In The News Today

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Jim Sinclair’s Commentary

The latest from John Williams’ www.ShadowStats.com.

- At An 18-Year Low, 2012 Real Median Household Income Was Below Levels Seen in 1968 through 1974
- 2012 Income Variance Hit Record High,Suggestive of Greater Financial and Economic Crises Ahead
- Systemic Instabilities That Led to 2008 Crisis Still Have to Be Worked Through
- Housing Starts Continued in Renewed Downturn or Stagnation

"No. 558: 2012 Household Income, August Housing Starts"
Web-page: http://www.shadowstats.com

 

Jim Sinclair’s Commentary

Can you imagine, accusations of Banks manipulating commodities at the level of the G20?

G20: The new Bretton Woods?
Global institutions responsible for price discovery and speculation in commodities are suspected of fuelling price hikes. With the world experiencing turmoil in the food and energy markets, fixing the global pricing architecture for commodities should be the priority for the G20
BY Akshay Mathur, K.N. Vaidyanathan

In the last three years, the G20 group of nations has taken up tough geoeconomic issues bedevilling both developed and developing countries. These include matters such as bringing transparency in global energy and commodities markets.

Addressing them is vital as the world faces turmoil in both energy and food markets. The new discoveries of shale oil, turbulence in traditional West Asian energy markets and massive food subsidies being doled out by developing country governments like India have had a disruptive effect globally.

Even though the recently concluded 2013 St. Petersburg G20 summit was dominated by the immediate issue of Syria and the impact of the U.S. Federal Reserve’s quantitative easing programme on emerging markets, it is the right institution that can, and must, address these issues. In fact, the G20 should be the new Bretton Woods that can incorporate the complexities of a diversified global 21st century financial architecture. It is vital that Australia, which will host the next G20 Summit in 2014, restore focus on these longer term issues and act on the recommendations already made by other international institutions and approved by the G20.

Foremost on the agenda is the regulation of global institutions responsible for price discovery and speculation in commodity markets—all suspected of being increasingly de-linked from physical markets and fuelling unqualified price hikes. Oil and gold, the two commodities that have major consequences on India’s (and other emerging markets) external liabilities, inflation and growth continue to suffer from antiquated price reporting mechanisms.

Oil, for example, moved from $45 per barrel in mid-2006 to about $145 in two years, corrected to $40 in a few months and thereafter, again surged to $130 in less than three years. It has been consistently trading at over $100 since. Through this period, oil production and demand fluctuations have hovered in the 10% range, far less than those of its price.

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Housing Starts, Permits Miss; Demand For Rental Units Continues Slide
Submitted by Tyler Durden on 09/18/2013 08:54 -0400

That today’s housing starts and permits data disappointed once again (in the case of starts this was the 5th miss in a row) is not surprising: with Starts printing at 891K, this was a miss to "expectations" of 917K, as analyst expectations for the "recovery" begin to be repriced in the face of rising rates. There was of course spin: the prior month was revised from 896K to 883K so the mainstream media could at least present the disappointing number as an increase. This was also the biggest 5 month drop in starts since February 2011. Furthermore, when looking at the internals one thing is obvious – the main driver of the non-existent housing recovery: Wall Street (and foreign)-based, REO-to-Rent subsidized investors in rental properties are finally leaving the scene, as demand for multi-family, aka rental units, dropped from 278K annualized to 252K, a far cry from the recent highs of 356K in March and back to a level first crossed (to the upside) back in September of 2012. This is a confirmation that absent a renewed plunge in rates, the downtrend in housing units is here to stay as the marginal dollar is quickly leaving.

Elsewhere, in the world of permits, the number was not only a major miss, down at 918K vs 950K expected, but substantially lower too, sliding from 943K to an upward revised 954K. This matched the lowest number of permits since April, and is higher than only

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To summarize: starts.

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And permits

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Jim Sinclair’s Commentary

What recovery?

23,116,928 to 20,618,000: Households on Food Stamps Now Outnumber All Households in Northeast U.S.
September 17, 2013 – 12:31 PM
By Terence P. Jeffrey

(CNSNews.com) – A record 23,116,928 American households were enrolled in the federal government’s Supplemental Nutrition Assistance Program (SNAP)—AKA food stamps—during the month of June, according to data released this month by the Department of Agriculture.

