Dear CIGAs,

More money was spent, in my opinion, than in any singular day ever to stabilize markets.

As Europe and Asia reviewed the various points of the Conservator form of action taken by the US Treasury over the failing mortgage giants in the USA, they had gold at $819 with the euro at $1.4427. Apparently that was the opinion. The US equity index, a tool of the PPT, was taken up sharply, probably somewhat more than the stabilizer liked with gold and the euro at their respective levels.

As the Comex got its hands on gold and the Exchange Stabilization Trust, the dollar, a poor reception of this unprecedented move, was converted in applause, bravo and well done.

The US equity market, especially the NASDAQ index, was overdone and attention of the stabilizer focused away from the equity indices to the euro and gold.

All this cost a great deal of reserves, as you have to have euros to sell for dollars. You can actually run out of euros and today massive amounts were applied as the cash market superseded derivative trading in full cash value versus derivative nominal value transactions.

It is not us that need to be impressed, it is the Russian and Chinese holders of senior securities and debt of these insolvent mortgage giants. Non US central banks need to know that the 12 trillion in liabilities are unconditionally guaranteed if the program is to have legs. Running gold and the euro down grabs the attention of financial TV and their viewers, but that crowd is meaningless to this equation.

How Russia and China feel will be evident by the action of the Fannie/Freddie credit instrument market two weeks from today. This is why the following articles ring so true:

Russia says may cut U.S. agencies holding further
Mon Sep 8, 2008 2:02pm EDT
By Yelena Fabrichnaya and Gleb Bryanski

MOSCOW (Reuters) - Russia's central bank has cut its holdings of U.S. agency debt to less than $60 billion this year and may reduce them further, its first deputy chairman, Alexei Ulyukayev, said on Monday.

The U.S. government on Sunday took control of mortgage finance firms Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), launching what could be its biggest federal bail-out ever, in a bid to support the U.S. housing market and ward off more global financial market turbulence.

At the start of the year Russia held $100 billion -- or over one sixth of its gold and forex reserves -- in Fannie Mae, Freddie Mac and Federal Home Loan Banks. The holdings have since been reduced by around 40 percent.

"For the Bank of Russia, one of the holders of the agencies' debt, nothing has changed substantially (after the U.S. decision)," the bank's first deputy chairman Alexei Ulyukayev said in an interview at the Reuters Russia Investment Summit.

"However, we are not making any pledges. Most likely we will continue to decrease the share (of U.S. agency's debt) a little but we will look into the situation as a whole," he said at the event, held at the Reuters office in Moscow.

He described the U.S. bailout as "well motivated".

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