding job in drawing on his interactions with many of
the key players in international finance to produce an
insightful and entertaining book.”
—Alan Greenspan
Former chairman of the Federal Reserve Board; author of The
Age of Turbulence

Forecast - February 2009 to Shift Commercial Valuations Down Further

Friday, December 19, 2008
By Benjamin Train
President, Online Consultancy Network


February of 2009 will be a time of woe, challenges, and hardships
for many across America and abroad. Meanwhile, the Federal Reserve
has printed trillions of U.S. dollars in South Korea, to lend; for
free, to the approved list of friends of the offshore corporation,
that postures itself as a Federal Government division, or department.

The banking industry, or Federal Government is about to announce,
due to re-assessment valuation of commercial portfolios by regulators,
that more bank failures are immanent, and that if necessary, they
will announce a banking holiday for approximately one week in some
areas of the U.S., or until asset valuations can be properly valued
by bank regulators.

What that means is that your local bank will be closed for a week in
February, and may not be allowed to re-open, depending on how many
commercial loans it has that will be down-valued after the closure of
thousands of retail stores after the Holidays, and the vacated retail
space holders, go into default.

I wrote about this phase of the economic collapse in 1991, and
republished it here in our Financial Journal in 2005. Please look up
that article in our archived articles for that year for further
information. I believe it was in May.

While the general public continues to loose their jobs and assets by
the thousands, hope will begin to turn to despair for many who are
unprepared. 1907 may a good year model to review for those studying
potential scenarios.

The commercial real estate sector valuation collapse will most likely
be felt by banks holding loans. But Cities, Counties and States will
also have to readjust their books, based on tax disclosure dates.

Tax disclosure dates of March and April will further impact local,
county and state municipalities, causing unfunded pension funds to
close, or collapse.

Fixing our economy will not take place in 2009. This coming year,
may become known and one of the worst depressions in the
history of America.

The financial crisis has now spilled over to Europe, Russia, Latin
America and Asian markets. Which is why European and U.S. central
bankers coordinated a global rate cut of epic proportions. The result
has crushed the U.S. financial system. China's sovereign wealth fund
has cut off further investment in the U.S. Foreign investors are
avoiding U.S. investments.

August will be seeing further decline in residential valuations that
will place additional pressure on all financial components, including
the residents that owe more than their homes are valued at by banking
systems and regulators.

In case you have missed it, Federal Reserve supported banks are no
longer lending money to even profitable businesses, or private banks.
They are hoarding money to buy, or take over target banks and
independent banks with assets, and credit unions.

If you, as a Citizen, do not support your local private bank and
community, you will be subject to a very unfortunate year ahead, and
into 2010-2011.

Help build your local economy, and it will support you. Take control
of your lives, and your own economy. Abandon your hopes that your
401k, Treasury bonds yeald, or government will save you, and support
your local "independent" bank, or expect it to close.

Buy food from your local farmers, and stop depending on food from
factory farms in South America, or further abroad. That food may not
be in your local store, in the future. If you do not support your
local farmers, then you may not have food to eat.

Stop pretending, that everything is going to be OK, and the
Government will save you. Stop giving your money away to buy useless
trinkets. Stop listening to peddlers. Embrace those that are close
to you, that have value and meaning in your life.

Support your family and your community. Speak up at public meetings
to keep your local city council, and state Representatives
responsible for their actions. Turn down any further taxation, or
fees without representation, or any accountability.

Wake up America. That is all I am going to say.

Here is an Excellent Artical on the Manipulation of Gold Prices

December 04, 2008
The Manipulation of Gold Prices

By James Conrad
Seeking Alpha
http://seekingalpha.com/author/james-conrad

There is no other leveraged commodity market where short sellers increase
their positions, materially, as the price rises, and increase them even more
when prices are exploding, except gold and silver.

The reason traders don’t normally do that is that it exposes short sellers to
unlimited liability and risk. Yet, in both March and July 2008, and on
countless occasions over the past 21 years, vast numbers of new gold
and silver short positions were temporarily opened up, with the position
holders seemingly unconcerned about the fact that precious metals had
just risen exponentially, and that there was a very real potential they would
bankrupt themselves with unlimited upside potential. Normal traders
would not expose themselves to such unlimited risks.

I conclude, therefore, that over the last 21 years or so, “fake” precious
metals supply in the form of promises of future delivery have habitually
been increased when prices increase until increased “supply” managed
to overwhelm increased demand, leading to a temporary price collapse.
This is compounded by the fact that the futures prices on COMEX tend
to dictate the “official” report price for the precious metals elsewhere.

First, when I say that the gold and silver shorting behavior is abnormal to
commodity markets, I am talking about commercial short positions. The
vast majority of speculators are always long on gold and silver. They are
generally the victims, not the perpetrators. The so-called "commercials"
... are the short sellers, and they are heavily represented by the big
bullion banks.

There is no other commodity, other than gold and silver, in which
commercial short sellers create huge numbers of highly transient short
positions in the middle of bull markets, ignore the fact that the market
keeps rising, and keep adding to their short positions until the market
comes crashing down. This has continued to happen in the midst of
vastly increasing world demand for gold and silver.

Take oil, as an alternative example. When demand was high, commodity
speculation was running rampant, and prices were exploding. Then, with
demand destruction, prices crashed. In the gold market, we know that
demand is soaring, but prices on the futures markets have, nonetheless
crashed. This is abnormal price behavior. If this were only happening
now, I would attribute it to the recent credit default event selling, but it is
not unique to now. It has been happening, over and over again, for at
least the last 21 years.


Here's an example of how the gold market is played.

In the beginning of last week, with the prospect of an avalanche of delivery
demands, records indicate that commercial shorts added about 5,000
transient short positions. This crashed gold to the $700 range.

In "olden times", when the non-leveraged longs did not exist, this would
have prevented most deliveries from happening, as the longs panicked
and sold their positions back to the short sellers, being unwilling to take
more loans in order to take possession of a declining metal. This time,
however, when the short sellers finally realized that they were dealing
with a different "animal" and that non-leveraged longs would be filing
their delivery demands no matter what, the increase in open interest
abruptly closed, and a mini-panic began, sending gold prices up by
over $100 per ounce, in a matter of only 3 days.

This type of shorting behavior is not unique to last week.

