The fact that the money and power are leaving for China has escaped everyone in our leadership. They are totally blind to this. They cannot conceive that we have given up the lead to anyone, because we are so perfectly good. This is called Hubris and is a tool of the Gods to destroy any who dare to become Godlike.

^[1]

Dear CIGAs,

Gold is a currency. In fact gold is the ultimate currency. It cannot be expanded to meet the needs of politicians as can paper currency.

Under .8200 the wheels of hyperinflation start to turn.
Under .7200 the impact of hyperinflation is in Main Street.
Under .5200 Zimbabwe Economics reaches the USA.

Gold and the USD as trend events are attached inversely at the hip. Hedge funds have played with that relationship but cannot change it.

Central Banks have NO tools that can drain the liquidity that has been injected into the INTERNATIONAL system over the last two years. Those in Europe that have been more conservative will be less effected even thought they are now derided for their heel dragging.

Asia will rule the economic world.

DJ MARKET TALK: Comex Gold Closes Higher As Dollar Eases

1742 GMT [Dow Jones] – Comex gold recouped some of the previous day’s pullback. "Part of it is the retreating dollar we are seeing today," said Carlos Sanchez, precious-metals analyst with CPM Group. "We were heading toward $1.35 [for the euro versus the dollar], but now are slightly back above $1.36."

Also, gold managed some technical strength when it bounced right back after an overnight dip below its 10-day moving average, says Charles Nedoss, senior account manager and metals analyst with Peak Trading Group. Just ahead of gold’s close, this average stood at $921.30 an ounce. June gold settled up $5 to $926.70. Gold seemed to take its cue from the dollar since equities, which had dictated much of the metal’s direction lately, were largely flat, Nedoss adds. (ALS)

 

Jim Sinclair’s Commentary

Governments have never been able to operate or profitably influence the operation of businesses.

Few in leadership have ever operated at risk businesses, yet nationalization (their business management) in a functional sense has its tentacles now everywhere.

Once you have accepted money or a benefit from the government you have sold your soul.

There is no refund policy.

Fannie and Freddie in ‘critical’ condition
Regulator says companies still suffer from severe operational and financial weaknesses. Recruiting executives also tough.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: May 18, 2009: 4:08 PM ET

NEW YORK (CNNMoney.com) — Fannie Mae and Freddie Mac, charged with helping lead the nation out of its housing crisis, are facing "critical" financial problems, federal regulators said Monday.

The companies suffer from severe financial, operational and compliance weaknesses, the Federal Housing Finance Agency said a report to Congress detailing its annual examinations of the firms. Taken over by the government in September, Fannie and Freddie are not able to operate without federal assistance.

"With new senior management teams, each enterprise has made strides in remediating problems," the agency said. "But they still face numerous significant challenges including building and retaining staff and correcting operational and credit management weaknesses that led to conservatorship."

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) play a vital role in the national housing market, accounting for a combined share of 73% of mortgage originations in the second half of 2008. They also serve central roles in the Obama administration’s foreclosure prevention plan.

More… ^[2]

Jim Sinclair’s Commentary

Green shoots are shot and over for the next seven months of down leg. The point here is what do you think 2000 dealerships devolving into nothingness means in an economy? The 2000 dealerships does not include all that Ford is doing likewise without media coverage.

OTC derivatives are at fault for this and nothing else. What would have been a mild four year recession is now a multi decade disaster.

The OTC derivative dealers have all been bailed out and are as rich as cream, safe in their Greenwich, CT mansions. The OTC derivative manufacturers and distributors have become billionaires while this poor guy and a multitude like him are going straight down the drain. Take this story and times it by 2000, then think of the additional fallout the domino effect has in each town and village. Car dealerships are not small potatoes.

Housing and Autos were the drivers of the big boom of the 2000s. They are both the victims of OTC derivatives and now the downward spiral drivers of a disaster yet to be admitted to as the cause is still out there flourishing.

Nothing at all has been done to help this fellow and therefore nothing has been done to help the economy outside of more fancy paper shuffling of the Wall Street ilk mucking up everything it touches as usual.

God help us all.

Letter from a Dodge dealer
May 19, 2009

letter to the editor

My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month.  All depend on our business for part of their livelihood.  We are financially strong with great respect in the market place and community.  We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees.  Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy.  This will also cause our 50+ employees to be unemployed. How will they provide for their families?  This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,

George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

Jim Sinclair’s Commentary

FASB will certainly go to hell for this. There is no redemption for canning the mark to market requirements.

