So what was it that spooked the markets… Well… The only thing I can find was the report yesterday about falling Housing Starts that Chris told you about… Did you know that about 14% of US homeowners were either delinquent on their mortgage or in some stage of foreclosure? That is the highest rate since the group started collecting the data in 1972!

But there was something else that was announced as the day went on, that I think probably spooked the markets more than anything else… And that is a key House panel approved two amendments to a sweeping financial-overhaul bill that would give federal watchdogs new authority to audit the Federal Reserve, and would establish a fund of as much as $200 billion to help dissolve large, troubled institutions. Rep. Ron Paul (R., Texas) offered the amendment seeking to subject the Fed to audits.

Currencies trade in a tight range again…U.S. Retail Sales are a clunker! RBA’s Stevens is upbeat! Thoughts on Brazil…And Now… Today’s Pfennig!

Americans should have been in the streets to reclaim the country long ago. Patrick Henry and his fellow patriots are turning over in their graves about the present day USA. The savvy folks I talk to on a regular basis are exceedingly pessimistic that our blessed republic can pull out of this present financial, economic and political tailspin. The US as we have known it is on the ropes.

Yesterday…we ventured into “Bubble World.”  “What’s going on? When will this be over? How bad do you think it will get? What can we do to turn this around?”

Well, with the US$ down a half a cent, and decent gains in both platinum and palladium, you have to be pretty much brain dead not to have seen the footprints of the Gold Cartel in the gold and silver markets yesterday.

Many who agree with me on a lot of other issues, do not understand my enthusiasm for gold and sound money or why I spend so much time studying and talking about monetary policy.  It’s true that I talk about money differently than most, but the fact is sound money offers many benefits.  For example – peace.

Hank Paulson’s bailout bill is in the dustbin thanks to the 94 Democrats and 133 Republicans in Congress who voted against it.Congressman Ron Paul (Rep.) pretty much summed it up in his speech before the doomed bailout bill.

He put the blame for the current crisis firmly on the shoulders of the “managed economy,” “an inflationary system,” “corporatism” and “a special interest system.”

He also warned that promoting more and more US government intervention would have “disastrous” consequences for the global economy and the US dollar.

See for yourself…

– There really must be a financial crisis. John “the fundamentals of our economy are strong” McCain has suspended his presidential campaign to to return to Washington to work on the proposed $700 billion bailout bill of financial institutions before Congress.

– Meanwhile, McCain’s fellow Republican George W. Bush made a televised appeal for the swift passage the plan. He said the “entire economy is in danger” and warned of a “financial panic” and “a long and painful recession” if Congress didn’t pass the bill soon.

– Billionaire investors Warren Buffett has sent US stock-index futures rallying after his Berkshire Hathaway announced it will buy $5 billion worth of perpetual shares in soon-to-be bank-holding company Goldman Sachs (NYSE:GS). The news sent shares in Goldman up almost 8%. Shares in Morgan Stanley (NYSE:MS), which is also converting into a bank, rose 9.8%.

– December-dated S&P 500 futures rallied 13.10 points, Dow futures were up 101 points, and Nasdaq-100 Index futures rose 18 points on the news. Yesterday, US stocks ended the worst two-day rout since 2002.

“The creature that destroys value.” This is how Republican Congressman Ron Paul described the Federal Reserve on CNBC’s Kudlow & Company.

Paul also calls the Fed and “illegal institution” and “an immoral institution.”

For the most part, the mainstream press seems to have decided that the Fed- and Treasury-led bailouts of Wall Street finest are scary but necessary. But the big picture, says Paul, is that the dollar, once backed by gold and then by Treasury bonds, is now backed by junk mortgage securities that nobody wants. And this is a nightmare scenario for the dollar…