In July, just before the U.S. government initiated what I believe is its new
policy of paying interest to foreign money center banks who agree to
sequester eurodollars, 3 major gold shorting banks suddenly increased
their short positions by close to 10 times what they were, just one month
prior to that.

It is now rather obvious that these banks had inside information from the
U.S. Treasury or Federal Reserve. They knew what was going to be done
to the dollar. No one without inside information would have increased their
short positions by 10x, in a fast rising futures market, in the midst of
exploding world demand, and at a time when no one else guessed
that the dollar was going to rally. We can only guess the identity of these
banks because, unlike futures markets in nations like Japan, U.S. futures
regulator, CFTC, refuses transparency and will not agree to release the
bank names.

COMEX futures contracts are backstopped by the entire membership of
the exchange, and it is doubtful that the U.S. government would allow the
exchange to go bankrupt, even if it meant releasing a small portion of
Fort Knox gold to save them from uncovered delivery demands.

The same is even more true of NYSE-Liffe, which has the entire wealth
of the New York Stock Exchange membership backing it up. So, I think
you will get your gold or silver, if you pay in full for your contracts,
and take delivery.


It is important to start buying gold and silver on futures
exchanges for two reasons.

First, it is the cheapest place to buy both metals. You can avoid all the
hefty dealer markups if you buy futures and take delivery.

Second, in order to end the manipulation more quickly, the short selling
crew needs to be put out of business. They have accomplished what they
have, over the last 21 years, by taking advantage of leveraged long
desperation. If you are not leveraged, and have sufficient liquidity to
really buy your contracts, you will be immune to their shenanigans.
You can simply take delivery, put the gold into your safe deposit box
or other safe place, and no matter how they manipulate the price in the
short run of a few months to a year, the price will rise exponentially in
the longer run.

This is a mathematical certainty because of fundamentally flawed dollar
dynamics, and a continuing worsening of the differential between world
supply and demand for both metals.

Now that the European central banks are refusing to sell gold, the supply
has dried up, which is probably why some of more honest portions of
various investment banks are forcing COMEX to make deliveries.

If people continue to force the short sellers to make deliveries, the game
will be over, because naked gold shorts no longer have easy access to
real metal. Last week's delivery demand avalanche was coupled with
the exit of leveraged Longs. Furthermore, it follows on hefty demands
for delivery in late September.

Another episode, hopefully even bigger, in the February delivery month,
will, in all likelihood, sink the gold manipulators, and catapult gold into
the stratosphere.

Let me give you some facts about how to do this.

First of all, you need to open a futures account. There are hundreds of
brokers, but not all alleged futures brokers are really full fledged futures
brokers. Many will refuse to facilitate delivery. For example, Interactive
Brokers, OptionsXpress, ThinkorSwim, and many others only claim to
handle futures. Such brokers refuse to deliver. RJ O'Brien, MF Global,
E-futures, and many others on the other hand, DO facilitate delivery.

Make sure you open your account at a brokerage houses that
accommodates delivery, and doesn't just push you into the
casino-like speculation game. Remember that in casinos,
in the long run, only the house wins.

DO NOT BUY COMEX miNY contracts.

They ARE NOT SUBJECT TO DELIVERY DEMANDS! MiNY COMEX
contracts are cash settled.

If you don't have enough money to buy a full contract, buy the NYSE-Liffe
mini-Gold and mini-Silver contracts. With NYSE-Lifee, you can take
delivery of 32.6 ounces of gold, and 1000 ounces of silver. However,
if you do have the cash, the standard 100 ounces gold and 5,000
ounces of silver are usually cheaper per ounce, and you can buy them
either on COMEX or NYSE-Liffe.

ALL 100 ounce and 5,000 ounce contracts
are subject to delivery demands.

Taking delivery and paying for temporary storage on gold, will set you
back $25 plus about $12 per month storage for each bar at one of the
COMEX warehouses.

There will also be a charge from your brokerage house. Yes, I know, you
won't leave your bars at the exchange, but, you will need to pay for a few
days storage, before you pick them up, or have them delivered by Brinks,
so they will hit you for the whole month minimum charge on each bar.

Brinks, and a number of other gold delivery agents can take the bars
and deliver them to you anywhere in the USA, or even overseas, at a
relatively low cost, compared to the value of the gold. You can contact
them for more information, or ask your brokerage house. Jim Sinclair,
at JSMineset.com, is currently putting together a summary of delivery
charges, from the various gold/silver delivery services. The costs of
delivery are a few dollars cheaper on NYSE-Liffe, at least
at HSBC, but the difference is not significant.

After the market is broken, shell-shocked leveraged long market
participants have always been thrown out of their positions by margin
calls, and/or have been happy to sell contracts back to the short sellers
at much lower prices. This process has always allowed short sellers to
cover short positions at a profit.

If for some reason naked shorts needed to deliver, they could always
count on various European central banks (and some say the Fed
basement repository) to backstop them, releasing tons of physical
gold into the market. It seemed that there were always another
34 tons or so of gold dumped at strategic times to bring down fast
rising prices. Meanwhile, huge physical market demand in Asia and
severe shortages buffered the downside. Because of the physical
demand, prices steadily increased but, perhaps, at a much slower
pace than would have been the case in the absence of market
manipulation.

Rarely was there ever a serious short-squeeze. Rarely, that is, until
Friday of last week when the deliveries demanded by non-leveraged
long buyers reached record levels. In spite of an avalanche of
complaints from gold and silver investors, the CFTC (Commodity
Futures Trading Commission) has never bothered to audit even one
vault to see if the short sellers really have the alleged gold and silver
they claim to have. There is a legal requirement that, in every futures
contract that promises to deliver a physical commodity, the short
seller must be 90% covered by either a stockpile of the commodity
or appropriate forward contracts with primary producers
(such as miners). Inaction by CFTC, in the face of obvious market
manipulation, implies a historical government endorsed price
management.

Things, however, are changing fast. As previously stated, the first major
mini-panic among COMEX gold short sellers happened last Friday.
As of Wednesday morning, about 11,500 delivery demands for 100
ounce ingots were made at COMEX, which represents about 5% of
the previous open interest. Another 2,000 contracts are still open, and
a large percentage of those will probably demand delivery.
These demands compare to the usual ½ to 1% of all contracts.

The U.S. economy is in shambles.

Both commercial and investment banks are insolvent. European central
banks no longer want to sell gold. China wants to buy 360 tons of it as
soon as humanly possible, and as soon as it can be done without
sending the price into the stratosphere.

