Dear Friends,
I am off to Toronto tomorrow. I prefer to drive rather than be groped by inspectors at airports. I will only fly when there is no other alternative because of the dehumanizing, meaningless, procedures at airports.
I need no hands-on convincing that Uncle is protecting me. Thanks to modern communication technology, I will not be out of contact with markets or yourselves.
AT&T offers a very inexpensive Lenovo that works via cell connection of which ATT is covering most of the route.
Trader Dan and the whole gang will keep a close eye on things and post on any important developments.
Regards,
Jim
Jim Sinclair’s Commentary
This is the entire story. First the job losses must be stopped completely. Second, job creation must offer valid hope of returning to normal levels. Until then all talk of a sustainable economic recovery is economic propaganda.
A consumer based economy requires consumers, a fact not often discussed.
The New Poor
Millions of Unemployed Face Years Without Jobs
By PETER S. GOODMAN
Published: February 20, 2010
BUENA PARK, Calif. — Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.
Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.
Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.
Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.
She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance.
More generations living under same roof
NEW YORK (Reuters) – More generations are living under the same roof and the trend will deepen as families grappling with near double-digit unemployment share expenses, a study showed on Monday.
Demand is escalating for multi-generational housing as buyers scale down during the deepest housing crisis since the Great Depression, according to a survey by Coldwell Banker Real Estate in Parsippany, New Jersey.
Thirty-seven percent of the company’s real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation. Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.
"More buyers are pooling investments, considering bringing mom and dad into it," said Diann Patton, a Coldwell Banker real estate consumer specialist based in Grass Valley, California, in an interview with Reuters.
Buyers were primarily driven by financial concerns when deciding to combine generations in a household, the survey found. Health concerns were the second most common reason and strong family bonds a distant third.
Jim Sinclair’s Commentary
Every state of the USA and every state of the EU will be bailed out by one method or another. The effect will be "QE to Infinity" in the Western world.
‘Doomsday is here for the state of Illinois’
It will take a massive tax increase — and $2 billion more in cuts — to reach solvency, group says
February 22, 2010
BY DAVE McKINNEY Sun-Times Springfield Bureau Chief
SPRINGFIELD — To become solvent, the state must enact the largest tax-increase package in Illinois history, whack another $2 billion from already starved government programs and wrest major financial concessions from the state’s unionized work force, a nonpartisan government watchdog contends.
In a new analysis of Illinois’ "horrific" finances, the Civic Federation lays out the painful choices awaiting Gov. Quinn and the Legislature as they stare down an epic $12.8 billion budget deficit that has choked the flow of state cash to public universities and schools, transit systems and social-service agencies to the point of economic collapse.
"Doomsday is here for the State of Illinois," said Laurence Msall, the organization’s president.
The Civic Federation recommends that the state income tax be increased from 3 percent to 5 percent for individuals, that retirees’ pension and Social Security checks be taxed for the first time at the same rate as workers’ paychecks, and the tax on cigarettes be raised by another $1 per pack. The group also favors getting rid of $181 million in corporate tax breaks.
Those tax increases, which would generate more than $8 billion, should come only if the state first can persuade its unionized employees to pay more toward their pensions and health care, cut pension benefits for new workers and reduce overall spending by $2.1 billion to 2007 levels. Medicaid programs and elementary and secondary schools would be spared from those cuts to avoid sacrificing federal stimulus dollars, Msall said.
Jim Sinclair’s Commentary
This is another important category to be informed of. Make note of this website for your weekly review.
Enforcement Actions
Legal actions by the Board and written agreements approved by the Federal Reserve Banks
February 18, 2010
Written agreement SunFirst Corporation
February 18, 2010
Written agreement with First National Corporation
February 18, 2010
Written agreement with TCM Company
February 18, 2010
Prompt corrective action directive against Marco Community Bank
February 17, 2010
Written agreement with Community National Bancorporation
February 17, 2010
Written agreement with Beach First National Bancshares
February 17, 2010
Written agreement with Community First Bank-Chicago
Jim Sinclair’s Commentary
CIGA HC asks where is the discussion of the severity of this in general media and F-TV.
