On August 10, in Australia, the Gold price was minding its own business and trading happily just above and just below the $US 650 level. This was up a few Dollars on the previous day's close and on the week as it stood to that point.
Then came an announcement out of the United Kingdom that British Police forces working with MI5 and "others" had foiled a gigantic terrorist plot to smuggle explosives contained in drinks bottles aboard trans-Atlantic flights from the UK and the US and "create mass murder on an unimaginable scale". No evidence was presented to back up this jolting announcement, although 24 hours after the plot was revealed, 19 out of the 24 suspects detained were identified. Suspects, however, is all that they are to this point. The announcement was, and remains, an unsubstantiated declaration of fact by the British "authorities".
Of course, "authorities" from many other nations lost no time in getting in on the act. President Bush announced that the US had been working hand in hand with their British (and Pakistani) colleagues to foil the plot. He went on to smear approximately 1.25 billion people with the term "Islamic Fascists". He also came out with another classic: "It is a mistake to believe there is no threat to the United States of America".
As already stated, no proof or even evidence that such a terror plan existed has as yet been produced. All that is known as this is being written is that the British authorities have released one of the 24 suspects they rounded up with no charges laid and no comments made.
Let us assume that the plot did exist, which it probably did. Look at the exquisite timing - and usefulness - of its being revealed. The Iraq quagmire had been swept off the front pages by the Israel invasion of Lebanon. That, in turn had been dragging on for almost exactly a month with no "resolution" in sight and the carnage and destruction continuing to escalate. Now that too was swept off the front pages.
The US and UK officials crowed at the top of their lungs that they had made their countries "safer" for their citizens. While they were doing that, they were acting in precisely the opposite way by ramping up security measures, wiretapping and other eavesdropping procedures and all the rest of their "anti terror" (and incidentally anti freedom and liberty) measures. If the UK and the US are now "safer", what was the necessity for this?
Of course, the stock rejoinder is that we have uncovered THIS plot, but who knows (we sure aren't telling) how many OTHER plots there are. When the powers that be do not like the direction in which the thinking of their subjects is heading, it is a time-tested and proven method to scare the bejesus out of them so that their thinking processes are derailed.
How derailed? A cursory glance at the absolute chaos in UK and US airports and the draconian measures instantly put in place to ban almost ANY form of carry on luggage will illustrate that starkly. These measures make any kind of business flying all but impossible.
The other situation which had to be "overcome" in the mass media, and in the troubled thinking of investors everywhere, was the Fed's "decision" on August 8 to leave official US interest rates alone. The Fed had no choice. First, they had strongly hinted that they would do just that. Second, Wall Street had made a HUGE bet that they would do just that. Third, the FOMC meeting on August 8 came right in the middle of a quarterly Treasury refunding auction.
So for the first time since May 2004, the FOMC met and did NOT raise US rates. They also said that they were aware of the upward pressures on US prices (their definition of "inflation") and would act decisively if necessary in future. So, the markets remain in tenterhooks. They regard this failure to raise rates as a "pause" and are now waiting anxiously for the next FOMC meeting on September 20.
The campaign to keep the "people" as off balance as possible has just been ramped up another notch with this British announcement of triumph in the "war against terror". US stock markets recovered on the day on the assumption that the US was now a "safer" place. The question - why destroy the domestic airline industry with these draconian "security" measures if that is the case? - was not addressed. The oil price fell $US 2.35 on the amazing assumption that the loss of business which is "sure" to affect all airlines will decrease the demand for oil. And Gold? It fell $US 15.65 on the day. Why? Because everything is "under control" and the system is doing its job.
When "terrorists" succeed - as they did on 9/11, in Bali, and in London last year, "security" is ramped up. When they are alleged to have failed, "security" is ramped up. Is there any circumstance in which security (read loss of even more of our freedom and liberty) will NOT be ramped up? Never mind, it's a rhetorical question.
And what about ramping "security measures" down? Well that would only occur if the cause of terrorism was to be removed and the US ceases its occupation of the Middle East and goes home. Not much chance of that happening, until the ability to ramp up the paranoia and thereby dull the thinking capacity of their citizens is worn out.
The issue is not whether the "authorities" in the US, UK, Pakistan and whoever else actually foiled a terrorist plan or did not. The issue is the trampling of the very "freedom and liberty" which Mr Bush is so fond of "defending". The methods haven't changed since 9/11, but they are getting a lot more threadbare - and therefore dangerous.