A close look at the Federal Reserve balance sheet tells us that Ben
Bernanke eventually intends to devalue the U.S. dollar against gold.

There has been a vast expansion of Fed credit, which has risen from
$932 billion to $2.25 trillion in the last two and a half months. The Fed
has bought nearly all toxic bank assets that were supposed to be
purchased pursuant by the $700 billion Congressional bank bailout.

Official bailout funds have been used to buy equity interests in the various
banks instead. By avoiding the use of monitored Congressional funds, the
Fed has embarked on a secretive campaign to buy toxic assets. They
have refused to give any accounting of their activities, even though they
are using taxpayer money to do this. The Fed has refused, for example,
to comply with a “freedom of information act” request from Bloomberg
News. That refusal is now the subject of a major lawsuit.

The Federal Reserve has embarked on the biggest money printing surge
in history, though the world economy has yet to feel its effect. To prevent
newly printed dollars from causing immediate hyperinflation, these newly
printed dollars have been temporarily sequestered into the banking
industry’s reserves, rather than being released for general use.
This was done in a number of creative ways.

First, the number of “reverse repurchase agreements” has been
increased to $97 billion. A “repurchase agreement” is a non-recourse
method by which the Fed increases the money supply by paying dollars
for collateral. The collateral, in this case, are toxic defaulting mortgage
bonds that banks want to be rid of. The cash enters the system and
theoretically stimulates the economy because it supplies banks with
money to make loans with.

A “reverse repurchase agreement” is the exact opposite. It is a method of reducing
the money supply by selling bonds to the banks, and taking the cash back out of
the system. In this case, the Fed gave banks cash for toxic defaulting mortgage
bonds. Then, it took the same cash back by selling the banks new treasury bills
just received from the U.S. Treasury. The Fed, in turn, bought these T-bills with
the newly printed dollars. The banks, having gotten rid of toxic assets, were
allowed to transfer private risk to the taxpayers. This process bolsters bank
balance sheets by privatizing bank profits, and socializing bank losses.

At the same time, the U.S. Treasury has been very busy selling newly printed
Treasury bills to anyone foolish enough to buy them. To a large extent, the fools
reside overseas, but some reside inside this country, and the sale of these U.S.
bonds has resulted in a substantial inflow of foreign reserves to the Treasury.

Banks have also been offered favorable interest rates on both reserve and
non-reserve deposits held at the Fed.

This was combined with what is probably a tacit agreement by which the banks were
given the money and led to redeposit most newly printed cash back into the Fed, in
a category known as “Reserve balances with Federal Reserve Banks”. This category
has ballooned from $8 billion in September to $578 billion on November 28th.

On October 9, 2008, the Federal Reserve began paying interest on deposits at
Federal Reserve Banks. The overnight rate happens to have dropped way below the
“official” federal funds rate. Meanwhile, rates paid by the Fed on required
deposits are only .1% less than the federal funds rate, and on voluntary deposits
only .35% less than the federal funds rate. Accordingly, U.S. banks can engage in
a dollar based one-nation carry trade, which further sequesters the newly printed
dollars.

Banks are borrowing from the Fed, then taking the same money, redepositing it, and
earning a spread on the interest rate differential. Banks can also deposit newly
printed dollars into a category known as “Deposits with Federal Reserve Banks,
other than reserve balances.” This category also earns interest in a similar way,
and has risen from $12 billion to $554 billion in the same time period. The funds
will eventually be used for direct lending from the Fed to open market borrowers,
at huge levels of risk that even the free-wheeling cowboys who run things at
America’s private banks are not willing to accept.

That being said, most money center banks in America are certainly NOT risk averse,
even now. People who are bailed out of foolish decisions never become risk averse.
They are, however, very insolvent, and, aside from the non-recourse provisions of
Fed repurchase agreements, they would prefer, for bad publicity reasons, not to
default on their obligations to the Fed. Aside from the newly printed dollars
given to them by the Fed and the recent transfer of all risk to the taxpayers,
they have no liquidity of their own with which to make new loans. That is why they
aren’t making any. The Fed will eventually make the loans itself and take all the
risk, while using the private banking system as merely a means for delivery.
Right now, however, the Fed wants to sequester the new dollars, until the U.S.
Treasury has finished the major part of its funding activities. That will allow
the Treasury to borrow money at very low rates. The Fed intends to feed money into
the system, but at the minimum rate needed to prevent the DOW index from staying
under 8,000 for any significant period of time. Right now, most measures are
designed simply to stop U.S. banking laws from automatically requiring the closure
of most big banks.

The extent of manipulations engaged in by this Federal Reserve is mind numbing.


The total number of sequestered dollars has now reached well in excess of $1.2
trillion dollars. That means that Fed credit, so far, has been effectively
increased only by about 10%, over the last 2.5 months, rather than 150% that
appears on the surface of the Fed balance sheet. The rest is temporarily
sequestered.

Back in July, the U.S. Treasury, through the ESF (Exchange Stabilization Fund),
sold billions of euros and, I believe, established a dollar sequestering
“derivative” by paying interest, perhaps in Euros, to foreign money center banks.
This was designed to keep dollars out of circulation, overseas. It was the
beginning of the dollar bull back on July 15th.

I had thought, at the time, with good reason, that the U.S. would run out of
foreign exchange and would be forced to close down the operation within a few
months. I underestimated Ben Bernanke.

Instead, the Fed managed to establish currency swap lines with various foreign
nations, under the guise of supplying them with dollars. This need for dollars
arose partly as a result of the actions of the Fed, in sequestering Eurodollars in
July, and partly as a result of the multiple credit default events which triggered
over $2.5 trillion worth of selling in the stock and commodities markets, as 50 to
1 leveraged players were forced to cover about $50 billion worth of credit default
insurance obligations.

In truth, the Fed needs the foreign currency more than the foreign central banks
need dollars. The Fed is using its new foreign currency resources, in part, to
control the value of the dollar, and to ensure that U.S. bailout bonds are sold
for the highest possible prices at the lowest possible long term costs. Anyone who
buys long term Treasury bills is going to lose a fortune of money in the long
term.