Congressional Oversight Panel Analyzes Commercial Real Estate Losses and the Risk to Financial Stability
February 11, 2010
Wave of Refinancing Could Overwhelm an Already Weakened Financial System Community Banks at Greatest Risk
WASHINGTON, D.C. – The Congressional Oversight Panel today released its February oversight report, "Commercial Real Estate Losses and the Risk to Financial Stability." The Panel is deeply concerned that a wave of commercial real estate loan losses over the next four years could jeopardize the stability of many banks, particularly community banks, and prolong an already painful recession.
Commercial real estate (CRE) loans made over the last decade – including retail properties, office space, industrial facilities, hotels and apartments – totaling $1.4 trillion will require refinancing in 2011 through 2014. Nearly half are at present "underwater," meaning the borrower owes more on the loan than the underlying property is worth. While these problems have no single cause, the loans most likely to fail are those made at the height of the real estate bubble. The Panel notes, however, "Even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit."
Community banks, unlike the largest Wall Street banks, face the greatest risk of insolvency due to mounting commercial real estate loan losses. According to federal guidelines, 2,988 banks nationwide are classified as having a "CRE Concentration." None of these banks are among the 19 largest bank holding companies. Forecasts project that banks will suffer their worst losses well after the timeframe examined by the stress tests – an exercise conducted only on the nation’s 19 largest bank holding companies – and well after Treasury’s authority expires under the Troubled Asset Relief Program (TARP).
The Panel found that "a significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American." When commercial properties fail, it creates a downward spiral of economic contraction: job losses; deteriorating store fronts, office buildings and apartments; and the failure of the banks serving those communities. Because community banks play a critical role in financing the small businesses that could help the American economy create new jobs, their widespread failure could disrupt local communities, undermine the economic recovery and extend an already painful recession.
Wealth Disparities in U.S. Approaching 1920s Levels
February 21, 2010
This graph was an eye opener for me (not that I should be surprised):
My Take:
What a time to be an oligarch! All I wanted to do was vomit when I saw this.
Folks, there is no way we can have economic prosperity in this country when the top 1% has all of the money. The middle class is basically being destroyed right in front of our very eyes. Consumption economies die when the consumers have no money to consume!
I see growing signs of desperation and anger as the wealth of this nation continues to get transferred to the elite of this nation.
People are starting to "lose" it as a result. This past week’s airplane event in Austin was a disturbing development. I must admit that I really am not surprised. The government shouldn’t be either.
Things are only going to get worse in the violence department as the taxpayers continue to get violated and more desperate as a result of this economic cataststrophe. The news media tried to downplay the actions in Austin.
I think Washington was both surprised and concerned about what took place in Texas.
I have to ask: Should the government really be surpised that an American flew a plane into an IRS building in a fit of rage as we all get repeatedly fleeced by the political and social elites of this country?
Let me preface all of this by saying violence is not the answer here. However, why shouldn’t every American be infuriated by what has ocurred since this crisis began?
Jim Sinclair’s Commentary
If there was no concern, why would these entities enact such contingent draconian regulations with their clients?
Regardless, the sheeple will not ask such a question.
Citigroup Can Limit Demand Deposit Withdrawals; Money Funds Can Too
by: Edward Harrison February 22, 2010
Apparently, some of the ‘best reforms’ now being instituted in the U.S. to prevent a liquidity crisis in the future include limitations on demand deposits (hat tip Karl Denninger). What financial institutions are trying to prevent is a bank run in whatever form it can take – via depositors in the case of IndyMac and Washington Mutual and via interbank loans in the case of Bear Stearns.
Citibank (C) has come up with an innovative solution – turn demand deposits into 7-day deposits:
Seen on a recent Citibank statement: "Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change."…
I called Citi about it and they said the warning applies only to customers in Texas and that the notification had been mistakenly included on statements nationwide. Whatever the explanation, it doesn’t exactly inspire confidence in Citi. I’ve got nothing against Citi as a general matter — I have friends who work there, and know some account holders who are generally satisfied customers. But it’s hard to believe a bank would be sending out a notice like that on its statements.
This may be good for Citi but I wonder how it is legal. After all, the point of a demand deposit is to provide safekeeping for one’s money. Otherwise, with interest rates at zero percent, why not just keep your money under a mattress? I find it hard to believe that Citi can simply decide to require seven days notice. I am sure that Citi uses the standard credit card tactic of issuing all affected account holders a notice in full legalese of the changes that are being instituted, giving them an option of closing their account.
Jim Sinclair’s Commentary
Another gift from our manufacturers and distributors of OTC derivatives.
