Posted at 12:01 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Here is a confidential picture taken inside one of the Fed meetings.

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Jim Sinclair’s Commentary

Somehow they understand in Europe.

Police Barricade European Central Bank Ahead Of Protests
Associated Press
Tuesday March 17, 2015 12:05 PM

FRANKFURT, Germany (AP) — Police in Frankfurt, Germany, have put up barricades and barbed wire around the headquarters of the European Central Bank as they brace for potentially violent demonstrations against government austerity and capitalism.

The Blockupy alliance says activists plan to try to blockade the new headquarters of the ECB ahead of a ceremony Wednesday inaugurating the building, and to disrupt what they term capitalist business as usual.

Some 10,000 people are expected for a rally in Frankfurt’s main square, the Roemerberg. Organizers have chartered a special train bringing demonstrators from Berlin and are busing in others from around Germany and other European countries.

Frankfurt police say most demonstrators are expected to be peaceful, but that violence-prone elements could use the crowds as cover.

The ECB, along with the European Commission and International Monetary Fund, is part of the so-called “troika” that monitors compliance with the conditions of bailout loans for financially troubled countries such as Greece. Those conditions include spending restraint and reducing deficits, moves that are aimed at reducing debt but have also been blamed for high unemployment and slow growth.

Greece’s new left-wing government blames such policies for a “humanitarian crisis” leading to poverty for pensioners and the unemployed.

ECB President Mario Draghi has called for more spending by governments that are in good financial shape such as Germany — a call that has been mostly ignored by elected officials.

The ECB says it plans to be “fully operational,” although some employees may work from home.

More…


ECB Prepares For Grexit, Anticipates 95% Loss On Greek Debt
Submitted by Tyler Durden on 03/18/2015 09:57 -0400

Dear Greek readers: the writing is now on the wall, and it is in very clear 48-point, double bold, and underlined font: when the ECB “leaks” that it is modelling a Grexit, something Draghi lied about over and over in 2012 and directly in our face too, take it seriously, because it is time to start planning about what happens on “the day after.” And incidentally to all those curious what the fair value of peripheral European bonds is excluding ECB backstops, the ECB has a handy back of the envelope calculation: a 95% loss.

Which also is the punchline, because while the ECB is making it very clear what happens next in the case of a “Graccident”, it has yet to provide an explanation how it will resolve the billions of Greek debt held on its own balance sheet which are about to be “marked-to-default”…

… and on which it is prohibited from suffering a loss, or else Draghi will have to fabricate even more on the run rules about how the ECB balance sheet is loss-proof… expect in this case, or that, or the other.

From Manager Magazin, google-translated:

The European Central Bank (ECB) is preparing for a possible Greek exit from the euro zone. In internal model calculations, the central bank has already calculated the consequences of different scenarios on the prices of Greek government bonds.

Fernando González Miranda, head of risk analysis of the ECB, assumed for his model calculations three different developments of the Greek crisis, the magazine reports. These variants have also been presented to our colleagues from the Bundesbank few days ago.

Under this method, the value of Greek government debt – currently around € 320 billion – in the event of a sudden, “accident-like” Farewell to the Greeks from the Euro-zone (“Graccident”) shrink to around 5 percent of the principal amount. If it were the Greek Government, however, to complete the withdrawal on the basis of ordered negotiations (“Grexit”), the ECB expects a residual value of government bonds by nearly 14 percent. And should it even create the country to negotiate a recent haircut, without having to give up the single currency, the government securities could keep at least a quarter of its original value.

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Putin made his move…
Russia has begun “dumping” U.S. dollars

Dear Concerned American,

This is a quickly developing story that you need to see. It’s being reported that under the direct order of President Vladimir Putin, Russia has begun dumping U.S. dollars.

In the most recent month, the amount of dollars dumped added up to an estimated $8.8 billion in a 30-day period. However, new details are emerging that suggest this attack on our currency may quickly escalate.

Putin has been taking a series of calculated measures to expose weak spots in our economy and national security that pre-date his Crimean invasion.

But according to this must-see presentation from our team of financial experts, what he’s now setting in motion could bankrupt millions of Americans virtually overnight. That’s why we’re giving you access privileges to watch it right now – along with free follow-ups from Money Morning on this and more of the biggest stories that affect your personal wealth.

Click here to view this presentation…

Stay Safe,

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Mike Ward
Publisher, Money Morning


Jim Sinclair’s Commentary

A hodgepodge of controls from cash to gold.

Google Translation :

The finance minister, M S, announced several measures including the prohibition to pay more than 1,000 euros in cash, as part of the “fight against the financing of T” in Le Parisien / Aujourd’hui en France on Wednesday.
In the name of ‘”the fight against the financing of T’” M S launches a manhunt to cash, writes that in “Finance Minister announces measures to minimize the use of cash. “
The first measure concerns the “prohibition to pay more than 1,000 euros in cash,” said Le Parisien explains. “So far, French consumers could address up to 3,000 euros cash purchases This maximum will be decreased to 1,000 euros. For non-residents, ie foreign tourists, the maximum is also lowered, from 15,000 to 10,000 euros. The cash payment allows indeed to recycle money from dubious origins. “
The measure “will be applied from 1 September 2015,” said M S the newspaper.
“The large withdrawals” will “systematically monitored,” the newspaper. “Banks should report any movement of funds or behavior that they consider suspicious to Tracfin, the Economy Ministry’s department for the fight against money laundering and financing of terrorism. But there was far no automatic threshold statement, “the paper recalls.
Now, “they will systematically report to Tracfin any deposit or withdrawal of superior species to 10,000 euros a month.” And from 1 January 2016. This delay is necessary to allow time for banking organizations to update their computer systems, points M S.
“From January 1, exchange offices will ask for ID when a person wants to exchange more than 1,000 euro currency,” the newspaper.
Another measure, “the obligation to declare capital transiting cargo.” “A customs declaration is mandatory if you enter the country with a ticket suitcase or a valuable commodity like gold,” the newspaper said. “But so far, it was not if you were delivered by post. From 1 January 2016, these physical capital transfers cargo and express cargo will have to be declared to  the customs.”


Jim Sinclair’s Commentary

The EU committed economic suicide when it signed on to the Russian sanctions.

Against US Strategy: Spain Calls for End to Confronting Russia
Madrid has recently joined the growing club of EU nations objecting to anti-Russian sanctions

The article originally appeared at German Economic News.

Translated for RI by Anita Zalaldinova

Spanish Foreign Minister Jose Manuel Garcia-Margallo spoke out against anti-Russian sanctions during his state visit to Moscow. These sanctions, he said, are harmful for both sides. Prior to this, Hungary, Italy, Greece and Cyprus had spoken out against the sanctions as well.

Spanish Foreign Minister Jose Manuel Garcia-Margallo said after a meeting with his Russian counterpart Sergei Lavrov in Moscow on Tuesday that the continuation of anti-Russian sanctions or their extension basically depend on ‘whether the agreements on Ukraine are complied with or not’. The sanctions are not advantageous for either side, EU Observer quoted García-Margallo.

In addition, there is no need for the extension of sanctions. Since the rebels in Ukraine withdrew their heavy weapons on the basis of the Minsk peace agreement which they thus obey. This is a positive development. The EU also needs to take into account Russia interests while developing its relations with Ukraine. García-Margallo added that the food sanctions of the Kremlin had affected the Spanish economy.

‘These sanctions have inflicted great damage on the Spanish economy (…) We have large losses, especially in the agricultural sector (…) I think that we need to somehow include Russia’s interests into the Association Agreement between the EU and Ukraine’, said the Spanish Foreign Minister.

Russian Foreign Minister Sergei Lavrov believes in a revision of the sanctions. ‘I would appreciate and prefer the situation in which each Member State of the EU is guided by its national interests’, said Lavrov. So Spain is a ‘long-standing and trusted partner’ but the Ukrainian crisis has led to a ‘difficult phase’ in European-Russian relations. Madrid and Moscow would like to create a bilateral multy-agency working group in order to combat international terrorism and to facilitate the adoption of Russian children by Spanish families.

