Dear CIGAs,
Here is the mantra of OTC derivative credit default swap manufacturers:
"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain."
–Napoleon Bonaparte, 1815
Jim Sinclair’s Commentary
The US dollar is not a safe haven. The Chinese do not speak to hear their own voice.
China ready to end dollar peg
The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual.
By Garry White
Published: 5:31PM GMT 06 Mar 2010
At the annual session of the legislative National People’s Congress in Beijing, Zhou Xiaochuan, governor of the People’s Bank of China, said that the days of the “special yuan” policy were numbered. He described the dollar peg as a “temporary” response to the global financial crisis, but gave no timescale for any change in policy. The currency has been pegged at about 6.83 yuan per dollar since July 2008.
Many economists expect China to allow the yuan to appreciate slightly this year, but the cautious tone by Mr Zhou means that any change may not happen for some time. He said that the central bank would maintain the “basic stability” of the currency. So, despite the fact that the Chinese economy grew by 10.7pc in the fourth quarter of last year, the country’s loose monetary policy looks set to continue.
“If we are to exit from irregular policies and return to ordinary economic policies, we must be extremely prudent about our choice of timing,” Mr Zhou said. “This also includes the [yuan] exchange rate policy.”
China’s currency policy has been subject of fierce debate, particularly in the US and Europe, with the country’s central bank accused of keeping the yuan artificially low to promote a domestic exports boom. An artificially lower currency makes the country’s goods and services more competitive, leaving other exporters at a disadvantage. Jim O’Neil, Goldman Sach’s chief economist, thinks the Chinese should allow their currency to appreciate by as much as 5pc.
In recent week President Obama has been vocal on the issue of the artificially low currency. “China and its currency policies are impeding the rebalancing [of the global economy] that’s necessary,” Mr Obama told Bloomberg last month. “My goal over the course of the next year is for China to recognize that it is also in their interest to allow their currency to appreciate because, frankly, they have got a potentially overheating economy.”
Jim Sinclair’s Commentary
Keep in mind that this is coming along with the IMF as the central bank of central banks.
Head of IMF Proposes New Reserve Currency
IMF’s Strauss-Kahn suggests IMF may one day provide global reserve asset
By HARRY DUNPHY Associated Press Writer
WASHINGTON February 26, 2010 (AP)
Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.
"That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now," he said in a speech on the future mandate of the 186-nation Washington-based lending organization.
Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF’s special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF. It is based on a basket of major currencies.
He said having other alternatives to the dollar "would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country."
Strauss-Kahn, a former finance minister of France, said that during the recent global financial crisis, the dollar "played its role as a safe haven" asset, and the current international monetary system demonstrated resilience.
Jim Sinclair’s Commentary
A jobless recovery is a world class oxymoron.
Economists: Another Financial Crisis on the Way
Nonpartisan Group Led by Nobel Winner Calls for Stronger Financial Reforms
By MATTHEW JAFFE
March 2, 2010
Even as many Americans still struggle to recover from the country’s worst economic downturn since the Great Depression, another crisis – one that will be even worse than the current one – is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.
In the report, the panel, which includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high-risk investing that precipitated the near-collapse of the U.S. economy in 2008.
The report warns that the country is now immersed in a "doomsday cycle" wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management – and when the risks go wrong, the banks receive taxpayer bailouts from the government.
"Risk-taking at banks," the report cautions, "will soon be larger than ever."
Without more stringent reforms, "another crisis – a bigger crisis that weakens both our financial sector and our larger economy – is more than predictable, it is inevitable," Johnson says in the report, commissioned by the nonpartisan Roosevelt Institute.
Jim Sinclair’s Commentary
This chart with input from my old friend Simon at Brooks Hunt tells the story of China.
Jim Sinclair’s Commentary
Here in CT you could cut an offering price by 50% and still not see a buyer.
There is no such thing as a "Jobless Recovery." That is a world class oxymoron only believed by morons.
Norwich-area foreclosures, delinquencies continue to mount
By JAMES MOSHER
Posted Mar 04, 2010 @ 11:49 PM
Mortgage foreclosure and delinquency rates in Norwich/New London rose in January, another sign economic recovery remains elusive for Eastern Connecticut.
The pattern is likely to persist, one market expert said.
Yet the Norwich foreclosure rate remains below the national average.
The rate of foreclosures in Norwich/New London was 2.35 percent in January, up from 1.61 percent a year earlier, according to First American CoreLogic, a California-based company that tracks home sales, price trends and foreclosures. The January national rate was 3.19 percent.
While he is relieved Eastern Connecticut’s most populated region remains below national foreclosure rates, John Bolduc, CEO of the Eastern Connecticut Association of Realtors, doesn’t expect the problem to lessen in the near future.
‘Not out of the woods’
“This is going to be a problem for the next year or so,” he said. “We’re not out of the woods yet.”