The Fed has also taken a number of steps beyond those already discussed to
restrict aspects of the normal money supply which most strongly affect exchange
rates. For example, they only allowed “currency in circulation” to rise by $33
billion in aggregate, while at the same time increasing foreign reverse repurchase
agreements to reduce foreign availability of dollars by $30 billion, and reducing
the “other liabilities” category dollar availability by another $7 billion. Since
it is likely that “other liabilities” involve foreign held dollars, this resulted
in a net deficit of $4 billion on foreign exchange markets, as compared to
September, 2008.

All these actions, taken together, have supported the dollar overseas, and led to
a breakdown of the commodities markets. The adverse effect of a paradoxically
rising dollar has been especially severe in dollar dependent commodity producing
nations, such as Ukraine.

The net effect is that the U.S. dollar, in spite of terrible fundamentals, is now
King of the Currencies once again, at least temporarily. The rising value of the
dollar happens also to support naked short sellers of gold and silver, on COMEX,
and these are old friends of the Federal Reserve. Supply and demand ultimately
determine the price of gold but, in the shorter term, it is inversely tethered to
the dollar. When the dollar is artificially high, gold prices will often plunge
artificially low.

But, in short, the Fed currently has gained complete control over the value of the
dollar. It can now adjust and micromange the dollar on a day-to-day basis. All it
needs to do is open and close the “dollar spigot.” When they want the dollar to
rise, the Fed can reduce the number of sequestered dollars. When they want it to
fall, they simply ease up, releasing dollars into the financial markets. There is
only one problem. Real investors are fleeing the stock market, and stock indexes
are becoming more and more dependent upon government cash in order to avoid
collapse.

People are liquidating holdings in mutual funds, and redeeming against hedge funds
at a fantastic rate. This has created heavy downward pressure on stock prices. If
the DOW falls below 8,000 for any significant amount of time, most big American
insurance companies will be forced to recognize huge losses on their portfolios,
and will become insolvent. Insolvent insurers, like insolvent banks, must be
closed by their regulators as a matter of law. Obviously, mass insurer
bankruptcies would be yet another major destabilizing slap in the face to an
increasingly unstable economy.

The Fed now has only two ways to stop this. One is by brute force. It can buy
securities directly, through its primary dealers, thereby supporting and pumping
up stock prices. It has done a lot of that in the past few weeks, but this method
is highly inefficient and costly. It is better to catalyze upward market movement
rather than force it. Catalysis of markets involves opening up the money spigot a
bit, allowing some of the sequestered funds to bleed back into the system. This
allows the stock market to rise or stabilize naturally, as the equivalent of
inflation is created mostly in the stock market without substantial bleed through.

At the same time, however, opening the money spigot reduces the value of the
dollar and causes gold prices to rise. Rising gold price adversely affects COMEX
short sellers who are, as previously stated, old friends of the Federal Reserve.
Gold buying enthusiasm, everywhere but at the COMEX, is at record levels, whereas
stock market investing appetite is low. For this reason, when the Fed tried to
constrict the money supply on Monday, it caused more damage to the stock market
than to the price of gold. Gold declined by over 5%, but the S&P 500 collapsed by
over 9%. The next day, the Fed eased up on the money supply spigot, allowing the
dollar to fall and the stock market to reflate. If the Fed repeats this
performance over and over again, stock investor psychology will be seriously
harmed. Withdrawals from mutual and hedge funds will accelerate. The stock market
will sink at an uncontrollable rate, and the world will surge onward toward Great
Depression II, much worse than the first. At some point, there will be nothing the
Fed can do about it, no matter what manipulations it attempts. Hopefully Ben
Bernanke is aware of the dangerous nature of the game he is playing.

The Federal Reserve must now make a tough choice. In the past, Federal Reserve
Chairmen may have felt it necessary to support regular attacks on gold prices to
dissuade conservative people from putting a majority of their capital into gold.

Now, however, the world economy needs much higher gold prices in order to devalue
paper money, not against other currencies in a "beggar thy neighbor" policy, but
against itself. This can jump start the system. If the Fed continued to support
gold price suppression, that would collapse the stock market far deeper than they
can afford, most insurers will end up bankrupt, and there will be no hope of
avoiding Great Depression II.

I think Ben Bernanke is aware of this. Gold shorts will be abandoned, to avoid
financial catastrophe. In commenting, I take a practical view, accepting what
appears to be so, without passing judgment on the acts and omissions of the last
21 years.

Anyone who reads the written works of our Fed Chairman knows that Bernanke’s long
term plan involves devaluing the dollar against gold. This is the exact opposite
of most prior Fed Chairmen. He has overtly stated his intentions toward gold, many
times, in various articles, speeches and treatises written before he became Fed
Chairman. He often extols the virtues of former President Franklin Roosevelt’s
gold revaluation/dollar devaluation, back in 1934, and credits it with saving the
nation from the Great Depression. According to Bernanke, devaluation of the dollar
against gold was so effective in stimulating economic activity that the stock
market rose sharply in 1934, immediately thereafter. That is something that the
Fed wants to see happen again.

It is only a matter of time before gold is allowed to rise to its natural level.
Assuming that about half of the current increase in Fed credit is eventually
neutralized, the monetized value of gold should be allowed to rise to between
$7,500 and $9,000 per ounce as the world goes back to some type of gold standard.

In the nearer term, gold will rise to about $2,000 per ounce, as the Fed abandons
a hopeless campaign to support COMEX short sellers, in favor of saving the other,
more productive, functions of the various banks and insurers.

Revaluation of gold, and a return to the gold standard, is the only way that
hyperinflation can be avoided while large numbers of paper currency units are
released into the economy. This is because most of the rise in prices can be
filtered into gold. As the asset value of gold rises, it will soak up excess
dollars, euros, pounds, etc., while the appearance of an increased number of
currency units will stimulate investor psychology, and lending and economic output
will increase, all over the world. Ben Bernanke and the other members of the FOMC
Committee must know this, because it is basic economics.

Many venerable names in banking agree, although none have gone so far as to take
their thoughts to the natural conclusion. Both JP Morgan Chase's and Citibank’s
analysts, for example, are predicting a huge rise in the price of gold. That is
interesting because GATA has come up with fairly compelling evidence that JP
Morgan Chase (JPM) and HSBC (HBC) may have been big COMEX naked short sellers in
the past.

Goldman Sachs (GS) is also a huge bullion bank, which allegedly is heavily
involved in downward gold price manipulation. However, this month, both HSBC and
GS took lots of deliveries of gold from COMEX. Given the size and bureaucracy at
such firms, it is certainly possible for the majority of traders to be entirely
honest, while others, at the same firm, may be totally corrupt.