More…


A Nation Divided (Or “It’s Not The Weather, Stupid”)
Tyler Durden on 03/17/2015 18:55 -0400

Blame the weather… not so fast… It appears to be time to geographically and seasonally adjust the data…

And here is Steve Liesman Status Quo “It’s the weather, stupid” meme being destroyed by Diana Olick…

http://youtu.be/wSPXvV3PRLQ

Whether you “believe” or not, the ranting is hilarious and we are sure Diana Olick will not be seen on screen again for a while (which is shame for numerous reasons)


Jim Sinclair’s Commentary

Who said the Greek exit from the EU would not be contagious?

Grexit Contagion Resumes After IMF Slams “Most Unhelpful Client Ever”
Submitted by Tyler Durden on 03/18/2015 09:20 -0400

Draghi, we have a problem. Despite the omnipotent buying power of the all-knowing ECB, peripheral European bond spreads are blowing out again (and stocks dropping) as Grexit fears start to spread contagiously across the continent. As Greece’s cash crunch looms ever closer (with capital controls looming) and bulls “throw in the towel” on the “nuts” Greeks, the IMF has come out and rubbed Mediterranean salt into that wound by telling the Eurogroup that Greece is the most unhelpful country the organization has dealt with in its 70-year history. As Bloomberg reports, in a short and bad-tempered conference call on Tuesday, officials from the ‘Troika’ complained that Greek officials aren’t adhering to a bailout extension deal leaving Dijsselbloem hinting at Cypriot templates for Greece.

The ‘Troika’ is not happy… International Monetary Fund officials told their euro-area colleagues that Greece is the most unhelpful country the organization has dealt with in its 70-year history, according to two people familiar with the talks. As Bloomberg reports,

In a short and bad-tempered conference call on Tuesday, officials from the IMF, the European Central Bank and the European Commission complained that Greek officials aren’t adhering to a bailout extension deal reached in February or cooperating with creditors, said the people, who asked not to be identified because the call was private.

German finance officials said trying to persuade the Greek government to draw up a rigorous economic policy program is like riding a dead horse, the people said, while the IMF team said Greece’s attitude to its official creditors was unacceptable. The German Finance Ministry didn’t respond to multiple requests seeking comment.

Concern is growing among officials that the recalcitrance of Prime Minister Alexis Tsipras’s government may end up forcing Greece out of the euro, as the cash-strapped country refuses to take the action needed to trigger more financial support. Tsipras is pinning his hopes for a breakthrough on a meeting with ECB President Mario Draghi, German Chancellor Angela Merkel, French President Francois Hollande and European Commission head Jean-Claude Juncker this week in Brussels.

More…


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March 18, 2015
Santiago, Chile

The United States government just went from “Please, baby, don’t leave me,” to frustrated threats and whining.

After the UK announced it will join new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member late last week, Germany, France and Italy decided yesterday to follow Britain’s lead and join as well.

Welcome to the beginning of the end of the US dollar’s domination. It’s happening.

For the past few decades America was the undisputed global economic and political superpower.

The entire world happily used the US dollar, and hence, the US banking system. More importantly, the world happily placed its trust in the US government.

But there’s a limit to how irresponsible, reckless, and threatening you can be. Eventually such behavior catches up to you.

That time has now come.

The US government is now drowning in debt that can never be repaid. The US government’s own numbers, in fact, estimate its level of insolvency at roughly $60 trillion.

This means that when you add up all the assets of the United States—every acre of land, every tank, every drone, every drop of oil in the strategic reserve… and subtract all the debt and liabilities, the result is MINUS $60 trillion.

That is the net worth of the United States government.

On top of that, the US government has chosen to use its once-trusted currency and banking system as weapons to blackmail the rest of the world.

FATCA (the Foreign Account Tax Compliance Act) is probably the best recent example.

FATCA’s provisions require every single bank in the world to jump into bed with the Internal Revenue Service and agree to all sorts of expensive, debilitating information-sharing agreements.

And any bank which dares to defy the US government gets effectively blackballed from the US banking system and subject to a 30% withholding tax.

On top of that, the US government has taken to slamming foreign banks with the most astonishing fines—$9 billion, for example, in the case of French Bank BNP Paribas.

BNP’s wrongdoing was conducting business with countries, like Cuba and Iran, that the US government doesn’t like.

Bear in mind, BNP is a French bank and broke no French law whatsoever.

Moreover, the business was done through its Swiss subsidiary, and they broke no Swiss law either.

That didn’t matter to Uncle Sam, which fined the bank $9 billion under threat of being kicked out of the US banking system.

Blackmail. Extortion. Intimidation. This isn’t the behavior of a trusted friend. It’s the behavior of an arrogant sociopath.

And the rest of the world is sick of it.

Other countries—even allied nations—see that times are changing. There are new players on the rise, and the US isn’t the only option anymore.

Increasingly they’re turning to China, who, by some metrics, is already the largest economy in the world.

And the US government can’t do anything about it.

This is happening now with increasing speed. It’s mainstream news everywhere: the US is being shunned by its allies for the new kid on the block.

This has major implications for the United States. History shows that when reserve currencies change, the losing country almost invariably goes through significant turmoil.

But here’s the thing—the world is changing. But it’s not coming to an end.

Yes, things will change dramatically in the West in the coming years.

The standard of living that was attainable in the US because of its economic dominance will diminish.

For cues, look to Europe to see how unsustainable policies unravel when you don’t have the backing of the world’s reserve currency.

But people who recognize and embrace these changes early will prosper, for there will be tremendous opportunities throughout this process.

Modern technology means that all of our lives don’t have to be trapped within one single bankrupt country.

You can move your savings abroad to safety.

You can structure your business and assets so that you keep more of your hard-earned income for yourself and your family.

You can seek out investment opportunities out there that aren’t subjected to chasing bubbles induced by world central banks.

You can plan ahead and establish an alternative residency in a safe and thriving place, and perhaps even qualify for a second passport.

Bottom line– the world is changing. We can’t stop the end of the dollar’s dominance. All we can control is how we react to it… and when.

This is a real opportunity. Either an opportunity to gain, or an opportunity to lose. The choice is ours to make.

Until tomorrow,
Simon Black
Founder, SovereignMan.com

Posted at 3:59 PM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

John Williams shares the following with us.

- First-Quarter GDP Outlook Weakened Further
- February Housing Starts Continued a Pattern of Down-Trending Stagnation
- Collapsing Headline Housing Starts Reflected a Weak Economy, Horrible Weather and the Usual Monthly-Reporting Instabilities
- Primary Economic Toxin Remains Lack of Healthy Consumer Liquidity

“No. 705: February Housing Starts, Consumer Liquidity, GDP Outlook ”
Web-page: http://www.shadowstats.com


Jim Sinclair’s Commentary

Economic war rages. Is hot war next?

Moscow Launches Ruble-Renminbi Futures To “Facilitate Trade Between China And Russia”
Submitted by Tyler Durden on 03/17/2015 11:50 -0400

While the west huffs and puffs, and threatens to unleash even more “costs” on Russia in the form of additional sanctions which will assure that Europe’s latest deflationary recession is even more acute, an “isolated” Russia is looking to outside, and to the east, and as part of its most recent de-dollarization initiative, the Moscow Exchange announced it has started trading Chinese Renminbi-Russian Ruble currency futures.

From the press release:

From 17 March the Moscow Exchange has started trading in a futures contract on the currency pair Chinese Renminbi — Russian rouble

The launch has been driven by a substantially increasing Renminbi turnover on the Exchange, growing volume of settlement in the currency between Russia and China as well as newly arising demand for hedging of such transactions.

Andrey Shemetov, First Deputy CEO of Moscow Exchange, said:

“The launch of the CNY/RUB futures is the next step made by the Moscow Exchange to offer a full range of Renminbi instruments and hedging tools to participants. We expect that the new contract will be liquid and in-demand as other Exchange’s derivatives, and facilitate the trade turnover between China and Russia”.

The contract is cash-settled against the Moscow Exchange CNY/RUB fixing.

The contract’s expiry dates are every 15th day of March, June, September and December.

