Posted at 12:34 AM (CST) by & filed under General Editorial.

Dear Friends,

85 days to go!

Today’s incoming emails exceeded the 1200 mark, a great degree of which are asking me what is the motivation behind a countdown of days for the USDX.

There are various answers to this question of which TA is the least important.

The primary reason for this “out on the limb statement” is that the recent China/US financial Summit meeting in Washington which was requested by China, was not significantly pre-planned.

As I understand it there are two things wanted and one thing disapproved of.

The US financial leadership wants, but more so needs, Chinese buying of US Treasury offerings to remain at these levels but more so to increase to offset the wholly unavoidable increase in offering of US Federal Debt.

The Chinese wish to see the USA support the creation of a Super Sovereign Currency as an offset to dependence on the dollar for international settlements and national reserves.

The Chinese rightly feel that the greatest risk to their present dollar position’s valuation is quantitative easing. or simply put, the monetization of one’s own debt by the electronic creation of money for funding yourself.

I am informed that Chinese interests want to see both in 2009.

You will note that the QE program was extended until October, particularly the end of October. This is what Bernanke would like to see, hoping the Management of Perspective Economics will succeed. The Chairman as the academic he is really believes it is possible.

As market related, I know MOPE works only when it has the wind at its back such as from 1981 until 2001. After that it loses it strength until it evaporates into reality and the law of economics such as now.

Quantitative easing cannot be curtailed in 2009 or 2010. To curtail QE as the US Federal Deficit explodes would be to release interest rates to the marketplace that could easily take them to late 1979 early 1980s levels due to a currency event.

The USA cannot support a Super Sovereign Currency. To do so would be to disavow the US dollar as the universal reserve currency which the financial leadership of the USA still adheres to, seeing this period as only an aberration in the constant.

The USA, due to market considerations, cannot yield to Asia and China as spokesperson for the BRIC on the two criteria required to remain as purchasers of the US Treasury instruments, which is the only real support the dollar presently has.

I have given you two tools for timing as well as other resources like Martin Armstrong who was at one time nearly unknown in our crowd.

Tools of timing, some I have not shared with you, indicate a major potential turning point that could easily see a break below .7600 or .7200 coming in the final quarter of this year.

Add this all together and you get a November bull’s eye for a loss of confidence in the US dollar internally as well as externally. That will end the misguided belief that MOPE, via its tool SPIN, defeats economic law.

Van Mises, Ricardo and Adam Smith have not been laid to rest by market manipulation. The wind is in the face of business now as a long-term trend. We are returning to basics and moving away from the fancy, complex and fraudulent.

All of this could have been fixed prior to the event of Lehman declaring bankruptcy. Now there are no PRACTICAL SOLUTIONS and NO PRACTICAL EXITS FROM CONSTANT QE.

Pandora’s Box is open, only to be closed by markets as the downward spiral goes to its practical end, a return to commodity money.

We, here, will be proven correct in time and in price.

Respectfully yours,

Posted at 12:19 AM (CST) by & filed under In The News.

Dear Friends,

The MOPErs are making a huge mistake drawing exact lines in the sand.

The work this evening to keep gold under $960 and the USDX above .7840 is so obvious that when it fails, and it must, the house falls down.

This type of action is focused on the huge and growing Federal debt issues. It reveals the panic that is descending on the Treasury.

These guys have such egomania that they really believe acting as they are this early morning is going to accomplish something.

Well it will, but it will not be what is anticipated by the MOPErs

Today was extremely busy, so I had to start JSMineset late. My incoming emails were over the 1200 mark when I started reporting to you four hours ago. They are still over 1200. The incoming messages were arriving much faster than I could read them.

It is late so please keep that in mind if you are looking for me early in the AM Friday.

You will be hearing from Trader Dan as soon as he gets his electronics working.

He has been en-route with his young family from his old digs in Texas to a new and remote ranch on the other side of the country. He practices what we preach.

Good US morning CIGAs.

It is Friday here.


Jim Sinclair’s Commentary

Have you read, starting on page 434, the pending Health Bill on the subject of END OF LIFE CARE?

The effort to save money is focused on the high cost of end of life care. The bill requires doctors to have this discussion with elderly or terminally challenged patients on the "Do Not Revive" option and Federally paid for Hospice care. That means die and do not cling to life because it costs too much.

The doctor will have to report the specific results of end of life discussions with you, the patient, to the government.

