Jim Sinclair’s Commentary
Please read the following:
Bloomberg brought this on by a suit for freedom for information for which we are all grateful, but their reporting on it takes the award for the least words about anything.
Reuters is somewhat more forthcoming.
Please keep in mind any agency or bank fighting to hide figures has something really awful to hide.
According to early definitions, the Fed had the legal right to lend to financial institutions, individuals and partnerships with these funds. They had full and legal rights to make these determinations themselves without oversight.
Fed Urges Secrecy for Banks in Bailout Programs
By Jonathan Stempel
Thursday, August 27, 2009
NEW YORK — The U.S. Federal Reserve asked a federal judge not to enforce her order that it reveal the names of the banks that have participated in its emergency lending programs and the sums they received, saying such disclosure would threaten the companies and the economy.
The central bank filed its request on Wednesday, two days after Chief Judge Loretta Preska of the U.S. District Court in Manhattan ruled in favor of Bloomberg News, which had sought information under the federal Freedom of Information Act.
Preska said the Fed failed to show that revealing the names would stigmatize the banks and result in "imminent competitive harm." The Fed asked the judge not to require disclosure while it readies an appeal.
"Immediate release of these documents will cause irreparable harm to these institutions and to the board’s ability to effectively manage the current, and any future, financial crisis," the central bank argued.
It added that the public interest favors a delay, citing a potential for "significant harms that could befall not only private companies, but the economy as a whole" if the information were disclosed.
Jim Sinclair’s Commentary
All of this occurred in 1932 exactly the same way it is happening now.
MOPE is an accepted school of economic thought adhered to by all of the financial world.
MOPE has gotten us here (2000- 2007) but economic law is still in effect.
Wall Street really believes that the worst is behind us, but it is not. That is the explanation of why the companies of the Walking Wounded and Critically Terminal are leading this rally.
It occurred before in history and is once again on stage, acting out the drama.
It is full of noise and fireworks indicating nothing more than speculation.
Stocks led by four wounded horsemen
Struggling financial firms Citi, BofA, Fannie Mae and Freddie Mac are dominating late summer Wall Street trading. Uh-oh. Who says speculation is dead?
By Paul R. La Monica, CNNMoney.com editor at large
Last Updated: August 27, 2009: 8:19 AM ET
NEW YORK (CNNMoney.com) — They say you can’t trust the government. Don’t tell that to Wall Street traders.
A bizarre trend has emerged during these hazy, lazy days of late summer. Overall market volume is unsurprisingly wafer-thin, but a big chunk of trading has been in just four financial companies that have received a healthy dose of support from Washington in order to make it through the credit crisis.
For the past few days, Citigroup (C, Fortune 500) (which taxpayers now own a third of), mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) (which were placed under government conservatorship last September) and Bank of America (BAC, Fortune 500) (which has needed $45 billion in bailout funds) have been far and away the most actively traded stocks on the New York Stock Exchange.
In fact, these four wounded horsemen of the financial sector comprised 40% of the overall trading volume on the NYSE on Tuesday. These stocks haven’t just been active, they’ve been surging.
This is kind of scary. It suggests that the late-summer portion of the almost six-month long market rally is being fueled more by speculation and momentum, not real optimism about a potential recovery in the financial sector and the overall economy.
Jim Sinclair’s Commentary
From John Williams’ www.shadowstats.com, a service you should subscribe to. This is the truth of the MOPE statistics:
- Gross Domestic Income Down 2.1% in 2nd Quarter, with Record 4.6% Annual Decline
- Housing and Durable Goods Not Signaling Recovery
Jim Sinclair’s Commentary
There simply is NO question.
The FDIC will have to go to the US Treasury and borrow all the funds required to meet all their commitments, thereby increasing the US Federal deficit to spiritual levels not contemplated in estimates so far.