More…


“Colossal Defeat” For Obama As Australia Joins China’s Regional Bank
Tyler Durden on 03/16/2015 23:15 -0400

Having attacked its “closest ally” UK for “constant accomodation” with China, we suspect President Obama will be greatly displeased at yet another close-ally’s decision to partner up with the Chinese-led Asian Infrastructure Investment Bank (AIIB). As The Australian reports, “make no mistake,” the decision by Australia’s Abbott government to sign on for negotiations to join China’s regional bank, foreshadowed by Tony Abbott at the weekend,  “represents a colossal defeat for the Obama administration’s incompetent, distracted, ham-fisted dip­lomacy in Asia.”

As The Australian’s Greg Sheridan writes Op-Ed,

The decision by the Abbott government to sign on for negotiations to join China’s regional bank, foreshadowed by Tony Abbott at the weekend, represents another defeat for Barack Obama’s diplomacy in Asia.

The Abbott government is right to make this decision. It had well-founded concerns about the vague and unsatisfactory governance arrangements of the institution when Beijing first invited Canberra to join.

Those arrangements have ­improved since then and Australia is only signing on to negotiate terms of accession.

If the terms are no good, Australia will ultimately walk away.

Canberra’s move follows similar decisions by Britain, Singapore, India and New Zealand.

More…


Jim Sinclair’s Commentary

New International Monetary Fund, World Bank and IFC together.

Europeans defy US to join China-led development bank
March 16, 2015 10:49 pm

George Parker in London, Anne-Sylvaine Chassany in Paris and Geoff Dyer in Washington

France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.

The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.

Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position.

The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards.

The AIIB, which was formally launched by Chinese President Xi Jinping last year, is one element of a broader Chinese push to create new financial and economic institutions that will increase its international influence. It has become a central issue in the growing contest between China and the US over who will define the economic and trade rules in Asia over the coming decades.

More…


Jim Sinclair’s Commentary

False every day. Now there is consistency.

ICE Futures Broke Law “Thousands” Of Times In 20 Months, CFTC Fines Exchange 0.75% Of 2015 Revenues
Tyler Durden on 03/16/2015 15:22 -0400

From October 2012 to May 2014, the CFTC found that ICE Futures exchange submitted reports and data containing errors and omissions on every reporting day, with cumulative inaccuracies totaling in the thousands. The CFTC stated unequivocally that, those “who fail to meet their reporting obligations will be held accountable,” and required ICE to pay a $3 million civil monetary penalty. With expectations of over $4 billion in revenues for FY 2015, the $3 million fine represents just 0.75% of the exchange’s income… that will teach them!!!

Full CFTC Statement:
CFTC Orders ICE Futures U.S., Inc. to Pay a $3 Million Civil Monetary Penalty for Recurring Data Reporting Violations

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against ICE Futures U.S., Inc. (ICE), a designated contract market (DCM), for submitting inaccurate and incomplete reports and data to the CFTC over at least a 20-month period, from at least October 2012 through at least May 2014.

According to the CFTC Order, on every reporting day during the period above, ICE submitted reports and data containing errors and omissions, with cumulative inaccuracies totaling in the thousands. The Order further finds that CFTC staff repeatedly notified ICE of the problems with its reports and data and requested that ICE take action to correct the mistakes, but that ICE continued to submit inaccurate reports and data. The Order requires ICE to pay a $3 million civil monetary penalty and to comply with undertakings aimed at improving its regulatory reporting.

CFTC Director of Enforcement Aitan Goelman commented: “The CFTC cannot carry out its vital mission of protecting market participants and ensuring market integrity without correct and complete reporting by registrants, including DCMs. Today’s action makes clear that registrants who fail to meet their reporting obligations will be held accountable and that the CFTC takes a particularly dim view of reporting violations that continue over many months, especially after CFTC staff has repeatedly alerted the registrant in question to the problems in its reporting.”

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Jim Sinclair’s Commentary

He will if cornered. History, if there is any, will ask who really ended the world.

Putin Warns “We Were Ready” To Use Nukes To Secure Crimea
Submitted by Tyler Durden on 03/16/2015 15:00 -0400

Having re-emerged from his hibernation, Vladimir Putin is wasting no time getting back to business. Having paced 40,000 troops on “snap-readiness,” AP reports that a documentary which aired last night shows Putin explaining that Russia was ready to bring its nuclear weapons into a state of alert during last year’s tensions over the Crimean Peninsula and the overthrow of Ukraine’s president, and admitted well-armed forces in unmarked uniforms who took control of Ukrainian military facilities in Crimea were Russian soldiers. In the documentary, which marks a year since the referendum, Putin says of the nuclear preparedness, “We were ready to do this … (Crimea) is our historical territory. Russian people live there. They were in danger. We cannot abandon them.”

As AP reports,

Russia was ready to bring its nuclear weapons into a state of alert during last year’s tensions over the Crimean Peninsula and the overthrow of Ukraine’s president, President Vladimir Putin said in remarks aired on Sunday.

Putin also expanded on a previous admission that the well-armed forces in unmarked uniforms who took control of Ukrainian military facilities in Crimea were Russian soldiers.

Putin’s comments, in a documentary being shown on state TV, highlight the extent to which alarm spread in Russia in the weeks following Ukrainian President Viktor Yanukovych’s ouster in February 2014 after months of street protests that turned increasingly violent.

In the documentary, which marks a year since the referendum, Putin says of the nuclear preparedness, “We were ready to do this … (Crimea) is our historical territory. Russian people live there. They were in danger. We cannot abandon them.”

The comments were reported on the state broadcaster’s website after its transmission in the Russian Far East and before it appeared on the air in Moscow.

More…


Jim Sinclair’s Commentary

The major sanction against Russia backfires badly as algos take over from government market intervention

Bailout for Big Oil? US Quietly Announces Crude Buy-Up
00:20 17.03.2015(updated 00:52 17.03.2015)

The Department of Energy said Friday it’s considering buying 5 million barrels of oil for the Strategic Petroleum Reserve (SPR) in a move that could signal a government plan to bolster an industry suffering from collapsing prices.

The price of oil has fallen precipitously — dropping nearly 60% since June. And while the average American may be appreciating relief at the pump provided by $45-a barrel crude, everyone from the oil companies themselves to the Wall Street financiers that lend to and trade on their business has been panicking over the falling profitability of the industry.

The Strategic Petroleum Reserve was created after the Arab oil embargo of the 1970s as an emergency pool of oil in case of sudden instability. But in recent years, as the US has become less dependent on foreign oil, and thus less vulnerable to fluctuations abroad, there’s more often been talk of shrinking the overall reserve.

In March 2014, the US surprised markets by selling off 5 million barrels of oil from the SPR in a test sale, while prices were high, which some interpreted as an attempt to lower prices as a jab at Russia for perceived aggression in Ukraine. And legally, the government is supposed to replace anything sold off within a year.

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Jim Sinclair’s Commentary

Respect for the USA is history. Respect at home and abroad for the office of the Presidency does not exist.

Bashar al-Assad dismisses US position on negotiating end to Syria war
Monday 16 March 2015 17.35 EDT

Bashar al-Assad has rejected calls by the US secretary of state that he should take part in talks, insisting that “declarations from outside do not concern us”. But then John Kerry himself faced criticism for “alienating” US allies.

Assad’s rebuff came after Kerry declared on Sunday that the US would “have to negotiate in the end” with the Damascus regime – a remark that immediately generated alarm in the Gulf states – which are determined to see him overthrown – and gloom among western supporters of a more robust US policy.

France and Turkey insisted Assad could not be part of a negotiated solution to the crisis. Britain’s position is similar – though no statement was made repeating it. Kerry also conspicuously failed to repeat the standard US line that Assad had “lost all legitimacy” over the four-year civil war in Syria and so had to go.

Still, his headline-grabbing remarks to CBS News were quickly qualified by a State Department spokeswoman, who insisted that the US view had not in fact changed. “There is no future for a brutal dictator like Assad in Syria,” said Marie Harf. The format for talks remained the Geneva conference, whose second and last session ended without results over a year ago. If talks were to resume they would certainly again include Syrian government ministers, though not Assad.

Kerry said the US and others were exploring how to revive diplomatic efforts to end Syria’s war, which has left more than 220,000 people dead, displaced millions and destabilised the region. “What we’re pushing for is to get him (Assad) to come and do that, and it may require that there be increased pressure on him of various kinds in order to do that,” he said.

