Dear CIGAs,
The smoke and mirrors modest upturn in economic statistics primarily due to the FASB capitulation in April of 2009 comes to an end as the Ski Jumper gets airtime.
All the MOPE about recoveries and double dip comes into question with the violent nature of major economic statistic dissolution.
Central Banks around the world, knowing full well that the assets of financial entities are as weak as they were during the 2008-2009 crash, immediately revert to QE to infinity. This lights fires to the Western World currencies making the dollar weak and the euro outrageously volatile. This gives rise to Currency Induced Cost Push Inflation, better known as the Yellow Brick Road to Hyper Inflation. Central banks are depicted as the devils as QE to infinity is thrown onto the pile in hopes of another illusionary soft landing.
This can easily happen so fast that your hair will catch fire and you get whiplash trying to catch it. When this event occurs it will be lightening speed. The evil deeds are done and there are no exits. Gold will trade at $1650 and beyond.
Jim Sinclair’s Commentary
Two hedgies short of gold and gold shares?
Jim Sinclair’s Commentary
Today’s exercise in MOPE (Management of Perception Economic) and plausible denial, also known as “BS.”
Fed divided over policy direction, WSJ reports
By MarketWatch
TEL AVIV (MarketWatch) — At its Aug. 10 meeting, at least seven of 17 Federal Reserve officials opposed or hesitated over the decision to stimulate the economy by keeping the Fed’s securities portfolio from winding down, The Wall Street Journal reported Tuesday.
At issue was whether to reinvest principal payments to the Fed back into the markets.
The Wall Street Journal report said Fed members were divided into two camps.
New York Fed President William Dudley, Boston Fed President Eric Rosengren, San Francisco Fed President Janet Yellen and others were concerned about the economy and "more inclined to act," it said.
But Fed Gov. Kevin Warsh, Dallas Fed President Richard Fisher and other officials were concerned about the effectiveness of such a move or the message it would send to markets, the report said.
Fed Chairman Ben Bernanke pushed for the move and ultimately prevailed, the Journal reported, based on interviews with several participants at the meeting.
Jim Sinclair’s Commentary
This is a straw man to hold up and knock down, a common political strategy.
Note that the so called fight is over banks. What you want to see is the non-banks that received bailouts.
Fed Loses Bid to Review Bailout Disclosure Ruling
By Grant McCool and Jonathan Stempel
August 23, 2010
NEW YORK (Reuters) – The Federal Reserve will have to appeal to the Supreme Court if it wants to avoid having to disclose details of its emergency lending programs to banks bailed out with taxpayer money during the financial crisis.
The U.S. 2d Circuit Court of Appeals denied the Fed’s motion on Friday to rehear the case in which Bloomberg LP, the parent of Bloomberg News and News Corp’s Fox News Network sought information on the U.S. central bank’s emergency lending programs that began in late 2007.
The programs, designed to shore up the financial markets, more than doubled the Fed’s balance sheet to well over $2 trillion, especially in the wake of the September 2008 collapse of Lehman Brothers Holdings Inc.
The Fed maintained that disclosing the information sought by the news outlets under the Freedom of Information Act (FOIA) could stigmatize banks, causing a loss of confidence that could lead to deposit runs and the demise of some lenders.
The Clearing House Association, a group of major U.S. and European banks, supported the Fed’s efforts.
Jim Sinclair’s Commentary
Under the new circumstances, four US banks, including names of great familiarity to the community have applied to open a branch in Iran.
Foreign Banks Welcome
21 April 2009
For the first time since the 1979 Islamic Revolution, Iran is set to allow foreign banks to establish branches in the country and engage in normal banking operations.
According to Presstv, Article 44 of the Constitution had heretofore placed banking activities exclusively in the hands of government. In tandem with the Law on Usury Free Banking Operations, these two measures effectively blocked foreign banking operations from conducting business in the mainland.
A handful of foreign bank branches and representative offices extant in the country were allowed to undertake administrative and coordinative activities but were not permitted to open customer accounts, receive deposits or extend normative facilities. Foreign banks, under special conditions, were allowed to function in the free zones.
With the long-awaited privatization law having already come into force in the summer of 2008, allowing the normal functioning of foreign banks in Iran is viewed as a major economy boosting initiative by the Central Bank of Iran (CBI)Central Bank of Iran (CBI)Loading….
The rules for regulating the activity of foreign banks are set forth in four parts and 13 articles in the decree dated March 18, 2009 by the Council of Ministers and titled The Executive Bylaw of the Manner of Establishment and Operations of Foreign Bank Branches in Iran.
Jim Sinclair’s Commentary
David Rosenberg has a higher price objective for gold than I do.
Here is a note for the deflationists out there that do not understand Currency Induced Cost Push Inflation.
Economy Caught in Depression, Not Recession: Rosenberg
Published: Tuesday, 24 Aug 2010 | 11:23 AM ET
Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.
But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.
Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response."
"Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times," he said.
Jim Sinclair’s Commentary
Please refer to the three Illustrations and explanations thereof posted today.
Any questions?
Dollar Plunges As Everyone Now Figures Return Of Quantitative Easing Is A Done Deal
Joe Weisenthal | Aug. 24, 2010, 10:45 AM
Today the weak economic data is not prompting a flight-to-the-dollar.
Today the weak economic data is causing dollar selling, because it’s becoming crystal clear to folks, as ForexLive notes, that quantitative easing II is now a done deal. No more baby steps or holding the balance sheet steady. There’s no excuse for the Fed Board of Governors to be have an unclear picture of the economy’s direction anymore.
And we may not have to wait for very long. Bernanke speaks this Friday at Jackson Hole, and you can figure he’ll be revising that speech now until then with every bad data point that comes across to get exactly the right message to the market.
Jim Sinclair’s Commentary
Only one of the reasons that "QE to Infinity" is the only political choice that can be made.
Things are moving fast.
Gold will trade at $1650 and above.
The trillion dollar bailout you didn’t hear about –Commercial real estate values plummet again yet banks hide losses. A $3.5 trillion financial disaster in the making. We are now proud owners of an AMC theater and Chick-fil-A.
The latest data on existing home sales should tell you exactly where we are in this so called recovery. Average Americans are unable to purchase big ticket items without massive government subsidies. It is also the case that all the too big to fail banks are standing only because of the generous support of taxpayer money. Without large tax credits and the Federal Reserve buying down mortgage rates the housing market is extremely weak. Yet very few of the housing “analysts” actually bother to ask why they are weak in the first place. The employment market is in disarray and wages have fallen for everyone outside of the top 1 percent of income earners. The bailout fatigue is running out of steam but banks are using clandestine methods to offload trillions of dollars of commercial real estate to taxpayers. The next giant bailout is already happening but you probably haven’t heard about it.
Commercial real estate values continue to slide:
Source: MIT
For the latest month of data prices fell an additional 4 percent. Now this is coming at a seasonal time when real estate values usually see price increases. But people are pulling back and spending less money on discretionary items. This is happening for a couple of reasons including the fact that wages have been stagnant for over a decade and the underemployment rate is still near peak levels. Commercial real estate in places like Las Vegas has crashed because who is out buying million dollar condos in this market? Very few and that is why you are seeing many places having vacancy rates of 50, 60, or even 70 percent.
