The price of gold surpassed its 2009 peak today, hitting an all-time record high of $1,232.50 an ounce. The reason for this is quite simple – Europe is printing nearly $1 Trillion dollar to stem their financial crisis and the markets think all that money will be wasted.

  This is leading people to blasphemous conclusions.

 “People are in panic mode,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “There is absolute panic over the risk of contagion spreading to other countries in Europe. Yields on Treasuries are so low, people are starting to look to gold as an alternative.”

  “This is the beginning of the unraveling of fiat currencies,” said Michael Pento, the chief economist at Delta Global Advisors Inc. in Huntington Beach, California. “Money has to be backed by something. People are beginning to realize that gold is the world’s reserve currency.”

  “When the sovereign-debt crisis laps onto our shores, there will be a global realization that gold, not the dollar, is the world’s reserve currency,” Pento of Global Advisors said.

  When the stock market plunged 1,000 point in half of an hour on Thursday, the immediate rumors were of a “fat finger” trader who punched in $16 billion instead of $16 million. It’s a disturbing idea, that a single trader could cause such financial destruction, but its better than the alternative – that the stock market plunge happened while the markets were functioning the way they were supposed to.

 Since the original rumor, the facts have been revealed – there was no “fat finger”. The stock market crashed on Thursday because that is the way the system is set up to function. Thus was should expect this event to happen again in the not so distant future.

  The financial crisis that grips our nation’s states and cities has a malicious source, and Governor Tim Pawlenty recently named that source: public school teachers.

 “It used to be that public employees were underpaid and over-benefited. Now they are over-benefited and overpaid compared to their private-sector counterparts.”

 The school teacher, the policeman, the firefighter – these are now the faces of what is wrong with America today. It doesn’t matter that studies by the Bureau of Labor Statistics say otherwise, America can no longer afford their overpaid, middle-class salaries.

  At least that is what the right-wing media is telling us. Tea party members also want to see a drastic pay cut for the same people who teach their children. A familiar comment on the internet is, “I took a pay cut last year. Why shouldn’t they?”

  This attitude goes beyond schadenfreude and goes straight to the crabs in a bucket mentality. Strangely enough this attitude of “if I can’t have it, neither should you” only extends to working class people who live next door. For some reason none of the jealousy and malice is reserved for the people who actually broke the budgets of the states and cities, i.e. the people who deserve it.

  These are strange days. There was a time when there was a clear divide between fiction and reality, but those days are passing. For instance, this amusing article from Andy Borowitz.

  (The Borowitz Report) – Eleven indicted Somali pirates dropped a bombshell in a U.S. court today, revealing that their entire piracy operation is a subsidiary of banking giant Goldman Sachs.

  There was an audible gasp in the courtroom when the leader of the pirates announced, “We are doing God’s work.  We work for Lloyd Blankfein.”

 The article was meant to be snarky and not taken seriously, but those are the kind of stories you have to keep the closest eye on. They tend to have a way of transforming from punchline to headline.

“I have always noticed that people will never laugh at anything that is not based on truth.”

 – Will Rogers

  The news started today with S&P downgrading Greek bonds to junk. It wasn’t just the sovereign debt that became junk, but also the debt of many of the major Greek banks as well.

  This dramatically increases the risk of default because junk rated bonds cannot be swapped for Euro-backed bonds, and this has markets very worried.

 Investors in Greek bonds may get back between 30 percent and 50 percent of the value of their holdings should the government default or restructure its debt, S&P said.

  Over a year ago Fed Chief Ben Bernanke made a very clear statement for what needed to be done.

 “If actions taken by the administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability — and only if that is the case, in my view – – there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” Bernanke said in remarks to the Senate Banking Committee in Washington.

  It seemed to make sense. The collapse of the financial system was what caused the Global Recession, so stabilizing the financial system appeared to be a necessary condition to get out of it.

  Eight months later the IMF declared that stability was returning to the financial system. There certainly are signs that the financial system, because of massive government intervention, is repairing itself. Borrowing costs have dropped. Securities markets have reopened. Large banks are better capitalized.

 But is that the whole story? I’ve taken a look at the raw numbers and they show something very different.

  The municipal budget crisis currently striking the largest states in America is about to enter its worst phase. This NY Times article warns that as many as 300,000 teachers could be laid off this summer.

   It’s sometimes amusing to see how hard the media tries to spin bad news into good news. For instance, this article from ABC today.

 (Reuters) – U.S. mortgage foreclosure filings dropped for a second straight month in February, and notched the smallest annual increase in four years as housing-rescue efforts contained activity, a report released on Thursday showed.

 It sounds like good news, huh? There’s just one problem: the foreclosures report that was released today concerned the whole first quarter, including March numbers.

  Since when did the news media start preferring outdated data over recent data?

I guess when the recent data said things like this.

 RealtyTrac® … today released its U.S. Foreclosure Market Report™ for Q1 2010, which shows that foreclosure filings – default notices, scheduled auctions and bank repossessions – were reported on 932,234 properties in the first quarter, a 7 percent increase from the previous quarter and a 16 percent increase from the first quarter of 2009. One in every 138 U.S. housing units received a foreclosure filing during the quarter.

  The IMF has been making a lot of noise recently, but their biggest move almost managed to slip through completely unnoticed.

 The Executive Board of the International Monetary Fund (IMF) today approved a ten-fold expansion of the Fund’s New Arrangements to Borrow (NAB) and the transformation of the Fund’s premier standing credit arrangement into a more flexible and effective tool of crisis management. The NAB will be increased by SDR 333.5 billion (about US$500 billion) to SDR 367.5 billion (about US$550 billion), representing a major increase in the resources available for the Fund’s lending to its members.

 This IMF program didn’t even exist until a year ago, when the IMF began issuing SDRs for the first time since the 1970’s. The IMF has only sold SDRs in times of global financial stress.

  It makes a person wonder “Why now?” Why is the IMF suddenly tripling its lending facilities? What do they know that we don’t?

 To answer that, let’s look at the announcements of the past few weeks.

  Fraud traditionally occurs behind closed doors. The larger the fraud, the more chances of its existence leaking out to the public. Only after the scheme has blown up does the media report it.

   Fraud has a short lifespan once it is subject to the harsh rays of sunlight. It is only a matter of time before the lies on which it is built come crumbling down.

 Last week a massive case of fraud was exposed to the light, but because it hasn’t imploded yet the mainstream news media isn’t reporting it. In fact, the media seems to want to ignore the facts.

  Why? Not because they question the facts, but simply because of the subject of the fraud – precious metals.