Posted at 2:06 PM (CST) by & filed under In The News.

Magic Growth Numbers
Paul Craig Roberts
December 26, 2014

Everyone wants good news, so the government makes it up. The latest fiction is that US real GDP grew 4.6% in the second quarter and 5% in the third.

Where did this growth come from?

Not from rising real consumer incomes.

Not from rising consumer credit.

Not from rising real retail sales.

Not from the housing sector.

Not from a trade surplus.

The growth came from a Bureau of Economic Analysis survey of consumer spending on services. The BEA found that spending on Obamacare drove the US real GDP growth to 5% in the third quarter.

In America, unlike in other countries, a huge chunk of medical spending goes to insurance company profits, not to health care. Another big chunk goes to paperwork, which has a variety of purposes such as collecting personal information on patients and combating fraud (probably the paperwork costs more than fraud). Another chunk goes for tests and procedures in order to justify further procedures. For example, if a doctor thinks a patient’s diagnosis requires a MRI, he must often first order an x-ray to establish that a cheaper procedure does not suffice. If a cancerous skin growth needs to come off, first a biopsy must be done to establish that it is a cancer so that a needless removal is not performed. And, of course, medical practicians must order unnecessary tests in order to protect themselves from the liability of relying on their medical judgment.

To regard any of these expenses as economic growth is farfetched.

There are sampling and other problems with the survey of personal consumption, and apparently Obamacare spending was all dumped into the third quarter. Why the third quarter?



Exposed – Dangerous 2015 Ahead As Global Governments Plan To Steal Money

Today a 40-year market veteran sent King World News an incredibly important piece that exposes global governments and their treacherous plan to steal people’s money.  This piece exclusively for KWN also cautions readers around the world to expect a wild and dangerous ride in the coming year.

By Robert Fitzwilson of The Portola Group

December 29 (King World News) – In mid-December, the U.S. Treasury finalized the rules for what looks like a fairly innocuous addition to the retirement plan menu, the so-called “myRA”. We say “finalized” with a wink as we all know that what has been promulgated is simply the proverbial camel nose under the tent. It looks benign and even positive, but the program clearly has the agenda of redirecting the retirement savings away from the current IRAs and other plans enjoyed as the primary savings vehicle for most Americans. 

The target has to be the near $20 trillion of retirement assets in the United States. The final incarnation of this retirement model will most likely be adopted globally by other governments, so those living outside of the U.S. should pay heed as well….


Posted at 1:09 PM (CST) by & filed under Jim's Mailbox.


It looks like China is expanding their sphere of influence even more.

CIGA Larry.

China Extends Forwards, Swaps Trading to Three More Currencies
By Bloomberg News Dec 26, 2014 12:57 AM MT

China will allow trading in forwards and swaps between the yuan and three more currencies in a bid to reduce foreign-exchange risks amid increased volatility in emerging markets.

The China Foreign Exchange Trade System will begin such contracts with Malaysia’s ringgit, Russia’s ruble, and the New Zealand dollar from Dec. 29, it said in a statement on its website today. That will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market.

A plunge in Russia’s ruble this month to a record low sparked a selloff in developing nations’ assets, leading to a surge in currency volatility. The new contracts come amid efforts by China to increase the international use of the yuan, as the world’s second-largest economy promotes it as an alternative to the U.S. dollar for global trade and finance. Malaysia and Russia are China’s eighth and ninth biggest trading partners, according to data compiled by Bloomberg.

“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong. “China won’t stop yuan globalization or capital-account opening because of the volatility in emerging market currencies.”

The CFETS is an agency under the People’s Bank of China.


Posted at 2:42 PM (CST) by & filed under In The News.

CBR launches SWIFT alternative for domestic payments
Published time: December 26, 2014 13:06

The Central Bank of Russia (CBR) has launched a new SWIFT-style payment service aimed at moving away from Western financial dominance. The system is already operating, and will be fully functional within six months.

"The new service was launched in order to ensure smooth and safe transmission of financial messaging within the country, and is another step towards improving the system of services provided by the Bank of Russia,” said the bank statement Friday.

The regulator said the new service will allow credit institutions to transmit messages in a SWIFT format through CBR to all Russia’s regions without restrictions.

The calls to disconnect Russian banks from the global interbank SWIFT system came amid the deterioration of relations between Russia and the West and the introduction of sanctions.

However, SWIFT itself does not intend to switch Russia off from the system, saying a number of countries put pressure on it, and insists it is not joining the anti-Russian sanctions.

Alla Bakina, head of the CBR’s national payment system department said in November the cost of transmitting financial messaging will be comparable to those of similar services in the market.

