Dear CIGAs,
Here is California’s gift to Monty Guild.
This is why Trader Dan is in the process of moving to the country.
![clip_image003[1]](http://jsmineset.com/wp-content/uploads/2009/08/clip_image0031.jpg "clip_image003[1]")
Jim Sinclair’s Commentary
If you think China is hostage to the US dollar then you are a world class fool.
China Keeps Buying Energy, Bids $17B For Stake In Argentinian Oil Giant YPF
Henry Blodget
Aug. 10, 2009, 7:44 PM|![clip_image004[1]](http://jsmineset.com/wp-content/uploads/2009/08/clip_image0041.gif "clip_image004[1]"){kind=small}
Those trillions of dollars we’ve borrowed from China and then shipped back to China to pay for all of our stuff? China’s using them to buy other things, like energy.
The latest move? A $17 billion bid for a majority stake in Argentinian oil giant YPF.
Will Argentina allow the deal to happen?
We’ll see. But if it doesn’t, you can bet China will just go buy something else.
Aries Poon, WSJ: China National Petroleum Corp. and Cnooc Ltd. have proposed paying at least US$17 billion for all of Repsol YPF SA’s stake in YPF, its Argentine unit, two people close to the talks said.
China National Petroleum Corp. and Cnooc Ltd. have proposed paying at least US$17 billion for all of Repsol YPF SA’s stake in YPF, its Argentine unit, two people close to the talks said.
The potential deal, which could be the biggest overseas investment by China, highlights the country’s growing thirst for energy resources globally and its willingness to offer big money for access. It also underlines the ambition of CNPC to build up its presence in South America and elsewhere.
Jim Sinclair’s Commentary
CIGA Green Hornet says he can answer the question.
Politicians always pay $66 million for a $49 million jet. These are the same people that showed fake anger when the Banksters came to congress on private jets. These are the same people who are going to run good ole GM.
Why Is Congress Paying $66 Million for a $49 Million Jet?
AUGUST 10, 2009, 1:30 PM ET
By Robert Frank
What struck me most about the Congressional private jets was the price tag.
As if loading up on private jets in an economic crisis wasn’t enough, Congress has pulled off a feat even today’s most extravagant billionaires would have a hard time matching. That is, they are paying $66 million for a jet with a sticker price of $49 million. (Read about the backlash that has started in Congress here.)
I’m talking, of course, about the G550. Congress is buying three, at $66 million a pop.
That price sounded high to me, since the G550 buyers I know paid around $45 million (at most) for their planes, and that was during the boom times. So I called Robert Baugnier, spokesman for Gulfstream. He informed me that the sticker price for a brand new, completed G550–leather interior and all–is $49 million.
Jet broker Jay Duckson of Central Business Jets tells me that because of weak demand for private jets amid the recession, he can get clients a new Gulfstream G550 for less than $43 million. “It’s like the auto dealers right now,” he said.
Jim Sinclair’s Commentary
The OTC derivative lobby must be throwing huge money at this one.
Lehman Contract Is Test Case for Billions of Dollars of Swaps
By Linda Sandler
Aug. 11 (Bloomberg) — A U.S. bankruptcy judge may have a controlling say in resolving a dispute in a U.K. court between Lehman Brothers Holdings Inc. and a Bank of New York Mellon Corp. unit over a swap agreement that could affect billions of dollars of similar contracts.
At issue is who under U.S. bankruptcy law gets paid first under two swap agreements related to Lehman’s so-called Dante program of credit-linked notes — Lehman or investors who bought the notes. Lehman lost under U.K. contract law. The U.K. judge left the question of U.S. bankruptcy law open as Lehman appeals his ruling.
“This issue has never been tested in court in the U.S.,” said Guy Dempsey, co-chair of the derivatives group at the law firm Latham & Watkins LLP.
Lehman, the investment bank liquidating in bankruptcy, says it is owed $70 million on the swaps and wants to get paid. BNY Corporate Trustee Services Ltd., acting for the note-holders, wants the case dismissed and cites a U.K. judge who said last month that note-holders are entitled to the payments under U.K. law now that Lehman is bankrupt.
