Wall Street Economics
Young Chuck moved to Texas and bought a donkey from a farmer for $100.
The farmer agreed to deliver the donkey the next day.
The next day the farmer drove up and said, ‘Sorry Chuck, but I have some bad news, the donkey died.’
Chuck replied, ‘Well, then just give me my money back.’
The farmer said, ‘Can’t do that. I went and spent it already.’
Chuck said, ‘OK, then, just bring me the dead donkey.’
The farmer asked, ‘What ya gonna do with a dead donkey?
Chuck said, ‘I’m going to raffle him off.’
The farmer said ‘You can’t raffle off a dead donkey!’
Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’
A month later, the farmer met up with Chuck and asked, ‘What happened with that dead donkey?’
Chuck said, ‘I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $898.00.’
The farmer said, ‘Didn’t anyone complain?’
Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’
Chuck now works for Morgan Stanley in their OTC Default Derivative Department.
Jim Sinclair’s Commentary
$42 billion in the hole according to recent reports and now a drought.
Do you think Mother Nature might be unhappy with how things are being run?
California declares drought emergency
By Peter Henderson
SAN FRANCISCO (Reuters) – California Governor Arnold Schwarzenegger on Friday declared a state emergency due to drought and said he would consider mandatory water rationing in the face of nearly $3 billion in economic losses from below-normal rainfall this year.
As many as 95,000 agricultural jobs will be lost, communities will be devastated and some growers in the most economically productive farm state simply are not able to plant, state officials said, calling the current drought the most expensive ever.
Schwarzenegger, eager to build controversial dams as well as more widely backed water recycling programs, called on cities to cut back water use or face the first ever mandatory state restrictions as soon as the end of the month.
"California faces its third consecutive year of drought and we must prepare for the worst — a fourth, fifth or even sixth year of drought," Schwarzenegger said in a statement, adding that recent storms were not enough to save the state.
Jim Sinclair’s Commentary
That is not FAIR
Senate bars FCC from revisiting Fairness Doctrine
By JIM ABRAMS – 1 day ago
WASHINGTON (AP) — The Senate has barred federal regulators from reviving a policy, abandoned two decades ago, that required balanced coverage of issues on public airwaves.
The Senate vote on the so-called Fairness Doctrine was in part a response to conservative radio talk show hosts who feared that Democrats would try to revive the policy to ensure liberal opinions got equal time.
The Federal Communications Commission implemented the doctrine in 1949, but stopped enforcing it in 1987 after deciding new sources of information and programming made it unnecessary.
President Barack Obama says he has no intention of reimposing the doctrine, but Republicans, led by Sen. Jim DeMint, R-S.C., say they still need a guarantee the government would not establish new quotas or guidelines on programming.
Jim Sinclair’s Commentary
The following quote from this article on Pakistan sums up the situation: "Their country is in mortal danger." If Pakistan is in mortal danger then so is the entire Middle East. If the Middle East is in mortal danger then so is the West.
Playing With Fire in Pakistan
Published: February 27, 2009
Almost no one wants to say it out loud. But between the threats from extremists, an unraveling economy, battling civilian leaders and tensions with its nuclear rival India, Pakistan is edging ever closer to the abyss.
In a report this week, The Atlantic Council warned that Pakistan’s stability is imperiled and that the time to change course is fast running out. That would be quite enough for any government to deal with. Then on Wednesday, Pakistan’s Supreme Court added new fuel upholding a ruling barring opposition leader Nawaz Sharif — a former prime minister — and his brother from holding elected office. That touched off protests across Punjab Province, the Sharifs’ power base and Pakistan’s richest and politically most important province.
The Sharifs charge that the Supreme Court is a tool of President Asif Ali Zardari. They are backing anti-government lawyers who have long campaigned for the reinstatement of the country’s former top judge who was dismissed by former Gen. Pervez Musharraf in 2007.
We don’t know if Mr. Zardari orchestrated this ruling, as Nawaz Sharif and many others have charged. (The government actually argued Mr. Sharif’s side in the case, which stems from an earlier politically motivated criminal conviction.) We do know the danger of letting this situation get out of control.
When Mr. Zardari became president, he pledged to unite the country. He has not. Like Mr. Zardari, Mr. Sharif is a flawed leader and no doubt is manipulating the combustible court ruling for personal political gain.
Jim Sinclair’s Commentary
Once you open this Pandora’s Box of Bailouts you cannot close it.
Protect yourself with gold! The US dollar is not strong. The non-euro, European currency units are being raided. The default derivative index is being used by Vlad the Impaler against the countries represented by the currency units being raided by the Vlads.
Citigroup’s Third U.S. Rescue May Not Be Its Last, Analysts Say
By Christine Harper
Feb. 28 (Bloomberg) — The U.S. government’s third attempt to help rescue Citigroup Inc. won’t stanch the company’s losses, which will continue to swell and may lead the bank to require more money in coming months, analysts said.
Yesterday’s action didn’t furnish the New York-based bank with new money, although it cuts expenses by eliminating dividends on preferred stock. Instead, it converted preferred shares into common equity, which absorbs the first hit in the event of further losses, at an above-market-value price of $3.25. The stock, which has fallen 78 percent since the beginning of the year, closed in New York trading yesterday at $1.50, its lowest since November 1990.
Vikram Pandit, 52, Citigroup’s chief executive officer, told investors yesterday that increasing tangible common equity to as much as $81 billion from $29.7 billion should “take the confidence issues off the table,” regarding the company’s ability to absorb losses. Still, Citigroup, which lost $27.7 billion in 2008, is expected to lose $1.24 billion in the first six months of 2009, according to the average of analysts’ estimates compiled by Bloomberg.
“There’s no difference here,” said Christopher Whalen, co- founder of Institutional Risk Analytics, a Torrance, California- based risk-advisory firm. “It won’t fix revenue, and you’re still going to see loss rates.”
Jim Sinclair’s Commentary
The worse it gets the more they will spend, ad infinitum.
Protect yourself with gold. There is nothing else.
Sharper Downturn Clouds Obama Spending Plans
By PETER S. GOODMAN
Published: February 27, 2009
The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.
A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent — already abysmal — the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.
The fortunes of the American economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been invoked since the 1940s: depression.
Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 percent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent, though many experts assert this downturn is on track to be significantly worse.
Jim Sinclair’s Commentary
I heard he was just trying to make a withdrawal from his own account as the FDIC took over.
Church deacon, soccer coach, suspected bank robber
February 27th, 2009
By Steve Brusk
(CNN) — Bruce Windsor is known as many things: church deacon, soccer coach, father of four. But facing potential financial problems, he’s now known as something else: suspected bank robber.
Police say the 43-year-old owner of a real estate company walked into the Carolina First Bank in Greenville, South Carolina, late Thursday with a mask and a handgun.
In court documents filed Friday, police said he forced two bank employees into an office at gunpoint and demanded money. Police arrived minutes later with the suspect still inside, touching off a tense 90-minute standoff before he released the hostages and surrendered.
