August 21, 2007 (LPAC)--The BSI was high today:

* On Aug. 21, the Financial Times of London ran as its lead front page headline, "Fed Fails to Calm Money Markets", while Rupert Murdoch's Wall Street Journal ran an almost identical front page headline, "Fed Fails So Far In Bid to Reassure Anxious Investors." The point of these articles, is that the Federal Reserve's cut of the discount rate from 6.25% to 5.75% on Aug. 17, boosted the stock markets globally, but did nothing to solve the freeze up of the asset-based commercial paper market, the junk bond market, the CDO-market, etc. The clearly implied answer to the problem: pump even more Fed-directed liquidity into the financial system. This would produce a hyperinflation orders of magnitude worse than that which ravaged Weimar Germany from March through November 1923.

* Senator Chris Dodd (D-CT), after his meeting with Bernanke and Paulson Aug. 21, when asked about the need for more regulation of hedge funds, brayed, "I've been a supporter of the wealth creation that's occurred under hedge funds."

* On Aug. 21, speaking from Montebello, Quebec, U.S. President George W. Bush stated, "The fundamentals of the U.S. economy are strong." On Aug. 21, speaking to investors, Treasury Secretary Hank Paulson said, "This will play out over time, and liquidity will return to normal." Napoleon says he still will conquer Egypt.