Posted at 10:11 AM (CST) by & filed under Bill Holter.

Dear CIGAs,

We have all from time to time tried to help others, friends and family, by pointing them toward reality. For our troubles and efforts we have been viewed as the "squirrely" guy/gal with a tinfoil hat who see’s everything as a conspiracy. We have lost friends and even had family cringe when holiday get togethers were planned because no one wants to be exposed to our "craziness". Worse than any disease or even leprosy, anyone spouting Austrian economics or even "common sense" (almost extinct today) has been shoved into the outcast corner by the mass delusional majority. Over the last few years, "theory after theory" has become fact after FACT after FACT! There can no longer be any question, conspiracy to delude and defraud has run rampant and is a day to day operation in the Western world.

Originally my thought was to write this piece about and around the perfect response, "but you do agree the government is bankrupt, right?". I say this because almost anyone (in the U.S.), no matter what age, sex, religion, race or financial status will generally agree with this. For those who don’t agree, it is better to leave well enough alone, this is a subset living in their own delusional world.

For those who do agree "the government is broke", they are broken down into basic subsets. There are those who "get it" fully. There are those who know the government is broke but don’t really understand what it means or the ramifications (they can’t connect the dots). Another group are those who agree and know in the back of their mind this is true …but they don’t REALLY believe it because they simply cannot …"it’s too awful to comprehend". Then, we have another group, probably the largest of all, those who agree but think it really doesn’t matter. They may also believe no financial crisis will ever occur because "the government will never let it happen". Let’s talk about this group next.

The "can’t happen here" crowd only need the dots connected for them. I believe it is best to ask them questions in an effort to lead them to their own answer and understanding. This is much better than lecturing or "telling" them because they will actually have to think to answer your questions. Questions such as:

1.  if the government is broke, how will they make good on their obligations such as payrolls, Social Security, food stamps, paying the military and most importantly paying on their debt?  Forget the first four, "do you realize Treasury securities are what funds Social Security, your pension, the bank’s balance sheet which holds your money …AND what underlies the dollar itself?"! 

2.  If the above doesn’t work, you might ask if the economy currently "feels good"?  Then ask, do you realize the federal government spends almost 20% of GDP (and their spending is "counted" as part of GDP).  If they are broke and have to drastically cut back on spending, will the economy not shrink by the amount the government can no longer spend?  Do you see without government spending, under any definition we would be in a depression greater than the 1930′s?

I don’t want to go through the entire exercise but please understand, "guiding" someone to their own conclusion which happens to be correct is best done with questions, MANY OF THEM.  If you can, take two, three or even more philosophical roads to help them reach the same conclusion each time …the understanding will be that much more cemented in their mind when they finally do(hopefully) arrive!

Switching gears just a bit, we have seen the "mentality" change somewhat over the last year or so.  Even the mainstream is showing some signs of a shift.  This "shift" has even become evident amongst and within the "old boys club".  For example, who would have imagined Germany, Netherlands, Belgium and Austria would ever ask for their gold back?  Or Texas building its own depository and using the words "not" and "confiscate" in the legislation for proposed repatriation? 

Several very well known and at one time mainstream money managers have publicly told of the dangerous situation.  The latest is a bond manager who has gone entirely to cash, how’s this for putting a crash helmet on?

http://www.bloomberg.com/news/articles/2015-06-22/tcw-braces-for-bond-market-collapse-by-piling-the-cash-up-high Just a few weeks ago, Bloomberg put out an article asking if China could gold back the yuan.  This was significant because no news source (other than maybe Kitco) has been as bearish and slandering regarding gold than Bloomberg.  http://www.bloomberg.com/news/articles/2015-05-20/chinese-gold-standard-would-need-a-rate-50-times-bullion-s-price

Going to the beginning and back to the top, who exactly was correct in 1999-2000? Who was correct from 2005-2008 about an impending crisis? The answer of course is the very same people screaming bloody murder today "the financial system will come apart from the seams". Are those who were correct before, now "crying wolf"? Or are they saying the same things for the same reason and forecasting the same results as before? "They" (we) were not crazy then and are not crazy now. In fact, it is even much easier to see now than previous. As a side note if you recall, we heard in late 2008 and 2009, "who could have seen it coming"? Or, "no one could have seen it coming". This is dead wrong! In fact, even within the mainstream press there was a concerted effort to silence the truth. For example, Greg Hunter while at CNN tried to warn of the banking collapse. He was told "don’t go there" and was rewarded by having his contract not renewed!

"Some" saw the dotcom bubble coming, more saw and warned of the 2008 crisis coming …and even more see this one coming. Not only are there more and louder voices today, the numbers are growing slowly but surely and even engulfing some mainstreamers who used to laugh at "us tinfoilers"!

I know how difficult it is and has been. The financial landscape is perverted beyond recognition and any time you open your mouth, you are proven wrong. Gold goes down the following day along with a new high in stocks so you look "stupid". You are not. "We" cannot make price, we can only tell the truth as we see it and suggest via common sense and logic the need to prepare for the worst. As I see it, the outcome is not in any doubt and becomes clearer each day. My fear is we are not in 2008 anymore, the coming collapse will change the world order to one unrecognizable to today. The U.S. is in fact "broke" as we spoke of at the beginning. The "realization" of this not only can happen but WILL happen. Sadly, because of how badly the U.S. has treated the world over these last years, we will be given no mercy when negotiating our bankruptcy. It will be a real live wolf at our door!