The town meetings are the second challenge by the people waking up slowly from their sleep as sheeple.

This is the first significant challenge to the aura of the present administration and impacts general confidence.


Jim Sinclair’s Commentary

My trust that the Tanzanian people would do the right market orientated action is clearly vindicated.

Tanzania to Table Mining Laws in October, Take Stakes in Mines
Updated: 2009-08-12 13:54

Tanzania will this October table mining laws which will allow it to take stakes in mines, Minerals & Energy Minister William Ngeleja said.

The legislation will give government power to acquire a stake of between 10 percent and 15 percent in strategic gemstone mining, Ngeleja said at a seminar on mineral resources development in Dar es Salaam today.

"This will not be something automatic; it will very much depend on the government’s decision on whether a particular gemstone is strategic in government’s view or not," he said.

Tanzania is Africa’s third-largest gold producer, after South Africa and Ghana, and holds the only known deposit of tanzanite, a precious gemstone. Barrick Gold Corp., the world’s largest producer of the metal, and third-ranking AngloGold Ashanti Ltd. are among companies with mines in the country.

A panel appointed by the nation’s president in 2007 suggested higher royalty rates and fewer tax breaks to help boost revenue from Tanzania’s mineral wealth. Mining companies want government to reconsider, saying this will lower profits.


Jim Sinclair’s Commentary

Positive developments come daily from here.

Tanzania firm hopes to add 45,000 customers to grid
Thu Aug 13, 2009 9:36am GMT
By George Obulutsa

DAR ES SALAAM (Reuters) – A Tanzanian subsidiary of Canada’s Artumas Group Inc says it hopes to add 45,000 customers to Tanzania’s electricity grid in five years if it can secure approval and funds for the project.

The Umoja Light Company, a part of Artumas Tanzania, has been serving about 16,500 customers for the past two and a half years in Mtwara and Lindi in the southeast of the east African nation, where it generates 12 megawatts (MW) from natural gas.

Artumas Tanzania discovered a gas deposit in Mnazi Bay, but has put plans for a 300 MW power plant on hold due to the global economic crisis, which made it harder to access financing.

Umoja Light has been planning the project with the government for the last four years, but is waiting for the Energy and Water Utilities Regulatory Authority to grant it the necessary licences and approvals.

"We are hopeful that this will happen in the near future," Richard Tainton, Umoja Light’s general manager, told Reuters late on Wednesday on the sidelines of a regional infrastructure and energy conference in Dar es Salaam.


Jim Sinclair’s Commentary

Confidence is a subtle thing.

This report by Huffington Post is the kind of thing that impacts confidence.

One chip at a time the confidence built on MOPE utilizing SPIN is failing.

This is the danger of really believing that you can build a healthy economy out of hot air.

Internal Memo Confirms Big Giveaways In White House Deal With Big Pharma
First Posted: 08-13-09 11:10 AM

A memo obtained by the Huffington Post confirms that the White House and the pharmaceutical lobby secretly agreed to precisely the sort of wide-ranging deal that both parties have been denying over the past week.

The memo, which according to a knowledgeable health care lobbyist was prepared by a person directly involved in the negotiations, lists exactly what the White House gave up, and what it got in return.

It says the White House agreed to oppose any congressional efforts to use the government’s leverage to bargain for lower drug prices or import drugs from Canada — and also agreed not to pursue Medicare rebates or shift some drugs from Medicare Part B to Medicare Part D, which would cost Big Pharma billions in reduced reimbursements.

In exchange, the Pharmaceutical Researchers and Manufacturers Association (PhRMA) agreed to cut $80 billion in projected costs to taxpayers and senior citizens over ten years. Or, as the memo says: "Commitment of up to $80 billion, but not more than $80 billion."

Representatives from both the White House and PhRMA, shown the outline, adamantly denied that it reflected reality. PhRMA senior vice president Ken Johnson said that the outline "is simply not accurate." "This memo isn’t accurate and does not reflect the agreement with the drug companies," said White House spokesman Reid Cherlin.


Jim Sinclair’s Commentary

If you recall the interview I did with Bloomberg Radio in March, we here at JSMineset called the time for this equity rally.

Click here to listen to Jim’s Bloomberg interview…

Now RBS is right. It is getting very tired.

RBS uber-bear issues fresh alert on global stock markets
Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts
By Ambrose Evans-Pritchard, International Business Editor
Published: 8:26PM BST 12 Aug 2009

Britain’s Uber-bear is growling again. After predicting a torrid "relief rally" over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears.

