Dear CIGAs,
Today Iran refused the present US Administration’s overtures on discussions concerning the Iranian nuclear program.
Did you see Paulson testifying today on F-TV? He was red as a beet, stuttering and wearing a Casio watch.
He is the best public speaker in the financial sector, usually handsome and strong looking. Today he looked like he could have had a coronary on the spot.
Jim Sinclair’s Commentary
Here is a major economic alert.
Should CIT be allowed to go bankrupt the impact around the country on small to medium sized employers would be disastrous. This alone could cause the second phase of this disaster.
Just like the fall of Lehman Brothers that stabbed the financials directly in the heart, you have to ask yourself how much intent is involved in this total rollover of business as CIT’s failure stabs the real economy directly in the heart.
CIT Rescue Talks Collapse
Impact on Small Firms Feared if Lender Fails; Stress Test Finds Need for $4 Billion
JULY 16, 2009
Ailing business lender CIT Group Inc. said Wednesday "there is no appreciable likelihood" it will receive fresh government support in the near future, marking the first time since the collapse of Lehman Brothers that the U.S. has declined to aid a struggling financial company of significant scope and size.
What happens next will be a major test of whether the financial system and economy are sufficiently healed to absorb CIT’s problems.
The company is a source of funding for thousands of small and midsize businesses. It’s also a big player providing cash advances to clothing manufacturers and suppliers, and credit …
Jim Sinclair’s Commentary
Here is the friction between the US Administration and Dr. Bernanke, upon which Dr. Bernanke’s future and maybe the future of the Fed as the monopolistic control on US monetary policy depends.
The present administration wants unlimited QE which is the purchase by the Federal Reserve of unlimited amounts of Treasury issues.
Somebody has to buy them as the supply expands or the US recovery fails. This is what Secretary of the Treasury Geithner’s trip to the Middle East bank this week is all about. This is where China has enormous potential clout over the US Fed and Treasury should they decide to use it.
FOMC sees both growth and unemployment.
The Federal Open Market Committee released minutes yesterday from its April meeting, suggesting that the pace of contraction is slowing but economic activity will remain weak ‘for a time.’ The FOMC expects exceptionally low levels of federal funds rate for an extended period of time and is wary of buying more Treasuries. Higher unemployment is forecast in conjunction with more robust economic growth than previously expected. (Read the FOMC press release and minutes)
Jim Sinclair’s Commentary
You really think this bureaucracy is going to work well?
Jim Sinclair’s Commentary
Here is the future of the Canadian dollar on its own. After tar sands you can add minerals and 1/3 of the world’s potable water.
Deduct the fact that Canadian Banks did not go as nuts as their Southern maniac brothers did. Naysayers have no vision, not being able to see beyond their noses.
Oil sands catches break from recession
Shawn McCarthy
OTTAWA — From Thursday’s Globe and MailLast updated on Thursday, Jul. 16, 2009 06:30AM EDT
The current slowdown could prove a boon for Canadian oil sands producers, driving down construction and operating costs and giving time for the development of infrastructure needed for the industry’s growth.
Signs of a thaw are already appearing, half a year after several companies shelved their most ambitious expansion plans amid diving crude prices and a breakdown of financial markets.
Smaller oil sands companies, including Canadian Oil Sands Trust (COS.UN-T)and Petrobank Energy and Resources Ltd. (PBG-T), have been able to raise debt and equity financing to finance their operations.
And larger companies are taking advantage of the hiatus to re-engineer their projects in order to drive down costs and incorporate the latest environmental technologies.
The latest vote of confidence in the industry comes from U.S.-based rating giant Moody’s Investor Services, which six months ago cited large increases in debt and declining oil sands economics in downgrading Nexen Inc. (NXY-T)and Suncor Energy Inc. (SU-N).
In a report yesterday, Moody’s said the oil sands sector will prosper but at scaled-back and more sustainable levels. Moody’s also expects smaller, financially weaker companies to be acquisition targets, as the industry is set for further consolidation.
"The way development was going on there, at such a breakneck pace, was not sustainable," Moody’s vice-president Terry Marshall said in an interview yesterday.
Jim Sinclair’s Commentary
The US Federal Reserve as QE under a new Chairman, who else?
Who is Going to Buy U.S. Debt?
Thursday, July 16, 2009 8:59 AM
By: Julie Crawshaw
In fiscal 2009, the U.S. government must find buyers for $2.041 trillion in new debt, three times as much debt as it issued last year.
