President-elect Obama is paving the way for success in working with Congress. The Hill calls it a “charm offensive on congressional Republicans.” Alexander Bolton reports, “One Republican called it the biggest effort to engage Congress since former President Ronald Reagan.” The story also provides a link to a handy table of which ranking members have gotten a call, and who has not — at least not yet!

FOMC to cut further…  Bernanke turns his back on inflation…  Kiwi and Australia rally…  Gold continues to shine… And Now… Today’s Pfennig!

Good day…and welcome to another week, hopefully the currency markets can continue their assault on the dollar which began a few weeks ago. The dollar index peaked back on November 21, and with the exception of a few days around the beginning of December, the greenback has consistently fallen vs. most of the major currencies. Friday was no exception, and the dollar continued to give back gains over the weekend with the Euro climbing back over $1.35 for the first time in two months.

This morning the markets are focusing on the Fed’s Open Market Committee meeting and rate announcement which will come tomorrow. It is widely expected that Bernanke and his compatriots will push US interest rates close to just 0.5%, the lowest on records dating back to July

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One way for the US economy to escape its doldrums will be for the country to expand its exports. Everyone’s great American hero, President Ronald Reagan, knew that.

Declassified US government documents show that in the 1980s while Iraq’s Saddam Hussein was involved in the genocide against his country’s Kurdish population (using poison gas), the US opposed punishing Iraq with a trade embargo.

The reason was simple. It was cultivating Iraq as an ally against Iran and as a market for US farm exports.

According to the documents, the Reagan administration “got carried away with their own propaganda. They began to believe that Saddam Hussein could be a reliable partner.”

Kinda makes you wonder if Osama bin Laden were to come out of hiding and start his own country if the US wouldn’t try to, once again, be his friend… make him a trading partner.

Source:

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For all the talk we do around here about our unsustainable Empire of Debt, certain events are still startling. Not surprising, but startling.

Take, for instance, the sentence that greeted me when I opened my morning e-mail briefing from the Financial Times:

China urged the United States to spare no effort to stabilise its economy and financial markets to help avert a global recession

I mean, really: For an older Gen-X’er who came of age during Ronald Reagan’s “Morning in America,” whose twentysomething salad days were the era of the “sole superpower,” this is jarring stuff indeed, no matter how much awareness I had on an intellectual level that it was all hokum. Seriously, the headlines I’ve been accustomed to seeing my whole adult life have been about the United States “urging” other countries to “spare no effort” to do such-and-such.

And then you bore into the meat of the story

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It takes time to correct the errors of a 25-year bull market, says Bill Bonner. There is a dark valley to cross before the market can climb again. But the Fed and Treasury continue to try and stop the correction process. Bill says all they are likely to do is cause some spectacular damage.

This from Daily Reckoning:

Financial markets are part of public life. As a consequence they follow the rules of all public spectacles. That is, they are one part rational and sensible… one part incomprehensible… and one part pure humbug. You never know exactly which part it is you’re looking at.

But the markets are also moral, not mechanical. That is, they follow moral rules, such as – Thou Shalt Buy Low and Sell High… Thou Shalt Save Thy Money… Thou Shalt Not Speculate Unless Thou Knowest Exactly What Thou Art Doing.

Break those commandments… and you’re

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Gold had a nothing day yesterday, but most of the action it did have occurred on the Comex in New York, where an attempt to break through $740 was once again thwarted. Silver was where all the action was. After a 20 cent sell off on the Comex open, silver jumped up sixty cents from the bottom by lunchtime, but someone was there to put an end to this “irrational exuberance.”

Monday’s open interest numbers showed another substantial decrease in gold open interest…this time 4,551 contracts. But in silver, o.i. rose 1,191 contracts to 93,757. Was it short selling? I’ll let you know on Saturday morning.

Talking about silver, here’s a graph (courtesy of Gene Arensberg) showing Comex silver stocks from October 17th to November 17th. Since that graph was published early yesterday, Comex silver stocks have fallen again…this time by 314,095 troy ozs. to 128,720,340 troy ozs. Options expiry and first

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Why We Should Take a Solutions Approach to the Crisis and Look at Some Things DifferentlyBy Peter Schiff, President of Euro Pacific Capital, Inc. Author of The Little Book of Bull Moves in Bear MarketsI don't think we're going to see any light at the end of the tunnel until we have a clear, objective understanding of how we got into this mess in the first place. There is a tendency whenever major problems occur in the economy to place blame on external factors and to assume that the external factors can be prevented from causing similar problems in the future by expanding the government's regulatory powers. The problem I have with this kind of thinking is that it makes government bigger and more intrusive without ever getting at the root of the problem, which is usually the government ...

There wasn’t a lot of activity in Thursday’s trading in gold in the Far East. However, at 3:00 a.m. New York time, there were some signs of life…but even the slightest attempt at a rally was met by equal bouts of selling. This ‘up-down-up-down’ activity went on for eight hours.

But shortly after the London p.m. fix was in, a serious seller showed up and took both gold and silver down to their respective lows of the day. Then, at precisely 1:00 p.m., G-Dubya opened his mouth…and one of the biggest turnarounds in gold, silver…and the stock markets…took place. The prices of both metals continued higher into after-hours trading on the Globex. Once again, these rallies in gold and silver looked like short covering to me. But, regardless of the cause of the price rises, the precious metals stocks did equally as well. Volume was only so-so in both metals.

Gold open

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I clearly remember Israeli industrialists begging for the Bank of Israel to intervene in forex markets in order to pick up exports. We were told that a strong shekel caused a loss of over $2 billion in lost business, because Israeli goods were more expensive abroad. Industrialists got their wish and there was central bank intervention and not only that but the USD made a big move against most major currencies. Sounds like great news for exporters, right?

Wrong. Globes is reporting that Israeli exports actually fell in October, the first drop in 5 years. ” exports of goods (excluding diamonds) of 3.4% and an annualized increase in imports of goods of 2.8% in August-October 2008, the Central Bureau of Statistics reported today. This is the first drop in exports in five years, although there have been slowdowns in the rate of growth.”

If i am not mistaken, the Shekel

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The following is a translation of an article written by Mikhail Khodorkovsky published in Friday's edition of Vedomosti. А TURN TO THE LEFT, 3 - Global perestroika By Mikhail Khodorkovsky Published in Vedomosti Barack Obama’s victory in the US presidential elections is not simply the latest change of power in one individual country, albeit a superpower. We are standing on the threshold of a change in the paradigm of world development. The era whose foundations were laid by Ronald Reagan and Margaret Thatcher three decades ago is ending. Unconditionally including myself in that part of society that has liberal views, I see: ahead – is a Turn to the Left. Chance and necessity In recent times I have been getting more and more questions from the broadest range of people: do I consider that the Kremlin has armed itself with the ...