"A black market is a free market operating against the wishes of the state."
–Harry Browne.
Thought For The Day
Negative and completely fallacious articles are carried in major international publications while the gold banks continue to cover their short positions according to filed reports.
What is wrong with that picture?
Bullish Money Flows in Gold – Follow Up
Eric De Groot
Bullish Money Flows in Gold on 7/10/10 illustrated how connected players were using a MOPE-induced decline in gold to cover their short positions
What are these charts?
These charts represent multivariate and multitime statistical analysis of leverage money flows within various trading groups. In other words, the analysis "looks" for statistically significant changes in the money flows to illustrate how a market is being setup for a move that contradicts the headline MOPE. It’s all about control.
MOPE, a tool of control and indication of the lack of intellectual respect its recipients, is never your friend in gold.
Jim’s Thought of the Day says it all,
Negative, and total fallacious articles, are carried in major international publications while the gold banks continue to cover their short positions according to filed reports. What is wrong with that picture?
Jim,
What is wrong with the picture is that few can "see" the setup or "play" in the con game.
Eric
Jim Sinclair’s Commentary
A lender lends money only when the economic sun is shining, and takes away your umbrella when it starts to rain.
More Americans’ credit scores sink to new lows
By EILEEN AJ CONNELLY (AP)
NEW YORK — The credit scores of millions more Americans are sinking to new lows.
Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.
Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery.
"I don’t get paid for loan applications, I get paid for closings," said Ritch Workman, a Melbourne, Fla., mortgage broker. "I have plenty of business, but I’m struggling to stay open."
FICO’s latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO’s 300-to-850 scale weren’t as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis. Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com.
More are likely to join their ranks. It can take several months before payment missteps actually drive down a credit score. The Labor Department says about 26 million people are out of work or underemployed, and millions more face foreclosure, which alone can chop 150 points off an individual’s score. Once the damage is done, it could be years before this group can restore their scores, even if they had strong credit histories in the past.
Jim Sinclair’s Commentary
You have to love how hard the big guys are working to cover their paper gold shorts.
This is in order to dull the comments on state and municipal risk by the Fed carried by the media yesterday and today.
U.S. States’ Financial Woes Aren’t the Next Greece, Samson Capital Says
By Esme E. Deprez – Jul 12, 2010
U.S. states and municipalities struggling with mounting budget deficits “are not in the same precarious financial condition as Greece,” Samson Capital Advisors said.
The cost of protecting U.S. municipal bonds surged this year as investors bought insurance on U.S. state obligations after global stocks tumbled and Europe’s debt crisis worsened. New Jersey Governor Chris Christie told members of the Manhattan Institute on May 25 that the state is “careening our way toward becoming Greece.” Even so, states aren’t on the verge of default and such comparisons distract from more serious issues, Samson Capital said in a July 8 report.
“The statement that any U.S. state is the next Greece, meaning a near default on their bonds, is not based on fact,” said Judy Wesalo Temel, a principal and director of credit research at Samson, which manages $7 billion. “Comparing the Greek debt crisis to state and local governments is not valid and is distracting from the real concerns about budgets.”
The median debt to gross domestic product of U.S. states is 2 percent, compared with Greece’s 113 percent, according to last week’s report by Samson Capital, a New York-based fixed income investment manager.
Equating Illinois, whose deteriorating financial position left it with about $4.7 billion in unpaid bills at the end of June, with the Mediterranean nation is “ridiculous,” Governor Pat Quinn said as the state prepared to sell $900 million in Build America bonds this week.
Jim Sinclair’s Commentary
It is all crap. The major profits for banks since April of 09 have been from the FASB permitted write up in value of previously marked down assets as a product of market valuation.
This filtered through the trading department as trading profits as that is how an inventory markup is always handled.
Unless mark to market is reinstated no financial entity’s balance sheet, Bank of America included, is anything more than a financial cartoon.
