"The deterioration of every government begins with the decay of the principles on which it was founded."
–Charles-Louis De Secondat(1689-1755) Baron de Montesquieu – Source: The Spirit of the Laws, 1748

 

Thoughts For The Morning:

EU bank stress tests are a pile of garbage when the Western world allows financial institutions to value crap paper at whatever they wish to value it at.

 

Jim Sinclair’s Commentary

Here is a look back on energy strategies and the validity of various administration promises.

Confidence in management sundering as MOPE fails is a great reason for gold at $1650 and beyond.

The Daily Show With Jon Stewart [1]	Mon – Thurs 11p / 10c
An Energy-Independent Future [2]
www.thedailyshow.com [3]
Daily Show Full Episodes [4] Political Humor [5] Tea Party [6]

 

Jim Sinclair’s Commentary

But be assured their recent cover up of deficits will cause another banking crisis.

Britain ‘might not cope with another bank emergency’
By Sean O’Grady and James Moore
Tuesday, 29 June 2010

Britain’s mountain of debt could leave the country powerless to launch another rescue bid in the wake of a fresh financial crisis, the world’s central bankers warned yesterday. Their "club" – the Bank of International Settlements – presented in its annual report a frightening picture of the impact of a second banking emergency on heavily indebted nations such as Britain.

The Bank of England’s Governor, Mervyn King, has estimated that the Government has pumped as much as £1trillion of taxpayers’ money into the banking system. Billions of pounds were spent part-nationalising the Royal Bank of Scotland and Lloyds Banking Group, as well as fully nationalising Northern Rock, in an attempt to stave off collapse. Measures such as the "special liquidity" scheme propped up other lenders and prevented the system from freezing up.

But a BIS report warned yesterday that repeating these measures could be impossible. It said: "Events coming out of Greece highlight the possibility that highly indebted governments may not be able to act as a buyer of last resort to save banks in a crisis. That is, in late 2008 and early 2009, governments provided the backstop when banks began to fail. But if the debts of the government itself become unmarketable, any future bailout of the banking systemwould have to rely on external help." Central bankers fear Europe is running out of "external backstops" that could step in, other than the US and the International Monetary Fund. This has unnerved capital markets in the EU, prompting some sharp swings in the value of shares and other financial instruments in recent days.

More… ^[7]

Jim Sinclair’s Commentary

A G20 member banker shows his regard for the common man and freedom of speech.

They do have that in Canada, do they not?

^[8]

Jim Sinclair’s Commentary

You have to wonder when this will go nuclear.

US accepts international assistance for Gulf spill
US accepts international assistance in dealing with massive oil spill in Gulf of Mexico
On Tuesday June 29, 2010, 6:43 pm EDT

WASHINGTON (AP) — The United States is accepting help from 12 countries and international organizations in dealing with the massive oil spill in the Gulf of Mexico.

The State Department said in a statement Tuesday that the U.S. is working out the particulars of the help that’s been accepted.

The identities of all 12 countries and international organizations were not immediately announced. One country was cited in the State Department statement — Japan, which is providing two high-speed skimmers and fire containment boom.

More than 30 countries and international organizations have offered to help with the spill. The State Department hasn’t indicated why some offers have been accepted and others have not.

More… ^[9]

Jim Sinclair’s Commentary

The hardship brought on by the OTC derivative manufacturers and distributor is horrific.

If there is anything to karma these guys have cooked themselves for eons to come. If you prefer the concept of Hell, they have express tickets even ahead of the guy that shot the Pope.

These people do not have any redeeming human qualities.

Jobs Market Barely Budges in June as Hiring Stays Weak
Published: Wednesday, 30 Jun 2010 | 10:21 AM ET

U.S. private employers added just 13,000 jobs in June, according to a report published Wednesday that suggested expectations of a big drop in the government’s upcoming nonfarm payrolls report were on target.

The ADP Employer Services report also said May’s gain was revised marginally higher to 57,000 from the original estimate of 55,000.

That revision was basically the only good news, however, in a report that under-shot expectations of a rise of 60,000 private-sector jobs in June.

It also supported fears that the short and tepid recovery from the worst recession since the 1930s was fizzling.

"There is really no way to characterize this number other than disappointing," said Macroeconomic Advisers LLC chairman Joel Prakken, whose firm jointly developed the ADP report. "The overall number tells you that the recovery in the jobs market is very, very sluggish at this point."

The ADP figures come ahead of the government’s much more comprehensive labor market report Friday.