The issue likely will get plenty of discussion Saturday at the association’s Home Buyer and Seller Fair at the Holiday Inn. Norwich U.S. Rep. Joe Courtney, D-2nd District, is scheduled to make a 2:30 p.m. appearance and may speak about the foreclosure situation, Bolduc said.
Jim Sinclair’s Commentary
The popular delusion of the dumbed down crowd is a "Jobless Recovery.’ That one will get filed with the 1931 "Plateau of Prosperity" or maybe the "Goldilocks Economy."
How do people buy these propaganda terms? What do you think the newest one, "PIGS" was created for?
Remember "Rear View Mirror Events" as applied to any economic statistic that might have suggested what we are going through now was coming?
Rise in Valley pre-foreclosures dulls hopes for recovery
Catherine Reagor,
The Arizona Republic – Mar. 2, 2010 05:25 PM
Pre-foreclosures in metropolitan Phoenix climbed in February, dashing hopes that the housing market is starting to recover from the crash.
In January, pre-foreclosures, known as notice-of-trustee sales, fell to their lowest level since late 2008. The significant drop had some housing-market watchers hopeful more lenders were working with borrowers on loan modifications early on and more borrowers could afford their monthly mortgage payments.
But in February, there were 7,604 pre-foreclosure notices filed by lenders in metro Phoenix, up from the 6,762 in January, the Information Market reports.
Foreclosures did fall last month, to 4,271 from 4,452 in January. But if the many struggling homeowners in pre-foreclosure can’t work out loan modification or short-sale deals with their lenders, foreclosures are bound to climb again in the next few months.
Home prices
Prices for both foreclosure homes and regular homes in metro Phoenix are ticking up, according to data from Phoenix-based NetValueCentral Inc.
Jim Sinclair’s Commentary
Goldman Sachs executives have armed themselves according to media reports. Maybe Moody’s might consider it as their impact becomes international.
Moody’s Cuts Ratings On Seven Abu Dhabi Companies
Thursday, Mar 04, 2010
By Nour Malas
DUBAI (Zawya Dow Jones)–Moody’s Investors Service Inc. Thursday downgraded the ratings of seven Abu Dhabi-based companies by a notch or more saying there’s "no explicit formal" government guarantee to support them, after being prompted to put them on review in December because of restructuring at Dubai World.
In an emailed statement, Moody’s said it lowered Mubadala Development Co.; International Petroleum Investment Co., or IPIC; Tourism Development and Investment Co., or TDIC; Abu Dhabi National Energy Co., or Taqa; Emirates Telecommunications Co., or Etisalat; Dolphin Energy; and Aldar Properties.
The rating on Aldar, Abu Dhabi’s largest developer, moved from investment grade to speculative grade, or junk.
Moody’s said it placed "a moderate distinction" between the ratings of Mubadala, IPIC, TDIC and sovereign Abu Dhabi, describing the companies as "vehicles of government policy" that remain heavily funded by the government. All three companies previously held ratings in line with Abu Dhabi’s.
Moody’s placed a greater distinction between the ratings of Taqa, Dolphin, and Aldar and sovereign Abu Dhabi, citing a lack of either continued, regular, or expected support from the government.
Jim Sinclair’s Commentary
One more added to the list.
Venezuela Central Bank to Increase Gold Purchases, Khan Says
By Corina Rodriguez Pons
March 5 (Bloomberg) — Venezuela’s central bank will boost its gold reserves this year and will buy more than half the estimated 20 metric tons of domestic production, bank director Jose Khan said today at an event in Caracas.
The central bank, which has about $16 billion of its $30.6 billion of reserves in gold, purchased 1.08 tons of gold from domestic mines in the first two months of this year after buying just 2 tons in all of 2009, said Khan, one of five directors at the country’s monetary authority.
“We’re going to increase our gold reserves and buy more local production,” Khan said today. “Our objective is to increase reserves and help develop the local gold industry.”
Venezuela’s central bank is planning to provide $250 million of financing for gold production this year in an attempt to boost non-oil exports. The bank, along with the Mining Ministry, plans to build a gold refinery, bank President Nelson Merentes told reporters March 3, without providing details.
Gold futures for April delivery rose $2.10, or 0.2 percent, to $1,135.20 an ounce on the Comex division of the New York Mercantile Exchange. The metal gained 1.5 percent this week.
Jim Sinclair’s Commentary
Four bank closings so far this weekend. The sheeple simply sleep on.
Bank Closing Information – March 5, 2010
These links contain useful information for the customers and vendors of these closed banks.
Centennial Bank, Ogden, UT
Waterfield Bank, Germantown, MD
Bank of Illinois, Normal, IL
Sun America Bank, Boca Raton, FL
Jim Sinclair’s Commentary
A "Jobless Recovery" is an insult to the intelligence of those that possess this rare quality.
