Dear CIGAs,
From all of us at JSMineset, we wish our CIGAs of Chinese descent a blessed, happy, healthy and wealthy New Year.
Jim Sinclair’s Commentary
Here is a definition and argumentation for the Management of Perspective Economics:
"The conscious and intelligent manipulation of the organized habits and opinions of the [public] is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country."
– Edward Bernays
Jim Sinclair’s Commentary
Business has certainly changed. It was once done for profit, but is now done for blood.
Jim Sinclair’s Commentary
After reviewing these articles and knowing the ECB has given Greece two weeks to disclose every particular concerning the swap arrangements made between Greece and the usual suspects, the following are reasonable conclusions.
1. The over the counter derivatives are, without any doubt whatsoever, the culprit that took a normal recession into what may well be a decade of economic suffering.
2. The manufacturers of over the counter derivatives in all cases are the usual suspects.
3. Swaps can be used to make camouflaged loans which might well be to some degree what occurred between the US Fed and EU governments in the liquidity crisis.
4. Governments, even poor ones, have the capacity to defend themselves via their intelligence agencies if attacked.
Wall Street is made up of cowards that rush to turn each other in if it is in their benefit. The strategy of breaking countries could easily prove contra-productive as the deed lies in the paper trail.
Wall St. Helped to Mask Debt Fueling Europe’s Crisis
By LOUISE STORY, LANDON THOMAS Jr. and NELSON D. SCHWARTZ
Published: February 13, 2010
Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.
As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.
Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.
The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.
It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.
Goldman Sachs: the Greek connection
Investment giant’s role in eurozone debt crisis falls under spotlight
By Stephen Foley in New York
Monday, 15 February 2010
Goldman Sachs, the giant investment bank, is today at the centre of the row over the Greek government’s finances, amid recriminations over complex financial deals that allowed the eurozone nation to skirt its debt limits.
With European finance ministers meeting in Brussels today and tomorrow to discuss ways to prevent a debt crisis threatening the eurozone as a whole, a spotlight has been shone on techniques used by Greece and other indebted countries to give the appearance of lower budget deficits and debt levels.
The euro membership rules place strict caps on the size of government deficits relative to a national economy, but Goldman Sachs and other banks helped Greece raise cash earlier in the decade in ways that did not appear in the official statistics. With the current recession causing even official budget deficits to balloon all across the continent, fears of further hidden liabilities have been contributing to the crisis of confidence in Greek debt and pulling down the value of the euro.
Goldman Sachs has been the most important of more than a dozen banks used by the Greek government to manage its national debt using derivatives.
The bank’s traders created a number of financial deals that allowed the country to raise money to cut its budget deficit now, in return for repayments over time or at a later date.
Jim Sinclair’s Commentary
Iceland, Dubai, Greece and then six others. Do you not have the eyes to see what is happening?
Only gold will survive as a currency that is a storehouse of value.
This is a war that will be no less destructive than the two previous world wars. Being shot might be a more merciful way to die than at the hands of the takedowners.
Time running out for Dubai to pull itself out of danger, says Lord Mandelson
Time is running out for Dubai to restructure its debt and pull itself out of economic danger, Lord Mandelson has warned
By Edmund Conway, Economics Editor
Published: 10:20PM GMT 14 Feb 2010
In a visit to the Gulf emirate, the Business Secretary urged its leaders, and the managers of stricken group Dubai World, to come up with details of how investors in its troubled units will be treated, or face further investment exodus. However, the company – effectively a state offshoot – has not yet provided any details on an offer, according to a spokesman, adding that it wanted to give creditors time to digest Dubai World’s business plan.
Lord Mandelson, in Dubai to discuss the multi-billion pound exposure of British banks to the state, said: "Time is running out. The current uncertainty and the lack of agreement cannot go on indefinitely.
"Dubai has to be conscious of the fact that how it resolves its current problems will mean a great deal for the Dubai brand, its reputation and how it secures investment from overseas in the future."
The warning came as the Dubai Financial Market suffered its biggest fall in three weeks following reports that Dubai World, which has suspended interest payments on $22bn (£14bn) of debt until May, will offer creditors only 60 cents in the dollar after seven years. The cost of insuring against a Dubai default rose on Friday to the highest level since November, as investors once again turned their attention to the state’s problems.
According to information provider Markit, the price of credit default swaps on Dubai government debt rose from 592 basis points to 630. It represents a relapse for the economy, which admitted in November that it was unable to honour all its debt commitments.
Jim Sinclair’s Commentary
China has a plan. The West reacts only to stimuli.
China has no meaningful debt. The West is drowning in debt, and now turning against itself with the weapon of finance.
You must see this happening. Fiat currency is finished as we know it.
Minerals will maintain buying power with Gold as number one.
Canada looks to China to exploit oil sands rejected by US
Canada courts Chinese investment in Alberta oil projects as US firms boycott tar sands fuel
Suzanne Goldenberg US environment correspondent
guardian.co.uk, Sunday 14 February 2010 16.58 GMT
Canada, faced with growing political pressure over the extraction of oilfrom its highly polluting tar sands, has begun courting China and other Asian countries to exploit the resource.