That report is expected to show a fall in nonfarm payrolls of 110,000 in June overall, as many temporary workers hired to complete the government’s decennial census were let go.

More… ^[10]

Jim Sinclair’s Commentary

I have never put any faith in a survey as an economic indicator, but for what it is worth here is the latest on consumer confidence.

Consumer Confidence Collapses Massively In June
Vincent Fernando, CFA | Jun. 29, 2010, 10:01 AM

The Conference Board’s consumer confidence index for June dropped sharply to 52.9, which is a horrible underperformance of expectations given that consensus had forecast a reading of 62.

It also disappoints bulls after three consecutive months of improvement previously.

To some degree a pullback was expected as the economy has been long forecast to slow as we enter the second half of 2010, but this shift in consumer sentiment has clearly been surprisingly severe.

Conference Board: The Index now stands at 52.9 (1985=100), down from 62.7 in May. The Present Situation Index decreased to 25.5 from 29.8. The Expectations Index declined to 71.2 from 84.6 last month.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence, which had posted three consecutive monthly gains and appeared to be gaining some traction, retreated sharply in June. Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence. Until the pace of job growth picks up, consumer confidence is not likely to pick up.”

More… ^[11]

Jim Sinclair’s Commentary

Yes, because the only part of the Volcker Rule that is Volcker’s is his name.

Volcker Said to Be Disappointed With Final Version of His Rule
By Yalman Onaran – Jun 30, 2010

Paul Volcker is disappointed with the final version of the rule that bears his name.

As first envisioned, the Volcker rule would have banned banks from running private-equity and hedge funds, an attempt to curb risk-taking that fueled the financial crisis. Last-minute congressional negotiations aimed at winning Republican support led to a compromise that allows banks to invest up to 3 percent of their capital in such funds.

Volcker, the 82-year-old former Federal Reserve chairman, didn’t expect the proposal to be diluted so much, said a person with knowledge of his views. He’s content with language that bans banks from trading with their own capital, the person said.

“The Volcker rule started out as a hard-and-fast rule on risky trades and investments,” said Anthony Sanders, a finance professor at George Mason University School of Management in Fairfax, Virginia. “But through negotiations, it was weakened and ended up with many loopholes.”

Democratic Senators Carl Levin of Michigan and Jeff Merkley of Oregon were also dissatisfied with the result, for the same reasons as Volcker, according to two people with knowledge of negotiations, speaking anonymously because they weren’t authorized to comment to the press. The two lawmakers introduced language that decreased the ability of regulators to water down a final version of the rule and provisions to prevent banks from bailing out failed hedge funds.

More… ^[12]

Jim Sinclair’s Commentary

Meanwhile the Fat Cats have so much money they cannot count it.

They don’t give a damn that they are culling the gene pool so their grandchildren are assured to rule the future.

Time runs out for 1.2 million on unemployment
By Christina Zdanowicz, CNN
June 30, 2010 9:59 a.m. EDT

(CNN) — With her unemployment benefits coming to a halt, Miriam Cintron is forced to make a difficult choice between health insurance and daily expenses.

Signing into her unemployment benefits account last week, the New Yorker was horrified to see she hadn’t received any money for three weeks, she says.

What would the four-year cancer survivor do if she couldn’t afford to pay her $650 monthly COBRA payment? Her health insurance helped pay for life-saving treatment before, so giving it up is not an option, she says.

When Cintron was laid off from her job as a case worker at a homeless shelter in late 2008, she never imagined she’d go on unemployment. But even with 17 years experience, she’s been unable to land a new job.

Cintron isn’t alone. Unemployment benefits are set to run dry for 1.2 million people nationwide Friday after the U.S. Senate decided not to extend a deadline to file for these benefits last week, according to the National Employment Law Project.

More… ^[13]

Jim Sinclair’s Commentary

When Wall Street owns Washington what else did you expect?

Nothing has changed and FinReg is a waste of time except in terms of how much paper it produces.

Lawmakers scrap bank fee. ^[14]
Congressional Democrats abandoned a controversial proposal in the financial reform bill that would have levied a $19B tax on the country’s largest banks and hedge funds. Several Republicans who are crucial to the bill’s passage were uncomfortable with the tax, which was added to the bill at the last minute. Instead, lawmakers will offset the bill’s costs by winding down TARP early and assessing a $5.7B fee on banks through the FDIC.

noreply@seekingalpha.com ^[15]