"We are now in the middle of a parabolic spike up," he said in his latest confidential note to clients.

"I expect this risk rally to continue into – and maybe through – a large part of August. What happens after that? The next ugly leg of the bear market begins as we get into the July through September ‘tipping zone’, driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets."

The key indicators to watch are business spending on equipment (Capex), incomes, jobs, and profits. Only a "surge higher" in these gauges can justify current asset prices. Results that are merely "less bad" will not suffice.

He expects global stock markets to test their March lows, and probably worse. The slide could last three months. "A move to new lows is highly likely," he said.


Jim Sinclair’s Commentary

CIGA JB Slear says: "To the people they were hired to protect; foreign and domestic."

Rep. Weiner Tries To Ban Cameras From Town Hall Event

Click here to watch the video…

Jim Sinclair’s Commentary

CIGA Rusty Bayonet says: "CNN barely reported this story this afternoon. It didn’t even make their main page on their website. No MOPE going on here, no siree."

Initial jobless claims rebound
Number of people filing first time claims for jobless benefits rose last week, but the total number of people filing ongoing claims fell.
By Ben Rooney, staff writer
Last Updated: August 13, 2009: 9:45 AM ET

NEW YORK ( — The number of Americans filing claims for first-time unemployment benefits rose last week, while the total jobless rolls decreased, the government said Thursday.

There were 558,000 initial claims filed in the week ended Aug. 8, an increase of 4,000 from an upwardly-revised 554,000 the previous week, according to the Labor Department’s weekly report.

Economists had expected initial claims to fall to 545,000, according to consensus estimates gathered by

The four-week moving average of initial claims, which smoothes out volatility in the measure, was 565,000. That’s up 8,500 from the previous week’s revised average of 556,500.

Despite last week’s rebound, the number of people filing new jobless claims has eased in recent weeks. In July, the data were distorted by seasonal factors related to early plant closings in the automotive industry.


Jim Sinclair’s Commentary

Substance is overcoming form as reality overcomes spin.

U.S. Economy: Sales Unexpectedly Decrease as Job Losses Mount
By Timothy R. Homan

Aug. 13 (Bloomberg) — Sales at U.S. retailers unexpectedly fell in July, raising the risk that consumers will keep cutting back as job losses mount and temper a recovery from the worst recession since the 1930s.

Purchases decreased 0.1 percent, the first drop in three months, as shrinking demand at department stores such as Macy’s Inc. and Wal-Mart Stores Inc. overshadowed a boost from the cash-for-clunkers automobile incentive program, Commerce Department figures showed today in Washington.

A separate government report today showed more Americans than forecast filed claims for unemployment insurance last week, underscoring the threat to spending from the continued deterioration in the job market. Treasury securities jumped and the dollar fell after the reports, and some economists lowered estimates for growth this quarter.

“Until we start seeing job growth, consumers are still going to be very cautious,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto, which accurately forecast the drop in purchases excluding automobiles. “It’s premature to talk about the sustainability of a recovery,” he said, until there’s “follow-through on the demand side.”

The gain in Treasuries sent the yield on the benchmark 10- year note down to 3.66 percent at 11:40 a.m. in New York from 3.72 percent late yesterday. The dollar dropped against the Japanese yen to 95.47 yen from 96.06 on Aug. 12. Stocks were little changed.


Jim Sinclair’s Commentary

12 trillion has made the bankrupt OTC derivatives good to the winner but accomplished little else.

Problems remain unsolved and without practical solution. They are not years off. That is the last stab at SPIN on this.

US CREDIT-Ambac, MBIA liquidity at risk without new business
Thu Aug 13, 2009 4:13pm EDT
By Karen Brettell

NEW YORK, Aug 13 (Reuters) – Ambac Financial Group (ABK.N) and MBIA Inc (MBI.N) risk a liquidity crunch in coming years as continuing losses at their bond insurance arms deplete capital and plans to write new business remain on hold.

Bond insurers have been decimated by losses from selling hundreds of billions of dollars of protection on debt that included large exposures to deals packed with risky mortgage-backed securities.

Attempts to launch new municipal bond insurance operations have also run into snags. Ambac in June delayed plans to launch a new insurance arm after struggling to raise capital for the unit, called Everspan.

MBIA plans to write new business through a unit called National Public Financial Guarantee Corp, but it is facing litigation from a group of banks that is delaying this effort.