Given the current state of the economy, it seems frighteningly apparent that a threefold increase in debt purchases by foreign buyers, mutual and pension funds and other usual investors is mathematically impossible.
“There is simply not enough money in the present economy to support a tripling bond issue in the normal course of business,” Sprott Asset Management head Eric Sprott wrote in a newsletter to clients. “As the lender of last resort, the only purchaser left is the Federal Reserve.”
In 2008, the Fed was a net seller of almost $300 billion of bonds, but in the first half of this fiscal year it’s buying almost $280 billion of bonds under a policy of “quantitative easing.” That means the Fed purchases assets, including Treasury and corporate bonds, using newly created money.
“The Federal Reserve’s ‘solution’ to the debt problem is the problem,” Sprott said. “It has resulted in the Federal Reserve doubling the monetary base of the United States over the span of a mere nine months.
Jim Sinclair’s Commentary
$12 trillion is spent on bailing out Wall Street and it results in billions of dollars in earnings for these firms even though everything was done to reduce the bonanza in public view.
Of course, you screw Main Street and the common man in the process. Then you dump CIT, ushering in phase two of the disaster – the death of the real economy.
If you are a sociopath you do not care at all. I know these Wall Street guys, and Dommer was more trustworthy.
Foreclosures up despite moratorium and legislative efforts
By MarketWatch
TEL AVIV (MarketWatch) — U.S. properties in the process of foreclosure in the second quarter rose to a record quarterly level of nearly 890,000, RealtyTrac reported on Thursday.
The total is up 11% from the first quarter and 20% from the year-earlier period, the Irvine, Calif., online marketplace and research firm reported.
In June, properties in foreclosure totaled 336,000, exceeding 300,000 for a fourth month and driving the second-quarter total to the highest level since RealtyTrac began its survey in the first quarter of 2005.
As of June 30, nearly 1.53 million U.S. properties were subject to a default notice, auction-sale notice, or bank repossession, RealtyTrac reported.
Nearly 1.2% of all U.S. housing units — 1 in 84 — were subject to a foreclosure filing in the first half, RealtyTrac reported.
Despite an industrywide moratorium on foreclosures earlier this year plus legislative action and more efforts by lenders to modify the terms of mortgages, "foreclosure activity continues to increase to record levels," RealtyTrac Chief Executive James J. Saccacio said in a statement.
Jim Sinclair’s Commentary
MOPE, Management of Perspective Economics, must always imply the West runs the world. As such, no accomplishment of China can receive kudos without an upper cut.
Sometimes it might be comical if it were not for the fact media in the West has China very angry.
China grows faster amid worries
China’s economy grew at an annual rate of 7.9% between April and June, up from 6.1% in the first quarter, thanks to the government’s big stimulus package.
The country’s quickening economic expansion comes as most nations in the West continue to experience recession.
Beijing now expects China to achieve 8% growth for 2009 as a whole, which compares with a predicted contraction of between 1% and 1.5% in the US.
However, the Chinese government warned that some economic challenges remain.
‘Numerous challenges’
The BBC’s correspondent in Shanghai, Chris Hogg, said China’s latest economic growth was largely due to the government’s 4 trillion yuan ($585bn, £390bn) economic stimulus plan unveiled last November.
Jim Sinclair’s Commentary
There is lots of media talk about this. It looks like smoke coming from an ongoing fire.
Q+A-Could Israel-Iran standoff turn violent?
Thu Jul 16, 2009 7:12am EDT
July 16 (Reuters) – Israel’s confrontation with Iran over Tehran’s nuclear programme is a major source of uncertainty in the Middle East and a complication in a wider stand-off between Iran and the West.Here is a look at where matters stand.
COULD ISRAEL LAUNCH A NUCLEAR STRIKE AGAINST IRAN?
It’s a poker game with high stakes and a degree of bluff. Israeli leaders refuse to rule out any option. They do not believe Iran’s assurances it wants only nuclear energy. Noting re-elected Iranian President Mahmoud Ahmadinejad has said Israel should be "wiped off the map", Israel says an Iranian bomb is a threat to its very existence that it will simply not tolerate.
Last year, however, it emerged officials were making plans for how Israel might live with a nuclear Iran in a state of mutual deterrence. And an opinion poll last month showed most Israelis would not expect a nuclear Iran to attack them.