Regards, Bill Holter
Holter-Sinclair collaboration
Comments welcome!  [email protected]

Posted at 12:48 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Major breakout. Inside job suspected. Last thing heard was Mr. Bif singing "Don’t Fence Me In."

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Jim Sinclair’s Commentary

How about do not hunt for yield, it is a trap in the bond market.

Beware Bond-Liquidity Traps When Hunting Yield, Pimco Says
by Katie Linsell
June 23, 2015 — 4:47 AM EDT Updated on June 23, 2015 — 12:50 PM EDT

Investors risk falling into liquidity traps as they seek to boost yields depressed by the European Central Bank’s 1.1 trillion euro ($1.2 trillion) bond-buying program, according to Pacific Investment Management Co.

The search for yield has caused investors to buy riskier and less frequently traded bonds, which may be hard to sell quickly, said Mike Amey, a London-based fund manager at Pimco, which oversees about $1.59 trillion of assets. Overall bond trading has slumped since the global financial crisis because banks have cut inventories to preserve capital in response to tighter regulations.

“If you want to find some yield-enhancing assets, then make sure you’re paid for tighter liquidity,” said Amey, a speaker at Euromoney’s Global Borrowers & Investors Forum in London, which starts Tuesday. “If you’re going to take a liquidity premium, be prepared to hold the asset for years.”

One measure of bond-market liquidity is down 10 percent in the past year and 90 percent since 2006, Royal Bank of Scotland Group Plc said in March. In the U.S., less than 5 percent of the market changes hands each month, down from about 20 percent in 2007, according to a November report by the Bank for International Settlements.

The average daily trading volume for German government bonds of all maturities plunged to 22 billion euros in the first quarter from 29 billion euros 10 years earlier, according to the nation’s debt-management office.

‘Biggest Worry’

“My biggest worry for the market going forward is liquidity,” said Kris Kowal, managing director of fixed income at DuPont Capital Management, which oversees $30.8 billion of assets. Investors are “trading illiquidity for a bit more yield, and I don’t think that’s the right approach at this stage in Europe’s economic cycle.”

Structured securities and loans are among the most illiquid assets, said Wilmington, Delaware-based Kowal, who is also speaking at the Euromoney conference. Investors who need liquidity should hold cash or highly traded government bonds, Amey said.

More…

Jim Sinclair’s Commentary

Ron Paul on the Bond Market.

 

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McDonald’s hires 7,000 touch-screen cashiers
Would you like some microchips with that burger? McDonald’s Europe strikes another blow against human interaction by installing 7,000 touch-screen computers to take your order and money.
by Amanda Kooser
May 17, 2011 4:20 PM PDT

"Welcome to McDonald’s . My name is HAL 9000. May I take your order?"

McDonalds recently went on a hiring binge in the U.S., adding 62,000 employees to its roster. The hiring picture doesn’t look quite so rosy for Europe, where the fast food chain is drafting 7,000 touch-screen kiosks to handle cashiering duties.

The move is designed to boost efficiency and make ordering more convenient for customers. In an interview with the Financial Times, McDonald’s Europe President Steve Easterbrook notes that the new system will also open up a goldmine of data. McDonald’s could potentially track every Big Mac, McNugget, and large shake you order. A calorie account tally at the end of the year could be a real shocker.

The touch screens will only accept debit or credit cards, adding to the slow death knell of cash and coins. This all goes along with an overall revamp of McDonald’s restaurants worldwide aimed at projecting a modern image as opposed to the old-fashioned golden arches with a slightly creepy (to my taste anyway) clown guy hanging around the french fries.

This puts McDonald’s one step closer to opening up its first Alphaville location. At least our new computer overlords will be nice enough to serve us a Filet-o-Fish. Maybe they’ll even throw in an iPad with the Happy Meal one of these days.

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Posted at 11:36 AM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

There is rational thinking behind this position.

A Derivatives Bomb Exploded Within The Last Two Weeks
June 9, 2015

I’ve never seen so many sophisticated Wall Street’ers this scared in my entire career.  – This comment comes from a very well-connected Wall Street/DC insider and is in reference to how illiquid the bond markets have become

Something deep and dark has transpired behind the Orwellian “curtain”  used by the elitists to hide the inner workings of the financial markets, especially with regard to big bank balance sheets and OTC derivatives.  What’s happening right now reminds of the movie “Jurassic Park.”  You can hear and feel the monster coming but you can’t see it yet and you don’t know it will pop up in your face or how big it is.

It was the sudden firing of Deutche Bank’s co-CEOs this past weekend – The Brown Stuff Is About To Hit The Fan – that prompted me to spend more time analyzing a sequence of events which indicate to me some sort of derivatives position, possibly at Deutsche Bank, has exploded.  In addition, the stock and bond markets have been emitting some curious signals which reflect that fact that something happened in the global economic and financial system.

Let’s look at some charts first (click on any chart to enlarge).  The first graph below shows a 1-yr plot Dow Jones Transportation Average vs. the S&P 500:

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As you can see, the DJ Transports and the S&P 500 were tightly correlated until the end of April 2015. The Transports hit an all-time high on October 25, 2014, which is about when the Fed formally ended its QE program.  The DJT began to underperform the S&P 500 at the end of April.  Since then it began to diverge quite negatively from the S&P 500.   The DJ Transports are largely made up of trucking, railroad and delivery services stocks.  This sector of the market reflects the heart-beat of economic activity, especially as it relates to consumer spending in the United States.  The Transports are down 9.4% from its all-time high.  I wrote about the collapsing U.S. economy a week ago:   LINK  The behavior of the Dow Jones Transports is the market’s confirmation that the U.S. economy is contracting.

