Some people think of Hank Paulson as our Treasury Secretary.  I think of him as a 19 year veteran of Wall Street banking.

At every turn of this entire bailout he has specifically advantaged banks over taxpayers, banks over industry, banks over homeowners, and banks over the future health and prosperity of this country.

Is this surprising for a banking veteran?  No, not really.

Bernanke’s remarks today did little to soothe this ruffled observer.  His remarks struck me as practically dishonest in their inability to speak directly to our actual problems. 

Here’s a question I received today, and it is both quite common and legitimate.

Hi Chris,
I know you have been a strong physical gold advocate as many on this
site have been as well. I can’t think of a less risky term to store wealth
over the long term.

However, although gold confiscation has been mentioned in a few
articles on the site, I have yet to see you post any comments or opinions.
The biggest risk I see with gold is the confiscation issue. Everyone will
have to decide their own course of action if this comes to pass, but my
question to you is this:

What evidence do you see for or against the reimplementation of a
gold standard and what evidence do you see for or against another round of
gold confiscation??

Hopefully you can answer. Also, I check your site multiple times a
day, but still I don’t have a chance to see every forum post. Is there any
way you can notify me of a response?

Thanks so much for your time and effort. You have already made a
great positive impact on my family!

Sincerely,
Mike

All I can offer here is my opinion, as I certainly do not have any better insights than anybody else.

US stocks gain, economic data falls.

Over the past four days, US stocks gained the most (percentage wise) since 1933. On the surface this is significant, because 1933 marked a significant turning point for stocks even though the economic crisis had a ways to go yet.

But is that a valid linkage to make?

Now, the stock market is sometimes called “the great discounting machine” for its supposed ability to sniff out great changes in trend well before those changes are obvious elsewhere. In times past, stocks have made a habit of rising months in advance of job gains, economic activity, profit gains, and other such economic data.

However, I will note that the stock market has gotten a bit off the rails lately and it completely missed the warning signs of an impending credit crunch that were given off more than a year ago. The stock market carried on and made new highs even as the financial underpinnings of our entire system were collapsing into the bay. So in some circles (mine included), “the great discounting machine” has lost some of its utility and impartiality along the way.

Today the economic news was horrible.

When the Big Three automakers were finally settled in their chairs before the Congressional committee investigating whether they deserved a handout of $50 billion, they were asked a defining question; “How many of you flew commercial airlines to get here?”

No hands went up and they were sunk. Somehow the hubris of trotting about on private jets while asking for public money was simply too much for a suddenly stingy Congress.

No such questions were asked of the Citi bankers, in fact no hearings were even held, and they were given access to over $306 billion on the most favorable terms you could possibly imagine. This illustrates the power that the banking industry holds over our political process and it is a ruinous power. Why should Citi receive not only special treatment, but exorbitantly preferential treatment at taxpayer expense? I don’t know, but I’d like some answers.

First, check out the terms of the deal:

This title is not mine, but that of an article that appeared in The Wall Street Journal today (Nov 24), which closely mirrors my own assessment of where we are and what is likely coming next. In short, deflation is so unacceptable to a debt-based money system that it will be avoided at all costs. And I do mean all costs.

This was written by an equity strategist in Hong Kong; be sure to catch his startling conclusion at the end. Startling because of where it was printed – in the main circular of the high church of fiat money, a.k.a. the WSJ.

The whole thing is worth a read, and a ponder, but let’s review some of the more relevant bits.