That outnumbers the 20,618,000 households that the Census Bureau estimated were in the entire Northeastern United States as of the second quarter of 2013.

According to the Census Bureau, the Northeast region includes Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New Jersey, New York and Pennsylvania. Thus, in June, the households receiving food stamps exceeded the total combined households in all of these states.

The 23,116,928 million households on food stamps in June also outnumbered the 15,030,000 home-owning households in the entire Western United States in the second quarter of the year and the 18,018,000 home-owning households in the entire Midwest.

The West, as delineated by the Census Bureau, includes Washington, Idaho, Montana, Wyoming, Oregon, California, Nevada, Utah, Colorado, Arizona, New Mexico, Alaska and Hawaii. So, the number of households taking food stamps in June outnumbered all of the home-owning households in all of these stated combined.

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Jim Sinclair’s Commentary

The author is right as this is the most significant development in the US dollar in our lives.

Dollar no longer primary oil currency as China begins to sell oil using Yuan
Courtesy of TIme, Facts Global Energy
September 12, 2012

On Sept. 11, Pastor Lindsey Williams, former minister to the global oil companies during the building of the Alaskan pipeline, announced the most significant event to affect the U.S. dollar since its inception as a currency. For the first time since the 1970′s, when Henry Kissenger forged a trade agreement with the Royal house of Saud to sell oil using only U.S. dollars, China announced its intention to bypass the dollar for global oil customers and began selling the commodity using their own currency.

Lindsey Williams: "The most significant day in the history of the American dollar, since its inception, happened on Thursday, Sept. 6. On that day, something took place that is going to affect your life, your family, your dinner table more than you can possibly imagine."

"On Thursday, Sept. 6… just a few days ago, China made the official announcement. China said on that day, our banking system is ready, all of our communication systems are ready, all of the transfer systems are ready, and as of that day, Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency, not the American dollar. – Interview with Natty Bumpo on the Just Measures Radio network, Sept. 11

This announcement by China is one of the most significant sea changes in the global economic and monetary systems, but was barely reported on due to its announcement taking place during the Democratic convention last week. The ramifications of this new action are vast, and could very well be the catalyst that brings down the dollar as the global reserve currency, and change the entire landscape of how the world purchases energy.

Ironically, since Sept. 6, the U.S. dollar has fallen from 81.467 on the index to today’s price of 79.73. While analysts will focus on actions taking place in the Eurozone, and expected easing signals from the Federal Reserve on Thursday regarding the fall of the dollar, it is not coincidence that the dollar began to lose strength on the very day of China’s announcement.

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Jim Sinclair’s Commentary

Someone just figured out that the SWIFT bank wire system was a spy craft tool? Anyone that did not know that for years was simply stupid.

SWIFT Suspension? EU Parliament Furious about NSA Bank Spying
By Gregor-Peter Schmitz in Brussels

Members of the European Parliament are furious with US spying.

Revelations the US is spying on international bank transfers has angered European parliamentarians. Some are calling for the suspension of the SWIFT deal between the EU and US. "Washington must make clear where it stands," says one.

The recent revelations regarding the degree to which the US intelligence agency NSA monitors bank data in the European Union has infuriated many in Europe. "Now that we know that which we had long been suspected, we have to protest loudly and clearly," Jan Philipp Albrecht, a legal expert for the Green Party in the European Parliament, told SPIEGEL ONLINE. He is demanding a suspension of the SWIFT agreement, which governs the transfer of some bank data from the EU to anti-terror authorities in the United States.

On Monday, SPIEGEL reported that the NSA monitors a significant share of international money transfers, including bank and credit card transactions. The information comes from documents in the possession of whistleblower Edward Snowden that SPIEGEL has been able to see. "Follow the Money" is the name of the NSA branch that handles the surveillance. Information obtained by "Follow the Money" then flows into a financial database known as Tracfin. In 2011, Tracfin had 180 million datasets — 84 percent of which are comprised of credit card data.

But data from the SWIFT network, headquartered in Brussels, also ends up on Tracfin. SWIFT, which handles international transfers among thousands of banks, is identified by the NSA as a "target" according to the Snowden documents. They also show that the NSA monitors SWIFT on several different levels, with the NSA department for "tailored access operations" also being involved. Among other methods, the documents note that the NSA has the ability to read "SWIFT printer traffic from numerous banks."

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Jim Sinclair’s Commentary

Is the West not sending them assault weapons?