More important, however, than dwelling on the accuracy of conspiracy theories is
the fact that huge international banking firms normally do not take metal
deliveries from futures markets. They normally buy on the London spot market. The
fact that they are demanding delivery from COMEX means one of two things. Either
the London bullion exchanges have run out of gold, or these firms are finding it
cheaper to buy gold as a “future” than as a spot exchange.

Smart traders at big firms may be buying on COMEX to sell into the spot market,
for a profit. This pricing condition is known as “backwardation”. Backwardation is
always the first sign that a huge price rise is about to happen. In the absence of
backwardation, there is no rational explanation as to why HSBC, Bank of Nova
Scotia (BNS), Goldman Sachs, and others are forcing COMEX to make large
deliveries.

The fact that this backwardation is hidden from the public eye is not surprising.
In spite of the ostensible existence of a so-called “London fix”, 96% of all OTC
transactions are secret and unreported. The transactions happen solely between two
parties, and are done opaquely, in complete darkness. The current London fix may
well be just as fake as the bank interest rate reports that comprised LIBOR proved
to be, just a few months ago.

It won’t matter much if you purchase gold at $750, $800, $850, $900 per ounce, or
even much higher. All of these prices will be looking extraordinarily cheap in a
few months. The price of our pretty yellow metal is about to explode, and it is
probably going to soar, eventually, to levels that not even most gold bugs
imagine. COMEX gold shorts will be playing the price a bit longer, in an attempt
to shake out some remaining independent leveraged longs. Once that is finished,
however, and it will be finished soon, the price will start to rise very quickly.


Disclosure: The author holds physical gold and is long positions in GLD and gold
futures.

James Conrad, Ph.D., is and has been, an investor and trader of stocks, bonds,
options, and precious metals for 37 years. He is also the editor of a closed
circulation daily market newsletter, which provides investment news, analysis and
opinion. Because of the time-sensitive nature of the information contained in the
newsletter, subscriptions are not currently open to the public. New subscribers
are accepted only on recommendation of existing subscribers. His articles on
Seeking Alpha, and elsewhere, however, mirror the subject matter, analysis and
opinions currently covered in the newsletter.

Largest Financial Swindle in the History of the World - The Tipping Point has been Breached

Tuesday, September 23, 2008
Market Commentary By Benjamin Train

U.S. Economy and Stock Market Update


There are fundamentally different ways of understanding the
world around us. Perception drives reality, and the reality
that, those in power, want you to believe is that our US
economy is no longer sustainable, and that you should be in
fear.

We are in historically unprecedented times. The foundation is
being laid for a default of US Treasuries in the wake of the
greatest regulatory failure in modern history, and the
collapse of the US financial system.

Anyone who cannot see that suffers from poor vision, chronic
nostalgia, or has not studied Economics. The wheels came off
the US financial wagon in 2001, but only now that fact is
being publicly recognized and monetized.

Citizens should be concerned that the US Federal Reserve and
US Dept of Treasury have begun to take actions far outside
their own legal powers.

Marc Faber on CNBC's European News said that he predicted the
U.S. government would soon ban U.S. investors from buying
foreign currencies and gold in order to protect the U.S.
dollar and as a follow-up to the current ban on short-selling
financial stocks.

5 member banks own 53% of the stock in the Federal Reserve
Bank of New York. The major stockholders are confidential. No
one, not even the government or the President knows who they
are. Only a small group of elite insiders know who these
people are.

World Central Banks agree to inject "unlimited liquidity
Central Banks aim to boost liquidity."

The Federal Reserve and other major central banks announced
last Thursday they would inject hundreds of billions of
dollars worth of liquidity into the financial system in a bid
to alleviate extreme distress in the short-term money markets.

The Fed, in a statement, said its Federal Open Market
Committee had authorized a $180 billion expansion of its swap
lines with other world central banks. The funds, which will be
provided by the U.S. central bank, can be injected into money
markets through overnight and term loans. "I think this is a
recognition that the time for subtlety is past," said Russell
Jones, head of fixed income and currency strategy research at
RBC Capital Markets.

All eyes will remain focused on Wall Street this week to study
the effects of reforms imposed by regulators in recent days
and whether a plan is finalized to take bad assets off
financial firms’ balance sheets.

U.S. stocks soared on Friday, led by a surge in financial
shares, as a series of sweeping steps to contain fallout from
the credit crisis temporarily eased investor worries, after
one of the most volatile weeks in financial history.

On Monday Sept 22, shares dropped. The Dow closed down to
11,015, the S&P dropped down to 1,207, and the NASDAQ closed
down to 2,178.98. Banks were among the biggest decliners as
the Bush administration pressed Congress to approve one of the
costliest U.S. bailouts for financial companies since the
Great Depression.

Economic reports on new-and existing-home sales and quarterly
results from three home builders will update views on the
struggling housing market.

Economic reports on August existing home sales and new home
sales are to be released Wednesday and Thursday, respectively.

Experts predict new-home sales will rise from July while
existing-home sales will fall short.

Dallas Fed President Richard Fisher discussed the U.S. economy
and financial industry Monday. The government will release its
final figure on second-quarter economic growth Friday.

World leaders have gathered in New York for the annual opening
of the United Nations General Assembly’s general debate. U.N.
Secretary-General Ban Ki-moon starts off the proceedings
Tuesday, followed by speeches by President Bush, Iranian
President Mahmoud Ahmadinejad and Georgia’s President Mikheil
Saakashvili among others.

Over the last weekend, Investment houses Goldman Sachs and
Morgan Stanley were granted a new status as Bank Holding
Companies, giving them a preferred status for low cost
government financing, and to buy US banking interests. Former
Goldman Sachs executive, Treasury Secretary, Henry Paulson is
said to have had a heavy hand in the deal.

"It will be a lot easier to make an acquisition, which the two
firms [Morgan Stanley and Goldman Sachs] are immediately
equipped to do, without having to go through the regulatory
machine," said Campbell Harvey, professor of finance at Duke
University's Fuqua School of Business.

Mitsubishi UFJ Financial Group Inc. said Monday it has agreed
to buy as much as a 20 percent stake in Morgan Stanley, the
same day reports said a merger between Wachovia Corp.

European shares fell by midday on Monday as questions lingered
over a U.S. financial sector package designed to tackle the
financial crisis.


