Dear CIGAs,
Note that the Fed herein confirmed that they will print as many dollars as required. That sounds like infinity if you ignore the most recent BIS figures on derivatives going back one reporting period at one quadrillion, one thousand one hundred and forty-four trillion.
U.S. Details $800 Billion Loan Plans
By EDMUND L. ANDREWS
Published: November 25, 2008
WASHINGTON — The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation’s crippled banking system.
The gargantuan efforts — one to finance loans for consumers, and a bigger one to push down home mortgage rates — were the latest but probably not the last of the federal government’s initiatives to absorb the shocks that began with losses on subprime mortgages and have spread to every corner of the economy.
In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan.
Those obligations include about $1.4 trillion that has already been committed to loans, capital infusions to banks and the rescues of firms like Bear Stearns and the American International Group, the troubled insurance conglomerate. But they also include additional trillions in government guarantees on mortgages, bank deposits, commercial loans and money market funds.
The mortgage markets were electrified by the Fed’s announcement that it would swoop in and buy up to $600 billion in debt tied to mortgages guaranteed by Fannie Mae and Freddie Mac. Interest rates on 30-year fixed-rate mortgages fell almost a full percentage point, to 5.5 percent, from 6.3 percent.
But analysts said the program would do little to reduce the tidal wave of foreclosures. That is because most of the foreclosures are on subprime mortgages and other high-risk loans that were not bought or guaranteed by government-sponsored finance companies like Fannie Mae.
Jim Sinclair’s Commentary
If anyone knows it should certainly be these fellows.
Citigroup says gold could rise above $2,000 next year as world unravels
Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world’s monetary system with liquidity, according to an internal client note from the US bank Citigroup.
By Ambrose Evans-Pritchard
Last Updated: 4:48PM GMT 26 Nov 2008
The bank said the damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps that had never been tried before.
This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.
"They are throwing the kitchen sink at this," said Tom Fitzpatrick, the bank’s chief technical strategist.
"The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed though into an inflation shock.
"Or it will not work because too much damage has already been done, and we will see continued financial deterioration, causing further economic deterioration, with the risk of a feedback loop. We don’t think this is the more likely outcome, but as each week and month passes, there is a growing danger of vicious circle as confidence erodes," he said.
Jim Sinclair’s Commentary
There are social implications when a currency totally tanks in the midst of stinking business conditions and excessive liquidity.
A near-riot and parliament besieged: Iceland boiling mad at credit crunch
Published Date: 24 November 2008
By Omar Valdimarsson
THOUSANDS of Icelanders have demonstrated in Reykjavik to demand the resignation of Prime Minister Geir Haarde and Central Bank governor David Oddsson, for failing to stop the country’s financial meltdown.
It was the latest in a series of protests in the capital since October’s banking collapse crippled the island’s economy. At least five people were injured and Hordur Torfason, a well-known singer in Iceland and the main organiser of the protests, said the protests would continue until the government stepped down.
As crowds gathered in the drizzle before the Althing, the Icelandic parliament, on Saturday, Mr Torfason said: "They don’t have our trust and they are no longer legitimate."
The value of the Icelandic krona has been cut in half since January.
Jim Sinclair’s Commentary
I wonder if a gold junior could take over a few banks, obtain access to the Begging Bowl Loan window and some TARP, plus a little Quantitative Easing funds…
I am kidding of course.
FDIC Expands Process To Allow Bidders Without Bank Charters
Wednesday November 26th, 2008 / 22h36
DOW JONES NEWSWIRES Federal Deposit Insurance Corp., grappling with an unprecedented number of bank failures, will allow parties without bank charters to bid on the deposits and assets of failed institutions.
The FDIC said it will also consider abbreviated information submissions and applications, noting time constraints, but said interested investors must have conditional approval for a charter and meet FDIC standards.
Last week, the FDIC finalized its policy to temporarily back debt issued by banks and thrifts, which government officials hope will shore up confidence in the banking sector.
Twenty-two banks in the U.S. have failed this year, including three more that failed Friday as government officials scrambled to contain the spreading financial turmoil. The failures have hit financial institutions of all sizes this year, from $18.7 million Hume Bank in Missouri to $307 billion Washington Mutual Inc.’s banking operations.