The case, being considered in bankruptcy court in New York today, may affect many other swap agreements designed like Lehman’s, which includes an indenture and a sequence of payments, Dempsey and other experts said.
Jim Sinclair’s Commentary
All of these deals distribute dollars in exchange for materials.
Any time you hear China is a prisoner of the US dollar you are listening to a fool.
Yanzhou close to Australian coal deal
By Peter Smith in Sydney
Published: August 10 2009 07:47 | Last updated: August 10 2009 18:37
China’s Yanzhou Coal Mining is in advanced talks to buy Felix Resources in a cash takeover that is expected to value the Australian coal mining group at about A$3.7bn (US$3.1bn).
If the deal is agreed and cleared by regulators, it would be one of China’s largest foreign takeovers and the country’s biggest Australian deal to date.
Felix on Monday requested that its shares be suspended from trading pending the outcome of “negotiations regarding a potential change of control transaction”.
The shares, which had traded at less than A$5 this year, last traded at A$16.90. However, the Chinese group was understood to have pitched its offer at about A$19 a share, a person close to the situation said.
At that level, Felix would be worth A$3.7bn.
Jim Sinclair’s Commentary
Here is a picture showing Friday and today’s dollar market:
Jim Sinclair’s Commentary
Bloomberg Financial TV has no idea how much damage they are doing to the USA internationally. It is not a good idea to kick your bankers in the ass daily.
They now have a talking head from ING on who simply said the economic figures issued by China are false with the implication that the West never lies.
Hell, what about the skewed unemployment figures issued in the USA on Friday?
Bloomberg has no clue that China’s success has made them economic ambassadors of the USA.
In other news the US postal service is planning to close 1000 post offices. At the same time, sales of AK-47s are booming in the US. Gun sellers are denying postal employees are buying them.
Jim Sinclair’s Commentary
Now that Goldman is a bank the potential change by FASB in their asset valuation auditing procedures could be a DISASTER for them.
A level 3 problem at Goldman Sachs?
August 10, 2009 — 7:49am ET | By Jim Kim
Reuters has taken a close look at Goldman Sachs’s latest 10Q and come up with something interesting: Goldman reported a second-quarter net unrealized loss of $1.4 billion on its Level 3 derivatives. "The unrealized loss is significant because it represents a reversal of what had been a positive trend at Goldman." In the just prior quarter, Goldman Sachs reported a net unrealized gain of $975 million on its Level 3 derivatives. For all of 2008, Goldman reported a net unrealized gain of $5.58 billion.
This may reflect Goldman’s bet on various distressed assets, which seemed to pay off in 2008. But if it now finds itself on the wrong side of the market, we may have a reason to be slightly more cautious on Goldman’s earnings in the second half of the year. We’ll just have to see if this turns into a trend.
Jim Sinclair’s Commentary
If you think the ads are bad Mr. Cuomo, the dealers are faking the paperwork.
Cuomo Tells Dealers to Stop Deceptive Clunkers Ads
By Linda Sandler
Aug. 10 (Bloomberg) — New York Attorney General Andrew Cuomo today told 40 auto dealers across the state to stop issuing misleading advertisements for the Federal Car Allowance Rebate System, known as “cash for clunkers.”
The government-funded clunkers program, which seeks to boost the economy, allows dealers to credit $3,500 or $4,500 for trade-ins that may be worth less. Dealers’ ads mislead consumers into believing that their trade-in vehicle qualifies for the program when it does not or that they are eligible for a several-thousand-dollar rebate, Cuomo said in a statement today.
Letters by Cuomo order the dealers “to immediately modify promotions and advertisements to clearly explain how the program works,” he said. Included on his list were dealers for General Motors Co., Chrysler Group LLC, and Ford Motor Co. as well as foreign car companies.
In metropolitan New York, Cuomo named Plaza Hyundai Ltd., City World Toyota and City World Hyundai, while in Westchester he cited Smith Cairns Ford Inc. of White Plains and Central Avenue Chrysler Jeep Dodge.
Jim Sinclair’s Commentary
Good for the Swiss Franc.
Good for tradition.
Good for the respect of international law.
U.S. Lets Swiss Banking Giant UBS Off the Hook
Posted: 08/10/09
Traditions die hard.