More…

Jim Sinclair’s Commentary

I wonder if Chair Yellin still sees improvement in her data watching.

Target Lays Off 1,700 Employees from Headquarters
Posted by: Renee Changnon  March 11, 2015

The corporate structure of Target has been shaken this week as the company makes efforts to cut costs. On Tuesday, March 10, Target announced it was laying off 1,700 employees from its Minneapolis headquarters, according to an article in The New-York Times.

Last week, Target let it be known the one of the primary ways the retail giant was planning on scaling back current operations was by cutting corporate jobs in the U.S. and India.

After cutting the positions, Target released a statement about the 1,700 employees laid off from the corporate offices. The company added that 1,400 open jobs would not be filled, according to an article by the Star Tribune in Minneapolis.

“Today is a very difficult day for the Target team, but we believe these are the right decisions for the company,” the company said in a statement.

In total, Target is expected to pay severance costs of about $100 million in this round of cuts, which will be booked as a pretax charge in its first-quarter earning, according to The New York Times article.

More…


Jim Sinclair’s Commentary

Is Chair Yellin going to follow statistics or just make it up as she goes along?

Empire State Manufacturing Misses: New Orders Slide To 16 Month Lows, Capex Plunges
Tyler Durden on 03/16/2015 08:42 -0400

At 6.90, Empire State Manufacturing missed expectations of 8.00 (and dropped from the previous 6.9 print) for the 2nd weakest print in 11 months. While New Orders tumbled back into the red (and 16-month lows), average workweek and number of employees rose markedly (making this survey once again seem a total farce). “Hope” for the future improved (though remains lower than most of the last year’s prints) but new order expectations, tech spend, and capex all plunged.

New Orders tumbled to 16 month lows…

But jobs are up?

The prices paid index edged down two points to 12.4, signaling a moderate increase in input prices for a sixth consecutive month. The prices received index climbed five points to 8.3, indicating a modest increase in selling prices. The index for number of employees climbed eight points to 18.6, pointing to significant gains in employment, and the average workweek rose six points to 5.2, indicating a small increase in the average workweek.

But expectations for almost everythingb are dismal…

As in February, indexes for the six-month outlook conveyed less optimism than in many of the preceding months. After plunging last month, the index for future general business conditions rose five points to 30.7, remaining well below readings that were generally above 40 from May 2014 through January 2015. The future new orders and shipments indexes declined. The future prices paid and future prices received indexes edged higher, but remained subdued. A significant expansion in employment levels was anticipated, with the index for expected number of employees rising to 28.9. After reaching a multiyear high last month, the capital expenditures index fell back to 18.6, and the technology spending index dropped to 7.2

More…

Posted at 3:56 PM (CST) by & filed under Jim's Mailbox.

Jim,

Things just keep ratcheting up. No sign of letting up. One could assume the worst will happen.

CIGA Miki

Russia starts nationwide show of force
By Thomas Grove

More than 45,000 Russian troops as well as war planes and submarines started military exercises across much of the country on Monday in one of the Kremlin’s biggest shows of force since its ties with the West plunged to Cold War-lows.

President Vladimir Putin called the Navy’s Northern Fleet to full combat readiness in exercises in Russia’s Arctic North apparently aimed at dwarfing military drills in neighboring Norway, a NATO member.

“New challenges and threats to military security require the armed forces to further boost their military capabilities. Special attention must be paid to newly created strategic formations in the north,” Defence Minister Sergei Shoigu said, quoted by RIA news agency.

Shoigu said the order came from Putin, who has promised to spend more than 21 trillion rubles ($340 billion) by the end of the decade to overhaul Russia’s fighting forces.

Putin made his first public appearance since March 5 on Monday, an absence from view that had fueled feverish speculation over his health as well as his grip on power. He was meeting Kyrgyz President Almazbek Atambayev at the Constantine Palace outside Russia’s second city of St. Petersburg.

More…

Posted at 10:00 AM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

Up, up and away goes the debt pile.

Treasury planning emergency measures to meet debt
Already at the statutory federal debt limit, the Treasury is asking Congress to raise the ceiling as soon as possible.
By Doug G. Ware   |   March 14, 2015 at 1:45 AM

WASHINGTON, March 14 (UPI) — The U.S. Treasury is getting ready to once again start maneuvering to keep the federal government from defaulting on its debt, and possibly setting off undesirable financial consequences, the agency said Friday.

The United States is currently at the federal debt limit, but for the last 12 months hasn’t had to suffer the consequences of it — thanks to a congressional-imposed suspension, which expires Sunday. That means, Treasury officials say, they will have to take “extraordinary measures” beginning Monday to keep the federal government’s head above fiscal water.

Unless Congress acts quickly to raise the limit, those measures will include putting a stop to a planned $46 billion investment in the federal employee pension fund, which is scheduled for June. By halting the reinvestments, the government effectively borrows that money to help stay under the debt. However, by law, that money must be repaid before the debt limit can be increased again.

Other measures the Treasury will likely take are drawing down a currency stabilization fund and imposing moratoriums on state and local government deposits, USA Today reported.

The federal government began imposing limits on the amount the Treasury can borrow nearly a century ago, but because of multiple recent struggles to stay beneath it Congress simply suspended the law. The suspension, granted in February 2014, expires Sunday.

“Beginning on Monday, the outstanding debt of the United States will be at the statutory limit,” Treasury Secretary Jacob Lew wrote in a letter to House Speaker John Boehner Friday. “Because Congress has not yet acted to raise the debt limit, the Treasury Department will have to employ further extraordinary measures to continue to finance the government on a temporary basis.”

Lew informed Boehner the Treasury is planning to declare a “debt issuance suspension period” on reinvestments into several funds.

“These actions have been employed during previous debt limit impasses,” Lew said.

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Jim Sinclair’s Commentary

When the EU agreed to Russian sanctions, they committed economic suicide and a major currency event.

Hundreds of German Protesters Rally Against Americanization of Europe
21:52 15.03.2015(updated 21:53 15.03.2015)

German protesters took to the streets of Hanover demonstrating and criticizing what they describe as the Americanization of Europe.

Hundreds of German protesters took part in the Saturday rally complaining that the new world order is restricting their freedom.

During the rally, protesters carried half German, half Russian flags and held signs that read “Stop terror,” “Stop the new world order,” and “We want to live as free people in a free Germany,” reports German media.

The protesters further condemned what they referred to as Germany’s interfering in Ukrainian domestic affairs with NATO channel.

Speaking at the protest rally, a former broadcast journalist for German television channel ARD and activist Christoph Horstel accused German Chancellor Angela Merkel of supporting “Nazis in Ukraine,” demanding that she should be “handcuffed” and brought to trial in a court of justice to respond to questions regarding her government’s role in escalating tensions in eastern Ukraine.

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Jim Sinclair’s Commentary

The decision to use the Swift system as an economic weapon has backfired badly.

Isolating Russia: Washington’s Failed Attempt to Exclude Russia from the SWIFT Bank Clearing System
Bill Holter.

The biggest news last week and for the year so far, pertains to the SWIFT clearing system and what they just did.  The U.S. has been pushing to kick Russia out which would certainly hamper their ability to do business internationally.  The idea was to isolate Russia and box their trade in.  This action has been at the top of the list for the U.S. in their move to press more and more financial and trade sanctions on Russia.  It just backfired and may even boomerang.  Not only did SWIFT not isolate and kick Russia out, they are giving Russia one of their 25 board seats!  You may or already probably know this news, I believe the world has now made and about face and we may now have a glimmer of hope for the world at large.  I will call this “a vote for peace, a vote for truth”, let me explain.

  First and most importantly, the vote is not just a “no vote” to isolating Russia, I view it more as a “no vote” and against the United States dollar hegemony.  The U.S. has during our entire lifetimes “run and ruled the world”.  Whatever the U.S. says, goes.  This mentality has obviously been even more forceful in recent years as the U.S. has sent military all over the world to enforce their desires.  Many of these operations have been seen by foreigners as unjust and discovered later (Iraq for example) to have been forwarded by false intelligence or even outright lies.  Not much was said because who really had the power to dissent?  China and Russia 15 years ago didn’t have the military or financial might to object.  Our allies like Britain and Germany did not want to cross Uncle Sam, so they just “went along to get along”.

