This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy. Please also add the links to any other thought-provoking articles you would like to share to the comments section.

• Paul Krugman (The New York Times): Averting the worst, August 9, 2009. So it seems that we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.

• Niall Ferguson (Financial Times): A runaway deficit may soon test Obama’s luck, August 10, 2009. Six months in, “Felix the Prez” still has the look of a lucky, two-term president. But that could change if voters become even more disenchanted with the legislative branch and start blaming the president for the looming fiscal train-wreck.

• Simon Johnson (The Baseline Scenario):

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At least something good has come out of the economic crisis; it blew off the purple robes that clothed economists and exposed their naked flanks. Still, they don’t deserve the beating they’re getting in the press – with snide remarks and sarcastic comments; they deserve better. A beating with sticks!

Even Alan Greenspan admitted he had “found a flaw” in his own thinking. We will have to imagine the giggles from the back of the room – if anyone had been awake. It was as if Stalin had confessed to being rude to his mother or Bernie Madoff copped a plea for shoplifting. The mea was fine, but the culpa didn’t seem to measure up to the facts. He, more than any living human being, was responsible for the biggest financial debacle in history; you’d hope he’d be a gentleman about it and hang himself.

Meanwhile, the queen of England visited

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 Goldman Sachs Would Have Collapsed If Not For Henry Paulson.

The Dow slipped a bit yesterday – only 39 points. Everyone is watching. They want to see how far this rally carries on. Many think it is more than a bear market bounce; they think it is for real.

The prevailing opinion is that quick action by the feds avoided a more serious meltdown. Ben Bernanke says he was working to prevent a “second great depression.”

And now that the crisis is past, the economy is slowly climbing out of its hole. The second quarter showed GDP falling at 1% per year in the US… rather than the 6.4% rate recorded earlier in the year. Housing sales have perked up. Oil is trading above $71 – a sign of renewed economic activity. And gold seems to be getting ready for another assault on the $1,000 mark – a sign of growing inflation pressures.

At

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The future cometh…Cash for bankers! Cash for Detroit’s clunkers! From one scam to the next…But first, let us turn to the latest market update.

The Dow rose again yesterday – up 33 points, to close at 9,320. We set 10,000+ as our objective for this bounce. We’ll stick with it for a while longer.

Make no mistake though. No one knows how long this rally will last – certainly no one here at the Daily Reckoning vacation headquarters. It will continue until it runs out of gas. That could be tomorrow. It could be months from now.

It will run out of gas sooner or later, and probably this fall. A real, durable bull market would require an economic boom – a genuine recovery. We don’t see that happening…

But people must think it is happening…

“There are signs of a recovery in the US… ” was a popular line at

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The markets had a good day as all three major indexes were up over 2%, with the Dow up 2.08% to finish at 8472.40.  The NASDAQ and S&P were up 2.08% and 2.14% respectively, closing at 1829.54 and 920.26.  The 10-year saw price climb over a dollar as the yield ended at 3.544%.  Crude oil saw prices rise, settling at $70.23, with August gold also seeing prices head up as the dollar weakens, settling at $939.50. 

American International Group [AIG: 1.46, 0.00 (0.00%)] and the Federal Reserve Board of New York agreed that AIG can repay $25 billion that they owe the New York Reserve through initial public offerings of the two of its international life insurance units.  AIG will put equity from American Life Insurance Co. and American International Assurance Co. into vehicles and receive preferred and common interest in exchange.  AIG will hold the common interest while

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Early today, Kenneth Lewis, CEO of Bank of America (BAC) was testifying before a government oversight committee with respect to his company's January 1, 2009 acquisition of Merrill Lynch.Considering recent announcements by the company, we would suspect there will be several more inquiries in the future for Mr. Lewis.Members of the Oversight and Government Reform Committee and the House Oversight and Investigations subcommittee hammered for a rationale as it appeared to them that Mr. Lewis failed to file the appropriate information prior to the December 2009 shareholder vote with respect its then-acquisition target Merrill Lynch, and known widening losses as of November 2009 -- thereby demonstrating that B of A neglected to meet the government's disclosure rules.The House Oversight and Investigations subcommittee's brought to light that Mr. Lewis was aware of the acceleration of the substantial losses at Merrill Lynch, but did ...

Reportedly, Bill O’Reilly referred to a recent story out of our nation’s capital as “bigger than Watergate.” Whether the story is bigger than Watergate or not, it is definitely a scandal of huge proportions.

To sum it up, on April 23, 2009, New York Attorney General Andrew Cuomo sent a letter to Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs Chris Dodd; Chairman of the House Financial Services Committee Barney Frank; SEC Chairwoman Mary Schapiro; and Chairwoman of the Congressional Oversight Panel Elizabeth Warren. The letter outlined how former Treasury Secretary Paulson and Fed Chairman Ben Bernanke forced Bank of America’s acquisition of Merrill Lynch – even though Bank of America CEO Ken Lewis and the board of directors tried to pull the plug on the deal after it turned out that Merrill Lynch was far deeper in debt than it had admitted. In the words of

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Both gold and silver were comatose all night long in the Far East…and all through European trading once again. However, the moment that the London p.m. fix was in, both metals’ prices went vertical. Silver got capped before it hit $13…but gold managed to close above $900, and is now above $910 as I write this. As I said yesterday…Friday is options expiry…so be ready for anything. But even I wasn’t expecting that. Today’s New York price action should be enlightening.

Needless to say, Ted Butler and I had a discussion about yesterday’s goings-on. His guess [and it's only a guess] is that the ‘four or less’ traders in the Commercial category of the Commitment of Traders…all bullion banks…have covered all the shorts they can by rigging the price to the downside…and now they’re forced to cover their shorts in silver and gold by buying in the open market. This action

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“We do not want a disclosable event.” Thus spoke former Treasury Secretary Hank Paulson to Bank of America CEO, Ken Lewis, last December.

Paulson’s remark came in response to Lewis’ request for a letter from Fed Chairman Ben Bernanke, acknowledging the government’s insistence that Bank of America acquire Merrill Lynch, despite the brokerage firm’s mounting mega-billion-dollar losses.

This one little phrase probably tells you everything you need to know about Henry Paulson, the man who put the “secret” in Secretary. And this one little phrase certainly tells you everything you need to know about the structure and actual objectives of the bailout campaigns Paulson orchestrated.

Specifically, the Paulson bailouts sought to divert hundreds of billions of taxpayer dollars toward Wall Street finance companies, and to do so as secretly as possible. In the name of “systemic risk,” the former Treasury Secretary dispensed hundreds of billions of dollars to

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The rally is on! The Dow rose another 246 points last week. Enjoy it while it lasts…but keep those trailing stops tight. The “End of the Rally is Nigh,” says Barron’s.

Our old friend, Marc Faber, says he expects a 10% drop in the stock market before the rally resumes.

Maybe. This rally is going to end sometime. But it probably has a ways to go. There are still a lot of suckers who haven’t been drawn in.

Another old friend, Rick Ackerman, thinks the problem with this rally is capitulation…or rather, the lack of it. There’s been no capitulation, says he. And you can’t have a real bottom without it. No capitulation, no bottom.

The news from the economy is bad and getting worse.

Credit card debt has just taken its biggest plunge in 32 years…maybe ever. Credit card balances fell at a 9.7% annual rate. And the number of open credit card accounts

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