They damn well knew what these OTC derivative devices were being used for and profited in the currency markets when the s**t hit the fan.
Eurozone plays hide and seek with debt.
Greece isn’t the only nation to have used off-market swaps to hide the size of its debt. Apparently, multiple European nations have turned to complex financial products, sometimes in secret, to disguise the level of their debts and deficits. Investors chose to ignore these maneuvers which countries like Portugal and France tried to use to stay inside the eurozone’s fiscal ceilings.
Jim Sinclair’s Commentary
Individual States are not in the MOPE mill or simply cannot fabricate with a straight face.
F-TV is confusing the markets for the economy broadcast today that M&A is going to fix everything.
Who needs jobs anyway?
Governors glum on growth.
In a meeting of the National Governors Association this weekend, state governors were generally downbeat about the economic outlook, warning "the worst probably is yet to come." Governors disagreed on the benefits of the $787B stimulus package, but facing a $134B budget shortfall over the next three years, most view job creation as the key to recovery and many pushed Congress to bear this in mind when voting on a slimmed-down jobs bill today.
Jim Sinclair’s Commentary
This is great news for nickel operations where cobalt is a major co product.
Normally new listing have secondary purposes. I laughed when I first heard that milk would be traded.
I should have paid more attention.
LME launches cobalt and molybdenum futures trading
18/02/2010
The London Metal Exchange will launch the world’s first cobalt and molybdenum futures contracts to be traded on exchange on Monday 22 February. The new contracts will introduce regulated exchange pricing, transparency, risk management and clearing to these two important metals used in a wide range of applications.
Cobalt and molybdenum are largely by-products from nickel and copper mining. Together their market value was estimated at around US$7billion in 2009, a year of low prices as a result of the global economic downturn. In comparison, the tin market’s value last year was close to US$5billion.
Historically cobalt and molybdenum have traded without the benefit of regulated exchange security and transparency. In particular, trading on the LME – a Regulated Investment Exchange (RIE) – will introduce important additional strengths to these markets. These include:
Transparent price discovery and neutral reference pricing
Flexibility of trading on LMEselect, the Inter-office telephone market and the Ring – the exchange’s open outcry trading floor
Leveraged trading and risk management
Counterparty credit security and guarantees via clearing on LCH.Clearnet
Support for LME trading of both metals has been demonstrated by producers with cobalt and molybdenum brands registered for good delivery. Cobalt producers with good delivery brands include Vale Inco, Votorantim and Sumitomo and a number of Chinese producers. Molybdenum producers include Chile’s Molymet and Mexico’s Molymex. In total, 12 cobalt and molybdenum brands are already registered with the LME with further applications lodged with the Exchange.
Jim Sinclair’s Commentary
The Marxists and Maoists have become financially driven as the West became financially confused Socialist/Marxists.
Unfortunately there seems no road back. This for the West is extremely sad but absolutely true.
Here is another gift we can thank Wall Street for all its help in. This gift is of course OTC derivatives.
American capitalism gone with a whimper
It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.
Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.
First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.
Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.
The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America’s short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.
Jim Sinclair’s Commentary
Here is one side of the Greek story.
Bacon’s Moore Capital Not Betting on Greek Default (Update1)
By Katherine Burton
Feb. 22 (Bloomberg) — Louis Bacon’s $14.6 billion Moore Capital Management LP told investors it isn’t betting on a Greek default because European authorities will probably bail out the country.
“We are expecting the European authorities to move beyond uninformed blame-casting and begin bailing out Greece,” Bacon wrote in a Feb. 19 letter to clients in his Moore Macro Managers Fund Ltd. Moore has a net long duration position in Greek bonds, meaning it will benefit from a uniform decline in interest rates across the yield curve.
New York-based Moore joins Brevan Howard Asset Management LLP, Europe’s largest hedge-fund firm, in rejecting speculation that they’re betting against Greek bonds, as European politicians warn managers they shouldn’t try to profit from the woes of European nations. Moore, which said it had been named in press reports as betting against the Greek bond market, said its position has hurt performance so far in February.
Greek two-year notes rose for a second day on speculation the government will find investors to buy its bonds in an auction expected as early as this week.
The yield on the two-year Greek yield fell 16 basis points to 5.39 percent as of 2:36 p.m. in London.
Jim Sinclair’s Commentary
Here is the other side indicating the short of the euro is not totally covered.