Since the founding of the Swiss Confederation in 1291, Switzerland has protected the privacy of its financial accounts. It may be the world’s most secretive banking jurisdiction, with a vaunted ability to protect its depositors from unwanted prying.
Switzerland converted this tradition to law in 1934, when it enacted its strict banking secrecy law. Revealing financial information without the client’s consent is prohibited.
For more than a year now, this tradition of bank secrecy, or financial privacy as the Swiss call it, has been under attack from one of the most powerful agencies in the world — the U.S. Internal Revenue Service. In July 2008, the IRS served a "John Doe" summons on UBS, seeking records that would identify U.S. taxpayers with accounts at UBS in Switzerland who have not reported these accounts to the IRS. UBS failed to comply with the summons.
So in February, the U.S. Department of Justice filed a petition to force the Swiss banking giant to turn over some 52,000 names of U.S. account holders the IRS suspects failed to pay taxes on earnings from those accounts, as required under U.S. law. UBS has continued to refuse to disclose the names, arguing that doing so would violate Swiss banking laws. It is a crime in Switzerland for bankers to provide information on client accounts to foreign tax authorities, and bankers who violate this law may be subject to criminal prosecution that includes the possibility of a prison sentence.
Jim Sinclair’s Commentary
The newest economic black hole is commercial real estate.
Maguire must of had big bucks in the buildings.
Maguire to Surrender Buildings, Says No Bankruptcy
By Brian Louis and John Gittelsohn
Aug. 10 (Bloomberg) — Maguire Properties Inc., the largest office landlord in downtown Los Angeles, may relinquish control of seven Southern California buildings with $1.06 billion of debt and said it’s not planning on filing for bankruptcy.
The company told lenders “it will no longer continue to fund the cash shortfall” on the mortgages for six properties, Los Angeles-based Maguire said in a statement today. Two properties are in default and Maguire said it already surrendered one building to a lender.
“We are not considering bankruptcy,” Chief Executive Officer Nelson Rising said today on a conference call. “And we feel the course we’re on is a far better course of action.”
Maguire’s decision is a sign that landlords in Southern California’s overleveraged office market can no longer make payments and may be forced to abandon properties. Maguire has been trying to sell buildings to pay debt incurred in 2007 when it purchased properties from Blackstone Group LP. Loans against six properties were split up into commercial mortgage-backed securities and resold to investors.
“It does highlight the credit problems associated with recent vintage CMBS loans and a trend in borrower behavior to increasingly walk away,” said Barclays Capital Research analysts Aaron Bryson and Tee Yong Chew in a research note today.
Jim Sinclair’s Commentary
Now here is a Green Shoot
Consumer, Celebrity Bankruptcies May Hit 1.4 Million
By Linda Sandler and Andrew M. Harris
Aug. 10 (Bloomberg) — Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the American Bankruptcy Institute.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
Debt problems don’t stop with sub-prime borrowers. Celebrities who filed for bankruptcy in July included movie actor Stephen Baldwin, who sought protection from creditors after lenders began foreclosure procedures against his home. Lenny Dykstra filed for Chapter 11 bankruptcy in a petition that says the former Major League Baseball All-Star owes between $10 million and $50 million.
Jim Sinclair’s Commentary
"A society that fails to help its helpless, is worthless." –Jim Sinclair
Father of Handicapped Son Received Threats After Confrontation With Rep. Dingell
Click here to watch the video…
Jim Sinclair’s Commentary
This is shocking even to me. The US dollar is toast.
Deutsche Sees 48% of All US Mortgages Underwater in 2011
By AUSTIN KILGORE
August 6, 2009 4:18 PM CST
Deutsche Bank (DB: 66.83 +0.97%) believes continued declines in home values will increase the number of US mortgagors with negative equity from 14m in Q109 to 25m in Q111.
According to a report Deutsche released this week, the 25m represents a projected 48% of all US mortgages. While subprime and option adjustable-rate mortgages (ARM) are the biggest source of underwater borrowers in the current market, Deutsche said a larger percentage of prime conforming and prime jumbo borrowers will join the fray.
Prime conforming and prime jumbo will make up 79% of all US mortgages and Deutsche estimates 41% of conforming and 47% of jumbo will be underwater, up from current levels of 16% and 29%, respectively.