The banks allege the transfer of assets to the new company leaves fewer resources to pay claims in its bond insurance arm.


Jim Sinclair’s Commentary

There is no solution or end to the need for funds now that Wall Street is bailed out. Here goes the real economy.

TARP Remains Troubled
Alexandra Zendrian, 08.13.09, 04:00 PM EDT

The Congressional Oversight Panel has concerns about the still very much present troubled assets on banks’ balance sheets.

The Troubled Asset Relief Program has being in place for 10 months. The program was originally designed to purchase troubled assets off the banks’ balance sheets; when the financial crisis became dire and the previous plan wouldn’t fly, the funds’ intention morphed into a cash injection for the banks. So in these 10 months, we still have many of the troubled assets that were previously on banks’ balance sheets but we’re $700 billion in the hole. The Congressional Oversight Panel has a problem with this.

In a recent report about the TARP funds, the panel cited the lack of transparency and available information about how many troubled assets are out there. "It is likely that an overwhelming portion of the troubled assets from last October remain on bank balance sheets today," the report says. Likely, as in "we’re not totally sure because we don’t have all the data."

This info isn’t readily available for a few reasons. One, only 19 banks were stress tested. Two, banks classify these troubled assets differently, with some banks considering an asset troubled while another doesn’t, for the same type of asset. The oversight panel anticipates asking for the Treasury Department to look into the size and scope of this problem the next time Secretary Timothy Geithner testifies before the panel, which will be in September, according to an oversight panel spokesman. The panel would also be interested in expanding the stress tests so they are applicable to smaller banks.


Jim Sinclair’s Commentary

Now here is the perfect hedge. Buy banks, gold and gold company shares.

Paulson Buys Banks That Lost Value in Credit Crisis (Update1) 
By Saijel Kishan and Cristina Alesci

Aug. 13 (Bloomberg) — John Paulson, the hedge-fund manager whose wagers against the U.S. housing market helped him earn an estimated $2.5 billion last year, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.

His firm, Paulson & Co., bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. It was the biggest new purchase in the second quarter for Paulson, 53, and made him the bank’s fourth-largest owner.

“It’s ironic because he was the one that made the right call shorting subprime,” said Jerome Dodson, who oversees $2.5 billion at Parnassus Investments in San Francisco. “His timing is good but he probably won’t be as successful with this purchase as he was with betting the housing market would collapse.”

Paulson, who manages about $29 billion, last year started a hedge fund, called Paulson Recovery fund, to invest in financial firms hurt by mortgage writedowns. He boosted investments in gold companies this year to help mitigate potential inflation as governments worldwide increase spending to help their economies recover from recession. Gold has gained 7.7 percent this year.

Stefan Prelog, a spokesman for New York-based Paulson, declined to comment on the filing.


Jim Sinclair’s Commentary

Note the extreme security system with the two guards near the missile with their backs turned shooting the bull. Sure, the nukes are safe…

Pakistan’s nukes are safe. Maybe.
Thu, 08/13/2009 – 4:57pm
By Vipin Narang


An excellent series of recent articles on the subject by Shaun Gregory, Rolf Mowatt-Larssen (a former director of intelligence at the Department of Energy), and Brig. Gen. Feroz Hassan Khan (Ret.) assess the very grim threat of Pakistan losing control over its 60-warheads-and-growing nuclear weapons arsenal. Given the lack of publicly available data on this critical issue, such articles by extremely knowledgeable scholars and practitioners represent some of the best information we have on realistic threats to Pakistan’s nuclear arsenal.

Gregory’s article has gotten some recent attention for noting that there have worryingly been several attacks at the perimeter of bases that may house nuclear components, though U.S. intelligence officials are quick to point out that there is little reason to believe that nuclear assets were ever at risk. So whatare the primary risks to the security of Pakistan’s nuclear arsenal?

In answering this question, it is important to differentiate between the various organizations involved with Pakistan’s nuclear weapons, and where and when nuclear assets are more or less vulnerable to internal and external threats. The bigger threat is probably not the Army losing control of nuclear assets, but rather insider-outsider collusion or diversion of nuclear material from the civilian nuclear agencies during either the production phase or transfer to Army locations.

The good news is that once the Pakistani Army takes custody of nuclear assets, the threat of terrorists successfully boosting a warhead or fissile cores — either through direct attack or facilitated by insiders — is reassuringly low. The Pakistani Army has every incentive to ensure firm control over the country’s nuclear assets since, should they be lost or stolen, there would literally be hell to pay.