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For The First Time Ever, Total ECB Claims On Greek Banks Surpass Total Greek Deposits
Tyler Durden on 06/22/2015 14:29 -0400

If it seems like it was only yesterday (in trading days) when the ECB boosted its latest Greek ELA by €1.8 billion to a record high €85.9 billion, it’s because it was.

Fast forward to Monday morning, when following a Friday bank run which sucked out another €1.6 billion coupled with another €1.6 billion withdrawn over the weekend and today, and perhaps the only question is why did the ECB not hike its latest "emergency" ELA disbursement more than just another €1.9 billion to a new record high of €87.8 billion: after all it will have no choice but to increase its emergency liquidity for Greece’s increasingly more insolvent banks (because the collateral against which the ECB is lending after a modest haircut would be worth precisely zero if the ECB were to pull its backstop to the Greek banking system) tomorrow, or else engage Goldman’s plan B in which a Greek terminal bank run ends up in a default and as a result the ECB proceeds to boost its QE to "regain credibility", send the EUR plunging (to assist the internal revaluation), and assure another year of record bonuses for Goldman.

This is how the now daily ELA increases have looked like for Greece since the arrival of the Syriza government:

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But perhaps what is even more important is that net of the latest ELA increase, when adding some €38 billion in collateralized EFSF bonds and other collateral usage, we find that we have not only reached parity but crossed it: as of this moment Greek deposits, which are generously estimated at €120 billion but in reality are lower, are less than the total ECB claims on Greek banks and the Bank of Greece, amounting to €126 billion.

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BRICS Bank to commence business on 7 July
June 20, 2015, 7:10 am

The BRICS New Development Bank will be launched at the first session of its Board of Governors in Moscow on 7 July, Russian officials have confirmed.

Russian Deputy Finance Minister Sergei Storchak announced at the St Petersburg International Economic Forum on Friday that the BRICS Bank will be ready for action after the maiden meet of the governors.

The New Development Bank will provide a financing alternative to the World Bank, where the five large emerging markets have sought more clout.

BRICS leaders also announced the establishment of the BRICS Contingent Reserve Arrangement, a 100-billion-dollar fund from which the BRICS member countries will be allowed to draw funds when going through a crisis.

The bank is set to be headquartered in Shanghai. India has already announced the first president of the Bank.

It will eventually open membership to non-BRICS countries and coincides with plans for the Asian infrastructure development bank spearheaded by Beijing.

Russian Finance Minister Anton Siluanov will be the first chairman of the BRICS Bank’s Board of Governors.

The leaders of five of the world’s largest emerging markets will showcase a new currency reserve fund and development bank during the BRICS Summit in the Russian city of Ufa in July.

Brazil’s envoy to the IMF and newly announced BRICS Bank Vice President , Paulo Nogueirga Batista, said at the BRICS Business forum on Thursday in Russia that the BRICS are “not fully satisfied with the international financial architecture, not fully satisfied with the role that our countries are allowed to have at the IMF and the World Bank”.

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Putin offers Italy the way out of the crisis: cooperation with BRICS
by IWB· June 21, 2015

Three days after the G7 summit in Bavaria, which has decided new sanctions against Russia, Russian President Putin made an official visit to Italy, which has sent an important signal in contrast with the provocations of war of Obama and Merkel at Schloss Elmau. During the joint press conference with Renzi Expo in Milan, Putin has made it clear that the sanctions policy is very dangerous for the Italian economy, which has already lost a billion because of them, and that even if Russia was excluded from G7 “There are other formats, such as the BRICS”, namely Brazil, Russia, India, China and South Africa, who with their New Development Bank will provide loans without conditions, and major infrastructure projects in which to participate. Federalimentare also called a halt to the sanctions, which affect not only our industry, but also our agriculture.

The invitation to leave the dictatorship of the euro and join the BRICS had been made earlier also to Premier greek Tsipras, during his recent visit to Moscow. Greece is now configured as the only alternative to the diktats of the Troika (EU, ECB and IMF) that are ruining this country and literally killing its citizens, starting with the children who do not even have money to eat at school, or the elderly at risk of losing the board to implement the reforms imposed by the IMF. The IMF itself has acknowledged, moreover, that his reforms have worsened the situation, instead of improving it.

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Posted at 10:25 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

You have heard the phrase many times "it’s already in the market", meaning if "something" or some sort of event happens it is already factored in to prices.  I was overseas last week, travelled much of the week and stayed in a hotel that had only two English speaking channels …one of which was CNBC.  I cannot tell you how many talking heads were paraded forth whom all parroted the same pabulum, "a Greek default is already factored in the market".  Really?  REALLY? 

For CNBC or any media outlet to downplay a Greek default is plain evil deceit at its core.  We have looked at this many times and from many angles, Greece owes close to 350 billion euros and when the amount of written derivatives are included we are probably talking well over 3 trillion euros!  Yes, the talking heads keep saying "much of the Greek debt is now off of the banks balance sheets and is now owned by the ECB itself".  Does this make it any better?  Or could it make the situation even worse because now a central bank has its balance sheet in peril and exposed?

The other side of the coin is the derivatives situation.  Please remember when a "default" occurs, the "notional value" becomes the true at risk amount.  This was the problem caused by Lehman Brothers in 2008, derivatives which had been supported by margin alone (and very thin at that) saw margin calls explode and the demands of 100% notional payments began.  This is why no one, ever, can be allowed to fail.  Because then the triggers are pulled and notional settlements begin …with a minor problem.  Derivatives simply cannot perform because they total more than the value of everything else added together on the planet.  The "money" simply does not exist for everyone to be paid.