This rapid influx of underwater borrowers will have a significant impact on default rates. In addition to future underwater borrowers being forced into default from a “life event” — unemployment, divorce, disability, etc. — Deutsche warned others may “ruthlessly” or strategically default.
Increased defaults in the middle class will suppress consumption, added Deutsche, further slowing housing recovery.
Jim Sinclair’s Commentary
Experts say "No problem."
The Next Fannie Mae
Ginnie Mae and FHA are becoming $1 trillion subprime guarantors.
AUGUST 10, 2009, 7:15 P.M. ET
"The housing lobby, which gets rich off FHA insurance, has long blocked these due-diligence reforms, saying there’s no threat to taxpayers. That’s what they also said about Fan and Fred—$400 billion ago."
Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too.
Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. (See the nearby table.) Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions” in loan volume?
Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee.
Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.
Jim Sinclair’s Commentary
All the MOPE, spin and games played in the dollar market cannot erase the negative impact of this on international dollar holders.
It is simple: The more you make, the less they will be worth.
Administration Wants To Raise $12.1 Trillion National Debt Ceiling
Posted: August 8, 2009 at 7:21 am
The Administration has a bit of a problem. The cap on the national debt, which must be approved by Congress, is $12.1 trillion. The Treasury is borrowing money so fast to fund the stimulus and budget deficits, that it will push up against the level in about two months.
With many members of Congress against the rising federal red ink, the battle lines are likely to be drawn with the stakes being how much higher the limits on federal borrowing will be allowed to go.
According to Reuters, Treasury chief Timothy Geithner sent Senate Majority Leader Harry Reid a letter saying, “It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations.”
The Democrats almost certainly have the votes to move the cap higher, but they are giving the Republicans another chance to make the case that borrowing is out of control.
IRS receipts are still running well under the numbers put into the Budget for the current fiscal year. Businesses are not making profits at projected levels and high unemployment is cutting into payments from individuals. Even if the Administration sticks to its spending plans, the rising deficit will have to be funded by higher taxes or greater sale of national debt in the global capital markets. The largest buyer of US debt, China, has already expressed significant reservations about the capacity of America to handle its increasing need for capital without moving up interest rates and hurting its ability to handle its debt coverage.
The recession seems to be coming to the end, but high unemployment could be a negative factor in IRS collections for years.The current request to raise the debt ceiling won’t be the last.
Douglas A. McIntyre
Jim Sinclair’s Commentary
Here is another view of Friday’s great employment numbers with links.
State unemployment rates continue to climb
August 9, 1:40 PM
Melissa Newby
The most recent numbers from the Bureau of Labor Statistics continue to paint a bleak picture for unemployment rates. According to the most recent unemployment rate press release, unemployment rates rose in 38 states. Seven states saw their unemployment rates stay steady and 5 states were lucky enough to show a decrease.
A still faltering economy leaves families struggling to make ends meet and pinching pennies however they can, from saving money on groceries and meals to finding discounts and deals on family vacations.
Some area seem especially hard hit. Ohio’s unemployment rate has nearly doubled since January 2008. Pennsylvania unemployment numbers have also risen sharply, affecting rural Pennsylvania the hardest.
How does your state rank?
Alaska – 9.5%
Arkansas – 8.4%
California – 11.6%
Colorado – 7.6%
Connecticut – 8.0%
Delaware – 8.4%
District of Columbia – 10.9%
Florida – 10.6%
Hawaii – 7.4%
Idaho – 8.4%
Indiana 10.7%
More…
Jim Sinclair’s Commentary
Stay the course. The pot is still boiling.
Social Security and the upcoming entitlement crisis
August 9, 2:00 PM
Michael Moore
Social Security provides benefits to roughly 60 million beneficiaries. Most people think of Social Security as a government retirement program, but there are many different facets to the complex social entitlement. The problem with Social Security is the looming bankruptcy of the entire program that will happen in thirty four years if changes aren’t made. Senior citizens depend on the monthly annuity they receive from the government as their sole income, or as a supplement to a pension or investments. Up until this point, the revenue that Social Security receives every year has outpaced the expenditures paid out annually. The Congressional Budget Office projects that as baby boomers march towards retirement, by the end of the decade, Social Security outlays will exceed revenues.