FDIC List of Problem Banks Surges, Putting Reserve Fund at Risk
By Alison Vekshin
Aug. 27 (Bloomberg) — The U.S. added 111 lenders to its list of “problem banks,” a jump that suggests rising bank failures may force the Federal Deposit Insurance Corp. to deplete a reserve fund that shrank 40 percent this year.
A total of 416 banks with combined assets of $299.8 billion failed the FDIC’s grading system for asset quality, liquidity and earnings in the second quarter, the most since June 1994, the Washington-based FDIC said in a report today. Regulators didn’t identify companies deemed “problem” banks.
The U.S. has taken over 81 banks this year, including Guaranty Financial Group Inc. in Texas and Colonial BancGroup Inc. in Alabama, amid the worst financial crisis since the Great Depression. The surge forced regulators to charge banks an emergency fee to raise $5.6 billion for its insurance fund, which fell to $10.4 billion as of June 30 from $13 billion in the previous quarter, the agency said. The total was the lowest since the savings-and-loan crisis in 1993.
“We’re right in the middle of the cycle and it’s a very tough place to be,” said James Chessen, chief economist at the American Bankers Association, a Washington-based industry group. “We’ll have another couple of more quarters where banks will be working through these loan-loss problems.”
An $11.6 billion increase in loss provisions for bank failures caused the decline in the reserve fund, the FDIC said. If the fund is drained, the FDIC has the option of tapping a line of credit at the Treasury Department that Congress extended in May to $100 billion, with temporary borrowing authority of $500 billion through 2010.
Jim Sinclair’s Commentary
We are headed for a very cold winter in the dollar.
MOPE continues to try to sell the dollar reverse case and that being a further unwind of the US economy and financial system is somehow good for the US dollar. That is an interesting but twisted view that will not have legs due to the law of supply and demand.
A Shocking Fall
by Egon von Greyerz – Matterhorn Asset Management
This month we will discuss what is likely to be a major change both in sentiment and in the economy in the next few months. The autumn of 2009 will be full of shocking surprises in the banking sector, in financial markets and in the world economy. The events that we outlined in our previous newsletter, “The Dark Years Are Here” are going to start unfolding. There will also be shocking falls in stockmarkets, in the dollar and in bond markets. But these falls will create major opportunities for investors which we will also discuss.
The syndrome of hope and false expectations
Some readers might feel that we are prophets of doom and that there is only gloomy news coming out of Matterhorn Asset Management. For people who want only good news we suggest that you listen to politicians or read the newspapers or your average stockbroker’s forecast. This is where you find the good news. But if you do listen to these people, remember that virtually nobody warned you about the events in the last couple of years, and that today most of these people are saying that the worst is over. And this is also what stockmarkets are telling us, isn’t it? These “optimists” whether they are politicians, bankers or from the media all make their living based on good news and this is why they will continually tell you lies and never warn you about the risks.
Investments are all about managing risk and our responsibility is to understand risk and warn investors when risk is unacceptably high. We have done this for many years and we will continue to do it. Sadly most investors base their investment decisions on hope. When government, private and corporate debt explodes the risk to the economy becomes very high. And when bank credit is growing exponentially and bank leverage is 50 times or more, this is very high risk. When derivatives reach $ 1 quadrillion with virtually no reserves against this astronomical exposure then investors should run for cover.
Jim Sinclair’s Commentary
How can you believe that there is safety in the US dollar or US dollar certificates?
Obama’s Spending Spree, Budget Numbers "Have All Gone Mad," Analyst Says
Posted Aug 27, 2009 09:00am EDT by Heesun Wee
When retail expert and all-around economy watcher Howard Davidowitz appeared on Tech Ticker in February declaring the worst was yet to come for the U.S. economy and that Americans’ standard of living has changed permanently, our comment boards lit up.
But surely with the latest rally off the March lows, bearish Davidowitz is more bullish, right? Not a chance. Look at your financial history books.
Two of the biggest rallies of more than 40 percent occurred during the Great Depression, says Davidowitz of Davidowitz & Associates,a retail consulting and investment banking firm. "People were sucked in and ultimately were destroyed," he says. It’s a warning to today’s investors, who are hoping to extend the rally.