Jim Sinclair’s Commentary

Foiled once, foiled twice, but attacked until a worldwide shocking change comes out of Pakistan

Pakistan nuclear thefts foiled
Arnaud de Borchgrave
Published 04:45 a.m., August 13, 2009

clip_image002Is Pakistan’s nuclear arsenal theft-proof? Former President Pervez Musharraf and his successor, Asif Ali Zardari, and their army and intelligence chiefs repeatedly have assured both the Bush and Obama administrations that their 80-odd nuclear weapons are as secure as the U.S. arsenal of some 7,000 city busters.

The Pakistanis have separated warheads from delivery systems and stored them in different secret locations throughout the second-largest Muslim country in the world (after Indonesia). The United States has given Pakistan copies of its own blueprint to ensure fool-proof, total safety. Yet Pakistan’s secret nuclear-storage sites are known to Islamist extremists and have been attacked at least three times over the last two years, according to two recent reputable reports.

The Baltimore-based Maldon Institute, whose worldwide staff consists mostly of retired intelligence officers, and the Times of India’s Washington-based foreign editor Chidanand Rajghatta both report attempted nuclear thefts that have been tracked by Shaun Gregory, a professor at Bradford University in Britain.

The first such attack against the nuclear-missile-storage facility was on Nov. 1, 2007, at Sargodha; the second, by a suicide bomber, occurred Dec. 10, 2007, against Pakistan’s nuclear air base at Kamra; and the third, Aug. 20, 2008, and most alarming, was launched by several suicide bombers who blew up key entry points to a nuclear-weapons complex at the Wah Cantonment, long believed to be one of Pakistan’s main nuclear-weapons assembly points, where warheads and launchers come together in a national emergency.

Mr. Gregory’s research paper was first published in West Point’s Counter Terrorism Center Sentinel, and elicited no attention or reaction. Renowned terrorist expert Peter Bergen, one of the very few journalists to interview al Qaeda chief Osama bin Laden before Sept. 11, 2001, reviewed Mr. Gregory’s paper and was baffled by the lack of reaction from the rest of the media.


Jim Sinclair’s Commentary

From the unreal to the real will be a shock to those who have been hypnotized by MOPE via F-TV and their SPIN.

Bleak sales are another reality check for economy

WASHINGTON — A bleak report on retail sales Thursday reinforced a nagging worry of economists: Shoppers won’t spend enough to help a recovery take hold.

The figures served as a reality check for an economy that lately has appeared poised to emerge from recession and grow again. Consumer spending powers about 70 percent of economic activity.

The Cash for Clunkers rebate program helped give auto sales to their biggest jump in six months in July, but sales sank elsewhere. Gas stations, department stores, electronics outlets and furniture stores all suffered.

Overall, sales fell 0.1 percent, the Commerce Department said, after two months of modest gains. Economists had expected a 0.7 percent increase. Excluding autos, sales fell 0.6 percent, also much worse than predicted.

Unemployment, flat wages, tighter credit, fear of layoffs and to urge to save more have caused many consumers to spend less. Shrinking home equity and stock portfolios have compounded the problem.


Jim Sinclair’s Commentary

Now here is a cost saving, mean and lousy thing to do.

Fire the politicians first before you kill the kids and cull the geezers.

California board votes to drop healthcare coverage for 60,000 children
As a result of state budget cuts, the Healthy Families program will have to begin terminating coverage for more than 60,000 children on Oct. 1. Nearly 670,000 children could be dropped by June 30.
By Patrick and McGreevy and Evan Halper
August 13, 2009 | 7:49 p.m.

Reporting from Sacramento – The announcement by state officials that California has enough cash to stop paying bills with IOUs did little to take the sting out of other budget news Thursday: Tens of thousands of poor children are about to lose their healthcare coverage.

A state board voted Thursday to begin terminating health insurance for more than 60,000 children Oct. 1 as a result of the budget amendments signed into law recently by Gov. Arnold Schwarzenegger.

Those children would be up for an annual review of their coverage next month, but instead they may be dropped from the California Healthy Families program under the action by the state Managed Risk Medical Insurance Board.

