I’m finding it difficult to express my anger and frustration at our dysfunctional Congress. Their inability to get some kind of budget passed is appalling. And it’s costing us a good rally for stocks. The Dow Industrials would probably be 1,000 points higher if these children would simply do their job.

If they worked for me, they’d have been fired long ago…

It was an interesting day for earnings. IBM (NYSE:IBM), Wells Fargo (NYSE:WFC) and Coca-Cola (NYSE:KO) came in great. Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC), well, not so much.

Actually, Bank of America would have been pretty good, were it not for the $9+ billion the bank set aside for mortgage settlements.

It’s really necessary to pick and choose bank stocks. Some, like JP Morgan (NYSE:JPM) and Wells Fargo are doing well adjusting to new rules and dealing with mortgage issues.

My belief as a researcher and an analyst is that undue speculation in not just the copper market - but nearly every market, including the stock market, currency markets, the bond market, etc. - my belief is that this speculation is being fueled predominately if not completely by the actions of the Federal Reserve. 

The Fed has a mandate, for better or worse, constitutionally or unconstitutionally, to maximize employment and keep GDP growth slow and steady. And now we're seeing the breadth of their power to implement those two goals - they can simply transfer "dollars" from out of thin air into the bond market, into the financial system, into the mortgage market. Those dollars have to go somewhere. Goldman Sachs (NYSE: GS) isn't likely to sit on billions of dollars - they'll put it to work speculating. The same is true of all of the Fed's member banks.

As we saw with the oil markets between 2008 and 2010, when the bets turn against the speculators, the price tends to drop to ridiculous lows. Looking at a copper chart, the same thing happened there too.

I plan to be unavailable for a few hours, starting around 10 a.m. this morning. I want to hear the members of the New York Fed try and defend their actions regarding the AIG (NYSE: AIG) bailouts in front of Congress.

The New York Tines published some of the prepared testimony of the principal players. I try to keep a level head, but I'm reaching for my pitchfork and torch right now.

*****Recall that the New York Fed orchestrated what ultimately became an $85 billion bailout. A good portion of that cash was paid directly to other companies with which AIG had entered into the now famous credit default swaps. These were essentially insurance contracts on mortgage backed securities held by banks and underwritten by AIG.

A full $25 billion in AIG bailout money went to pay off Goldman Sachs (NYSE: GS). Here's a section from the New York Times (Mr. Baxter s the general counsel for the NY Fed):  

Mr. Baxter explained that the New York Fed felt compelled to pay out A.I.G.'s counterparties in full to unwind tens of billions of dollars in derivative contracts because "there was little time, and substantial execution risk and attendant harm of not getting the deal done by the deadline of Nov. 10." That was the date when A.I.G. was scheduled to report its earnings and could face downgrades from credit ratings agencies. A downgrade would have led to more collateral calls and even greater liquidity problems for A.I.G., Mr. Baxter said.