Since becoming prime minister in March, Benjamin Netanyahu has, aides say, made ending threats from Iran a defining element of what he sees as his personal role in Jewish history. A 1981 Israeli air strike that destroyed Iraq’s only nuclear reactor, as well as a strike in Syria in 2007 that remains cloaked in mystery, set historical precedents. Despite a policy of silence, few doubt Israel has nuclear weapons that could hit Iran.
Jim Sinclair’s Commentary
Wait 90 days from today when you see what dumping CIT means to the real economy. CIT’s bankruptcy will drive a dagger directly into the heart of the real economy. The entire reason for stepping aside of CIT is political. This will bring more damage to the economy than the dumping of Lehman, which brought in trillions to the financial firms.
Father forgive them for all they know is politics, just like the Sanhedrin.
Foreclosure Rate Rises 4.6 Percent in June over Prior Month
By Renae Merle
Washington Post Staff Writer
Thursday, July 16, 2009; 6:12 AM
Foreclosure filings increased again in June as the weak labor market pushed more homeowners into delinquency and government efforts to prevent foreclosure efforts struggled to gain traction, according to data from RealtyTrac released today.
The firm counted 336,173 filings nationally, which can range from default notices to bank repossessions. That is up 4.57 percent from the previous month and up 33 percent compared with the same period last year. For the second quarter, filings were up 20 percent from the comparable period last year. RealtyTrac, a private firm, says its data includes more than 90 percent of U.S. households.
"Nationwide the trajectory is remaining the same, continuing to increase," said Daren Blomquist, a RealtyTrac spokesman.
Sunbelt states like California and Nevada continued to have the most filings, while the Washington region was less impacted. Filings were down in the District and flat in Virginia last month compared to June 2008, but up in Maryland.
The monthly data reflects the challenges facing the Obama administration as it implements a sweeping program, Making Home Affordable, that is intended to arrest rising foreclosure rates.
Jim Sinclair’s Commentary
Read the prospectus. Do your homework and do it now.
Are GLD and SLV Legitimate Investment Vehicles?
July 16,
First, let me preface this article by stating that it contains my opinions and speculation based upon no concrete evidence, but primarily upon information contained within the SLV and GLD prospectuses, and secondarily upon instincts cultivated over a decade of research into gold and silver markets. While there is no smoking gun regarding some of the issues I raise in this article, there is plenty of smoke.
Ever since the launch of the US gold ETF, GLD, in November, 2004 and the launch of the US silver ETF, SLV, April 2006, a debate has raged in analyst circles regarding the legitimacy of these two investm
ent vehicles as a proxy for physical gold and physical silver. Though all evidence against investing in these two trusts has been entirely circumstantial, plenty of red flags exist in both the GLD and SLV prospectuses that should steer any logical, rational human being that wishes to own gold and silver away from these two investment vehicles.
Conflicts of Interest
Let’s begin with the obvious. Is it not a huge conflict of interest that JP Morgan (JPM), a bank that perpetually ranks among the largest short positions against silver on the COMEX, is the custodian for the iShares Silver Trust (SLV)? According to silver analyst Ted Butler, JP Morgan is consistently among the one or two U.S. banks that hold more than 80% to 90% of the entire commercial net short position in COMEX silver futures. If you have positioned yourself to make huge profits from drops in the price of silver, is it reasonable for you to simultaneously desire investors to buy more physical silver (if indeed the SLV holds the amount of physical silver it claims)?
Is it also not a conflict of interest that HSBC (HBC) bank, a bank that allegedly holds some of the largest short positions against gold on the COMEX, is the custodian for the SPDR Gold Trust (GLD)? If these banks profit when gold and silver drop, and they manage the largest ETFs in the US regarding these respective metals, is it unreasonable to state that these two banks should be barred from acting as custodians of the GLD and SLV? In fact, how is this situation any different than Goldman Sachs’s (GS) actions in the past when they originated CDOs and then made a fortune by shorting them, actions that back then, were apparently unknown even to the firm’s own traders? On the surface, it certainly appears to be another classic case of the fox guarding the hen house.
Jim Sinclair’s Commentary
Supply increases as demand falls. Now you know why the Administration is going to replace Bernanke unless he steps up buying of Treasury offerings.
International Demand for Long-Term U.S. Assets Falls (Update1)
By Vincent Del Giudice
July 16 (Bloomberg) — International demand for long-term U.S. financial assets weakened in May as Russia, Japan and Caribbean banking centers trimmed their holdings even as China stepped up its purchases.
Total net sales of long-term equities, notes and bonds were a net $19.8 billion in May, compared with buying of $11.5 billion the month before, the Treasury said today in Washington. Monthly foreign investment flows dropped $66.6 billion in May, compared with a decline of $38 billion in April.