‘Al-Qaeda and Al-Nusra in Syria may have significant amounts of sarin’
Published time: September 17, 2013 18:46

The US military have reportedly proved that sarin gas production is going on among some Sunni salafists in Iraq, and via Turkey, can reach Syrian rebels, former Pentagon official Michael Maloof told RT, citing classified sources.

RT: France, the US and UK are saying the UN report clearly points to the Assad government’s involvement in the August attack . But how can they be so sure, especially as the document states that improvised rockets may have been used, possibly pointing to rebel involvement?

Michael Maloof: I have a report from a source who has direct connections with classified information and he basically told me that [the] US military did an assessment based upon 50 indicators and clandestine interviews that the sourcing of sarin originated out of Iraq and into Turkey before some of it was confiscated in May in Turkey. He believes that since that report was disseminated in August in 2013, that there has actually been a more significant amount of sarin production both in Iraq and in Turkey going to the opposition, principally Al-Qaeda and Al-Nusra.

That was their specific target, to see to what extent Al-Qaeda was actually involved in production, in research and dissemination. He says what was confiscated was bench level or small specimens at the time, but that the production now they believe is much more robust and that the non-proliferation, genie, as he says, is no longer exclusive. So there’s quite an increasing concern that this is still ongoing, that production is occurring among some Sunni salafists in Iraq and continues to be transported into Turkey.

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Jim Sinclair’s Commentary

This headline under the title diplomacy has to be an attempt at humor.

Brazil Spurns U.S. State Visit Invitation Over NSA Spying
By Denver Nicks @DenverNicks
Sept. 17, 2013

President Dilma Rousseff of Brazil has postponed a planned official visit to Washington amid fallout over revelations that the U.S. has been spying on her government, the Associated Press reports. Leaks from former-National Security Agency contractor Edward Snowden revealed, among other things, extensive spying by the U.S. on countries in Latin America, for which regional heavyweights like Mexico and Brazil already rebuked the U.S. Brazil in particular has reportedly been a primary target of NSA spying—with reports by Brazil’s Globo TV, alleging the agency had spied extensively on the internal communications of the Rousseff administration and on the country’s state-owned oil company Petrobras. The allegations awoke the region’s age-old distrust and resentment of yanqui imperialism.

Rousseff’s visit, originally scheduled for next month, was to be the first such visit of Obama’s second term, an invitation extended to mark “Brazil’s economic, political and diplomatic rise in the world,” Christopher Sabatani, senior director of policy for the Council of the Americas told TIME.

Indefinitely postponing—in effect, canceling—an official state visit is a symbolic and significant move. Brazil’s last official state visit to the United States, with full state dinner and all attendant pomp and circumstance, was nearly two decades ago, in 1995. According to the Brazilian president’s office, Obama called Rousseff late Monday in an attempt to coax her into keeping to the plan, but he reportedly refused her demand that the U.S. issue an official public apology for its spying program, leading Rousseff to call off the trip.

“I’ve never heard of such a thing happening before.” says Sabatani, suggesting Rousseff may be playing to nationalist sentiment at home. “The reaction seems a bit exaggerated, leading one to believe that this may be more about domestic politics than diplomatic state craft.”

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Jim Sinclair’s Commentary

Some rude people who do not feel monetary stimulus is the sole answer to the present problems call her Calamity Jane.

Jobs champion Janet Yellen leads Fed race as Larry Summers forced out
Global markets are euphoric over the defeat of Larry Summers, blocked by Senate Democrats from taking over the US Federal Reserve. His ties to Wall Street doomed him.
By Ambrose Evans-Pritchard
7:30PM BST 16 Sep 2013

Yields on 10-year US Treasuries plummeted, cutting borrowing costs worldwide. The US dollar slumped. Stock markets soared in Asia and Europe as investors embraced “risk”, from copper to the Australian dollar. Such is the potency of Summers’ name.

The assumption is that President Barack Obama will have to turn to the “dovish” Janet Yellen to replace Ben Bernanke at the helm of the Fed, still the world’s monetary hegemon. This will ensure looser money for longer, or so the argument goes. The Fed will be slower to wind down quantitative easing (QE), a tapering process likely to begin this week.