You know about the Western world banking community’s desire for outrageous bonuses. That is because it is definitely the last dip at the well of absurd, paper only, profits.
Bank Profits Depend on Debt-Writedown `Abomination’
By Bradley Keoun and David Henry – Jul 11, 2010
Bank of America Corp. and Wall Street firms that notched perfect trading records in the first quarter are now depending on an accounting benefit last used in the depths of the credit crisis to prop up their results.
Bank of America, the biggest U.S. bank by assets, may record a $1 billion second-quarter gain from writing down its debts to their market value, Citigroup Inc. analyst Keith Horowitz estimated in a June 23 report. The boost to earnings, stemming from an accounting rule that allows banks to book profits when the value of their own bonds falls, probably represented a fifth of pretax income, Horowitz wrote.
Investor fears of a Greek default, stalled U.S. economic recovery and tougher industry regulations have rattled markets, snapping banks’ trading streaks and rekindling doubts about their creditworthiness. Prices for Bank of America’s credit derivatives — used by traders to bet on the likelihood of the firm’s default — rose by 34 percent during the second quarter, while Morgan Stanley’s doubled and Goldman Sachs Group Inc.’s surged 86 percent.
“What’s on investors’ minds are the macroeconomic issues, as reflected by the interbank market in Europe, the very low yields on U.S. Treasuries and recent data on economic growth, jobs and housing,” Credit Agricole Securities USA analyst Michael Mayo said in an interview. “To the extent that the earnings power is less, the banks would not generate as much capital, so there’s less capital available to absorb future losses.”
Statement 159
In the first quarter, the four biggest U.S. lenders — Bank of America, JPMorgan Chase & Co., Citigroup and Wells Fargo & Co. — produced combined profit of $13.5 billion, the most since the second quarter of 2007. That figure probably fell by 28 percent in the second quarter, based on a Bloomberg survey of analysts’ estimates. The banks are scheduled to announce results over the next two weeks, led by JPMorgan on July 15.
Jim Sinclair’s Commentary
Courtesy of Cometgold.com.
Presenting The Wall Of Worry: The 50 Ugliest Facts About The US ECONOMY
by Guest » 12 Jul 2010 14:35
As we close on another week replete with ugly economic data and the usual bizarro counterintuitive market, here is a summary of the 50 most underreported facts about the state of the US economy, courtesy of the Coto report. After reading these it almost makes sense that the market has become completely desensitized to the sad reality now pervasive in this country. Readers are encouraged to add their own observations to this list. Surely if the list is doubled, the market will go up to 72,000 instead of just 36,000.
#50) In 2010 the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.
#49) It is being projected that the U.S. government will have a budget deficit of approximately 1.6 trillion dollars in 2010.
#48) If you went out and spent one dollar every single second, it would take you more than 31,000 years to spend a trillion dollars.
#47) In fact, if y ou spent one million dollars every single day since the birth of Christ, you still would not have spent one trillion dollars by now.
#46) Total U.S. government debt is now up to 90 percent of gross domestic product.
#45) Total credit market debt in the United States, including government, corporate and personal debt, has reached 360 percent of GDP.
#44) U.S. corporate income tax receipts were down 55% (to $138 billion) for the year ending September 30th, 2009.
#43) There are now 8 counties in the state of California that have unemployment rates of over 20 percent.
#42) In the area around Sacramento, California there is one closed business for every six that are still open.
#41) In February, there were 5.5 unemployed Americans for every job opening.
#40) According to a Pew Research Center study, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession.
Jim Sinclair’s Commentary
Gee whiz, what a discovery!
You knew this years ago from the Formula.
Obama’s debt commission warns of fiscal ‘cancer’
By Dan Balz
Monday, July 12, 2010; A02
BOSTON — The co-chairmen of President Obama’s debt and deficit commission offered an ominous assessment of the nation’s fiscal future here Sunday, calling current budgetary trends a cancer "that will destroy the country from within" unless checked by tough action in Washington.