Euro Worst to Come as Greece Hammerlocks ECB on Rates (Update3)
By Liz Capo McCormick and Oliver Biggadike
Feb. 22 (Bloomberg) — Derivative traders are signaling that the euro’s slump to a nine-month low will continue even if European Union leaders bail out Greece.
Short-term rates for borrowing in euros in the forwards market are the cheapest relative to loans in dollars since September. The 50 percent collapse in that spread this month signals investors are betting the European Central Bank will keep its target interest rate at a record low, sacrificing euro strength to prevent deficit cutting by debt-laden economies in the region from stymieing growth.
“Investors have already started to think about the next likely phase of the present crisis, and it appears that all they are finding are new reasons to sell the euro,” said David Woo, global head of foreign-exchange strategy at Barclays Plc in London. “Aggressive fiscal tightening by Greece, Spain and Portugal are likely to plunge their economies back into recession. All else being equal, this calls for a looser monetary policy.”
The shift underscores a turnabout in the two most-traded currencies. In the last three quarters of 2009, the euro outperformed the dollar relative to 15 major currencies tracked by Bloomberg, with Deutsche Bank AG’s euro index gaining 1 percent and the Intercontinental Exchange Inc.’s Dollar Index down 9 percent.
Since Nov. 25, the dollar is up 8.3 percent and has outdone all but four major currencies as the euro lost ground against them. The euro traded at $1.3613 as of 7:11 a.m. in New York, unchanged from Feb. 19. The currency is down 5 percent against the U.S. currency this year.
Jim Sinclair’s Commentary
Wall Street will love this! An army of lobbyists will go wild.
Obama Endorses New Wealth Taxes, More Drugmaker Fees
By Ryan J. Donmoyer and Nicole Gaouette
Feb. 22 (Bloomberg) — President Barack Obama, seeking to break an impasse over health-care legislation, proposed a plan that includes the first Medicare tax on unearned income such as capital gains and higher fees on drugmakers, while scaling back a levy on high-end benefits.
The measure released today marks a reversal from months of leaving the legislation’s details largely up to congressional Democrats, who have failed to agree on a plan. Obama relied mostly on a Senate bill passed in December, with elements of a House version passed in November.
The plan to cover 31 million uninsured Americans presents a challenge to Republicans before a Feb. 25 meeting at Blair House, across the street from the White House. Obama invited leaders from both parties and called on Republicans, who have almost universally opposed the Democratic plans, to offer their own “comprehensive bill” to extend coverage and reduce costs.
“We view this as the opening bid for the health meeting,” said Dan Pfeiffer, the White House communications director, on a conference call with reporters today. “The president is coming to the meeting with an open mind. He hopes that the Republicans do, too. Our hope is to find some areas of agreement.”
Republicans have criticized the Democratic legislation, saying it’s too expensive at about $1 trillion over 10 years, that it unfairly forces people to obtain insurance, and will lead to government domination of health care. The White House says the program will be fully paid for with taxes and savings.
Jim Sinclair’s Commentary
QE to infinity, one way or another.
All states of the USA and EU will be bailed out, one way or another.
With G.O.P. Help, Senate Advances $15 Billion Jobs Bill
February 22, 2010, 6:38 pm
By CARL HULSE
In a rare bipartisan breakthrough, the Senate pushed a $15 billion measure intended to spur job creation over a crucial preliminary obstacle Monday night after five Senate Republicans broke ranks to back consideration of the Democratic leadership initiative.
The test vote of 62-30 makes it likely the Senate will approve the measure that Democrats said would create tens of thousands of new jobs, improving the struggling national employment market. But whether the House will go along with the legislation without making substantial changes remains to be seen.
After being repeatedly stymied by Republicans on a series of initiatives and nominations, Democrats were elated with the outcome and expressed gratitude to the Republicans who joined in bringing the measure to the floor.
“Today jobs triumphed over politics,” said Senator Barbara Boxer, Democrat of California.
Senator Scott Brown of Massachusetts, the newly elected Republican, was the first to join Democrats in backing the measure. He was then joined by Senators Susan Collins and Olympia Snowe of Maine, George Voinovich of Ohio and Christopher Bond of Missouri, who voted after it became obvious Democrats would prevail. Senator Ben Nelson of Nebraska was the sole Democrat to oppose beginning debate on the measure.