While Treasuries have been a haven for investors during the credit crisis, emerging economic powers question the dollar’s status as the U.S. runs up record debt to fund the economic recovery. At a Group of Eight summit last week in Italy, China repeated calls for a “diversified and rational” global currency regime. Russian and Brazilian officials said the issue may come up at the wider G-20 forum in Pittsburgh in September.
“We still need the foreign capital,” David Wyss, chief economist at Standard & Poor’s in New York, said before the report. “We’re still borrowing. It’s important to see a significant inflow.”
China, the biggest foreign holder of U.S. Treasuries, increased its holdings of government notes and bonds by $38 billion to $801.5 billion. Holdings in Hong Kong also increased. Japan, the second-biggest international investor, reduced its total by $8.7 billion to $677.2 billion. Russia’s holdings fell $12.5 billion to $124.5 billion. Holdings at Caribbean banking centers also fell, declining by $9.9 billion to $194.8 billion.
Jim Sinclair’s Commentary
So it is now quite clear what the Taliban’s target is in Pakistan.
al-Qaida issues nuclear warning to Pakistan
July 16, 2009 – 5:00am
WASHINGTON – Ayman al-Zawahiri, Osama bin Laden’s right hand man, released an audio tape Wednesday telling Pakistan its nuclear weapons are at risk.
In the 9-minute audio tape, he claimed the U.S. is seeking control of Pakistan’s nuclear arsenal.
Ironically, the warning comes amid new evidence al-Qaida and the Taliban are engaged in an active search for the weapons.
A familiar uneasiness has crept over U.S. intelligence assets operating in the region, because they too have been looking for them – but with little success.
A former U.S. intelligence official says he received regular reports in recent months from "trusted agents" indicating they have been seeking to help the Pakistani government protect the weapons, but have received little or no cooperation.
However, Zawahiri’s for-your-own-good warning has run into a huge credibility problem.
Jim Sinclair’s Commentary
This article so perfectly sums up what I have been telling you. The Wall Street takeover of Washington has mucked us up so bad our grand children and their grand children will still be suffering from the madness of bailing out the Fat Cats and leaving the average to suffer the pangs of hell.
Shattering the Right vs. Left Prism Once Again: The Wall Street Journal Goes After Goldman and the Bank Bailout
Arianna Huffington
Posted: July 15, 2009 08:16 PM
Yesterday’s opinion section of the Wall Street Journal offered convincing proof that those who want a progressive financial policy and those who simply want to save capitalism are in agreement about the madness of the administration’s Wall Street policies.
There, on the editorial page of the capitalist Bible, was a piece taking repeated shots at Wall Street darling Goldman Sachs. And, over on the opposite page, a two-fisted op-ed by former hedge-fund manager Andy Kessler in which he labels the government bailout of Wall Street "a dumb move" and "a bust."
I’m planning to shrink down today’s Journal, laminate it, and hand it out anytime someone in the media starts analyzing the economy using the cobweb-covered, tried-and-untrue right vs. left framing.
You know that this way of looking at financial policy is dead and buried when Rupert Murdoch’s pride and joy is publishing takes that I could happily have written myself.
Let’s start with the editorial, "A Tale of Two Bailouts," which decries the fact that, thanks to the policies of Tim Geithner and Larry Summers, Goldman "enjoys the best of both worlds: outsize profits for its traders and shareholders and a taxpayer backstop should anything go wrong."
The piece is spiked with disdainful references to "the Goldmans of the world" and "the likes of Goldman, which apparently needs no help printing money," and takes issue with the way "we changed when we stepped in to save certain banks in the name of saving the system." It also dubs Goldman "Goldie Mac," saying: "Goldman will surely deny that its risk taking is subsidized by the taxpayer — but then so did Fannie Mae and Freddie Mac, right up to the bitter end."
Jim Sinclair’s Commentary
Politicians really do come cheap.
Big Joke: Hedge Funds Want Regulation
by andrewtna
Thu Jul 16, 2009 at 07:46:44 AM PDT
The White House sent a bill to Congress today that would finally require that hedge funds are regulated – to an extent. And now Reuters reports that hedge funds, which have forever resisted any form of meaningful regulation, really want to be regulated.
Now we know why the industry contributed nearly four times as much money to federal candidates as they did last cycle, according to the Center for Responsive Politics:
‘Cause that’s what industries do when they want more oversight….
