Dear Friends,

When in the history of the United States has there been a credible movement to remove both the Chairman of the Federal Reserve and the Secretary of the US Treasury? The answer is never since the invention of the private bank, the US Federal Reserve.

I have been telling you for months that there is a war going on between the Banksters and Daddy Warbucks. This is best understood as the desire to bring the power of the Federal Reserve into the Oval office, not by trusting an appointee but by absolute control over the appointee. Failing that the plan is to emasculate the Fed.

The loss of Mass. to the Democratic party has had the effect of causing the fear of evaporation of their political base. The immediate reaction landed deservedly on the banksters, but quickly it was realized that as much as Main Street hates the banksters, it is jobs and the general economy that has the power to deem this administration a one term wonder.

Some feel that there is a plan to dump the equity market here so as to be able to bring it back going into November. That is giving these people more credit than deserved as a loss of their only shining gain, the wealth effect of the 1932 type bear stock market rally, is not easily controlled. If it and the economy go into a double dip whereby a new low could be established, it will be a really shocking low. The risk is simply too high that control, once lost, cannot be recaptured. That was proven painfully in the 30s. Once the bear market rally was over it was all toast for years. Only a world war reversed the depression.

The poorly thought out knee jerk reaction to the Mass. political loss has put the market and more than likely the economy into a state of flux, which has the capacity to put this entire western world mess into a flat spin which as in a fighter aircraft is nearly impossible to correct.

Stay the course but tighten your seat belt in gold.

Volatility is going ballistic but one thing is for sure and that is a $1650 minimum price objective with much more probable.

Regards,
Jim

Bernanke future in doubt as Democrats defect
Boxer, Feingold turn against Fed chief; term ends Jan. 31
updated 5:36 p.m. MT, Fri., Jan. 22, 2010

Ben Bernanke’s nomination for a second term as U.S. Federal Reserve chairman, once seen as a sure thing, appeared in jeopardy on Friday after two more Senate Democrats said they would vote against it.

"I believe there will be the votes to confirm him. But it’s going to be very close," a senior Democratic leadership aide said.

With the U.S. job market in disarray and voters angry at Wall Street, members of Congress facing mid-term elections in November have come down hard on the central bank and its leadership.

They say the Fed failed to prevent the worst financial crisis since the Great Depression, and combated the meltdown in a way that favored the financial sector at the expense of ordinary citizens.

Sens. Barbara Boxer and Russ Feingold brought the total of known ‘no’ votes among the Democratic majority to four, while many others have said they were still on the fence.

"Our next Federal Reserve chairman must represent a clean break from the failed policies of the past," Boxer said. "It is time for Main Street to have a champion at the Fed."

The shift comes rather abruptly and has added a new element of uncertainty to a stock market that had already been reeling in recent days. The S&P 500 fell into the red for the year on Friday, joining the Dow and Nasdaq indexes.

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