The deputy head of the department Ramilya Kanafina said the bank plans to complete Russia’s switch to its SWIFT alternative by May 2015.

SWIFT is a global banking transaction system used by most international banks. The information the system carries, including payment instructions, is securely exchanged between financial institutions. It began operating in 15 countries in 1973 and is now used in 210 countries.


Posted at 4:26 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Booming GDP – Strongest Growth in More than a Decade Is Nonsense 
- Magnitude of GDP Revisions Suggests Unstable Data and Unusual Internal-Reporting Issues at Bureau of Economic Analysis 
- Basic Durable Goods Orders Slowed Sharply in Third-Quarter 2014, On Track for Fourth-Quarter Contraction 
- Home Sales Also Showed Patterns of Stagnation and Renewed Downturn

"No. 684: GDP Revision, November Durable Goods, New- and Existing-Home Sales" 


C.D.C. Ebola Error in Lab May Have Exposed Technician to Virus

A laboratory mistake at the Centers for Disease Control and Prevention may have exposed a technician to the deadly Ebola virus, federal officials said on Wednesday. The technician will be monitored for signs of infection for 21 days, the incubation period of the disease. A small number of other employees, fewer than a dozen, who entered a lab where the mistake occurred will also be assessed for exposure.

The error occurred on Monday when a high-security lab at the C.D.C. in Atlanta, working with Ebola virus from the epidemic in West Africa, sent samples that should have been inactivated to another C.D.C. laboratory, which was down the hall. But the lab sent out the wrong samples, ones that had not been inactivated and that may have contained the live virus. The second lab was not equipped to handle the live virus. The technician who worked with the samples wore gloves and a gown, but no mask, and may have been exposed.

The error was discovered on Tuesday.

The accident is especially troubling because dangerous samples of anthrax and flu were mishandled at the C.D.C. in June, eroding confidence in an agency that has long been one of the most respected scientific research centers in the world. The C.D.C. promised last summer to improve its safety procedures.


Jim Sinclair’s Commentary

The downtrend in the price of oil is not all good for the USA as Financial TV claims continually.

Oil Drillers Are Under Pressure to Scrap Rigs to Cope With Downturn
By David Wethe Dec 24, 2014 12:59 PM ET

Offshore oil-drilling contractors, who last year were able to charge record rates for their vessels, are now under pressure to scrap old rigs at an unprecedented pace.

The recent five-year low in oil prices is threatening an industry already grappling with a flood of new vessels and weakening demand. More than 200 new rigs are scheduled to be delivered in the next six years. That’s a 25 percent jump from the number currently under contract.

To cope, many rig owners will try to keep revenue up by culling older vessels to balance supply and demand.

“The older assets, particularly those built before the 2000 time period, are really less desired by the industry,” James West, an analyst at Evercore ISI in New York, said in a phone interview. Those vessels “are only causing the customer base to use those rigs against higher quality rigs to get pricing lower.”

Oil Prices

About 140 older rigs would need to be scrapped to make way for the new vessels scheduled for delivery by 2020, according to Andrew Cosgrove, an analyst at Bloomberg Intelligence. That pace would double the number scrapped in the previous six years and even eclipse the 123 vessels retired since 2000, according to data compiled by Bloomberg.

Booming offshore exploration earlier in the decade encouraged a flurry of rig orders. That’s now leading to a potential market crash in a global industry pegged to generate revenue of $61.5 billion this year. Low oil prices are compounding the problem, alarming investors.


Excited Puppy Starts To Dance After Spotting Its Owner
The Huffington Post | By Jade Walker

2015 Will Be A Year Of Surprise, Panic, Desperation & Radical Change

Today one of the greats in the business warned King World News that 2015 will be a year of panic, desperation, and radical change for the world.  He also said 2015 will be a year of surprises that will have an incredible impact not only people but also major markets and economies around the globe.

Egon von Greyerz:  “As we approach 2015 the world is on the cusp of a deflationary collapse.  Central banks around the world are fighting trying desperately keep their economies afloat.  Zero percent interest rates are no longer helping, so negative interest rates have been introduced in an attempt to create inflation….


Posted at 3:32 PM (CST) by & filed under

By Greg Hunter’s

Dear CIGAs,

Financial writer Bill Holter says the record stock market does not reflect reality.  Holter explains, “This will go on until it doesn’t.  Very quietly, this past week, they postponed the “Volcker Rules” for the banking system.  The reason they did that is they can’t allow the Volcker Rule to come into place.  That would require increased capital ratios.  It would bring mark to market back.  We live in a financial fantasy land, and they need to continue the fantasy to prevent collapse.”