The White House has until now been talking down Mrs Yellen in a clumsy whispering campaign, but has backed itself into corner – the monetary equivalent of the Syrian crisis. It has no other front-runner. “It’s really hard to see how Obama can justify not picking Janet Yellen at this point. Nobody else is as qualified; any other choice would look like spite,” said Princeton professor Paul Krugman.

The Fed’s former number two Don Kohn is a contender. He would be less willing to hold long-term interest rates below their natural level – less of a “Woodfordian” in the jargon – and more likely to fret about asset bubbles.

Former Bank of Israel chief Stanley Fischer would be a safe pair of hands, one of the few men in public life with a stellar record and no enemies. But both are 70, too obviously caretaker picks.

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Jim Sinclair’s Commentary

Oops. Someone is going to pay for this!

Budget Office Warns That Deficits Will Rise Again Because Cuts Are Misdirected
By JACKIE CALMES
September 17, 2013

WASHINGTON — As the White House and Congress careen toward another fiscal showdown, the nonpartisan Congressional Budget Office warned on Tuesday that President Obama and lawmakers have been cutting the wrong kind of federal spending as they try to avoid the unsustainable buildup of debt that is projected in the coming decades.

Annual federal deficits will continue to fall in the short term, the budget office reported in its yearly long-term outlook, because of the recent spending cuts in military and domestic programs and rising tax collections in a recovering economy. The report projected the deficit in 2015 to be equal to 2.1 percent of the economy’s output, or just one-fifth of the peak shortfall at the height of the recession in 2009.

But starting in 2016, deficits are projected to rise again as more baby boomers begin drawing from Medicare, Medicaid and Social Security — the fast-growing entitlement programs, which Democrats and Republicans cannot agree on how to rein in.

The accumulating federal debt, which averaged 38 percent of the gross domestic product for the 40 years before the 2008 financial crisis, would rise from 73 percent of the G.D.P. now — above what most economists consider an optimum level — to at least 100 percent in 2038.

Budget experts have been warning since at least the Reagan era that in the early 21st century, aging baby boomers will drive entitlement spending — chiefly for Medicare and Medicaid, and to a lesser degree for Social Security — to levels that will crowd out all other military and domestic spending. Interest on the debt will also be a major and growing expense.

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Krugman: Please Don’t Taper
Tuesday, 17 Sep 2013 08:26 AM
By Michael Kling

Nobel Prize-winning economist Paul Krugman is sending a desperate plea to the Federal Reserve as it considers shrinking its quantitative easing stimulus:

"Please don’t do it," Krugman writes in his New York Times column.

The risks of tapering its stimulus too soon far outweigh the risks of continuing them, he contends.

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Jim Sinclair’s Commentary

This is of infinitely more fundamental importance to the future of markets than the Fed’s action today.

Obama braces for budget showdown with hardline Republicans
Bowing to internal pressures, John Boehner announced GOP would try to withhold funding from Affordable Healthcare Act
Dan Roberts and Paul Lewis in Washington
theguardian.com, Wednesday 18 September 2013 12.55 EDT

Republicans announced a last-ditch budget showdown with Barack Obama on Wednesday, threatening imminent votes that could paralyse the government within weeks if the president doesn’t postpone his flagship healthcare initiative, cut taxes and permit the Keystone oil pipeline.

Bowing to pressure from his conservative wing, House speaker John Boehner said Republicans would pass a budget bill on Friday that included measures to withhold funding from the Affordable Care Act, known as Obamacare.

Both the White House and congressional Democrats however are refusing to blink, raising the prospect of a partial federal government shutdown when current funding arrangements run out at the end of this month.

The Democrat-dominated Senate is expected to reject the House budget and send it back without the healthcare ransom, giving Republicans in the lower chamber one last chance to step back from the brink and agree what is usually a routine extension of government spending permits.

But raising the stakes even higher, House majority leader Eric Cantor told a packed press conference on Capitol Hill that Republicans would also link Obamacare to separate negotiations to extend the US debt ceiling, adding the prospect of theoretical default on government debt repayments to the high-stakes game of bluff.

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Jim Sinclair’s Commentary

What recovery?