The purpose for writing this piece is not to discuss Greece, whether they pull an "Iceland" and leave the central banks holding the bag …or talk about the odds of their banks opening Monday morning …or to speculate as to "when" they default ("if" is already in the rearview window).  A Greek exit from the Eurozone or a change in allegiance from NATO to Russia are both very real possibilities …but NONE OF THIS is "in the market".  Greece is but one of an absolute litany of potential events being ignored!

The list of potential events being ignored by the markets is very long.  They include the geopolitics of Ukraine, Syria, Iraq, Yemen, the South Sea islands Iran, and we might as well throw Israel into this mix.  Russia and China just announced trade to be done exclusively in yuan and rubles, is this factored in to the valuation of the dollar?  The U.S. has moved missiles into Poland and elsewhere to ring fence Russia, Russia has responded by repositioning "EMP" weaponry.  China’s economy is slowing while their margin debt and speculation in stock markets are at an all time high after doubling in value over 6 months.  As for the U.S., bogus number after bogus number is being reported while the economy declines in recession…and the world moves further and further from the dollar.  It’s all "business as usual" as long as markets can be controlled…

The biggest "factor" being ignored is the fact credit markets around the world have already seriously cracked.  Interest rates are rising and bond prices falling.  Please, never forget this, "credit" is THE FOUNDATON to the "value" of everything we know and believe to have value.  "Credit" (debt) is THE foundation to every current currency on the planet.  If the underlying debt is beginning to lose value, what will this mean for currencies?  What will it mean for the "discount process" to be used to value stocks?  Or real estate?  Not to mention the fact current cash flows will have the capacity to carry LESS debt …which has been used to hold up current values?  To finish this thought process out, the big picture is quite simple.  Debt has continually expanded faster and faster than the underlying global GDP.  Current GDP is simply not sufficient in size any longer to carry the global debt burden…

I am going to tell you, NOTHING "bad" is factored into today’s markets… even slightly.  All markets, all assets, everything has been "priced to perfection", FORCEFULLY "PRICED".  Do you understand what I am saying here?  "Prices", all prices are being "made".  They are being made to paint a picture of a perfect world.  This picture is a must to portray "all is well and no worries".  Almost none of the potentials I wrote of above (and there are many more) have even seen the light of day in the Western mainstream press …because if they did then they might affect values and partly be "priced in".

Let me finish by talking about "black swans".  A black swan by definition is a surprise event taking participants unaware.  How can anything we already know about …and is supposedly priced in to the market be a black swan?  Maybe because so few believe a systemic failure can happen?  Maybe we should categorize the entire financial system or even our way of life as a "black swan" because almost no one believes "it" (the ride) can ever end?  Americans in general know something is wrong but they just can’t put their finger on it.  A recent poll taken by Gallup shows confidence in almost everything has dropped

http://www.usnews.com/news/blogs/ken-walshs-washington/2015/06/17/americans-have-lost-confidence-in-everything to previously unseen lows. 

As I have mentioned many times before, the last piece of glue holding the system together is confidence.  The confidence of a central bank in another central bank, the confidence of institutions in other institutions and of course the confidence of the general public.  While on this topic of confidence, why do you believe four European central banks have requested their gold back?  Or closer to home, why does Texas want to retrieve their gold from Yankee bankers?  Confidence is a peculiar thing, it takes a long time to build and may be retained by "reputation" for quite some time …but when it breaks it goes away like lightning!

None of the potential black swans have seemed to even move the dial because the puppeteers have used derivatives to collar, support and suppress various prices and thus "hide" any bad reaction.  I have to believe the ultimate black swan is exactly this, the loss of control of everything including perception.  After all, the most ingrained of thoughts are these; the government can never go broke, the government will never allow it or let it happen.  Maybe THE black swan is the most obvious of all, the government is in fact broke and Mother Nature does still exist.  We have gone so far down the rabbit hole where absolutely nothing is actually "in the market", I believe the biggest shock of all will be what the world looks like the day markets try to reopen?  

Regards,  Bill Holter
Holter-Sinclair Collaboration
Comments welcome!  [email protected]

Posted at 9:27 PM (CST) by & filed under In The News.

 

Jim Sinclair’s Commentary

Coming to your town soon.

Protesters throng London to oppose new UK government’s austerity plan
LONDON | By David Milliken

Tens of thousands of anti-austerity protesters massed outside Britain’s parliament on Saturday to demonstrate against the newly re-elected Conservative government’s plans for further public spending cuts.

Holding banners saying "End Austerity Now" and "Defy Tory Rule", protesters had marched from the Bank of England in the heart of London’s financial district, in a rally which organizers said drew several hundred thousand people.

Police declined to estimate numbers for the event, which featured speeches from celebrities such as singer Charlotte Church and comedian Russell Brand as well as trade unionists and Labour Party leadership contender Jeremy Corbyn.

"Everyone from up and down the country is here because they have had enough of austerity, cuts and privatization," university scientist Gareth Hardy told Reuters Video News.

One marcher carried a placard showing Prime Minister David Cameron peeking out of a garbage can — suggesting this was where his policies belonged too — while another pictured him with devil’s horns.

A small number of protesters let off red-colored smoke bombs in a mostly good-natured march.