The board is scrambling to secure funding from other sources, including money set aside by voters for early childhood education, but so far it has come up short. If additional funds are not found, board officials said, the program could ultimately drop 669,296 children in the current fiscal year, which ends June 30, 2010. Currently, 921,000 people age 18 and younger are enrolled in Healthy Families.

"There are not sufficient funds for the services we are providing," said Board Chairman Cliff Allenby. "We will work to do what we can do" to find additional money.

The budget cuts made by Schwarzenegger and the Legislature left the Healthy Families program with a $194-million shortfall.


Jim Sinclair’s Commentary

From California moving east, and from the Sun Coast moving north and west, the real economy is now rolling over hard.

The Wall Street guys may not even know there is something called the real economy. They only know casino swaps, market manipulating super fast soft ware and predatory destruction of the real.

D/FW area foreclosure filings up 32%
Dallas Business Journal

Foreclosure filings on Dallas-Fort Worth homes jumped 32 percent in the third quarter of this 2009 compared to last year, according to a new report issued by Addison-based Foreclosure Listing Service Inc.

With the filing deadline passed for September foreclosures, FLS was able to report on third-quarter and year-to-date (January through September) numbers.

In Dallas-Fort Worth, foreclosure filings were issued on 15,880 properties for the third quarter of 2009, up from 12,050 postings during the same period last year.

Three local counties—Tarrant, Collin and Denton—set new record highs in the most recent quarter, the report concluded.

Collin County foreclosures rose 33 percent to 2,138 total filings. Meanwhile, Tarrant County foreclosures jumped 40 percent to 5,252 filings and Denton County foreclosures rose 35 percent to 1,745 foreclosure filings, according to the FLS report.


Jim Sinclair’s Commentary

Anyone that says China is dollar bound is a raving idiot. These dollars are being used for acquisition.

China May Boost Spending on Energy Acquisitions by Half in 2009
By John Duce

Aug. 14 (Bloomberg) — China, unfazed by failures to invest in Rio Tinto Group and Unocal Corp., will boost spending on oil and mining acquisitions by at least half this year to take advantage of lower valuations after commodity prices slumped.

State-owned Yanzhou Coal Mining Co.yesterday agreed to buy Australia’s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion), a day after Sinochem Corp., China’s biggest chemicals trader, offered to buy Emerald Energy Plc for 532 million pounds ($881 million) to gain oil fields in Syria and Colombia.

China National Petroleum Corp.’s plan to buy Repsol YPF SA’s Argentine unit may push Chinese purchases of overseas commodity assets to $43 billion this year, a 48 percent increase on 2008, according to data compiled by Bloomberg.

“The Chinese don’t have enough nickel, don’t have enough oil, and they don’t have enough copper,” Jim Rogers, chairman of Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist”, said in a telephone interview yesterday. “There’s a crisis coming. They are going around the world buying up what they can. They’re preparing for a rainy day.”

Bids for resources by China, whose $2.1 trillion in currency reserves are the world’s largest, have been met with opposition in the U.S. and Australia. Neither concern over its growing influence nor the arrest of four Rio executives in Shanghai have stopped Chinese companies from buying assets abroad as the nation’s 4 trillion yuan ($585 billion) economic stimulus spurs demand.


Jim Sinclair’s Commentary

What election today anywhere is on the level? Come on now.

Observers see pattern of fraud before Afghan vote
By JASON STRAZIUSO, Associated Press Writer – Thu Aug 13, 6:23 pm ET

KABUL – Voting observers expect fraud during next week’s Afghanpresidential election and warn that cheating will most likely take place at polling stations in remote or dangerous areas where independent monitors won’t be able to be present.

A suspiciously high number of women — far more than men — have been registered to vote in culturally conservative provinces wherePresident Hamid Karzai expects to do well, a leading election monitor said this week. An adviser to the top U.S. commander said the black market for voter registration cards is flourishing and that she could have personally bought 1,000.


Jim Sinclair’s Commentary

Look at what Wall Street has done to main street.

Home foreclosure filings up more than 100 percent in Seattle area
Last updated August 12, 2009 10:24 p.m. PT

Home foreclosure filings in the greater Seattle area increased 115 percent in July compared to the same period last year, according to data released Thursday.

Filings in Washington state were up 94 percent from July of this year compared to the same month last year, according to RealtyTrac. The online service tracks foreclosure filings, which are default notices, scheduled auctions and bank repossessions. In King County, such filings were up 148 percent compared to July of last year.