  This is now changed.  China is the largest creditor to the U.S., Russia has built her military and we have double crossed and in general alienated many of our long time allies.  Think Israeli relations, German eavesdropping, pressure on Swiss banks etc..  Even the “special friendship” between the U.S. and Britain has been fractured badly as they just applied to become a charter member of the AIIB, http://shanghaiist.com/2015/03/13/britain-applies-join-china-backed-asia-bank-us-furious.php    which aims to be a direct competitor with the U.S. led World Bank.  This could never have even been dreamed of only five years ago.  I don’t believe this decision was made by the Brits because of something or “some things” we have done.  In my opinion, Great Britain has simply looked around and decided to “go with the winner”.  We are talking more about U.S. weakness here, and even our strongest ally is moving away from us!

  So how exactly does SWIFT giving a board seat to Russia translate into a vote for peace and a vote for truth?  This is an action by the rest of the world saying a very loud “NO” to the United States.  They have seen us stir up unrest and strive at every turn to start a war.  Mr. Putin and Russia stepped in late 2013 to diffuse our attack on Syria.  They have not reacted to sanctions and have not so far reacted to the U.S. led political coup in Ukraine.  They have refused to be drawn in to what will become WWIII.  I believe the world recognizes this and is rewarding Russia for her restraint.  The “world” does not want a war, the U.S. does.

  The U.S. “needs” a war, just as it did back in 2001 when the economy was deteriorating.  War is obviously a bad thing but make no mistake, it is good for the real economy as long as the fighting is not done on your own soil.  The U.S. also needs a war to retain “control” over various parts of the world where control is being lost, think the Middle East and energy regions.  As you know, I also believe the U.S. needs “something to point at” as a reason or to blame for collapsing markets.  I believe collapse is a 100% given but how would it “look” if it just happened out of the blue?  A war would be perfect “cover” to explain why things went bad in our markets.  The rest of the world knows this and in my opinion wants to take this away.

  The rest of the world also knows that dollar hegemony is not in their favor in any way, shape, or form.  They realize the U.S. has been importing real goods and paying for them with freely printed pieces of paper and electronic digits.  The world desires “truth”.  It desires real and true settlement of trade, as in “something real for something real”.  The U.S. wants to continue with something for nothing in what is an obvious “never pay” model.

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Jim Sinclair’s Commentary

No problem, just raise the roof on debt.

US Reaches Debt Ceiling Amid Tensions in Congress
07:36 16.03.2015(updated 07:38 16.03.2015)

WASHINGTON (Sputnik) — Two US federal agencies have issued warnings that Congress must take action to raise the government’s borrowing limit, the debt ceiling, by March 16, or face consequences including default.

On Monday, the 2014 extension of the US borrowing limit will reach its statutory limit, inhibiting the ability of the Treasury to finance government activities.

“The creditworthiness of the United States is not a bargaining chip, and I again urge Congress to address this matter without controversy or brinksmanship,” US Treasury Secretary Jack Lew wrote in a letter to Congresson Friday.

He emphasized the unique role of the US Congress as the only body that “can extend the nation’s borrowing authority,” adding that “no Congress in our history has failed to meet that responsibility.”

According to the statement, the Treasury has already stopped issuing state and local government securities. Secretary Lew’s Friday letter advising Congress to raise the debt ceiling is the second one he has sent to Capitol Hill in the past month.

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Jim Sinclair’s Commentary

How does your data look Chair Yellen?

Confidence Among U.S. Homebuilders Declines to Eight-Month Low
7:00 AM MST
March 16, 2015

(Bloomberg) — Confidence among U.S. homebuilders unexpectedly fell in March to an eight-month low as prospective buyers were in little rush to shop for properties ahead of the busier spring selling season.

The National Association of Home Builders/Wells Fargo sentiment gauge dropped to 53 from 55 in February, figures from the Washington-based group showed Monday. The median forecast in a Bloomberg survey called for a gain to 56.

Sales of single-family homes declined to a five-month low and builder optimism about the outlook failed to improve, the report also showed. Low mortgage rates and job creation may help spur homebuyer interest in coming months.

“Even with this slight slip, the HMI remains in positive territory and we expect the market to improve as we enter the spring buying season,” NAHB Chairman Tom Woods, a homebuilder from Blue Springs, Missouri, said in a statement.

Estimates in a Bloomberg survey of 47 economists ranged from 50 to 58. Readings greater than 50 mean more respondents report good market conditions.

Other data today showed factory production fell in February for a third straight month, a sign that cutbacks in manufacturing will hold back the economy this quarter. The 0.2 percent decrease followed a 0.3 percent drop in January that was initially estimated as a gain, according to figures from the Federal Reserve. Total industrial production, which also includes mines and power plants, rose 0.1 percent, propelled by a record surge in utility use as temperatures plummeted.

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Posted at 9:51 AM (CST) by & filed under Jim's Mailbox.

Jim,

“You’ll wonder where the money went, when you pay for all the armaments.” (old Pepsodent jingle)

Almost half a trillion dollars on a jet and it doesn’t even fly! We need look no further to see where our money goes.

The government’s definition of boosting the economy is:

-support of banking and
-support of defense industry and
-support of healthcare industry (thru ACA).

Probably the 3 largest lobbying groups in the world.

CIGA Wolfgang

How to Build a $400 Billion F-35 That Doesn’t Fly
By Brianna Ehley March 15, 2015 6:30 AM

The Pentagon’s embattled F-35 Joint Strike Fighter continues to be plagued with so many problems that it can’t even pass the most basic requirements needed to fly in combat, despite soaring roughly $170 billion over budget.

As the most expensive weapons program in the Pentagon’s history, the $400 billion and counting F-35 is supposed to be unlike any other fighter jet—with high-tech computer capabilities that can identify a combatant plane at warp speed. However, major design flaws and test failures have placed the program under serious scrutiny for years—with auditors constantly questioning whether the jet will ever actually get off the ground, no matter how much money is thrown at it.

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Jim,

New Rules for Money Market deposits:

1) No withdrawals in the next stock market collapse (As I understand it)
2) Money Market deposits (your cash deposits) will float, like the price of stock.  No longer guaranteed.
3) Cash deposits in Municipal Funds (if you own muni’s, interest pay’ts. into your account) will be subject to fees if you withdraw them.

Something smells awfully fishy here.  Does the SEC expect something nefarious to happen in the near future?

CIGA Wolfgang Rech

Change is afoot! In the Cash Markets-

Money-market mutual funds used to be a place to park your cash, now investors used to ignoring that part of their portfolio might suddenly have to pay attention instead because-

•                  New rules recently passed by the Securities and Exchange Commission governing the $2.7 trillion industry have sparked proposed changes at two of the largest money-fund providers, Fidelity Investments and Federated Investors Inc.

•                  The SEC regulations aim to prevent an investor exodus from money-market funds like the one that happened during the 2008 financial crisis, when the federal government had to step in with financial backing for the industry.

•                  And shares of money-market funds must float in value, like the shares of most other mutual funds. That’s a change from the stable $1-a-share value traditionally maintained by all money-market funds. The idea is that investors will be aware of changes in asset values as they occur and be able to adjust their holdings accordingly, rather than stampeding out of funds when they suddenly become aware that their shares aren’t worth $1.

•                  Another big change is that all money-market funds that invest in corporate or municipal debt will be allowed to charge investors a fee to redeem shares when the funds are under pressure or temporarily block investors from withdrawing cash.

Posted at 4:41 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

US, Great Britain and the EU to name a few.

Boston University Economist Calls Out Congress on Enormous Fiscal Gap
Written by Bob Adelmann 
Thursday, 12 March 2015

During his annual trek to Washington, D.C., to lecture Congress on its spendthrift habits, Boston University economist Laurence Kotlikoff took the gloves off this year. He dressed down Senator Mike Enzi, chairman of the Senate Budget Committee, along with the committee’s members:

Let me get right to the point. Our country is broke. It’s not broke in 75 years or 50 years or 25 years or 10 years.