FASB tightens off-balance-sheet loan rules
05/19/2009

WASHINGTON_The board that sets U.S. accounting standards on Monday moved to end companies’ use of a device that allowed them to park hundreds of billions of dollars in loans off their balance sheets without capital cushions and has been blamed for helping stoke banks’ losses in the housing boom.

The change will tighten the use of so-called "qualifying special purpose entities" by requiring companies to report to regulators the loans contained in them and to increase their capital reserves in proportion as a cushion against potential losses.

It was the lack of disclosure and absence of capital supporting ballooning subprime mortgage loans in these special entities that aggravated the massive losses sustained by banks, regulators say.

The change by the Financial Accounting Standards Board could result in about $900 billion in assets being brought onto the balance sheets of the nation’s 19 largest banks, according to federal regulators. The information was provided by Citigroup Inc., JPMorgan Chase & Co. and 17 other institutions during the government’s recent "stress tests," an analysis designed to determine which banks would need more capital if the economy worsened.

In its quarterly regulatory filing earlier this month, Citigroup said the rule change could have "a significant impact" on its financial statements. Citigroup estimated it would result in the recognition of $165.8 billion in additional assets, including $90.5 billion in credit card loans.

More… ^[3]

Jim Sinclair’s Commentary

I would pay a reasonable premium for this assurance.

$4bn Swiss Gold ETF: Paranoia premium or plain expensive?
By Rob Mackinlay 19 May 2009

One of Europe’s largest and fastest growing physical gold ETFs is facing an industry backlash after suggesting that its higher trading costs are justified because its product is ‘safer’, in a case that throws the spotlight on charges paid by investors for different funds holding the same underlying asset.

The performance of physical gold exchange traded funds (ETFs) should not deviate much as they all aim to track the same underlying commodity and many of the products charge the same 0.4 per cent annual management fee.

This leaves investors with a handful of factors to consider when choosing a physical gold ETF, including trading costs and security. For buy and hold investors – and the many extremely risk averse investors buying these products – security is the key. For investors looking for quick returns, the trading cost will be the decider.

Until now investors would not have seen these two issues as being in conflict. But statements by Swiss ETF provider ZKB have raised the stakes by suggesting that this is indeed the case – security versus trading costs – and the ETF industry is now embroiled in a debate over the merits of the argument.

With many physical gold ETF investors paranoid about fundamental security issues (Could owning gold be banned? Hedge fund warning) anything that eases their minds could command a premium. One of Europe’s largest and fastest growing gold-backed ETFs, the Swiss  ZKB Gold ETF, has sparked a heated debate by suggesting that its product does just this, and that it is safer than its peers.

More… ^[4]

Jim Sinclair’s Commentary

This article is right on the money.

It is too bad, but the West defines everything according to their reality. It is unfortunate that the West’s reality has no application at all in Pakistan, Iran, Iraq and Afghanistan.

U.S. stirs a hornet’s nest in Pakistan
ERIC MARGOLIS
MAY 18, 2009

PARIS — Pakistan finally bowed to Washington’s angry demands last week by unleashing its military against rebellious Pashtun tribesmen of North-West Frontier Province (NWFP) — collectively mislabelled "Taliban" in the West.

The Obama administration had threatened to stop $2 billion US annual cash payments to bankrupt Pakistan’s political and military leadership and block $6.5 billion future aid, unless Islamabad sent its soldiers into Pakistan’s turbulent NWFP along the Afghan frontier.

The result was a bloodbath: Some 1,000 "terrorists" killed (read: mostly civilians) and 1.2 million people — most of Swat’s population — made refugees.

Pakistan’s U.S.-rented armed forces have scored a brilliant victory against their own people. Too bad they don’t do as well in wars against India. Blasting civilians, however, is much safer and more profitable.

Unable to pacify Afghanistan’s Pashtun tribes (a.k.a. Taliban), a deeply frustrated Washington has begun tearing Pakistan apart in an effort to end Pashtun resistance in both nations. CIA drone aircraft have so far killed over 700 Pakistani Pashtun. Only 6% were militants, according to Pakistan’s media, the rest civilians.

More… ^[5]

Jim Sinclair’s Commentary

Yes, another present from our OTC derivative manufacturers and distributors as an increase in crime comes with increased unemployment and a decreased police presence.