Britain’s Conservatives unexpectedly won an outright majority in a national election last month after five years when they had led a coalition focused on cutting public spending to narrow Britain’s large budget deficit.

Since winning the election, finance minister George Osborne has said he wants government departments to make extra cuts this year and to commit future governments to run budget surpluses during normal economic times.

More…

Posted at 10:19 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

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

- Further Frustrating Fed Hopes of Raising Rates, U.S. Economy Should Weaken Ahead 
- "New" Recession Remains in Play 
- Four Months of Flat-to-Down Real Earnings Headed for a Second-Quarter Contraction 
- May Retail Sales Gain of 1.21% Was 0.76% After Inflation; Sales Headed for Quarterly Gain; Annual Growth Signaled Recession 
- May Annual Inflation: 0.0% (CPI-U), -0.6% (CPI-W), 7.6% (ShadowStats)

"No. 729: May CPI, Real Retail Sales and Earnings, Consumer Liquidity, FOMC, GDP" 
Web-page: http://www.shadowstats.com

Jim Sinclair’s Commentary

How do you spin this into good news for the Fed?

For Caterpillar, The Second Great Depression Has Never Been Worse
Tyler Durden on 06/19/2015 13:18 -0400

When one strips away all the "double seasonal adjustments", all the non-GAAP masking tape, all the pro-forma addbacks, all the constant brainwashing propaganda where if one excludes all the bad things are great, and certainly the $22 trillion in central bank liquidity injections to keep crony capitalism as we know it alive in what is now a 7-year-old attempt to restore the post-crash confidence (which is failing thanks to the $57 trillion in debt added since then) what is one left with?

Well, the monthly retail sales of Caterpillar is a good place to start. Because far from confirming a "recovery" or ever stagnation, one look at the ongoing destruction in end demand for products of this industrial and heavy-machinery bellwether confirms nothing short of the second great depression.

And while in the past few months there had been some hope that the US was indeed decoupling from the rest of the world following a 5% Y/Y increase in retail sales in April, the tumble in May to just 1% for North America indicates that contrary to hopes that the US may pull the rest of the world up from its epic slump, it is the rest of the world (where China just posted a 17% drop in demand, while Latin America cratered by -50%) that is succeeding in dragging the US down into an upcoming global recession.

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Actually did we say recession? That was the 19 month period following the Great Financial Crisis. The current interval, in which CAT retail sales have dropped for an unprecedented 30 months in a row (!) at an average monthly pace of -10% suggests that, when stripping away all the endless veneer and propaganda, there is nothing short of a Second Great Depression just below the surface.

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Jim Sinclair’s Commentary

This 42 seconds of video was made by a Vancouver, BC news anchor.

She first showed it at the closing of the news one day and it has since gone viral.

 

Jim Sinclair’s Commentary

Each step forward for the Chinese currency is a step backwards for the dollar.

CNH Tracker-China’s bond market opening to further expand yuan’s global footprint
HONG KONG, JUNE 18 | BY MICHELLE CHEN

China’s determination to open up its $6 trillion domestic bond market to foreign investors will further help expand the yuan’s global footprint – a hot pursuit of Beijing as it looks to bolster its currency’s standing in world financial markets.

The People’s Bank of China (PBOC) said earlier this month that Beijing would encourage overseas entities to issue yuan-denominated bonds in the onshore market and allow more categories of foreign institutions to enter its interbank bond market with bigger investment quotas.

The move marked another step in China’s efforts to liberlise the capital account and internationalise its currency to match its economic might, and, some analysts say, eventually challenge the dominance of the U.S. dollar in the global monetary system.

Beijing has greatly opened its equity market by launching a stock connect scheme between Shanghai and Hong Kong in November, and is scheduled to roll out another one between Shenzhen and Hong Kong later this year.

Statistics from the PBOC showed that foreign investors held a total of 635 billion yuanbonds in China by the end of April, accounting for less than 2 percent of the market. The percentage is much lower than South Korea’s 8 percent and Taiwan’s 6 percent.

In addition to the quota limit, overseas investors can only buy bonds and conduct bond repurchase agreement (repo) in the onshore market, and are largely shut out from other investment tools like interest rate swap (IRS) and credit risk mitigation warrant (CRMW).

More…

Greek prime minister reaches out to Vladimir Putin for help in financial crisis
Mark Rice-Oxley
Friday 19 June 2015 14.13 BST

Alexis Tsipras in Russia dismisses criticism that he should be in Brussels solving debt standoff: ‘We are ready to go to new seas to reach new safe ports’

Alexis Tsipras, the Greek prime minister, has made a broad overture to Russia as he seeks a way out of his country’s debt and currency impasse, telling Vladimir Putin that Greece wants new partners to help it out of the crisis.

In a speech delivered in front of Putin in Russia, Tsipras said Moscow was one of Greece’s most important partners, and dismissed critics who wondered why he was in St Petersburg and not in Brussels trying to secure an urgent deal with European creditors.

European Central Bank has agreed to provide more support to keep Greek banks operating until crucial eurozone meetings on Monday

Read more

“As all of you are fully aware, we are at the moment at the centre of a storm, of a whirlpool, but we live near the sea so we’re not scared of storms. We are ready to go to new seas to reach new safe ports,” he added, in a subtle nod to his hosts.

Tsipras said the world’s economic centre of gravity had shifted and that there are “new emerging forces” such as the Bric countries and Putin’s new Eurasian union that are playing a more important economic role.

“Russia is one of the most important partners for us,” said the Greek prime minister, ahead of formal talks with Putin.