In a report entitled, CBO’s Long-Term Projections for Social Security: 2009 Update www.cbo.gov/doc.cfm, the non-partisan CBO examines the financial outlook of Social Security to the year 2083. Clearly, you don’t have to look that far into the future to realize that a significant problem exists with the funding of the program. In fact, it only takes until the year 2043 before the funds in the program will be exhausted. The CBO report states, “Thus, if the law remains unchanged, CBO projects that thirty four years from now, the Social Security Administration (SSA) will not have the legal authority to pay full benefits.”
Jim Sinclair’s Commentary
This is the subject of the book "Boom: Visions and Insights For Creating Wealth in the 21st Century" written by myself and Frank Vogl.
Financial crisis could hasten wealth shift from West to East
10 Aug 2009, 0113 hrs IST, George Cherian, ET Now
The credit crisis may have forced Citigroup’s former chairman & CEO, Charles “Chuck” Prince, to step down from the top job at what was once the world’s largest bank by market capitalisation, but he argues that the collective belief of the financial system was that the markets were still safe just before the subprime mortgage- fuelled credit crisis brought all big banks down on their knees.
In an exclusive interview with ET NOW’s correspondent, Prince says that the new regulatory structure for banks could be very different from the past and that the scale of consolidation in the US financial system will depend on how deep the current recession will be.
Would you, with any sort of certainty, say that the worst is behind us?
Well, if your question is ‘with certainty’, then the answer is no. I don’t think that in these times with what we have seen over the past couple of years, anyone can speak with certainty about anything. But if I had to just look at the US banking system, no one can, with any certainty, say that the worst is behind us.
There is talk about credit card defaults and even prime mortgage defaults in the US. Do you believe that’s going to be a big issue, going forward?
I think that in the US, we are in the middle of a consumer-led recession. And I think that there are historical precedences for that, so that it can be mapped out a little easier than the liquidity crisis we saw in capital markets starting in 2007. I think that defaults on credit card receivables and better mortgages will track unemployment.
Jim Sinclair’s Commentary
We old coots pose no problem. The new health bill will cull us.
A special report on aging populations
A slow-burning fuse
Jun 25th 2009
Age is creeping up on the world, and any moment now it will begin to show. The consequences will be scary, says Barbara Beck (interviewed here)
STOP thinking for a moment about deep recession, trillion-dollar rescue packages and mounting job losses. Instead, contemplate the prospect of slow growth and low productivity, rising public spending and labour shortages. These are the problems of ageing populations, and if they sound comparatively mild, think again. When the IMF earlier this month calculated the impact of the recent financial crisis, it found that the costs will indeed be huge: the fiscal balances of the G20 advanced countries are likely to deteriorate by eight percentage points of GDP in 2008-09. But the IMF also noted that in the longer term these costs will be dwarfed by age-related spending. Looking ahead to the period between now and 2050, it predicted that “for advanced countries, the fiscal burden of the crisis [will be] about 10% of the ageing-related costs” (see chart 1). The other 90% will be extra spending on pensions, health and long-term care
Jim Sinclair’s Commentary
Of course there is no consideration for Social Security.
We are eliminating all the coots in the new health bill. No coots equals No social security or pension problems.
You can’t argue with that logic unless you are a coot like me.
Billions for bail outs, but none to save Social Security
Am I the only one who notices that our politicians in Washington can come up with billions of dollars for their pet projects or "bail out" money for car manufacturers, banks, savings and loans or any other companies that they (or their families) have stocks in? And yet they keep telling us Medicare and Social Security are on the way down the drain. If they’d kept their grubby hands out of the Social Security funds years ago, things wouldn’t be so bleak.
How can we keep promising all these countries more money to help save their countries? Just try to find out how much money we spend on foreign aid each year, see how far you get.
I tried over 20 years ago and I did get a list that only covered about 10 countries and the amounts were 5 years old because the bookkeeping wasn’t up to date.
As the kids would say, "Duh."
Please let me know if any of you can get an updated list. Good luck on that one..
Don Belanger
Waterville
