“Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies… What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment."
–Alan Greenspan, 9 September 2009
Jim Sinclair’s Commentary
Listening the heroes of Wall Street speaking right now of their patriotic belief in America is shocking. These wise men should be more interested in protecting people than simply talking their positions.
New ghost towns: Industrial communities teeter on the edge
By Rick Hampson, USA TODAY
RAVENSWOOD, W.Va. — When Henry Kaiser arrived 55 years ago, this place was no place — "a rural problem area," the government called it, so poor and isolated that the population had dropped 15% since 1940.
That all changed after Kaiser, the industrialist who’d turned out ships and planes at a record pace in World War II, built the nation’s largest consolidated aluminum works here on the banks of the Ohio River.
The plant paid Tim Shumaker his first living wage, and he won the right to keep it two decades ago after his union was locked out for 19 months.
Today, that victory seems hollow. Shumaker, 49, has been laid off. Part of the vast aluminum complex is closed, and the rest is for sale — its orders down, its workforce reduced, its future uncertain. Shumaker stands at the locked plant gate and, after a year without work, worries what’s next for him and his community. "The way things are going," he says, "there’s not going to be anything here."
Ravenswood, with 4,000 people and one big factory, is like many towns in the USA where things still are made: caught in a winter between recession and recovery, hoping the latter will arrive before the former kills the last decent blue-collar job.
Jim Sinclair’s Commentary
Although many will dismiss this as extreme, please bear in mind that there is numerous historical precedent that supports the argument.
We must arm ourselves for a class war
The recession has increased the wealth gap to dangerous levels, and George Osborne does not seem serious about tackling it, says Edmund Conway.
By Edmund Conway
Published: 6:40AM GMT 25 Feb 2010
If you don’t work in the City or in economics, you may not have heard of the annual Mais lecture, which was delivered last night by George Osborne. But it’s a big deal, arguably the most important set-piece speech in the Square Mile calendar. And only once before has City University, the host, deigned to invite an opposition politician primed for election to deliver it.
On that occasion, the young thrusting pup at the lectern derided a government in crisis, its finances in a state, its economic reputation in tatters. He promised to cut the deficit, to intervene in markets where necessary, and laid out a "new framework" for running the economy. That man was Tony Blair.
Last night, George Osborne became the second opposition politician to deliver the lecture. His title? "A New Economic Framework". That aside, the difference could hardly be more stark. In 1995, the economy was in recovery. With the deficit past its peak, the great transformation in macro-economic management had already taken place, when the collapse of the Exchange Rate Mechanism forced Britain to start targeting inflation rather than exchange rates.
Today, the economy is in a far more damaging spiral. The first leg of the financial and economic crisis, which stemmed from excessive private borrowing and the subsequent collapse of the banking industry, is over. The second leg, characterised by a crisis of sovereign debt in even the richest economies, is only just beginning. The Bank of England’s inflation-targeting approach is under question from sources as authoritative as the International Monetary Fund. The world economy looks increasingly vulnerable to a "double-dip", tipping back into recession or stagnation rather than bouncing back to health.
More important, both political parties are committed to spending cuts of a scale never before experienced by the public. Ignore the fuss about economists’ letters: based even on Labour’s plans for public spending, the next half-decade will be the first time in modern history that a government has imposed five successive years of real spending cuts. The question is not about timing (the Tories would cut earlier and slightly more) but over who will push the cuts through. Labour perennially disappoints and misses its fiscal targets. What most recommends the Tories is the pedigree that suggests they will at least approach the task with some relish.
Jim Sinclair’s Commentary
Which escalator did Wall Street, The City, and the Bahnhofstrasse take?
Trader Dan’s Commentary
Here is a typical government response to a spending crisis – conjure up trillions of dollars in new, unpaid for spending, but cut Saturday mail delivery. Yep – that ought to close the funding gap! After all, $3.5 billion will make a big dent in that 2 year projected deficit of $2.9 trillion!
Wait until it costs us $1.00 to mail a first class letter.
What makes this all the more idiotic is that the Administration is revealing their “Cash for Caulkers” program where the feds will pay homeowners to caulk their holes in their houses. The number that I am reading associated with this program is $6 billion!
