U.S. Stocks Plunge; Worst June For Dow Since 1930
Appenzell Daily Bell

U.S. stocks fell sharply Thursday with the blue-chip index enduring its worst June so far since 1930, and plunging to its lowest finish since Sept. 11, 2006, after getting slammed hard as crude soared to new highs and Goldman Sachs disparaged U.S. brokers and advised selling General Motors Corp. "We're going to move in the opposite direction of oil, and General Motors is going to go out of business, at least according to Goldman Sachs," said Art Hogan, chief market strategist at Jefferies & Co. The Dow Jones Industrial Average (DJI) tumbled 358.41 points, or 3%, to 11,453.42, leaving it down nearly 1,200 points, or 9.4%, for the month, with two trading days yet to go. As things stand, the month is the worst June so far since 1930 when the index declined 17.72%. - CNN Money

Hey, wasn't everything supposed to be OK? The market was snapping back. Goldman Sachs issued statements saying the marts were turning. The firm even advised buying financial stocks. Oops. Had to correct that one earlier this week. But 350 points in a day? Where's the plunge protection team when you need it?

OK, let's get this straight. The Dow was down on comments from various analysts saying the US auto industry is in the crapper, specifically General Motors. Also, unemployment figures look pretty bad. Is this the real reason the Dow plunged 350 points? How about this: the Federal Reserve has printed hundreds of billions of inflationary dollars during the 2000s to fund an endless, serial "war on terror." Iran seems to be next and has threatened to turn the Middle East into a "fireball." On the US domestic front, oil prices are making a mockery of the paltry savings that people held, and only 50 percent of US citizens apparently have any savings anyway. The other 50 percent have survived on credit and that's about tapped out as well. Oh, yes - the Fed recently threatened to raise rates again, which would just make things worse. And even the US government has to admit that employment figures are down sharply. This from a government that won't include oil and food in inflation figures because they might "skew" the averages.

Stock prices in America, and indeed around the world are actually propped up the same way that fiat money is propped up - by providing investors a kind of three-ring circus. Clowns, elephants and midgets are trotted out to entertain. Misdirection is employed. A good time is had by all, for a while anyway. During good times, in fact, "blue chip" stocks are the recipients of heady praise. They may even be referred to as "family heirlooms" as one famous analyst put it in the earlier 2000s, to be "passed down from generation to generation" like religious relics. How about this: The marts - and their sideshows - are part of what might be seen as a large confidence game. Instead of inflating individual stocks, the central bank inflates whole markets with fungible fiat money. Markets swell and those with the capital to start companies and gain listings come into enormous troughs of dollars courtesy of a feverish public. Those are the groovy days, the part of the business cycle that provides the best kind of promotion. It leaves virtually no fingerprints because it lifts all along with it, for a while anyway. Only those with very large amounts of capital can afford to play the public game at the highest levels - and make the most during the good times. During the bad times? Then the claws come out. The top people and their hatchet men hit Big Media, and hit it hard. Night after night they point to "overconfidence," suggest arresting money managers, and, when things get really bad, blame general private sector malfeasance.

They will also, these handlers of money power, eventually, push for central banks to receive more power as lenders of last resort. No, the Dow didn't crash on Thursday because GM was poor-mouthed. The Dow crashed because the system actually demands it. Manias rise and fall. A euphoric state cannot be maintained forever. We're in the shake out period now. It's going to go on for a while. And watch commodities, especially money metals. They tend to rise with anxiety. And there is plenty of anxiety out there. Central banks and the wise men who run them are running out of comforting things to say. There will be more down days. And it may not yet be the right time to "buy on weakness." Those who followed Goldman's advice and bought financial sector stocks recently found out the hard way.