Treasuries:

A gigantic wave of selling hit the whole Treasury
market on sweeping aid from the Federal Government
to the financial sector amid the worst financial
crisis since 1930s.

The Government announcements improved investors' confidence,
eased tremendous tensions in the short-term funding markets,
and encouraged investors to return to risky assets from stocks
and corporate bonds to agency mortgage-backed securities and
emerging-market assets.

The Treasury Department announced today the initiation of a
temporary Supplementary Financing Program at the request of
the Federal Reserve. The program will consist of a series of
Treasury bills, apart from Treasury's current borrowing
program, which will provide cash for use in the Federal
Reserve initiatives.

"The Federal Reserve has announced a series of lending and
liquidity initiatives during the past several quarters
intended to address heightened liquidity pressures in the
financial market, including enhancing its liquidity facilities
this week. To manage the balance sheet impact of these
efforts, the Federal Reserve has taken a number of actions,
including redeeming and selling securities from the System
Open Market Account portfolio.

Announcements of and participation in auctions conducted under
the Supplementary Financing Program will be governed by
existing Treasury auction rules. Treasury will provide as much
advance notification as possible regarding the timing, size,
and maturity of any bills auctioned for Supplementary
Financing Program purposes."

In simple terms:

When the US Federal Reserve System announced it was broke, the
US Treasury turned on its printing presses to create new
Treasury Bills which have no value whatsoever, except giving
the illusion of liquidity to the unsuspecting American public
so they will cease withdrawing their dollars from their
crashing banks and stock markets prior to their savings
becoming completely worthless.

To the astounding plan unveiled by the US Government to
address their financial collapse, one could justifiably be
confused to if they are reading a pronouncement from the old
Soviet Politburo, instead of the largest capitalistic economy
system in the World, and as we can read as reported by the
Bloomberg News Service:

"The Bush administration sought unchecked power from Congress
to buy $700 billion in bad mortgage investments from financial
companies in what would be an unprecedented government
intrusion into the markets.", reported by the Bloomberg News
Service.

US Senator Jim Bunning stated, "The free market for all
intents and purposes is dead in America. The action proposed
today by the Treasury Department will take away the free
market and institute socialism in America."


Fed says it assumes risk in New Loan Program:

The Federal Reserve says it is assuming market risk in its new
loan program aimed at shoring up money market mutual funds,
but senior Fed staff said they don’t expect the Fed to lose
money.

The program, announced early Friday, allows banks to obtain
cheap loans from the Fed to finance purchases of asset-backed
commercial paper from money market mutual funds.

The package, which is awaiting Congressional approval, would
give sweeping powers to the U.S. Treasury to buy up toxic
mortgage-related debt from financial firms, including U.S.
subsidiaries of foreign banks.


Temporary Ban in place on "Short Selling" financial equities:

The U.S. Securities and Exchange Commission temporarily banned
short-selling in the stocks of 799 financial companies. British, and
other Countries authorities have also issued a ban on short selling.

Short-selling is a form of trading which effectively bets that
the value of a market sector, or company's shares will fall.

This method of trading is executed by Market Makers, such as
Goldman Sacks and Lehman Bros to make billions of dollars.
The aim, Fed staff said in a briefing, "is to prevent further
precautionary short selling on the part of money market
funds."

Taiwan dealers said the Taiwan market got a boost from local
curbs on short sales. Taiwan's top financial regulator
announced a temporary ban on short-selling in 150 stocks to
"maintain the order and stability of the stock market."

The Australian benchmark S&P/ASX 200 index finished 4.5
percent higher at 5,020.5, boosted by a ban on short selling
and renewed confidence after the U.S. government unveiled
steps to rescue the financial system.

The Fed initiative, which also includes purchases from primary
dealers of federal agency discount rate notes, serves as a
complement to actions announced earlier Friday by the Treasury
Department to shore up the money market mutual fund sector.

Under the Treasury program, Treasury will insure the holdings
of any eligible publicly offered money market fund. The funds
must pay a fee to participate in the program. The insurance
program will be financed with up to $50 billion from the
Treasury’s Exchange Stabilization Fund, which was created in 1934.

Under the Fed’s new initiative, the Central Bank will extend
non-recourse loans to commercial banks and holding companies
at the discount rate to back bank purchases of asset-backed
commercial paper from money market funds. Money market funds
hold about $230 billion in asset-backed commercial paper, Fed
staff said.

On Sat. a Treasury official said hedge funds and non-U.S.
financial institutions would not be allowed to offload
troubled assets under the plan. However, Monday Paulson came
out and said non-U.S. financial institutions would be allowed
to participate in the plan, an aspect that will significantly
add to the cost of the plan.



Government's "$700 billion plan" to buy bad mortgages
may not save troubled banks:


The proposal for the government to soak up a small portion the
mortgage-backed securities would be the biggest bailout plan
since the Great Depression, but experts say a critical issue
will be how much it actually pays for the troubled assets.

Even the banks themselves don't think the rescue plan will
work. Expect more and larger liquidity operations in weeks to
come.

"The U.S. plan has calmed nerves, but I don't think people
believe it will take out all the problems yet," said Standard
Bank analyst Walter de Wet. "Details are still sketchy. We
need to see when and how the plan the will be implemented."

The gov't. is proposing "reverse auctions", where the gov't.
would put up a set amount of money for a class of distressed
assets -- such as loans that are delinquent but not in default
-- and financial institutions would compete for how little
they would accept for the investments.

Banking industry sources say the reverse auctions would offer
to purchase $50 billion of debt, which could include
residential and commercial mortgages and mortgage-backed
securities. One source said the purchases would then be made
in further increments of $10 billion and that five outside
asset managers would help run the auctions.

Treasury Secretary Henry Paulson involves a process under
which financial institutions would propose a price for their
mortgage-backed securities and the government would choose the
lowest bids.

If banks sell at the proposed price -- say 50 cents on the
dollar -- accounting rules would require firms to take the
losses on their balance sheets before getting the damaged
assets off their books. For weaker banks buffeted by the
deepening credit crisis, the losses may hinder their ability
to go out raise capital, make loans and ultimately stay
afloat, according to industry experts.

"There is a risk that there will be bank failures to come,"
said Vincent R. Reinhart, former director of the Federal
Reserve's monetary affairs division.