Now that is government math if I ever saw a wondrous example. Cut Saturday mail and save $3.5 billion but spend $6 billion on caulk. Folks – we could not make this stuff up.
This is supposed to create all manner of green jobs. About the only jobs I see being created by this is “Honey Do” lists. You know what those are if you are married: “Honey, can you do the caulking on the house”?
Postal Service Seeks Permission to End Saturday Delivery
Updated March 02, 2010
Postmaster General John Potter said Tuesday that he intends to seek congressional approval to cut Saturday delivery as part of a wide-ranging plan to close a multi-billion dollar budget gap.
Postmaster General John Potter said Tuesday that he intends to seek congressional approval to cut Saturday delivery as part of a wide-ranging plan to close a multi-billion dollar budget gap.
Though the idea of cutting service from six to five days has gotten a cool reception on Capitol Hill, Potter said that the plan would include enough flexibility so that customers who need Saturday service can get it and that this and other changes need to be implemented for the Postal Service to survive.
"We built a plan that we think is very reasonable. … We intend to pursue that," he said. "It’s a move that we simply have to make."
The financially struggling Postal Service is trying to find ways to get out of the red without resorting to taxpayer aid. Potter announced Tuesday that the service could lose a staggering $7 billion this year — losses attributed to a combination of the recession and the predominance of e-mail and other electronic forms of communication.
Jim Sinclair’s Commentary
Don’t hold your breath. Transparency in this is its demise.
You cannot clear anything without standards and transparent immediate market related valuation.
Derivatives dealers agree on OTC updates
By Aline van Duyn and Gregory Meyer in New York
Published: March 2 2010 02:00 | Last updated: March 2 2010 02:00
Derivatives dealers have agreed to give regulators more information about over-the-counter derivatives trades in the credit, interest rate and equity markets and will continue shifting more trades towards central clearing, they said in a letter to the Federal Reserve Bank of New York yesterday.
Even as banks raised their target of clearing credit derivatives that can be cleared to 85 per cent from 80 per cent – a key measure that regulators are calling for to reduce the risks of a systemic collapse of the financial system in the event of a default by a dealer – derivatives investors have so far failed to sign up for similar specific clearing targets.
Extending clearing to large dealers as well as big investors is widely regarded as an important step towards reducing derivatives risks, but in practice it is complex to implement.
"Remaining impediments to the expansion of buy-side access to clearing include legal and regulatory, risk management and operational issues," the letter to the Fed said. They said "a meaningful amount of open interest in buy-side transactions will be cleared".
With continued concerns about transparency in markets such as credit default swaps, which have come to the fore amid the pressures on Greece and its creditworthiness, the industry is planning to analyse existing sources of data in OTC markets, with the first report due at the end of March.
Jim Sinclair’s Commentary
This article by Huffington posses interesting questions.
Greece-Goldman Sachs Deals Were ‘Completely Scandalous’ – And Perfectly Legal: Martin Wolf (VIDEO)
Jim Sinclair’s Commentary
As our Polish and Russian CIGAs said, "Please read the handwriting on the wall."
States are falling like leaves in the fall. The CDS market, if you can call it that, will attack all the States of the US, just as it is attacking Greece now.
State mulls unpaid leave
Furloughs could be option for government agencies in Mississippi
State agency heads are readying plans to furlough employees or reduce staff if necessary as revenues continue to decline and lawmakers remain at loggerheads over a plan to help agencies through the remaining months of the fiscal year.
House and Senate budget negotiators traded jabs Friday morning and left the Capitol for the weekend without an agreement to offset cuts to the 2010 budget.
Last week, the State Personnel Board signed off on a request from the Department of Human Services to furlough employees for up to four days in the remaining four months of the fiscal year, said Deanne Mosley, the board’s chief of staff.
Julia Bryan, spokeswoman for DHS, said the request was put in as a "just-in-case." The department employs about 3,200.
"We have no plans at this time to furlough employees," Bryan said. "It’s strictly strategy or pre-planning in the event that more budget cuts come down. That’s the last thing we would want to do is have our employees off work."
Jim Sinclair’s Commentary
See what snow storms can do when MOPE is involved?