VIOLENT CRIME WAVE JOLTS TRENDY DOWNTOWN
By JAMIE SCHRAM and MURRAY WEISS
Last updated: 9:03 am May 19, 2009

Downtown Manhattan, the city’s party mecca, has been hit by an alarming spike in vicious street violence.

Assaults in Greenwich Village lead the frightening upturn, with a whopping 43 percent increase so far this year compared with the same period in 2008.

"I’ve never seen it like this before — never, ever," said G. Simon Chafik, a female photographer who has lived in Manhattan for 15 years.

"I’m a big New Yorker. New York is one of the safest cities. [But] I’m beginning to question that."

Other hot Manhattan neighborhoods tainted by the crime wave include TriBeCa, with a nearly 17 percent jump, and Gramercy, which has seen a 24 percent increase in assaults.

The danger zones also include the East Village from East 14th Street to Houston Street and the East River to Broadway, which has seen a 27.7 percent rise, from 47 to 60 assaults.

More… ^[6]

Jim Sinclair’s Commentary

The Devil is always hiding in the details, but a nice headline to see in the Wall Street Journal anyway.

China Gold Reserves May Back Yuan Internationalization-Report
MAY 17, 2009, 10:54 P.M. ET

SHANGHAI (Dow Jones)–China’s gold reserves may serve as backing for the yuan as Beijing promotes its use overseas, said Zheng Lianghao, managing director of the World Gold Council’s Far East division, the Shanghai Securities News reported Monday.

Zheng, who was speaking at a forum over the weekend, said increasing gold holdings would provide China with a useful hedge as the dollar faced the possibility of depreciation, according to the report.

In late April, the official Xinhua News Agency quoted Hu Xiaolian, the head of China’s foreign exchange agency, as saying China’s gold reserves had risen 454 metric tons since 2003 to 1,054 tons.

More… ^[7]

Jim Sinclair’s Commentary

South Florida, the crime capital of the USA (outside of Washington) fires police, keeps politicians?

The Long Layoff Arm of the Law
The Broward Sheriff’s Office told 177 employees Monday that their services were no longer needed
By TODD WRIGHT
Updated 5:45 PM EDT, Mon, May 18, 2009

Times are so hard, even the lawman has had to swing a heavy ax.

The Broward Sheriff’s Office notified 177 employees on Monday that they will be laid off as part of a cost-cutting measure to meet the 2010 budget. The employees’ last day will be July 31.

The cuts include 48 current deputies currently patrolling the streets. In total, BSO is eliminating 264 positions, 77 of which were tabbed for deputies, said BSO spokesman Jim Leljedal. Some of the positions were vacant.

Broward Sheriff Al Lamberti warned county commissioners it would come to this when they asked him to cut $54 million from his budget. BSO still employees over 5,000 people, including law enforcement and fire rescue personnel, but losing so many can’t help but have a detrimental impact on service and safety.

One old saying goes, you never miss a cop until you need one. Well these cuts will put that adage to the test.

More… ^[8]

 

Jim Sinclair’s Commentary

The filth coming out of pay to play is going to be topped only by the horrid condition of what is left of the asset value of pension funds not required to mark to market.

How Pension Placement Agent Exploited Political Ties
By Martin Z. Braun and Gillian Wee

May 18 (Bloomberg) — After raising more than $1 billion for Democratic candidates, Eileen Kotecki transformed herself into a marketer for hedge funds and private-equity firms, eventually racking up more than $6.5 billion in sales.

Within weeks of wrapping up the 2000 campaign, Kotecki’s own attorneys said later in a lawsuit, she had begun “seeking to exploit” an “impressive network of contacts” gained in part from “extensive experience as a political fundraiser” to sell investment services to public pension funds and endowments.

Taking advantage of political work for private gain isn’t illegal. Yet Kotecki’s career shift from former Vice President Al Gore’s chief fundraiser into the placement-agent business illustrates how it has become the province of the well- connected, including campaign operatives, out-of-office politicians, former public pension officials and even a Pro Football Hall of Fame wide receiver.

“When you look at some of who the placement agents are, you say these are people who are really not in the financial business,” said Orin Kramer, who oversees pensions as head of New Jersey’s Investment Council. “These are politically connected intermediaries, and that’s not a way it ought to operate.”

More… ^[9]