His intervention came as Greece teetered on the brink of a banking crisis, a deal between the government in Athens and creditors owed $320bn still elusive. Greece wants significant debt relief in return for fiscal reforms; lenders are reluctant to be generous to a country that has struggled to balance the books for years.

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Jim Sinclair’s Commentary

There is historically a breaking point and that in these situations is always the currency.

Americans Have Lost Confidence … in Everything
It’s not just Congress and the economy that have Americans concerned these days.
By Kenneth T. Walsh June 17, 2015 | 7:20 a.m. EDT

Americans have little confidence in most of their major institutions including Congress, the presidency, the Supreme Court, banks and organized religion, according to the latest Gallup poll.

"Americans’ confidence in most major U.S. institutions remains below the historical average for each one," a Gallup spokesman said in a news release. Only the military, in which 72 percent of Americans express confidence, up from a historical average of 68 percent, and small business, with 67 percent confidence, up from 63, are currently rated higher than their historical norms. This is based on the percentage expressing "a great deal" or "quite a lot" of confidence in these institutions, the Gallup spokesman said.

Only 8 percent have confidence in Congress, down by 16 points from a long-term average of 24 percent – the lowest of all institutions rated. The rating is about the same as last year’s 7 percent, the lowest Gallup has ever measured for any institution.

Thirty-three percent have confidence in the presidency, a drop from a historical average of 43 percent.

Thirty-two percent have confidence in the Supreme Court, down from 44.

All in all, it’s a picture of a nation discouraged about its present and worried about its future, and highly doubtful that its institutions can pull America out of its trough. In a political context, the findings indicate that the growing number of presidential candidates for 2016 will have a difficult time instilling confidence in a skeptical electorate that they have the answers to the country’s problems.

"Americans’ confidence in most major institutions has been down for many years as the nation has dealt with prolonged wars in Iraq and Afghanistan, a major recession and sluggish economic improvement, and partisan gridlock in Washington," the Gallup spokesman said. "In fact, 2004 was the last year most institutions were at or above their historical average levels of confidence. Perhaps not coincidentally, 2004 was also the last year Americans’ satisfaction with the way things are going in the United States averaged better than 40 percent. Currently, 28 percent of Americans are satisfied with the state of the nation."

The Gallup spokesman added: "From a broad perspective, Americans’ confidence in all institutions over the last two years has been the lowest since Gallup began systematic updates of a larger set of institutions in 1993."

Twenty-eight percent have confidence in banks, down from 40 percent.

Twenty-one percent have confidence in big business, down from 24 percent.

More…

The Truth About The Ban On Cash, Big Brother And What Has Western Central Planners So Terrified
June 18, 2015

Today the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events warned King World News about what has Western central planners so terrified.  He also warned that a major panic is coming as the world is rocked by global financial chaos.

Egon von Greyerz:  “Eric, the die is cast and the world is now on its way to a secular decline of a magnitude never seen in history.  No country and no central bank can stop the inevitable implosion of all the asset and debt bubbles in the last 100 years….

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Jim Sinclair’s Commentary

"Fat Chance," as the old saying goes.

Greece needs its gold to back a new currency, Commerzbank says
Submitted by cpowell on 07:52AM ET Friday, June 19, 2015. Section: Daily Dispatches

Greek Gold Sales to Raise Funds Seen Unlikely by Commerzbank

By Eddie van der Walt
Bloomberg News
Friday, June 19, 2015

Greece is unlikely to resort to selling gold because disposing of the hoard valued at about $4.3 billion would only postpone a default, Commerzbank AG said.

Bullion prices would probably fall if the nation were to sell metal on the open market, Commerzbank said in a report Friday. Using gold to raise funds may mean selling to another central bank or the International Monetary Fund, or lending out the metal, it said. …

"Selling gold would deprive the country of its only really valuable reserves, which could be put to good use at a later date, perhaps to stabilize a new currency if Greece exits the euro," Commerzbank analysts including Frankfurt-based Eugen Weinberg wrote in the report. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2015-06-19/greek-gold-sales-to-ra…

Posted at 10:02 AM (CST) by & filed under Jim's Mailbox.

Jim,

I noticed a curious thing in the article below. Texas’ gold is NOT there! At least not all of it.

Let’s get our Gold back !

This should be a warning to others.

CIGA Wolfgang R.

Wolfgang,

The question is are the number of bars and ounces there? Are they the bars they were delivered for segregated storage?

Jim

There’s a Pile of Gold in Manhattan. Texas Wants It Back.
by Lauren Etter
June 19, 2015 — 1:01 AM EDT

Texas wants its gold back from the Yankees, wherever they’re keeping it.

Governor Greg Abbott signed a law last week to build a depository for its 5,600 bars of the precious metal and, as he said in a statement, “repatriate $1 billion of gold bullion from the Federal Reserve in New York.”

The gold, it turns out, isn’t at the New York Fed — it’s in a rented vault in midtown Manhattan — and is worth about $650 million. Regardless, Texas aims to bring it home.

“We want to show off our strength and resilience,” said Giovanni Capriglione, the Republican lawmaker who sponsored the repatriation bill. “This is to be able to say ‘Hey, listen, Texas is unique, it’s stable, it’s strong and we can show that by letting other states and individuals know that, yes, Texas has a billion dollars worth of gold. Does your state have a billion dollars worth of gold?’”

Informed that the value is about $350 million short of that, Capriglione said he was no less proud.

More…

 

Jim,

Coming ever closer to war. Just remember, it’s never really about freedom and democracy. It’s always about stockholders and corporate interests.