While the reverse auctions could help banks set a clearing
price for mortgage-related assets, Reinhart said, that "price
doesn't mean that every financial firm will be solvent" after
those assets are sold.

Another risk is that if the auctions set too low a price for
mortgage-related assets, other institutions with bad debt may
be forced to take the distressed valuation onto their books
under mark-to-market accounting rules, Reinhart said.
Mark-to-market rules involve adjusting the price of an asset
to reflect its current market value. "If the auctions don't go
well, it will drag down everybody's balance sheet who marks to
market," Reinhart said.

The American Bankers Association sharply criticized the U.S.
Treasury’s move to backstop money market funds, saying it
would give institutions managing such funds a competitive edge
over commercial banks.

“Today’s action will undermine the role of banks during this
credit crisis and has the potential to have an extremely
negative impact in the future. Simply put, the ability of
banks to attract and keep deposits is being compromised in a
profound fashion,” Wrote, ABA President Edward L. Yingling in
a letter to Treasury Secretary Henry Paulson.


This is a pivotal moment in both the U.S. and World economies:

If you thought successful Bank Robbers got away with lots of
money, then you have not been paying attention to the
financial markets and the Federal Reserve's actions over the
last 90 days.

This financial bail-out could prove the most cataclysmic of
all, driving the Dow Jones Industrial Average down below
7,000. I also believe you will see the entire World financial
system collapse within six months to a year.

The current bank bailout will cost, we the Citizens of the
U.S., more than $1.2 trillion Dollars. You will never hear
that number stated in the mass media. They, our Government
"advisors" and "officials", don't want to scare you. Instead
they are stating only "$700 billion" dollars.

If I am right, you will see Congress take emergency measures
to further raise the Statutory Limit of our National Debt
Public Debt again this week, or the following week, in excess
of $10.615,000,000,000.00 trillion Dollars. I think you may
here something near $12 trillion dollars.

I am sure that Socrates would have something to say about
this. He is credited as one of the founders of the field of
ethics in Western philosophy. It would appear that ethics have
been removed from the U.S. charter, along with honor, common
sense and the economic sovereignty of the United States of
America.

It is hard to believe that the dollar will continue to stand
its ground as the crisis continues to deepen and unfold into
2009.

One of the most extraordinary features of the past month is
the extent to which the dollar has remained immune to a
once-in-a-lifetime financial crisis. If the US were an
emerging market country, its exchange rate would be plummeting
and interest rates on government debt would be soaring.

Instead, the dollar has actually strengthened modestly, while
interest rates on three- month US Treasury Bills have now
reached 54-year lows. Do not expect the current value of the
faux U.S. Dollar to continue.

The US Constitution has also come under attack the last two
weeks. There are sound reasons that the US has three branches
of government.

This is a major power grab, and it is backed by party members
from both sides of the political aisle. The Secretary of
Treasury is asking for unlimited powers coupled with no
judicial review.

The Treasury Sec. Paulson and Chairman Ben Bernanke would be
able to grab anything and impose anything without court oversight.


U.S. debt rescue plan is taking shape while you sleep:

Details are emerging of an emergency plan by the US government
to tackle one of the worst crises to be announced about the
world's financial markets in decades.

The US Treasury is proposing a fund worth up to $800 billion
dollars to buy back a proportion of the bad debt in the US
mortgage market, reports say. "We've had skyrocketing funding
costs, interbank lending has dried up and there's been a run
on money markets that's led to stress in the commercial paper
market." said Weston Boone, vice president of listed trading
at Stifel Nicolaus Capital Markets in Baltimore.

Talks and deals will continue throughout the week and the
package is expected to be signed into law within a week or
two.

It is believed, the intention is to find a way of bringing all
the bad debts into one organization whose task will be to hold
them on behalf of the taxpayer until they can be sold off at
some point in the distant future, says the BBC's Justin Webb
in Washington.

There are some members of Congress who are queasy at the
thought of the taxpayer taking on additional hundreds of
billions of dollars of currently worthless debt, he says.

But the leader of the Democrats in the House of
Representatives, Steney Hoyer, said he expected quick action.

After a week of turmoil, stock markets around the world
rallied on news of the U.S. rescue plan, with the UK's FTSE
100 closing on Friday with its biggest one-day gain.


'Maximum impact'

President Bush said swift, politically bipartisan action was
needed to keep the US economy from grinding to a halt as
problems sparked by the credit crisis had begun to spread
through the entire financial system - leaving jobs, pensions
and companies under threat.

"These are risks the US cannot afford to take. We must act now
to protect economic health from serious risk," he added.

Treasury Secretary Henry Paulson said a "bold" move was needed
to restore the financial system's health.

Giving few details, Mr. Paulson said the Bush administration
was stepping in with a plan to remove so-called "toxic debts"
from US banks' balance sheets.

The program, he said, must be "large enough to have maximum
impact". In the meantime, he said that the government would be
stepping up action to increase the availability of capital for
new home loans. Once this difficult period was over, Mr Paulson said, the
Government's next task would be to overhaul bank regulations.

Christopher Dodd, Chairman of the Senate Banking Committee,
said he and his colleagues would need to see the details of
the plan first, but he accepted that quick action would be
needed. "We understand the gravity of the moment," said the
Democratic Senator.


Rescue moves:

Earlier on Friday, the Government announced plans to guarantee
US money market funds, mutual funds that typically invest in
low-risk credit such as government bonds and are often used by
pension funds, up to a value of $50 billion, in a move to further
restore confidence.

"The Treasury and the Fed have finally realized the depth and
systemic nature of the crisis," said John Ryding, an economist
at RDQ Economics.

"We believe that these actions will constitute the wider
firebreak that will contain the crisis."

Mounting fears that the credit crisis is beginning to spread
out through the financial system have rocked shares and
companies recently.

Investment giant Lehman Brothers collapsed last week, rival
Merrill Lynch was bought out by Bank of America, and the US
Government has bailed out insurer AIG with an $85bn rescue
package and state-backed mortgage lenders Fannie Mae and
Freddie Mac.

Boston-based Putnam Investments on last Thursday suddenly
closed a $12 billion money-market fund and announced plans to
return investors' money after institutional clients pulled out
cash despite the fund's lack of exposure to troubled financial
firms such as Lehman Brothers Holdings Inc.