The move comes as American firms are turning away from tar sands because of its heavy carbon footprint and damage to the landscape.
Whole Foods, the high-end organic grocery chain, and retailer Bed Bath & Beyond last week both signed up to a campaign by ForestEthics to stop US firms using oil from Canadian tar sands. The Pentagon is also scaling down its use of tar sands oil to meet a 2007 law requiring the US government to source fuels with lower greenhouse gas emissions.
Major oil companies such as Shell are also coming under shareholder pressure to pull out of the Canadian projects. Earlier this year, Shell announced it was scaling back its expansion plans for the tar sands after a revolt by shareholders. Producing oil from the Alberta tar sands causes up to five times more greenhouse gas emissions than conventional crude oil, according to the campaign group Greenpeace.
In the most significant deal to date, the Canadian government recently approved a C$1.9bn (£1.5bn) investment giving the Chinese state-owned oil company Petro China a majority share in two projects. Prime minister Stephen Harper said: "Expect more Chinese investment in the resource and energy sectors … there will definitely be more." China’s growing investment in the tar sands is seen in Canada as a useful counter to waning demand for tar sands oil from the US, its biggest customer. The moves, which have largely gone unnoticed outside north America, could add further tension to efforts to try to reach a global action plan on climate change.
The state department envoy, Todd Stern, on Tuesday accused China of being "a bit ambiguous" in its commitments to reducing greenhouse gas emissions. Efforts to impose national carbon limits in the US have stalled in Congress, but a number of leading US firms are moving to reduce their carbon footprint by moving away from abandoning tar sands oil.
Jim Sinclair’s Commentary
An example of Wall Street diplomacy regarding China just today:
- Something’s Brewing in China by Eddy Elfenbein
- Why We Should Take Goldman’s Yuan Prognostications Very Seriously by Bruce Krasting
- Timing a China Bubble Collapse by BlindReason
- Is China the ‘Mother of All Black Swans’? by Market Folly
- The Economics of Illusion Starting to Fade by Cynicus Economicus
- Market Overview: Pfizer, Vodaphone and the Chinese Economy by Vitaliy Katsenelson
- China’s Not So Tiny Bubble by Craig Pirrong
- Rising Wages in China Are a Good Thing by Michael Pettis
Jim Sinclair’s Commentary
No military base means take your Toyota home. This is the US kicking their new largest banker directly in the ass.
China cuts holdings of U.S. Treasuries
Foreign demand drops by record amount; Japan now holds most Treasuries
WASHINGTON – The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.
The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.
The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.
The big drop in China’s holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.
Japan increased its holdings of U.S. Treasuries, boosting them by $11.5 billion to $768.8 billion in December. That amount was higher than China’s December total of $755.4 billion, putting Japan back in the top spot in terms of foreign ownership of Treasury securities, a position it had lost in the fall of 2008 when China surpassed Japan.
Jim Sinclair’s Commentary
The takedown vultures are now circling the state of Illinois. After that comes Florida and 37 states in line behind them. This makes Greece look like child’s play.
Surviving Illinois’ Debt Sentence: $106 Billion
Chicago Sun-Times 12/07/2006
The Illinois Debt Counter is calibrated according to the following algorithm: $106,000,000,000 increasing at a straightline interest rate of 6% equals $6,300,000,000 of annual additional debt. This is a debt increase of $530,000,000 a month, $17,424,658 per day, $726,027 per hour, $12,100 per minute, and $201.67 per second.
This counter is a conservative estimate of how the $106 billion of Illinois state government debt can increase. Since the Facing Facts study by the Civic Committe’s Task Force on Illinois State Finance, and the companion article in the Chicago Sun-Times in December, 2006, we have not found another source to update the Illinois state debt figures. And since Illinois state government was nearly shut down this summer and early fall over a budget showdown, we can only assume that the debt has continued to grow exponentially.
"As it stands, Florida ranked second only to California in 2009 foreclosures (473,438 vs. 434,104) and well above runner-up states – Arizona (212,227), Illinois (105,472), and Texas (101,740)."
Debt clock is ticking
Hernando Today
Published: February 3, 2010
On the day President Bush took office the national debt stood at $5.7 trillion. By the end of his two terms in office (yeah!) it had reached more than $9.8 trillion, a 70 percent increase. But this isn’t about Bush-bashing – it’s about The Clock.
As the National Debt Clock keeps ticking at a frantic rate of $12,000 per second, thus adding to the United States’ $12.3-trillion deficit, you can bet your bottom dollar that, at no fault of your own, what you currently have in your pocket will be less in the years ahead.
Overall debt per taxpayer is more than $113,000 including short term (credit card) and long term (mortgage) payments, but the single largest contributor is the $40,000 due to the federal deficit. In a 24-hour period I witnessed a fifteen dollar increase.
Jerome Corsi of WorldNet Daily, "If the Obama administration increases the national debt by 65 percent every two years, the debt will be $16.5 trillion in 2010 and $27.225 trillion by 2012, the year of the next presidential election." If correct, the recent $1.9 trillion increase to the national debt ceiling will be revisited multiple times over during the next two years.
As expressed by John Silva, Managing Director of Wachovia, and other economists, "the housing market in the U.S. is essentially a government-sponsored entity."
