Jim,

The Editor-in-Chief of MarketWatch raises some interesting questions on why some of the largest hedge funds are closing up shop. While his article focuses on the dangers of the bond market and appears to dismiss OTC derivatives as a threat in the future, nevertheless some of Wall Street’s biggest players are seeing dark days ahead and are starting to jump ship.

January 2011 will soon be upon us.

Kind regards,
CIGA Black Swan

Big investors pulling the exit chute
Commentary: Grab a beer and avoid the bond-bubble bang
By David Callaway, MarketWatch

SAN FRANCISCO (MarketWatch) — It’s a common misperception that nobody saw the financial crisis coming save a few savvy traders. In fact, everybody saw it coming.

It’s just that no one knew when or how it would manifest itself. Same thing is happening right now with the bond bubble.

Visitors to the trading floors, bars, pubs and restaurants in New York and London from 2004 through 2006 would commonly hear investors and financial types counting their blessings and profits, and saying, "when this thing finally ends it’s going to be ugly."

Which way is the bond market headed?

The relative riskiness of bonds is probably greater than most investors acknowledge relative to stocks, according to Barron’s Michael Santoli.

Most people speculated it would be tied to derivatives, which meant mortgages. The media, including MarketWatch, was full of stories about crazy prices and ridiculous lending practices, as well as the dangers of securitization and cutting mortgages into pieces to diversify the risk.

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Jim Sinclair’s Commentary

The miracle debunked by CIGA Eric.

Major study proves oil plume that’s not going away
CIGA Eric

Loss of confidence or trust in those that issue and manage the currency tends to increase its velocity (turnover). An increase in velocity, in turn, creates more inflation. Do reports such as these influence confidence in leadership? If so, does it alter confidence in USA, Inc?

A 22-mile-long invisible mist of oil is meandering far below the surface of the Gulf of Mexico, where it will probably loiter for months or more, scientists reported Thursday in the first conclusive evidence of an underwater plume from the BP spill.

The most worrisome part is the slow pace at which the oil is breaking down in the cold, 40-degree water, making it a long-lasting but unseen threat to vulnerable marine life, experts said.

Earlier this month, top federal officials declared the oil in the spill was mostly "gone," and it is gone in the sense you can’t see it. But the chemical ingredients of the oil persist more than a half-mile beneath the surface, researchers found.

Source: news.yahoo.com ^[2]

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Jim,

Where California goes, so goes the country.

CIGA BJS

Dear BJS (Bertram J Seligman?)

All trends start on the West Coast and work their way all the way to Maine.

Regards,
Jim

Schwarzenegger Orders Furloughs to Start After Top California Court Rules
By Michael B. Marois – Aug 18, 2010 7:08 PM ET

California Governor Arnold Schwarzenegger said 150,000 government workers must begin taking time off without pay starting Aug. 20 following a court ruling lifting an injunction temporarily blocking the furloughs.

The California Supreme Court, saying it would review the governor’s plan, stayed decisions by lower courts that had halted the furloughs. Schwarzenegger directed state workers to take three unpaid days off each month to save cash. The high court set a Sept. 8 hearing on a challenge to the order.

California began its fiscal year on July 1 without a spending plan after Schwarzenegger and Democrats who lead the Legislature remained deadlocked over how to fill a $19.1 billion deficit. The Republican governor on July 28 issued an executive order for the monthly furloughs until a budget is passed.

“The result of the Supreme Court ruling today means that the furloughs will continue until the court says otherwise,” Aaron McLear, a Schwarzenegger spokesman, said by e-mail.

A union for state engineers has sued to block the plan.

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