The move, believed to be unprecedented in the nearly $3.4
trillion money-market fund industry, came a day after asset
managers sought to reassure investors in the wake of a massive
pullout from large retail fund Reserve Primary Fund. The run
on that fund caused its assets to plunge in value by nearly
two-thirds and fall below $1 for each dollar invested,
exposing investors to losses of 3 cents on the dollar.


Some Truths About This "Crisis":

"The U.S. is, in dollar terms, bankrupt." stated Dick Young of
Rhode Island in his article, published Thursday, Sept. 18th,
titled; "The Truth About This Crisis"

How did this happen?

"Well, there are $800 Trillion dollars in over-the-counter
derivatives floating around in the market. That's 10 times the
Gross Domestic Product (GDP) of the World. These
dollar-denominated paper assets are likely worthless or close
to it."

“Which means that the dollar is already effectively
worthless.”

US Senator Jim Bunning stated, "The free market for all
intents and purposes is dead in America. The action proposed
today by the Treasury Department will take away the free
market and institute socialism in America."


Raids on Individual Accounts:

Hidden inside the AIG bailout funding package, is a clause
that permits raids on private individual brokerage account
funds to relieve their own liquidity pressures. This
represents unauthorized loans of your stock account assets.

The actual evidence for legalized stock account raids by the
financial firms can be found in recent articles in Financial
Times and Wall Street Journal. So this is not a wild claim.

The September 14th article on the Wall Street Journal entitled
"Wall Street Crisis Hits Stocks" was the first exposure.
The run on US banks are in progress. Washington Mutual alone
could deplete the entire Federal Deposit Insurance Corp fund
for bank deposit coverage. Eventually the FDIC will compete
for US Govt federal money for bailouts and nationalizations.

Eventually, bank deposits will not receive 100 cents per
dollar, in a compromise. Next the bank runs will push banks
into failure, at a time when stock accounts are under raids,
without broad public knowledge.


China Speaks Out:

China's state media today reports on the real reason behind
the Wall Street meltdown and a subject that the mainstream US
media dare not mention - the Federal Reserve's over issuance
of currency - which the Chinese say is part of a wider agenda
to justify increased control over the global economy.

According to numerous Chinese state media news sources today,
the Federal Reserve's continued zeal for propping up the
market by injecting illusory liquidity is part of an agenda to
gain trust and grease the skids for increased government
intervention in financial markets.

"The amount of money that has been put into the market can not
fundamentally save the market," said Xiaolie, adding that the
move was merely part of an agenda to "regain the trust and
justify future further intervention in the economy."


Russia Speaks Out:

A visibly angry Prime Minister Putin addressing the media
during his visit with French Prime Minister Francois Fillon in
Sochi blasted the United States plans for dealing with the
collapse of the Western Banking system by stating, "We all
need to think about changing the architecture of international
finances and diversifying risks. The whole world economy
cannot depend on one money-printing machine".

Alexander Dugin, described as the "New sage of the Kremlin",
advocates the combining of both Russia's nearly $500 billion
and China's 20,000 tons [est.]gold reserves to back a new
gold-backed Eurasian Currency modeled on the Euro, and which
if implemented would `shock' the American dollar to such an
extent that it would cease to exist on International markets.

This report further notes that the United States is already
preparing for such a response from Russia and China by this
past weeks invoking of the Gold Reserve Act of 1934 by the US
Government in a desperate move to protect their money markets
for the first time since the Great Depression, and of which
the vast majority of Americans remain oblivious to the fact
that their personal gold holdings can still be confiscated by
their officials at anytime of their choosing despite the 1975
laws allowing these people to own gold again.


Something Big is Happening:

"I’m convinced the time is now upon us that some big events
are about to occur." said Congressman Ron Paul. "These
fast-approaching events will not go unnoticed.

They will affect all of us. They will not be limited to just
some areas of our Country. The world economy and political
system will share in the chaos about to be unleashed."

"This is indeed frightening and an historic event." "I’m
fearful that my concerns have been legitimate and may even be
worse than I first thought. They are now at our doorstep. Time
is short for making a course correction before this grand
experiment in liberty goes into deep hibernation."

"There are reasons to believe this coming crisis is different
and bigger than the World has ever experienced. Instead of
using globalism in a positive fashion, it’s been used to
globalize all of the mistakes of the politicians, bureaucrats
and central bankers."

"Our huge foreign debt must be paid or liquidated. Our
entitlements are coming due just as the world has become more
reluctant to hold dollars.", stated Ron Paul.


"The central banks of the World secretly collude to centrally
plan the World economy. I’m convinced that agreements among
central banks to “monetize” U.S. debt these past 15 years have
existed, although secretly and out of the reach of any
oversight of anyone—especially the U.S. Congress that doesn’t
care, or just flat doesn’t understand.", said Paul.

"The central banks and the various governments are very
powerful, but eventually the markets overwhelm when the people
who get stuck holding the bag (of bad dollars) catch on and
spend the dollars into the economy with emotional zeal, thus
igniting inflationary fever."

There are two choices that people can make, according to Paul.
"We have already lost too many of our personal liberties
already. Real fear of economic collapse could prompt central
planners to act to such a degree that the "New Deal" of the
30’s might look like Jefferson’s Declaration of Independence.

The more the government is allowed to do in taking over and
running the economy, the deeper the depression gets and the
longer it lasts.


Will the massive financial bailouts push the U.S. into
Depression?

This is no longer a question. Now I am sure it is a well
planned event for our near-term future.

BBC Business Editor Robert Peston said that "the taxpayer
funded bail-out will severely dent the ability of the US to
export its way of doing business to the rest of the world."
But an even bigger risk could be a loss of confidence in the
American government's balance sheet, he said. "This could
ultimately undermine the dollar, push up inflation even more
and raise the cost of servicing debt for the US authorities,"
our correspondent explained.

The ranking Republican on the House Budget Committee said the
U.S. government is headed toward bankruptcy if it stays on its
current fiscal course. “We know that for a fact,” said Rep.
Paul Ryan (R-Wis.) told CNSNews.com in a video interview.

“All the actuaries, all the objective score-keepers of the
federal government, are predicting this.” To back up this
claim, Ryan cited an estimate the government faces a
$53-trillion shortfall to cover the costs of promised
entitlement benefit programs. This entitlement benefit budget
"short-fall" is now evident in every State in the United
States of America.


But remember, this is an election year!

Expect the market volatility, market manipulation, and to
begin to rally up to the election. Expect continued cautionary
news.


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