It’s broke today.

Indeed, it may well be in worse fiscal shape than any development country, including Greece.

It isn’t just Enzi, or his committee, or the present Congress, that’s responsible for a fiscal gap that’s vastly larger than that projected by the Congressional Budget Office (CBO). It’s the idea that the country can borrow without limit because its past profligacy has not only been ignored but has been papered over by inaccurate and incomplete accounting by the CBO, the General Accounting Office (GAO) and the Office of Management and Budget (OMB). According to these agencies, the national debt held by the public is just 74 percent of the country’s economic output, or GDP. Put that way, according to Kotlikoff, the United States is in pretty good shape, and there’s not much to worry about.

Said Kotlikoff, “The CBO is, in my opinion, deliberately misleading the public and Congress about our nation’s true fiscal condition.… [The real fiscal gap is] 16 times larger than [the] official debt, which indicates precisely how useless official debt [numbers are] for understanding our nation’s true fiscal position.”

According to Kotlikoff, the government is 58 percent underfinanced. Not only is that worse than Detroit, just before it went bankrupt, it’s worse than Social Security:

The Social Security system, taken by itself, is 33 percent underfinanced. Another comparison is Detroit prior to declaring bankruptcy. The city appears to have been roughly 25 percent underfunded.

Hence, the U.S. is in far worse shape than was Detroit before it went broke.

Kotlikoff uses “fiscal gap accounting” and “generational accounting” in an attempt to get his arms around all the promises the government has made, whether “on books” (such as Treasury bills, notes, and bonds), or “off books” (such as Social Security, Medicare, Medicaid, and the Prescription Drug Benefit). He then compares U.S. government promises to expected government income from all sources: taxes, fees, tariffs, interest payments, payroll taxes, and so forth. The fiscal gap, instead of the highly misleading (he says) number issued by the CBO of some $11 trillion, is really $210 trillion.

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Jim Sinclair’s Commentary

Chair Yellen, how is the flawed data you watch doing?

Surprise: U.S. Economic Data Have Been the World’s Most Disappointing
Is this a sign of unanticipated weakness in the economy?
March 13, 2015

It’s not only the just-released University of Michigan consumer confidence report and February retail sales on Thursday that surprised economists and investors with another dose of underwhelming news. Overall, U.S. economic data have been falling short of prognosticators’ expectations by the most in six years.

The Bloomberg ECO U.S. Surprise Index, which measures whether data beat or miss forecasts, fell to the lowest since 2009, when the nation was in the deepest recession since the Great Depression.

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There’s been one notable exception to the gloom, and it’s a big one: payrolls. The economy added 295,000 jobs in February and 1.3 million over four months, a reflection of a healthier labor market in which the unemployment rate has fallen to the lowest in almost seven years.

Most everything else? Blah.

This month alone, personal income and spending, manufacturing as measured by the Institute for Supply Management, auto sales, factory orders, and retail sales have all come in a bit weak.

Citigroup keeps economic surprise indexes for the world, and its scoreboard shows the U.S. is most disappointing relative to consensus forecasts, with Latin America and Canada next, as of March 12. Emerging markets were supposed to be hurt by falling oil prices but are now delivering positive surprises. U.S. policymakers frequently talk about weakness in Europe and China, though both are exceeding expectations.

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Billionaire Eric Sprott Just Made The Most Terrifying Prediction Of 2015

Today billionaire Eric Sprott warned King World News that the entire global financial system is now facing the greatest danger in history.  He then issued the most dire prediction of 2015.

Eric King:  “We had (the stock market collapse) of 2001 – 2003.  Then we had (the more intense collapse of) 2007, 2008, 2009.  The next one (collapse) is going to be worse because that’s just how these cycles progress.  As you know, they (seizures in the global financial system) get more violent and the collapses become more and more intense.  People couldn’t imagine it would get worse than 2001 – 2003, and yet we had 2007 – 2009.  This one that’s in front of us, I’m assuming it’s going to be the mother of all collapses.”

Eric Sprott:  “Two words that come to my mind, Eric, ‘No bid.’  In other words, if you take the central planners out of the market, there is no bid….

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Jim Sinclair’s Commentary

This is a fair statement if not by decision, then by the collapse of their treasury paper.

Italy, Spain to follow if Greece exits eurozone, says Greek Defense Minister

Greece’s Defence Minister Panos Kammenos has said his country’s exit from the eurozone could be followed by Italy, Spain and even Germany. Kammenos’ interview comes amid lack of progress in Greece’s bailout plan.

Panos Kammenos, Greece’s defense minister, spoke to German newspaper "Bild" on Saturday, saying his country’s leaving the euro could precede an exit by Italy and Spain, followed by Germany in the future.

"If Greece explodes, Spain and Italy will be next and then at some point, Germany. We therefore need to find a way within the eurozone, but this way cannot be that the Greeks keep on having to pay, "Kammenos told Bild.

Berlin to pay for WWII reparations

Instead of a bailout, Greece needed a debt "haircut" like one Germany was given after World War II in 1953, Kammenos proposed. He also argued for Berlin to pay World War II reparations to Athens. "All European countries have been compensated for crimes committed by Nazis, except for Greece," Kammenos said, referring to the gold Nazi soldiers brought back from Athens during the war.

The defense minister also accused Germany of "interfering" in its domestic affairs, targeting German Finance Minister Schäuble, who earlier warned of a "Grexident" which could push Athens out of the euro.

"I don’t understand why he turns against Greece every day in new statements. It’s like a psychological war and Schäuble is poisoning the relationship between the two countries through that," he said.

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Posted at 3:10 PM (CST) by & filed under Jim's Mailbox.

Jim,

First this, about a possible Euro break up and the price of gold.

Then look at the next article. Appears we may soon see this.

CIGA Wolfgang Rech

Gold still has a shot at $2,000 an ounce
By Myra P. Saefong
Published: Mar 13, 2015 2:42 p.m. ET

SAN FRANCISCO (MarketWatch) — Contrary to some expectations that gold prices are more likely to fall, Capital Economics on Friday said they might actually top $2,000 an ounce.

“Many of the latest headlines have focused on the negative implications of the surge in the dollar,” said Julian Jessop, head of commodities research at Capital Economics. But “this misses the rather bigger point that the gold price has held up remarkably well given the extent of the dollar’s move.”

“This resilience is arguably encouraging for the precious metal’s prospects when the focus returns to more supportive factors,” he said in a note Friday.

“If the eurozone does actually break apart, we would not be surprised to see the gold price top $2,000,” he said.

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Germans Furious After Varoufakis/Tsipras Admit "Greece Will Never Repay Its Debts"
Submitted by Tyler Durden on 03/12/2015 – 16:59

ZERO HEDGE

But The Greeks had the last laugh, as first Varoufakis and then Tsipras explained respectively that "Greece would never pay back its debts," and "Greece cannot pretend its debt burden is sustainable." The German response, via tabloid Bild, "there must be an end to this madness. Europe must not be made to look stupid."

More…

Posted at 10:10 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Can I say I told you so? Some intelligence agent jumped the gun and unloaded what would have been a strong weapon prematurely thereby making it a squirt gun at best.

US plan to drop Russia from global banking system hilariously backfires
by Simon Black on March 11, 2015
Panama City, Panama

If Vladimir Putin is remotely capable of laughter (the jury is out on that one…) then he’s probably doing so right now.

Russia is once again Arch-Enemy of the United States. It’s like living through a really bad James Bond movie, complete with cartoonish villains.

And for the last several months, the US government has been doing everything it can to torpedo the Russian economy, as well as Vladimir Putin’s standing within his own country.

The economic nuclear option is to kick Russia out of the international banking system. And the US government has been vociferously pushing for this.

Specifically, the US government wants to kick Russia out of SWIFT, short for the Society of Worldwide Interbank Financial Telecommunications.

That’s a mouthful. But SWIFT is an important component in the global banking system because it lays the foundation for banks to communicate and transfer funds with one another.

It’s a network protocol of sorts. Whenever a bank in Pakistan does business with a bank in Portugal, the funds will clear through the SWIFT network.

