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Paulson Gave Hedge Funds Insider Tip on Fannie Mae Rescue

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It was reported in Bloomberg of how Hank Paulson in 2008 give a number of hedge fund managers the inside tip of the rescue of Fannie Mae. Around a dozen were present at a meeting including at least 5 of his former Goldman Sachs buddies. My God those guys get everywhere ;-).

Paulson had been pushing a plan in Congress to open lines of credit to the two struggling firms and to grant authority for the Treasury Department to buy equity in them. Yet he had told reporters on July 13 that the firms must remain shareholder owned and had testified at a Senate hearing two days later that giving the government new power to intervene made actual intervention improbable.

went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.

Stock Wipeout

Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.

The fund manager says he was shocked that Paulson would furnish such specific information — to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.

Isn’t that illegal?

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Sarkozy Wants European Monetary Fund, Draghi Hints at ECB Printing

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In a televised address to the nation tonight, Sarkozy

called for a new treaty incorporating tougher budget discipline, a European Monetary Fund to support countries in difficulty and decisions in the euro area taken by majority vote instead of unanimity.

While talking about the ECB printing, he said

“Naturally the European Central Bank has a decisive role to play … I am convinced that faced with the risk of deflation with threatens Europe the central bank will act.”

Earlier today ECB President, Super Mario Draghi went on to hint of the ECB printing monetizing (or is it called sterilizing), to protect against deflation.

he said the ECB was aware many European banks were in difficulty because of stress on sovereign bonds, tight inter-bank funding markets and scarce collateral.

“Downside risks to the economic outlook have increased,” he said, noting that the ECB’s mandate was to maintain price stability “in both directions” — a rare indication that the bank is concerned about deflation risks as well as inflation.

So, there you have it. TPTB want total control and turn on the printing press. This ties in with an earlier post which backs up Paul Craig Robert’s theory on the engineered Eurozone crisis.

Source: Reuters

Hint of Gold Price Manipulation

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Those familiar with stories of gold price suppression and manipulation will not be surprised in todays report from GoldCore. There is a hint from the data available from the LBMA that price looks to be fixed. Why would this possibly happen? 😉 This post is an interesting introduction into gold supression by central banks. For futher information on this subject I would recommend looking at GATA who are an action group dedeicated to exposing the manipulation in this market. Another good site, but a little unusual is hosted by USAGold but written by Another (Thoughts).

The London AM and PM Gold Fix (USD) of the last two days in a row have been identical – to the cent – which is highly unusual.  View data from LBMA Website.

On Monday and Tuesday, the 28th and the 29th of November, the gold fix was identical in dollar terms and nearly identical in pound and euro terms.

On Monday, the 28th, gold’s AM and PM fix was at $1,714.00/oz.

On Tuesday, the 29th, gold’s AM and PM fix was at $1,717.00/oz – exactly just $3.00 higher than the day before.

It may be a coincidence but if it is one, it is highly unusual as it happens rarely.

While it has happened twice in 2011 – on January 10th and February 2nd – it has never happened two days in a row. It happened six times in 2010 but again never for two days in a row.

Should it happen a third day in a row today – then questions will be asked as to whether the official sector and or bullion banks are attempting to fix prices at this level.

This was attempted by the London Gold Pool in the 1960’s when the Federal Reserve and seven European central banks capped and artificially suppressed the price of gold for a few years before the controls collapsed in 1968 due to free market realities.

Gold rose 24 times in the next decade from $35/oz in 1971 to $850/oz in 1980.

Obviously, there is a motivation for attempting to cap gold prices due to a real risk of an international monetary crisis due to the growing European and global debt crisis – not to mention an increasingly likely European currency crisis.

It is too soon to jump to conclusions and judgment must be suspended for now.

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