Always was, always will be.

CIGA Wolfgang R.

Angry Russia Will "Respond In Kind" To Europe’s Asset Seizures
Submitted by Tyler Durden on 06/19/2015 09:15 -0400

On Thursday, nearly 50 Belgian companies were told to disclose their Russian state assets, setting the stage for the seizure of Russian property in connection with the disputed $50 billion Yukos verdict.

In short, Russia was required to submit a plan for a €1.6 billion payment by June 15 pursuant to the 2014 arbitration court decision which found in favor of Yukos shareholders who the ECHR ruled were treated unfairly when Moscow seized the company amid allegations of fraud and other crimes. Russia appealed the ruling and lost.

Because Russia does not look set to comply, Belgium is effectively moving to enforce the ruling itself. Austria and France also moved to freeze Russian assets on Thursday.

More…

Jim,

More on Texas gold!

CIGA Arlen.

Arlen,

Send the Fed your gold, and you have made a non-deductible charitable contribution.

Jim

Bloomberg News confirms Texas’ gold isn’t at NY Fed
Submitted by cpowell on 07:48AM ET Friday, June 19, 2015. Section: Daily Dispatches

There’s a Pile of Gold in Manhattan, and Texas Wants It Back

By Lauren Etter
Bloomberg News
Friday, June 19, 2015

Texas wants its gold back from the Yankees, wherever they’re keeping it.

Gov. Greg Abbott signed a law last week to build a depository for its 5,600 bars of the precious metal and, as he said in a statement, "repatriate $1 billion of gold bullion from the Federal Reserve in New York."

The gold, it turns out, isn’t at the New York Fed — it’s in a rented vault in midtown Manhattan — and is worth about $650 million. Regardless, Texas aims to bring it home. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2015-06-19/there-s-a-pile-of-gold…

Posted at 7:01 PM (CST) by & filed under In The News.

Another Fed "Insider" Quits, Tells The Truth
Submitted by Tyler Durden on 06/17/2015 12:43 -0400

Once more, an "insider" from The Fed exposes the reality of an academic ivory tower clueless of the real financial markets. Former adviser to Dallas Fed’s Dick Fisher, Danielle DiMartino Booth speaking in a CNBC interview slams The Fed for "allowing the [market] tail to wag the [monetary policy] dog," warning that "The Fed’s credibility itself is at stake… they have backed themselves into a very tight corner… the tightest ever." As she writes in her first Op-Ed, "The hope today is that the current era of easy monetary policy will have no deep economic ramifications. Such thinking, though, may prove to be naive… All retirees’ security is thus at risk when the massive overvaluation in fixed income and equity markets eventually rights itself."

Via The Liscio Report,

The Great Abdication

The business cycle is dead! Long live the business cycle!

Not too long ago, in a land not so far away, the business cycle was declared to be defeated. Policymakers at the Federal Reserve were credited with slaying the pesky beast that featured recessions as part of its nature. Such was the faith in the permanence of business cycle’s demise that the era was given its own label, The Great Moderation, a perfect world in which inflation ran not too hot or too cold and profit growth was accepted as the steady state.

As is so often the case, reality rudely disturbed nirvana’s prospects. The Great Moderation devolved into the Great Recession precipitated by one of the most devastating financial crises in U.S. history. The veneer of calm advertised over the prior years was stripped away. In its stead, economists had to concede that an era of benign monetary policy had encouraged malinvestment, the scourge that Austrian Ludwig von Mises warned of in the early 20th century. An overabundance of debt, if left unchecked, inevitably leads to the misallocation of resources. In the case of the first years of the 2000s, the target was, of course, the housing market.

The hope today is that the current era of easy monetary policy will have no deep economic ramifications. Such thinking, though, may prove to be naive. It goes without saying that the heat of the financial crisis merited a monumental response on policymakers’ part. That said, the most glaring outgrowth has been politicians’ exploiting low interest rates to their benefit. While it’s conceivable that well-intentioned central bankers want no part in encouraging Congressional malfeasance, the fact remains that the lack of action on politicians’ part would not have been possible absent the Fed’s allowing Congress to abdicate its responsibilities to the manna of easy money.

Of course, we all appear to have been spoiled over the last 25 years. A funny thing happened when the Fed placed a floor under stock prices with assurances that investors’ pain and suffering would be mitigated – recessions faded from the norm. Over the past 25 years, the economy has contracted one-fourth as often as it did in the 25 years that preceded this benign era. Hence the illusion of prosperity, one that has rendered investors complacent to the point of being comatose. That’s what happens when entire industries are able to run with more capacity than demand validates simply because the credit to remain in operation is there for the taking. To take but one example, capacity utilization is at 78.1 percent, shy of the 30-year average of 79.6 percent some six years into the current recovery. The downside is that the cathartic cleansing that takes place when recession is allowed to play out all the way to the bitter end of a bankruptcy cycle never occurs – winners and losers alike stay in business.

The savvy fellows in the C-suites are not blind to reduced competitiveness. As such they are remiss to expand their core businesses too much, that is, until the time they can truly assess the operating environment in a post-easy money world. The tricky part is that the credit is still there for the taking. What’s to be done? In the words of one of the wisest owls on Wall Street, UBS’s Art Cashin, such environments raise the not-so-fine art of financial engineering to a “botox state”. It’s no secret that companies have been gorging themselves on share buybacks and mergers and acquisitions, non-productive but highly lucrative endeavors. When combined the results are magnificent – costs are cut, profits juiced and bonus season becomes the most wonderful time of the year.