The two leaders — former Republican senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton — sought to build support for the work of the commission, whose recommendations due later this year are likely to spark a fierce debate in Congress.
"There are many who hope we fail," Simpson said at the closing session of the National Governors Association annual meeting. He called the 18-member commission "good people with deep, deep differences" who know the odds of success "are rather harrowing."
Bowles said that unlike the current economic crisis, which was largely unforeseen before it hit in fall 2008, the coming fiscal calamity is staring the country in the face. "This one is as clear as a bell," he said. "This debt is like a cancer."
The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans — the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.
Jim Sinclair’s Commentary
Ok, here we go on the Pound. The so-called bond vigilantes must be in position now, having been selling British debt for many months.
A bond vigilante is an OTC derivative dealer specializing in credit default swaps.
WORLD FOREX: Dollar Gains; UK Pound Hit By S&P Credit Outlook
By Frances McInnis Of DOW JONES NEWSWIRES
JULY 12, 2010, 12:05 P.M. ET
NEW YORK (Dow Jones)–The dollar gained against most of its competitors Monday, as investors took a defensive stance ahead of euro-zone debt auctions later this week.
The U.K. pound declined against the dollar after ratings agency Standard & Poor’s affirmed the country’s top-shelf credit rating, but issued a negative outlook on the U.K., warning its debt level could threaten the country’s coveted AAA standing.
Even after the U.K.’s recent belt-tightening emergency budget received a "positive reception" from other ratings agencies, "it seems the U.K. is not completely out of the woods yet," said Ian Stannard, currency strategist at BNP Paribas in London.
Upcoming euro-zone debt auctions, in particular Greece’s offering on Tuesday, also contributed to the cautious tone in currency markets. Though the absence of negative headlines out of Europe recently has allayed some fears about the region’s debt crisis, investors remain nervous about some countries’ ability to raise capital. Portugal and Spain will also be auctioning government debt this week.
"This Greek auction could be a litmus test for Greece to reenter the capital markets," said Andrew Busch, global foreign exchange strategist at BMO Capital Markets in Chicago.
Jim Sinclair’s Commentary
If you question me then look at this message from above on gold.
Jim Sinclair’s Commentary
WRONG, WRONG, WRONG! This is such MOPE BS. It only confuses those that have no understanding of gold.
This event increased the use of gold in inter-central bank use and is therefore BULLISH.
This is just WRONG!
Secret gold swap has spooked the market
It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion
Jim Sinclair’s Commentary
Keep in mind the rumors of who DEBKA is. Remember the Formula of three.
Hizballah advances 20,000 troops to Israeli border
July 11, 2010, 4:42 PM (GMT+02:00)
Prime Minister Binyamin Netanyahu keeps on vowing that Iran will not be allowed to establish an outpost on Israel’s borders, but he has not lifted a finger to stop this menace ensconcing itself in the north. He cannot realistically expect feeble UN reprimands and the puny French contingent of UNIFIL to blow away the 20,000 Hizballah troops dug in in 160 new positions in South Lebanon, backed by a vast rocket arsenal – even though this is a gross violation of UN Security Council resolution 1701.
Iran’s proxy has therefore won the first round of its drive to recover the forward positions lost in the 2006 war and stands ready for the next. Israel has reinforced its border defenses against this massed Hizballah strength just a few hundreds meters away.
How could Jerusalem let this to happen?
The answer is by a misguided policy of misdirected reliance on international players and diplomacy, as though the military menace existed only in documentary form, instead of real armies led by single-minded terrorists with utter contempt for the rules of international diplomacy.
The guns Israel invoked for dealing with the Palestinian Hamas in Gaza –President Barack Obama and the European Union – were too big for their target and the Middle East Quartet’s envoy former British premier Tony Blair had to be roped in. The guns Israel relied on to deal with Hizballah – the UN and France – are too small and ineffective for the job.
