Let's get the easy stuff out of the way first.

The headline reads "Consumers went shopping". Accurate? Well, not really.

"The Commerce Department reported Monday that retail sales edged up 0.3 percent in July after having plunged by 0.7 percent in June, the worst showing in 16 months."

So let's see, this would still put us at -0.4% on the two month basis.... and back-to-school is one of the strongest times of the year....... I don't think these numbers are great at all!

The "liquidity crunch" appears to have eased some overnight, and with it the buyers came back into the market. Goldman threw $3b into their internal Hedgie who lost a huge amount of money, Asia and Europe opened up strongly and we followed. But is this real?

Answer, late in the day: No dice suckas!

Remember, my thesis here is that this was never about illiquidity - it was about perceived insolvency. And you can't fix that by handing someone more cash on a temporary basis; that can only be fixed by price discovery and the determination that indeed the organization involved is solvent.

And let's think about this - what happens if Goldman's $3 billion just got flushed down the bowl? That would be bad, no? It wouldn't bankrupt Goldman of course (its a tiny part of their total cash position, although it does represent 4% of their market cap) but it would still sting more than a bit.

In short - what's changed? Not a thing, really. We still have a consumer in the ditch, a housing market that has one arm sticking up out of the bowl as it flushes down, and a few trillion worth of worthless paper flying around globally.

Yet the talking heads are all over still trying to jawbone the Fed into rate cuts. Ain't gonna happen folks, at least not here! Now when we get to Grinchmas, yes, I expect we will see rate cuts - and a declared recession too. They kinda go together.

Of course this doesn't stop people from trying to twist arms.

"Credit markets are telling central banks what to do, and it isn't what Ben S. Bernanke or Jean- Claude Trichet had in mind.

Days after reaffirming their interest-rate stance against inflation, central bankers may be forced to do an about-face. Traders are paring bets on imminent rate increases in Europe and Japan, and some even speculate the Federal Reserve may execute an emergency cut."

Forced? Because some folks on Wall Street are whining and having full-on psychotic meltdowns on national television? They're worried about their bonuses and jobs, built on an environment where fraud, avarice and inappropriately-layered leverage have been the staples of their diet for the last four years?

But now they're suddenly skeered that the world isn't such a rosy place, and when you pull something like this people might get nervous and in return pull the rug out from under you.... so this justifies screaming on national television that you "need a bailout"?

Its probably a good thing I could never be in public office, because my answer to those clowns would be simple and equally on national television - bite me!

In the "you knew this would be the Lawyers' Full Employment Act" column we have this:

"Accredited Home Lenders Holding Co. said Monday it had sued private equity firm Lone Star Funds seeking to force it to complete the $400 million takeover of the money-losing subprime mortgage lender."

Of course this one will be fun - and expensive - for both sides. Not that LEND has much to lose here; without Lonestar they look like a big fat goose-egg. With Lonestar perhaps Lonestar turns into a big fat goose-egg! So you have all the necessary ingredients for a true Battle Royale, and you can bet nobody's gonna be backing down.

We do have a few fund managers who are being honest. Like this bloke:

""I think we are at the start of ... almost a financial crisis, on a big scale," Kenneth Murray, chief executive and head of investments at Blue Planet, which specialises in investing in financial companies, told Reuters on Friday.

"A lot of people will tell you it will be over in a week or two. It won't. It's just started.""

Uh huh.

And for those who think "this is just mortgage stuff." Uh, wrong answer:

"Coventree Inc., a Canadian financial-services company, said it failed to sell asset-backed commercial paper to replace maturing debt because of the credit crunch caused by U.S. subprime mortgage losses."

This is what I was talking about a little while ago - that the real ****storm, beyond the mark-to-market losses, would come when corporations started to have trouble rolling over debt issues!

Guess what - its starting!

And then you've got amusing price action in the futures today. SOMEONE (my guess would be options MMs who are potentially on the hook large come Friday) is playing with the futures, trying like hell to kick off short-covering rallies.

The general approach here is pretty simple - you stick a BIG market order out there to buy the futures - usually the S&P. This of course causes exhaustion of the "ask" side which spikes them. Everyone else sees this on their chart systems and what you hope happens is that some group of people who are SHORT the futures have a coronary as they start to imagine 10, 15, even 20 point moves in the space of a minute or so to the upside. See, the futures offer 20:1 leverage, so a bad bet can get really, really expensive.

Then you quietly take that position back off as people pile in and you're flat, smiling with a small profit on the trade but you accomplish the actual goal - a huge rally.

Of course attempting to foment a short squeeze is illegal, but this is essentially impossible to prove, and is done all the time, especially when someone has a "bad" index derivative position that's fixing to go "bang" on them.

This is not without risk though. If you run into someone dedicated (and/or sure you're playing with them instead of actually buying) on the other side that couple of million bucks you threw at it can evaporate faster than you can snap your fingers, and in fact you can lose more than you put up trying to get your move.

No big technical changes today. We're still "sideways" in terms of confirmation one way or another, despite the attempt to play arsonist with the shorts. And it appears that Mr. Market is seeing through the "liquidity injection" scam too.

Something amusing has happened in this bubble - something that truly IS new. I'll leave you with this for the evening, because if you chuckle half as much about it as I have been, you'll get a good old-fashioned belly laugh...... and we can all use those!

The usual pattern, as you may know, is that the retail investor - the little guy - gets left holding the bag at the end of all manias. The "smart money" gets out, selling you the bag; you get screwed.

Except this time, it looks like it didn't work that way. Yes, the little guy has a totally unaffordable mortgage, and that's bad. But what's worse is that the "smart money" is holding the CDOs, CDO squareds, and CLOs, and guess what - they're where the real toxic waste is this time!

So perversely, this time around it may be that the "smart money" will be the one taking the pole instead of the "retail bagholder" - at least in the majority.

Hope springs eternal; might we be calling the firm "Goldman Sucks" soon?