The recent spending bill passed by Congress, which puts taxpayers on the hook for more than $300 trillion in future derivative losses, is another ominous sign financial trouble is coming.  Holter contends, “It tells me that they know something.  They know something we suspect, and they know something they don’t want to tell us.  They know a crash is coming and they are preparing.  For the Republicans to vote “yes” on this after they won a landslide election is throwing the voters under the bus.  People voted for change and we got change, but it was change into a greater direction of taxpayers being screwed.”

So, how long can this “financial fantasy” last?  Holter, who has more than 30 years experience on Wall Street and finance, says, “I have no idea.  I say I have no idea because I would have thought a complete credit contraction and collapse would have and should have already occurred.  The Federal Reserve with QE (money printing) and the Plunge Protection Team manipulating basically all markets have held it together.  It is being held together with confidence and confidence alone.  So, when will the wheels fall off of this thing?  It could be tomorrow morning; it could be January 5th, the first trading day of 2015.  It could be anytime, but it’s going to happen.”

On the new so-called trading “collars” on gold and silver prices, Holter says it is another tipoff on where the precious metals prices are going.  Holter thinks, “It’s to prevent a disorderly rise and not a disorderly collapse in prices.  How far can it go from here?  It is $6 to $8 below the cost of production.”


Posted at 2:34 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

I’m in India for Christmas. I have been coming to India for 30 years and never tire of it. I try and make an annual spiritual pilgrimage to refresh and rejuvenate.

Hope you’ve had a good year.

Below is a skit with a UK comedian and Max Keiser. Unfortunately it is all too true especially now that bail in has been legalized globally.

Have a wonderful Christmas and new year.

Best wishes,
CIGA Satya

Posted at 3:53 PM (CST) by & filed under In The News.

"Isolated"? China Officially Offers Help To "Irreplaceable Strategic Partner" Russia
Tyler Durden on 12/22/2014 12:12 -0500

Just a week ago we detailed how China was preparing to bailout Russia’s liquidity crisis via the 150 billion yuan swap line the two nations agreed in October. Today, as Bloomberg reports, we got confirmation as two Chinese ministers offered support for Russia. China will provide help if needed and is confident Russia can overcome its economic difficulties, Foreign Minister Wang Yi was cited as saying; and Commerce Minister Gao Hucheng said expanding a currency swap between the two nations and making increased use of yuan for bilateral trade would have the greatest impact in aiding Russia. The Global Times (mouthpiece for the Comunist Party) wrote in an editorial this weekend, "Russia is an irreplaceable strategic partner on the international stage." Isolated?

A week ago we noted the movements and tone from China suggested a ‘bailout’ was coming for Russia, and it appears the market is starting to realize that Russia is not so isolated…

It seems CNBC and the mainstream media are oddly quiet about the 31% surge in the value of the Ruble in the last 6 days…

Which is not entirely surprising as, for those who have forgotten who the BRICS are, aside from a droll acronym by a former Goldman banker, here is a reminder of the countries that make up 3 billion in population.



Bankers See $1 Trillion of Zombie Investments Stranded in the Oil Fields
By Tom Randall 2014-12-18T05:52:36Z

A disused mining machine is displayed in front of an oil sands extraction facility near the town of Fort McMurray, Alberta, Canada.

There are zombies in the oil fields.

After crude prices dropped 49 percent in six months, oil projects planned for next year are the undead — still standing upright, but with little hope of a productive future. These zombie projects proliferate in expensive Arctic oil, deepwater-drilling regions and tar sands from Canada to Venezuela.

In a stunning analysis this week, Goldman Sachs found almost $1 trillion in investments in future oil projects at risk. They looked at 400 of the world’s largest new oil and gas fields — excluding U.S. shale — and found projects representing $930 billion of future investment that are no longer profitable with Brent crude at $70. In the U.S., the shale-oil party isn’t over yet, but zombies are beginning to crash it.

The chart below shows the break-even points for the top 400 new fields and how much future oil production they represent. Less than a third of projects are still profitable with oil at $70. If the unprofitable projects were scuttled, it would mean a loss of 7.5 million barrels per day of production in 2025, equivalent to 8 percent of current global demand.


Exposing The Deception: How The US Economy "Grew" By $140 Billion As Americans Became Poorer
Submitted by Tyler Durden on 12/23/2014 11:12 -0500

This is simply stunning.

Regular readers will recall that last month, at the same time as the US Bureau of Economic Analysis reported was a far better than expected 3.9% GDP (since revised to 5.0% on the back of the previously noted Obamacare spending surge), it also released its Personal Spending and Income numbers for the month of October, or rather revised numbers, because as we explained exactly one month ago "Americans Are Suddenly $80 Billion "Poorer"" thanks to (upward) revised spending data and (downward) revised income. What this meant a month ago is that as a result of a plunge in the imputed US savings rate, some $80 billion in personal savings was revised away from the average American household and right into the US economy.