The insult added to the economic injury is the players who are compelled to underwrite the not-so-virtuous cycle. Broken pension accounting and incentives continue to force the hands of the individuals tasked with allocating the portfolios underlying the nation’s $18 trillion in public pension obligations. One of the least discussed consequences of easy monetary policy is the damage wrought on the nation’s pension system. Not only have low interest rates compounded underfunded statuses, they have driven pension assets into riskier and less liquid investments than anything prudence would dictate. The catalyst is the perverse rate of return assumptions that are wholly disconnected from reality. Averaging 7.75 percent, these bogeys have forced allocations into credit plays, many of which are caged in the least liquid corners of the debt markets. The irony is that many pensions have sought to diversify away from their bloated equity holdings by seeking out what they perceive to be the traditional safe harbor of fixed income investments, much of which flows straight back into the stock market via debt-financed share buybacks and M&A.

More…

Jim Sinclair’s Commentary

You would swear there is an epidemic amongst banksters. It looks a lot like the know too much flu.

JPMorgan Vice Chairman Jimmy Lee Dies Unexpectedly at Age 62
by Hugh Son

James B. “Jimmy” Lee, the colorful JPMorgan Chase & Co. rainmaker whose pioneering work in the loan market helped propel an era of Wall Street deals, died unexpectedly Wednesday morning. He was 62.

Lee felt shortness of breath while exercising at his home in Darien, Connecticut, and was taken to a hospital, where he died, according to a person briefed on the matter who asked not to be identified discussing personal matters.

“Jimmy was a great friend, leader and mentor to me and so many others,” JPMorgan Chief Executive Officer Jamie Dimon said in a statement. “Jimmy was a master of his craft, but he was so much more — he was an incomparable force of nature.”

At an investment bank that often emphasized its team and resources over individual stars, Lee was the exception, with a charismatic personality and Rolodex known throughout Wall Street. He had worked for New York-based JPMorgan and its predecessors since about 1975, eventually running its investment bank before becoming a company vice chairman and continuing to garner some of its biggest deals. A rival banker once quipped that one of Dimon’s most important tasks every year was to make sure Lee stayed happy.

Lee is survived by his wife Beth and three children, Lexi, Jamie and Izzy, according to Dimon’s statement.

“It’s a sad day for Wall Street,” Raymond McGuire, global head of corporate and investment banking at Citigroup Inc., said by phone. “Jimmy Lee was a formidable competitor who commanded respect.”

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Jim Sinclair’s Commentary

The boon of the privileged.

Wal-Mart Has $76 Billion in Undisclosed Overseas Tax Havens
by Jesse Drucker and Renee Dudley

Wal-Mart Stores Inc. owns more than $76 billion of assets through a web of units in offshore tax havens around the world, though you wouldn’t know it from reading the giant retailer’s annual report.

A new study has found Wal-Mart has at least 78 offshore subsidiaries and branches, more than 30 created since 2009 and none mentioned in U.S. securities filings. Overseas operations have helped the company cut more than $3.5 billion off its income tax bills in the past six years, its annual reports show.

The study, researched by the United Food & Commercial Workers International Union and published Wednesday in a report by Americans for Tax Fairness, found 90 percent of Wal-Mart’s overseas assets are owned by subsidiaries in Luxembourg and the Netherlands, two of the most popular corporate tax havens.

Units in Luxembourg — where the company has no stores — reported $1.3 billion in profits between 2010 and 2013 and paid tax at a rate of less than 1 percent, according to the report.

All of Wal-Mart’s roughly 3,500 stores in China, Central America, the U.K., Brazil, Japan, South Africa and Chile appear to be owned through units in tax havens such as the British Virgin Islands, Curacao and Luxembourg, according to the report from the advocacy group. The union conducted its research using publicly available documents filed in various countries by Wal-Mart and its subsidiaries.

Randy Hargrove, a Wal-Mart spokesman, called the report incomplete and “designed to mislead” by its union authors. He said the company has “processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where we operate.”

More…

Jim Sinclair’s Commentary

GOTS in Greece. The problem is they are hoarding the wrong thing.

Greeks are stashing €10,000 bundles in their homes in fear of Grexit
Jon Henley, The Guardian
Jun. 17, 2015, 5:52 AM

“Everybody’s doing it,” said Joanna Christofosaki, in front of a Eurobank cash dispenser in the leafy Athens neighbourhood of Kolonaki. “Our friends have all done it. Nobody wants their money to be worthless tomorrow. Nobody wants to be unable to get at it.”

A researcher in the archaeology department at the Academy of Athens, Christofosaki said she knew plenty of people who had “€10,000 somewhere at home” and plenty of others who chose to keep their stash at the office. Was she among them? “If I was, I certainly wouldn’t tell you.”

It was not too hard, in central Athens’ plushest district on Tuesday, to find people worried that the latest breakdown of talksbetween Greece and its creditors over a new aid-for-reforms deal may have implications for the security – and accessibility – of their savings.

With time fast running out to secure a desperately needed €7.2bn in new rescue funds before the end of the month, when Athens is due to repay €1.5bn in loans to the International Monetary Fund, anxious Greeks have begun withdrawing money from their country’s banks at an unprecedented rate.

Bank deposits have been falling steadily since October and now stand at their lowest level since 2004. Withdrawals in recent weeks have averaged €200-250m a day, but on Monday – after the shock collapse of last-ditch talks between the Greek government and its eurozone and international lenders – withdrawals surged to €400m.

More…