According to the SWIFT itself, they link over 9,000 financial institutions worldwide in over 200 countries, which transact 15 million times per day.

Bottom line, being part of SWIFT is critical to conducting business with the rest of the world. And if Russia gets kicked out of SWIFT, it would be a disaster.

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Jim Sinclair’s Commentary

At the end of every binge the sharks start eating the sharks until there is one fat sick shark left. Could this be a sign of the binge ending?

Flash Boys’ Michael Lewis Warns "The Problem’s Not Just HFT, The Problem Is The Entire System"
Tyler Durden on 03/13/2015 09:50 -0400

As HFT shops begin to turn on each other, it seems appropriate to reflect on the impact that Michael Lewis’ Flash Boys book had on exposing the ugly truth that many have been discussing for years in US (and international) equity (and non-equity) markets. As Lewis concludes, after explaining the attacks he has suffered from the HFT industry, "If I didn’t do more to distinguish ‘good’ H.F.T. from ‘bad’ H.F.T., it was because I saw, early on, that there was no practical way for me or anyone else… to do it. … The big banks and the exchanges [have] been paid to compromise investors’ interests while pretending to guard those interests. I was surprised more people weren’t angry with them."

Authored by Michael Lewis, originally posted at Vanity Fair,

When I sat down to write Flash Boys, in 2013, I didn’t intend to see just how angry I could make the richest people on Wall Street. I was far more interested in the characters and the situation in which they found themselves. Led by an obscure 35-year-old trader at the Royal Bank of Canada named Brad Katsuyama, they were all well-regarded professionals in the U.S. stock market. The situation was that they no longer understood that market. And their ignorance was forgivable. It would have been difficult to find anyone, circa 2009, able to give you an honest account of the inner workings of the American stock market—by then fully automated, spectacularly fragmented, and complicated beyond belief by possibly well-intentioned regulators and less well-intentioned insiders. That the American stock market had become a mystery struck me as interesting. How does that happen? And who benefits?

By the time I met my characters they’d already spent several years trying to answer those questions. In the end they figured out that the complexity, though it may have arisen innocently enough, served the interest of financial intermediaries rather than the investors and corporations the market is meant to serve. It had enabled a massive amount of predatory trading and had institutionalized a systemic and totally unnecessary unfairness in the market and, in the bargain, rendered it less stable and more prone to flash crashes and outages and other unhappy events. Having understood the problems, Katsuyama and his colleagues had set out not to exploit them but to repair them. That, too, I thought was interesting: some people on Wall Street wanted to fix something, even if it meant less money for Wall Street, and for them personally.

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The surging dollar is a signal that a colossal financial event is just around the corner
Mike Bird
Mar. 13, 2015, 10:26 AM

The dollar is set for its strongest quarterly strengthening since 1992, according to Bank of America, a good sign that a rate hike is around the corner.

When markets expect that US interest rates will be hiked, it typically strengthens the dollar. That’s because people rush to change other currencies into dollars — they can make more money in dollar-denominated investments. The higher demand for the US currency drives its value up.

In the past, significant dollar gains against other currencies have pretty much happened only during periods of extreme financial or geopolitical distress.

The last four large dollar shocks in the past 45 years have been symptoms of huge financial events: the collapse of Lehman, Britain’s panicky ejection from the European Exchange Rate Mechanism (ERM) in 1992, the first Gulf War, and Paul Volcker’s shock rate hikes in the early 1980s.

Today’s surge is already considerably larger than the one that surrounded Lehman’s collapse, although the economic conditions are very different.

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Gold market sentiment matters no more than technical analysis does
Submitted by cpowell on Fri, 2015-03-13 06:55. Section: Daily Dispatches
2:05p ICT Friday, March 13, 2015

Dear Friend of GATA and Gold:

Some gold market analysts are noting that sentiment in the sector has probably never been worse. They construe this as an indicator of a bottom in the metal’s price and the price of gold mining shares. But in a market as manipulated as the gold market, sentiment has no more meaning than technical analysis does.

Really, who cares about what is being thought by ordinary investors, who may be able to deploy a few billion dollars in the gold market, when central banks have infinite money to deploy and acknowledge that they are trading the gold market nearly every day? And central banks are not trading just the metal itself but also futures, options, and derivatives, by which they can leverage their trading to infinity.

In the face of the infinite money deployed against them, the sentiment of gold market investors could be entirely positive or negative and it wouldn’t mean anything. In the gold market right now the only sentiment that matters is that of the biggest traders, central banks.

These days no gold market analysis is worth anything unless it starts with questions like the following or is underlain by premises arising from these questions:

– Are central banks active in the gold market or not?

– If central banks are active in the gold market, is it just for fun — say, to run contests among their foreign exchange desks to see which one can cheat the most ordinary investors — or is it for policy objectives?

– If central banks are active in the gold market for policy objectives, are these objectives those that have been documented in government archives for decades — to limit the price of the monetary metal and to push it out of the international financial system so that central banks may accrue more power? Or are there other objectives as well, like the objective suggested by the economists and fund managers Paul Brodsky, Lee Quaintance, and James Rickards, who argue more or less that gold price suppression by central banks lately is meant to redistribute gold away from Western central banks and investors to Eastern central banks needing to hedge their grotesque U.S. dollar-based foreign exchange surpluses against devaluation of the dollar?

In these circumstances, if central banks are determined enough they could use their infinite leverage to drive the price of gold on the futures markets down to zero. Their intervention is limited only by the metal they are prepared to lose, just as their intervention during the operation of the London Gold Pool was limited only by the draining of central bank gold reserves to critical levels in March 1968.

Recent attempts by some central banks to repatriate their gold from the Federal Reserve Bank of New York support suspicion that the price-suppression scheme, engineered largely the U.S. government, has begun expropriating foreign custodial gold for suppression purposes, buying the scheme a lot more time than some gold market analysts thought it ever could have.

And if, as seems generally agreed, any default on the gold contract at the New York Commodities Exchange can be resolved with cash settlement at the price prevailing before no gold was offered for sale and the price skyrocketed, should the price-suppressing central banks care much about a default? For the risk of default in Comex gold would be not really the risk of losing metal but rather the risk of losing the primary mechanism of price suppression, the exchange itself, which might be replaced by confiscation or the outlawing of private possession of gold.

While it may be hard to imagine, the U.S. government claims to be fully authorized by law not just to rig the gold market and all markets in secret –

http://www.treasury.gov/resource-center/international/ESF/Pages/esf-inde…

– but also to strip anyone of any asset, not just assets in the monetary metals, upon a presidential proclamation of emergency:

http://www.gata.org/node/5606

That is, the outcome of the current round of gold price suppression may not be anything like the outcome of the collapse of the London Gold Pool, an advance toward freer markets, but rather more of what even some central bankers call "financial repression."

But at least then gold price suppression would be undertaken so openly that even mainstream financial news organizations would have to mention it — that is, if news organizations were allowed to continue operating at all.

That’s why the only gold market analysis that may be worth anything anymore is analysis of the struggle between totalitarianism and liberty. No Internet site of financial data offers a chart for that.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

China Furious at US ‘Childish, Hysterical Paranoia’ on Beijing World Bank
© Sputnik/ Sergey Guneev
17:51 13.03.2015(updated 23:09 13.03.2015)

An editorial in the Chinese state-run Xinhua news agency blasts the US government for its attempts to steer Britain away from China’s new infrastructure investment bank.

The United States has launched into paranoid hysteria by criticizing the United Kingdom for joining the Beijing-headquartered Asian Infrastructure Investment Bank (AIIB), China’s state-run Xinhua news agency announced on Friday.

"The US has again launched into paranoid hysteria by manifesting its skepticism toward China’s creation of the Asian Infrastructure Investment Bank."

The editorial continues, saying that the US has been closing its eyes to China’s constructive efforts such as the Silk Road Economic Belt, which aims to build an economic corridor between China and Europe. The editorial also notes that certain US politicians "sometimes simply cannot restrain themselves from making picky and irresponsible remarks" about China.

"This reaction of the US Government is nothing but childish paranoia toward China, which should not be surprising considering that Washington has long ago set itself on a wave of distrust."