After all, something had to grow the US GDP by a massive amount in order to give the Fed the green light it needs to hike rates eventually, just so it can then ease when the global dry powders from all the other central banks is used up.

And sure enough, this is how just one month ago, personal income was revised lower…


… Even as personal spending was revised higher:


Jim Sinclair’s Commentary

The cold war can easily go hot.

Ukraine’s parliament ends non-aligned status, will work to join NATO

Moscow (dpa) – The Ukrainian parliament voted by overwhelming majority Tuesday to drop the country‘s non-aligned status, a major step toward joining NATO, local media reported.

The legislation was submitted by President Petro Poroshenko, who has promised to hold a referendum on NATO membership once the country fulfills conditions set by the Western military alliance.

The vote in favour of ending Ukraine‘s official neutrality, which had been adopted in 2010, had been expected. The step was agreed to by Ukraine‘s new governing four-party coalition, which took office earlier this month.

The coalition agreement includes aims for NATO membership, but Poroshenko has said it could take at least six years to meet demands set by NATO and the European Union.

More than 4,00 people have been killed in the fighting between pro-Russian rebels and government forces in eastern Ukraine. The crisis has set off alarm bells in Eastern European countries like Poland and the Baltic states, which also host big Russian minorities.

Moscow has condemned the eastern expansion of NATO for not taking into account Russian interests, and has warned against a Western monopoly on security in Ukraine and the broader region.


Posted at 12:47 PM (CST) by & filed under Jim's Mailbox.

Dear CIGAs,

For the second time in a week, on December 17, 2014, the OCC (regulator of nationally-chartered banks), issued a Press Release containing some pretty alarming statements regarding credit risk among U.S. banks. The Release, titled "OCC Highlights Key Risks Facing National Bank and Federal Savings Associations," described key findings from the OCC’s just-published, Semiannual Risk Perspective for Fall 2014 ("RP Report").

Highlights of the Press Release included:

"The [RP Report] noted declining revenues and profitability in OCC-supervised institutions contributed to the increasing credit risk within the banking sector."

"Competition for limited lending opportunities is intensifying, resulting in loosening underwriting standards, particularly in direct and indirect auto lending, leveraged lending, asset-based lending, commercial real estate lending, and commercial and industrial loans. Increased risk layering is also occurring in commercial loans."

"The prolonged low interest rate environment continues to lay the foundation for future vulnerability. Banks that extend asset maturities to pick up yield, especially if relying on the stability of non-maturity deposit funding in a rising rate environment, could face significant earnings pressure and capital erosion depending on the severity and timing of interest rate moves…"

"Many banks continue to re-evaluate their business models and risk appetites to generate returns against the backdrop of low interest rates."

This is an excellent illustration of Jim’s point that the Monetary Authorities always telegraph ahead of time what they’re intending to do. We have already seen broad-based Position Papers indicating that the next financial crisis will be met with "bail-ins" like in Cyprus, where bank depositors were considered junior creditors and suffered the worst of the losses. Now, we have a major bank regulator announcing twice in one week that credit conditions are beginning to look as bleak as they did in 2006.

The Monetary Authorities are not concerned with the effect these kinds of information releases have on the general public because the Authorities know an obedient, well-trained Mainstream Press will take the information no further. However, those of us who have learned to pay attention cannot afford to ignore these kinds of warnings.

The full OCC Press Release can be found at:

Sincerely yours,
CIGA Richard Belfanti



New Jersey is poor with equally poor finances. Now they are jumping on the "bail out" bandwagon. What are they thinking?

Looks like every major entity in the world will get bailed out of their fiscal irresponsibility… except the public!

CIGA Wolfgang

New Jersey to bail out Atlantic City with short-term loan
By Hilary Russ

Dec 23 (Reuters) – Atlantic City, New Jersey’s struggling gambling hub, will get a short-term $40 million loan from the state rather than try to borrow the money in the capital markets this year, a city official said on Tuesday.

Even the city’s originally planned $40 million note sale, now squashed, was itself a scaled back version of a larger bond issuance that was delayed amid uncertainty over the city’s next financial steps.

The city must repay the loan by March 31 at a 0.75 percent interest rate, according to the loan agreement, signed on Dec. 18 by Mayor Don Guardian and the state.

Atlantic City still hopes to issue at least $140 million of bonds in the first quarter of 2015, revenue director Michael Stinson told Reuters. That will help pay down property tax appeals won by casinos.