Median Household Income Has Fallen For FIVE YEARS IN A ROW
By Michael Snyder, on September 17th, 2013

If the economy is getting better, then why do incomes keep falling?  According to a shocking new report that was just released by the U.S. Census Bureau, median household income (adjusted for inflation) has declined for five years in a row.  This has happened even though the federal government has been borrowing and spending money at an unprecedented rate and the Federal Reserve has been on the most reckless money printing spree in U.S. history.  Despite all of the "emergency measures" that have been taken to "stimulate the economy", things just continue to get worse for average American families.  Americans are working harder than ever, but their paychecks are not reflecting that.  Meanwhile, the cost of everything just keeps going up.  The Federal Reserve insists that inflation is "low", but anyone that goes grocery shopping or that stops at a gas station knows that is a lie.  In fact, if inflation was calculated the exact same way that it was calculated back in 1980, the inflation rate would be somewhere between 8 and 10 percent right now.  Paychecks are being stretched more than ever before, and that is probably the reason why about three-fourths of the entire country is living paycheck to paycheck at this point.

According to the Census report, the high point for median household income in the United States was back in 1999 ($56,080).  It almost got back to that level in 2007 ($55,627), but ever since then there has been a steady decline.  The following figures come directly from the report, and as you can see, median household income has fallen every single year for the past five years…

2007: $55,627
2008: $53,644
2009: $53,285
2010: $51,892
2011: $51,100
2012: $51,017

How far does that number have to go down before we admit that we have a major problem on our hands?

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Jim Sinclair’s Commentary

QE to infinity described as the dollar in the low .7000s on the USDX.

Fed delays bond tapering, wants to see more data
Fed holds off slowing bond purchases, says it wants to see more data before reducing support
By Martin Crutsinger, AP Economics Writer

WASHINGTON (AP) — The Federal Reserve has decided against reducing its stimulus for the U.S. economy, saying it will maintain the pace of its bond purchases because it thinks the economy still needs the support.

The Fed says it decided to hold off on slowing the $85 billion a month in bond purchases to see more conclusive evidence that the recovery will be sustained.

In a statement after its meeting, the Fed says that the economy is growing moderately and that some indicators of labor market conditions have shown improvement. But it noted that rising mortgage rates and government spending cuts are restraining growth.

The bond purchases are intended to keep long-term loan rates low to spur borrowing and spending.

Many thought the Fed would scale back its purchases, despite mixed economic reports.

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Jim Sinclair’s Commentary

A surprise only to Economic Dullards.

Fed, in Surprise Move, Leaves Bond-Buying Intact
Wednesday, September 18, 2013 2:18 PM EDT

The Federal Reserve postponed any retreat from its long-running stimulus campaign Wednesday, saying that it would continue to buy $85 billion a month in bonds to encourage job creation and economic growth.

As Congressional Republicans and the White House hurtle toward another showdown over federal spending, the Fed said it was concerned that fiscal policy once again “is restraining economic growth,” threatening to undermine what the Fed had described just months ago as a recovery gaining strength.

Stock markets jumped after the 2 p.m. announcement, with the Standard & Poor’s 500-stock index touching a record high and the Dow Jones industrial average ahead more than 100 points.

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Jim Sinclair’s Commentary

The Brits deal with them. Banks know no state but wealth. What country needs enemies when they have bankers?

Sour over Syria: American senators attack Russian banks
Published time: September 18, 2013 12:26
Edited time: September 18, 2013 13:53

In cold war style, US Senators have urged the Obama administration to freeze assets of three major Russian banks, ban their activities in the US, and deny employees’ entry into the country on the suspicion they are doing business with the Assad regime.

Having failed to galvanize allies for military action, and politically trumped by President Putin’s proposal for peaceful intervention in Syria, American congressmen have now turned to soft power to regain a grip on the Syria conflict. The senators are blaming Russia’s banking giants VTB, Gazprombank, and Vnesheconombank -the state development bank known as VEB– for ‘undermining’ UN sanctions by ‘aiding Assad’.

“The Syrians could not conduct this war without Russian financing,” Richard Blumenthal, a Democrat who represents the state of Connecticut, said at a US policy meeting on Iran and Syria at the Bipartisan Policy Center in Washington DC.

“We can freeze their assets. We can stop them from doing business in the United States, prevent their employees from traveling here and, in effect, impose very heavy financial pain on the Russians,” Blumenthal said.

The letter accuses VTB of holding President Assad’s personal account, VEB for facilitating Syrian payments for S-300 missile systems, and Russia’s third largest lender Gazprombank for making payments on crude oil. The senators believe these institutions should be ‘barred from the US financial system’.

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