Let the lawsuits roll..

By now, you’ve probably heard that the SEC has filed official charges of fraud against Goldman Sachs, but the little detail that might have escaped scrutiny is that the original SEC complaint is being followed up with a virtual flood of investigations, lawsuits, and even some criminal charges.

Not only are regulators across Europe looking for ways to get back at Goldman for its role in selling off toxic mortgages as AAA bonds (of course, the ratings agencies had to play along as well) because the German, French, and British banks that took the hit are now scrambling for enough funds to stay solvent in the face of debt crises in Spain, Greece, and Portugal.

Of course, mortgages aren’t the only part of the market that were manipulated in order to exaggerate sharp rises and falls in value – it has long been suspected that JP Morgan, Goldman, et al have been engaged in the aggressive ‘market-making’ speculation that has brought commodities, and especially precious metals, on a roller coaster over the last few years.  If this report is true, someone at the DoJ is getting ready to go after JPM for fraud in the silver markets.  When and if that happens, expect some immediate price instability – and possibly even investigations into the physical gold that is supposedly backing up all of the paper certificates sold in the last decade.

Keep an eye out for new lawsuits and complaints going public over the next few weeks.  Its going to be an interesting time…

Dollar slips, Gold and Oil Rally

If you’ve got a bunch of money in the stock market, the rise in the Dow Jones Industrial Average might actually be good news for you.

For the rest of us, the technical movements behind this recent surge paint a much bleaker picture of what’s going on.

The primary mechanism driving equity prices at the moment is the continued fall of the dollar.  At this time, gold is testing prices near $1100 per ounce and oil is back up over $80 a barrel for the first time since the great crash first undid runaway inflation.

For workers, anything short of a huge payraise is actually turning out to be a pay cut.  As the cost of living continues to ramp up, people continue to lose jobs and the government continues to run up our debt.

In a few months, as the incentives and stimulus spending is exhausted, we will also face a new round of mortgage crisis as option-ARMs mature and commercial real estate continues in its downward spiral.

Hold on tight, this economic ride isn’t over yet.

Federal Reserve Supresses Gold Prices – Poorly

The Federal Reserve has long been suspected of directly manipulating gold prices, but they’ve been able to deny this activity due to the secrecy that surrounds all of their monetary policies.

In response to the looming threat of a Congressional audit of the central bank, the Fed is now fessing up to some manipulations in the gold market.

Will the unlikely alliance of Ron Paul and Barney Frank deliver the votes needed to reveal what “our” bank is really up to behind the scenes?

Stay tuned, more news on the Federal Reserve audit is on the way.