Jobless claims up 12% in past 2 weeks
By Blake Ellis, staff reporter
February 25, 2010: 9:59 AM ET
NEW YORK (CNNMoney.com) — The number of Americans filing for initial unemployment insurance surged to just below the 500,000 level last week, and have climbed more than 12% over the past two weeks, the government said Thursday.
There were 496,000 initial job claims filed in the week ended Feb. 20, up 22,000 from a revised 474,000 the previous week, the Labor Department said in a weekly report. The prior week, there were 442,000 claims filed.
A consensus estimate of economists surveyed by Briefing.com expected new claims to fall to 460,000.
The 4-week moving average of initial claims was 473,750, up 6,000 from the previous week’s revised average of 467,750.
"This is certainly not surprising given the very adverse weather conditions for the eastern half of the country, especially in the major population areas," said Robert Dye, a senior economist at PNC Financial Services. "Weather has a huge impact, particularly with things like construction, which remains very soft."
Jim Sinclair’s Commentary
Yet another example of MOPE.
Summers says weather may distort employment data
The Director of President Obama’s National Economic Council is preparing the markets for what could be an ugly employment report this Friday. In an interview with CNBC, Summers had this to say, "The blizzards that affected much of the country during the last month are likely to distort the statistics … it’s very important to look past whatever the next figures are.
Jim Sinclair’s Commentary
The entities providing this financing are dependent on Federal funds because they are broke.
FHFA Extends Refinance Program
Tuesday, March 02, 2010
Federal Housing Finance Agency Acting Director Ed DeMarco today announced the extension of the Home Affordable Refinance Program, (HARP), a refinancing program administered by Fannie Mae and Freddie Mac, to June 30, 2011. … The HARP program expands access to refinancing for qualified individuals and families whose homes have lost value. The program was set to expire on June 10 of this year.
“FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed,” said DeMarco. “Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the extension of HARP until June 30, 2011.”
Jim Sinclair’s Commentary
I have no financial interest is this company yet I financed the purchase of the high tech equipment that can actually examine gold and silver regardless of the item size and determine the purity without error.
I did this because of my concern for the CIGA community and my knowledge that crooks have taken control of this world of finance in all forms.
To keep my intentions pure I have excused the debt, and will not accept repayment of any kind.
What I can tell you is that it works.
Their email address is BullionAnalysis.com at info@bullionanalysis.com.
BullionAnalysis LLC has developed a technological application that is unique to the precious metals market, for the purpose of determining if your bullion has been counterfeited by including tungsten alloy. This technology is completely safe and non-destructive to the precious metal, and will be effective on everything from fractional ounce coins all the way up to the full size 100, 400 and 1,000 ounce COMEX bars of gold and silver.
Their technological application has been developed in response to the growing threat to the bullion community from tungsten/lead alloy adulteration. Tungsten (19.25 g/cm3 density) has a density nearly identical to gold (19.32 g/cm3 density), and lead (11.35 g/cm3) will have a density very close to pure silver (10.45 g/cm3). Lead can also be alloyed with lighter elements to match even closer the density of silver. The threat arises from unscrupulous individuals and possibly institutions that have been removing precious metal from the center of bullion bars and replacing it with tungsten or lead alloy. Modern computer-aided machine tools are then used to seamlessly re-smooth the surface of the bullion product to hide any trace of the theft that has just happened.
Traditionally, the use of a density calculation (mass divided by volume) has been the solution to verify the assay purity of bullion. Unfortunately the insidious use of tungsten and other alloys that match the densities of gold and silver make this test completely useless for this type of problem.
Their new detection technologies are unique to the bullion market. They can detect tungsten/lead and other impurities and cavities that are hidden at any depth inside the bullion product and it is 100% completely non-destructive and safe.
In addition, they are able to produce tamper-resistant holographic-sealed assay certificates with the analysis results for the bullion item, that bear a digital image of the bullion product and show the serial number and hallmark if present. These tamper-resistant assay certificates could then trade with the bullion product and give both buyers and sellers a sense of real security.
At the present time they are focusing their efforts on delivering this service to depositories and institutions and plan to expand their services to cover retail gold and silver investors in the near future.
