Dear CIGAs,

Paul Volcker is correct, but being correct carries no asset value in this situation.

Wall Street owns Washington, and is not about to give up there omnipotence.

There are other discussions on this video but not of my interest.

 

Volcker says must let big financial firms fail
WASHINGTON
Sun Feb 14, 2010 10:52am EST

Chairman of the President’s Economic Recovery Advisory Board Paul Volcker testifies before the U.S. Senate Banking, Housing, and Urban Affairs Committee on Capitol Hill in Washington, February 2, 2010. REUTERS/Jim Young

WASHINGTON (Reuters) – Large financial institutions that engage in speculative activities for profit should be allowed to fail if they get in trouble, White House advisor Paul Volcker said on Sunday.

"If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it — not save it," Volcker said on CNN.

"It’s called euthanasia, not a rescue."

As Congress debates financial reform in the wake of the worst financial crisis since the 1930s, Volcker has argued for fencing off investment firms primarily engaged in market speculation from commercial, deposit-taking banks.

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Jim Sinclair’s Commentary

Where else are they going to get new production from? Have you heard of any world class mines opening lately?

Mining M&A May Double This Year, Ernst & Young Says
By Rebecca Keenan

Feb. 16 (Bloomberg) — The value of mining mergers and acquisitions may more than double this year, snapping a two-year decline, as China and India seek to secure supplies of raw materials, Ernst & Young LLP said.

The value may rebound to 2006’s levels when $175 billion of deals were done, after halving to $60 billion last year, Ernst & Young’s Global Mining & Metals Leader Mike Elliot said in an interview. Deals peaked at $210 billion in 2007, according to a report by the consulting firm.

Mining companies such as Anglo American Plc and Vale SA sold a record amount of dollar bonds last year to bolster war chests for acquisitions, expansions and buybacks. China, the world’s largest metal consumer, may add to last year’s record $32 billion spending on resource acquisitions.

“Many mining and metals companies are looking for acquisitions to fast track supply pipelines, driven by confidence in ongoing underlying demand in China and India,” Elliot said. “We are seeing a lot larger lists of potential buyers than there are assets available.”

BHP Billiton Ltd., the world’s largest mining company, fell 0.3 percent to A$40.55 at the 4:10 p.m. Sydney time close on the Australian stock exchange and Rio Tinto Group, the third-largest, was little changed at A$70.58.

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Jim Sinclair’s Commentary

Does the ends (profit) justify the means (misstatement of a national balance sheet)?

Maybe on the Dark Side, yes.

Goldman Sachs in new storm over secret deal to mask Greek debts
By Sam Fleming
Last updated at 9:52 AM on 16th February 2010

Goldman Sachs struck a secret deal with Greece to help it mask its vast debts, it emerged yesterday.

The Wall Street giant is claimed to have reaped as much as £192million in fees by entering a complex currency transaction in 2001 that helped Athens borrow cash without putting it on the books as a loan.

The so-called ‘swap’ deal, while permitted under EU rules, helped Greece meet eurozone limits on government borrowing.

Greece’s vast deficits caused it to fail the criteria for joining the single European currency in 1999, but it succeeded in 2001.

Member nations had to reduce their budget deficit to less than 3 per cent of gross domestic product and trim national debt to less than 60 per cent of GDP.

The Greek deficit stands at nearly 13 per cent of GDP and public debt is almost twice the official ceiling at 113 per cent of GDP.

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Jim Sinclair’s Commentary

Mark down then mark up. Thank you FASB.

Why should the Fed not if everyone else has?

Outlook is bearish for some Fed holdings. ^[4]
The Federal Reserve is reportedly holding paper losses on the real estate portfolio it acquired when it helped JPMorgan (JPM) buy Bear Stearns. The losses are in part due to debt used to finance large buyouts, and are concentrated in commercial real estate assets. When the Fed first received the assets, they had a face value of $8.4B with an estimated worth of $7.7B; as of September, the assets had been marked down to $4B.

Jim Sinclair’s Commentary

Before you assume the dollar is a safe haven you might like to review this pie chart carried by Leap2020.

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New sovereign debt issuance in 2009 (USD billions) – Source: PhoenixProject, 07/2009

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Jim Sinclair’s Commentary

The 11 weakest currency situations. This is also a good chart for consideration so you do not fall for the dollar rally MOPE pouring out today.

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Jim Sinclair’s Commentary

Never kick your banker directly in the ass repeatedly.

Foreign demand for US Treasury securities falls by record amount as China reduces holdings
Martin Crutsinger, AP Economics Writer, On Tuesday February 16, 2010, 9:58 am EST

WASHINGTON (AP) — 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 also reduced its holdings of U.S. Treasuries, cutting them by $11.5 billion to $768.8 billion in December, but that amount was still more than China’s December total of $755.4 billion.

The $53 billion decline in holdings of Treasury securities came primarily from a drop in official government holdings, which fell by $52.3 billion. The holdings of foreign private investors fell by $700 million during the month of December.

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Jim Sinclair’s Commentary

Diplomacy at its best. Clock the guy!

US, Turkish officials get physical in Qatar
Mon, 15 Feb 2010 18:06:21 GMT

A fight broke out between high-ranking US and Turkish officials at a meeting held between Secretary of State Hillary Clinton and Prime Minister Recep Tayyip Erdogan in Qatar.

The fight was reported between the US ambassador to Qatar and an advisor to the Turkish prime minister at the end of a 20-minute meeting between Clinton and Erdogan on Monday.

The altercation took place after the US envoy entered the room to remind those present to close the meeting as the time was over.

In response, Erdogan’s adviser said, "It is not for you to judge the importance of our meeting, you offend our country," the Turkish daily Today’s Zaman reported.

The quarrel led to physical confrontation and the two diplomats were separated with difficulty.

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Jim Sinclair’s Commentary

This picture says it all.

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Jim Sinclair’s Commentary

It can be described as Congress is catatonic, in total denial and simply not up to the challenge.

What Evan Bayh’s retirement really says about Obama’s Washington
February 16, 2010

For all of its eloquence and admirable candor, the unusual retirement statement (see video below) by Indiana’s Democrat Sen. Evan Bayh also revealed a stunningly keen grasp of the obvious — for millions of Americans watching the playground antics of the elected clowns in D.C. with bipartisan head-shaking.

"For some time," Bayh said, "I’ve had a growing conviction that Congress is not operating as it should. There is much too much partisanship and not enough progress; too much narrow ideology and not enough practical problem-solving. Even at a time of enormous national challenge, the people’s business is not getting done."

No kidding? He’s a real Sherlock Holmes.

It’s no diminishment of the long years of successful public service and politics in a Republican state by Democrats Bayh and his father, Birch, to point out that well back in the last century another former Democratic governor, named Jimmy Carter, campaigned to bring fresh air to the federal swamp. That worked out so well that voters sent Republicans to the White House for the next 12 years.

Ross Perot was an outsider. So was Bill Clinton of Arkansas. George W. Bush of Texas campaigned to change the tone in Washington.

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