The official commentary also added that while China seeks a mutually beneficial relationship with the United States, its current paranoia can only threaten future prospects:

"The US Government must understand that prejudice and deep-seeded strategic mistrust toward China cannot help develop healthy and strong relations with this Asian country."

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Jim Sinclair’s Commentary

This is hysterical.

Parasite Turns On Parasite: HFT Sues Other HFTs For "Egregious Manipulation" Of Treasury Securities
Tyler Durden on 03/12/2015 23:43 -0400

There was a time when those who dared to call out the massive Libor manipulation conspiracy (such as what Zero Hedge did with one of its first posts in 2009) for being a massive Libor manipulation conspiracy some 4 years before the "theory" became a fact, were branded as scaremongering, fringe voices, best to be ignored. Then, of course, once the "theory" became "fact" it suddenly was perfectly obvious to everyone in retrospect.

But the bigger question, and what stumped the so-called experts, is how could something so vast, with so many moving pieces, remain a secret for as long as it did.

The answer is extremely simple: everyone who was in on the "secret" was also benefiting from it: from the lowliest Libor rigger to the CEO of Barclays and every other major bank, they all knew what was going on, but also knew that if the information became public knowledge, the jig would be up, and everyone’s benefits would evaporate with some even going to jail (at least in a hypothetical legal system in which bankers actually go to jail). In other words, it was merely a case where everyone’s interest was aligned to maintain the conspiracy cartel as long as possible.

Which brings us to High-Frequency Trading: another vast "conspiracy", this time involving market rigging and manipulation, which Zero Hedge also called out as early as April 2009, only to be mocked before it became a generally accepted fact that the "algos" manipulate and frontrun virtually any security that is traded on an exchange or over the counter. This culminated with Michael Lewis’ book "Flash Boys", only unlike the Libor case, there was absolutely no response because unlike Libor, and then FX and then gold rigging, the Federal Reserve’s own activity often depends on its symbiotic collaboration with the HFT community’s upward momentum bias (by way of Citadel, a peculiar close relationship between the NY Fed and Citadel we have discussed in the past). That, and there was also no informant to turn sides with the Feds, and make a case that goes to the very top. At least not yet.

More…

Jim Sinclair’s Commentary

The euro must have gotten someone’s attention.

Deal-Breaker? Germany, NATO in First Open Conflict Over Ukraine Crisis
© Flickr/ US Embassy Vienna
20:25 12.03.2015(updated 07:00 13.03.2015)

German Foreign Minister Frank-Walter Steinmeier has told his US counterpart John Kerry that it is too early to take any pride in the western strategy towards the Ukraine crisis, just days after accusing the US of "dangerous propaganda" over Ukraine.

Steinmeier, speaking on a visit to the US, said to Kerry at a joint press conference in Washington: "It is far too early to pat our shoulders and take pride in what we’ve achieved."

His comments come days after an official in German Chancellor Angela Merkel’s offices had complained of US Air Force General Philip Breedlove’s "dangerous propaganda" over Ukraine, and that Steinmeier had talked to the NATO Secretary General Jens Stoltenberg about him.

"It’s true that I asked in two instances, in which the information we had from our sources was not entirely consistent with the information that came from the United States or NATO," Steinmeier told a European Union foreign ministers meeting in Riga, earlier this week.

False Information from the US

Steinmeier hinted that "false information" had been used by the US to hype up the situation in Ukraine and that some people within the European Union believed the crisis is being promoted by the US, according to an article in the German magazine Der Spiegel.

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The Real Reason The Swiss Peg Ended
MARCH 11, 2015 / BRUNO DE LANDEVOISIN
Submitted by J.C. Collins – philosophyofmetrics

When Managing Director of the International Monetary Fund Christine Lagarde gave the speech last year where she mentioned the number 7 numerous times, the internet caught fire with theories and analysis of what exactly was meant by the term “magic seven”. Contrary to popular opinion, it had very little to do with the occult, and more to do with the forthcoming composition changes to the SDR valuation.

The purpose and theme running through the Special Drawing Right composition is also directly connected to the ending of the Swiss franc peg to the EUR. But before we get into that let’s review some of the information and logic behind the analysis which we are going to review and present in this post.

The move away from the USD as the primary reserve currency used in the global financial system will be the largest change and transition in how the world functions in most of our lifetimes. The balance of payments system which supports the United States dollar is stricken with imbalances, as presented in the Triffin Paradox.

The Triffin Paradox thoroughly explains the challenges faced when one specific domestic currency is used as the global reserve currency. The amount of USD building in the foreign reserve accounts around the world creates domestic pressure on the USD, which in turn forces the US to print more currency, which then in turn promotes deficiencies and pressures on the exchange rate regime which supports the USD.

It is collectively agreed by all, including America itself, that the USD should be reduced in the foreign reserve accounts around the world, and something supra-sovereign to a domestic currency needs to be optimized as the international unit of account. The SDR of the International Monetary Fund is set to rise and take that crown, which will soon be vacated by the USD.

The reserve characteristics of the SDR create the opportunity to move away from the use of domestic currencies as primary reserve currencies. Currently the SDR basket composition is made up of four currencies, the USD, Japanese YEN, British GBP, and the EUR.

More…

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March 13, 2015
Willemstad, Curacao

In another awkward blow to the rapidly waning US-dollar hegemony, America and Britain just had their "It’s not you, it’s me" moment.

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Late yesterday, the government of the United Kingdom announced that they would be applying to join the Chinese-led Asian Infrastructure Investment Bank… as a founding member.

This is huge.

Right now, the United States dominates the global financial system.

But after years of endless wars, spying, debt, money printing, bailouts, and insane regulations, the rest of the world has had enough. And they’re looking for an alternative.

China is coming up with an answer.

The soon-to-be-live Chinese International Payment System (CIPS) will provide a way for banks to transfer funds to one another without having to use the US banking system… or the US dollar.

China is also the ringleader behind both the BRICS development bank (called the New Development Bank, or NDB) as well as the Asia Infrastructure Investment Bank (AIIB).

Both of these are multilateral development banks that aim to end the dominance of the western-controlled World Bank and IMF.

NDB includes all the BRICS nations– Brazil, Russia, India, China, and South Africa.

Founding members of the AIIB include China, India, Indonesia, Kazakhstan, Mongolia, etc. They’re typically all rapidly growing and/or resource-rich developing nations.

New Zealand was the first western nation to join AIIB back in October. And yesterday afternoon, Britain announced its intention to become the second.

(Of course in the UK’s eyes they’re the first since New Zealand still belongs to the Queen!)

This is a massive, embarrassing blow to the United States, and to the future of the US dollar.

It’s pretty obvious when you look at the dozens of signatories to the NDB and AIIB charter documents: the rest of the world is sick and tired of the United States dominating the global financial system.

And by putting these new development banks and alternative payment systems together, they’re actually doing something about it.

Even America’s own allies have supported this anti-dollar movement.

Last summer the French Finance Minister explained to reporters how completely unnecessary it was for a European aircraft manufacturer to sell jets to European airlines in US dollars (instead of euros).

He also slammed the US government for arrogantly fining French bank BNP a whopping $9 billion for doing business with countries that the US doesn’t like.

(Side note: one of the ‘evil’ countries BNP did business with was Cuba, and they were heavily punished for this, even though BNP broke no law in France. But now all of a sudden the US and Cuba are buddy-buddy again. Is BNP going to get a refund?)

His conclusion? It’s time for a ‘rebalancing’ of the global financial system away from the US dollar. Other political allies of the United States have echoed similar sentiment.

But now we can see words are turning into action.

Britain might be too polite to tell the US straight up– "Look, you have $18.1 trillion in official debt, you have $42 trillion in unfunded liabilities, and you’re kind of a dick. I’m dumping you."

So instead they’re going with the "it’s not you, it’s me" approach.

But to anyone paying attention, it’s pretty obvious where this trend is going.

It won’t be long before other western nations jump on the anti-dollar bandwagon with action and not just words.

Bottom line: this isn’t theory or conjecture anymore. Every shred of objective evidence suggests that the dollar’s dominance is coming to an end.

It’s happening. Time to plan for it.

Enjoy your weekend,
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Simon Black
Founder, SovereignMan.com