The 0.7 trillion dollar bailout plan of Treasury Secretary Paulson must be seen for what it is: a scheme to privatize profits while socializing losses. The scare tactics with which he was trying to railroad it through Congress has failed and the world is better for it. The malady has to be diagnosed properly. I summarize the popular diagnosis in five points.

Decisions are about to be made that reach far into the future. The destiny of the little ones, here, and not yet come, lay in the balance. We must choose wisely or suffer the consequences, both to ourselves and to the innocent who know not from whence this comes. On the right hand path walks freedom and liberty; on the left hand path walks slavery and fascism. The choice should be easy; it has been made to appear hard and confusing.

Gold fell nearly 2% in Asia and London and fell even further in New York to as low as $828.95 by late morning before it rebounded $13.60 from that low in the last couple of hours of trade, but it still ended with a loss of 4.5%. Silver followed a similar pattern on its typical accelerated scale and ended with a loss of 12%.

The banking system breakdown is very far along, but still early. Remember USFed Chairman Bernanke stated over a year ago that the mortgage problem was contained. Try not to laugh. The bond crisis is absolute, broad, deep, and all-inclusive, enough to kill the USTreasurys after it kills the US banking system.

The upcoming release of the September non-farm payrolls report by the Bureau of Labor Statistics will not provide much comfort to the market or the public. Our forecast implies that payrolls will decline -105K and that the rate of unemployment will increase to 6.2% for the month.

Gold fell $7.90 to $868.40 by midday in London and rose to over $887 by about 10AM EST before it fell back near unchanged to $877.20 by late morning, but it then rallied to a new high of $893.20 in the last two hours of trade and ended with a gain of 0.67%. Silver fell $0.23 to $11.96 by midday in London before it rallied fiercely higher throughout most of trade in New York and ended near its high of $12.967 with a gain of 3.69%.

Rep. Ron Paul says the bailout could destroy the dollar and should be voted down.

Note first, how the Paulson Plan, which we will hereinafter refer to as PP (which is also a good acronym for Preposterous Poppycock), is a perfect example of Illuminist extortion aimed at stuffing a very rotten apple down the collective throats of our elitist marionettes in Congress, who, for the first-time in what must be over half a century, displayed some backbone in their denial of the initial proposal for the PP, albeit that their nixing of the PP was most likely motivated by political opportunism more so than by any true patriotism.

The threat that an actual market price, rather than a government-approved price, might develop somewhere in the fantastic, overarching illusion that crony capitalism and central banking have made of what used to be markets. These days, if you want a market, you’re stuck with Ebay — at least until that too is nationalized.