Don’t get Davidowitz started on the economy or fundamentals. "Barack Obama’s numbers have all gone mad," Davidowitz says. The Obama administration recently announced the U.S. budget deficit will be $9 trillion during the next decade; $2 trillion higher than the original forecast.
And, the proposed price tag for health-care reform? "Minimum $3 trillion," Davidowitz says. "One trillion? Are you kidding?"
Jim Sinclair’s Commentary
Yahoo Finance has gone slightly to the bear side.
“In the Tank Forever”: U.S. Consumers, Retailers in a "Death Spiral," Davidowitz Says
Posted Aug 27, 2009 07:30am EDT by Peter Gorenstein
Retail maven Howard Davidowitz paid another visit to Tech Ticker this week. And despite signs of improvement in consumer confidence and retail stocks rising, Davidowitz is steadfast in his belief the consumer is dead.
Rather than summarize, let me just highlight some of his best one-liners:
On retail:
* "The retail business is terrible… It’s almost all negative."
* "We’re going to close hundreds of thousands of stores."
On the consumer:
* "They’re still over leveraged, they’re losing jobs, their credit has been cut back."
On America:
* "We are in the tank forever. As a country we are out of control, we’re in a death spiral."
Jim Sinclair’s Commentary
Knock them down and then stomp on them.
Those who lose homes may face state tax hit
Kathleen Pender
Tuesday, August 25, 2009
Californians who lose their homes in a foreclosure, short-sale or deed in lieu of foreclosure this year could be hit with a state income tax on canceled or forgiven debt.
A state law that temporarily exempted many homeowners from this tax at the state level expired at the end of last year. Attempts to revive it have not been successful.
The state law was similar to a federal one that exempts many homeowners from federal tax on canceled mortgage debt. The federal law remains in effect through 2012.
The state-tax hit could be substantial and the rules are complex. People in mortgage trouble should consult a qualified tax professional.
Normally, when a lender forgives debt, the forgiven amount is taxed as income.
Jim Sinclair’s Commentary
Last month you went to the casino and lost $500,000.
This month you went to the casino and lost $400,000.
Things are really great. You have a "GREENSHOOT."
Go long the gambler.
U.S. economy shrinks at 1 pct rate in Q2
08.27.09, 09:51 AM EDT
WASHINGTON, Aug 27 (Reuters) – The U.S. economy contracted more slowly than expected in the second quarter as smaller declines in consumer spending and exports offset a record inventory liquidation, government data showed on Thursday, while corporate profits rose.
The Commerce Department said gross domestic product, which measures total goods and services output within U.S. borders, fell at a 1 percent annual rate, unchanged from last month’s estimate.
Analysts polled by Reuters had forecast output shrinking at a 1.5 percent pace in the second quarter after collapsing 6.4 percent in the January-March quarter.
Jim Sinclair’s Commentary
Carried by CNBC, this article is not from "Whackedout.com." It is a serious article to be taken seriously by thinking people.
This means the FDIC will have to come to the US Treasury to borrow the funds required to meet these requirements.
The funds will have to be provided. The US deficit will rise exponentially.
The dollar must and will decline geometrically. The law of supply and demand dictate this.
Here is where the Karma of Economic Law flattens the dogma of MOPE.
1,000 Banks to Fail In Next Two Years: Bank CEO
Published: Thursday, 27 Aug 2009 | 11:44 AM ET
By: Natalie Erlich
The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.
“We’ve already lost 81 this year,” he told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They’re smaller companies.”
Failed banks tend to be smaller and private, which exacerbates the problem for small business borrowers, said Kanas, who became CEO of BankUnited when his firm bought the bank and is the former chairman and CEO of North Fork bank.
“Government money has propped up the very large institutions as a result of the stimulus package,” he said. “There’s really very little lifeline available for the small institutions that are suffering.”