Nationally foreclosure filings were up 32 percent in July of 2009 compared to last year, the tracking service said. Nevada had the nation’s highest foreclosure rate for the 31st consecutive month, with one in every 56 housing units receiving a filing last month.

Washington state ranked 13th. There were 5,370 filing notices last month (one out of every 511 housing units). Oregon’s rank was 10th nationally, with 3,605 filing notices, translating to one out of every 446 housing units.

In the Seattle-Tacoma-Bellevue metro area, there were 3,476 foreclosure filings last month. That was up almost 5 percent from June of this year.

Thursday’s report came a day after a state study that showed a $8,000 federal tax credit for first-time home buyers appears to be drawing people back into Washington’s housing market.


Jim Sinclair’s Commentary

Bernanke either goes to infinite QE, or will be made redundant as will the Fed itself.

Political direct control of monetary policy will reside in the White House more effectively.

Rethinking the Fed Chairmanship and Weighing Who’s Right for the Job
By Steven Pearlstein
Friday, August 14, 2009

A popular parlor game among Washington insiders this summer is guessing whether Ben Bernanke will be reappointed to a second four-year term as chairman of the Federal Reserve, or whether President Obama will try to put his own stamp on the Fed by appointing his most trusted economic adviser, Larry Summers.

Before getting to the question of who will be the next Fed chairman, however, perhaps it’s worth considering what the job ought to be. Over the last two years, we’ve certainly all learned that it involves a lot more than adjusting interest rates and dissembling knowledgeably before Congress. We also saw the consequences of having left the previous chairman in the job so long that it created a cult of personality that drained the Fed of the kind of critical thinking that might have averted the recent financial crisis. If there ever was a time to reconceptualize the role of Fed chairman, now would be it.

So here are a few thoughts:

Whenever the Fed comes under serious attack, as it has recently, its reflexive response is to accuse its critics of jeopardizing the Fed’s independence. Yet if you think about it, the greatest threat to the Fed’s independence comes not from outside the institution but from a chairman and members who are so anxious to get reappointed that they begin to tilt policy to win favor with the White House or with Wall Street or take on a reluctance to criticize policies that they think harmful to the economy.

There are two easy fixes for this problem. Congress could extend the chairman’s term from four years to six but remove the possibility of reappointment. And it could end the current practice of appointing new members of the Fed’s board of governors to fill the partial, unexpired terms of governors who leave. All new governors should be appointed to their own 14-year terms, without possibility of reappointment.


Jim Sinclair’s Commentary

Here comes the humdinger for the average guy looking forward to retirement in the USA and GB.

U.K. Companies Face Pension-Plan Deficits

LONDON — Pension deficits have hit many top U.K. companies — and about 22% of the FTSE 100 firms don’t have enough cash to pay out on existing liabilities, according to research released Thursday.

The increased pressure on already stretched balance sheets is forcing many companies to consider whether to continue supporting defined-benefit schemes, KPMG said, adding many will end up pulling the provision for existing employees.

It …



Jim Sinclair’s Commentary

In a MOPE world you can have a recovery even if there was no economy at all. They would just make up one, and start issuing bullish statistics.

A ‘Jobless’ And ‘Wageless’ Recovery?
Nouriel Roubini, 08.13.09, 12:01 AM EDT

After severe job losses in early 2009, the pace of job losses slowed starting in April, and the July numbers have brought more respite. Non-farm payroll job losses were 247,000 in July. However, the private sector lost 254,000 jobs. This is considerably better than analysts expected (around 325,000) but not good enough to claim that we are in the middle of a strong and sustainable recovery.

Looking at the recessions of the post-war period, average monthly job losses ranged between 150,000 and 260,000. Average monthly losses in this recession are still at 350,000. For the first four months of the year, the average was at 648,000. The improvement with respect to the first part of the year is clear. The improvement with respect to what we are used to seeing in recessionary periods is much less clear cut. The latest numbers are not exactly what you’d call good news, at least not in absolute terms. In relative terms, however–after skirting a near-depression–markets seem to consider 247,000 payroll losses a breath of fresh air.


Data Source: Bureau of Labor Statistics

The increase in average weekly labor hours in July is certainly a positive sign. But it also shows that, when economic conditions begin improving, companies will increase labor hours and temporary workers and move workers from part time to full time. Only after that do they begin hiring new workers. So hiring is still a long way ahead. The decline in the unemployment rate from 9.5% in June to 9.4% in July was not due to an improvement in the employment situation but is explained by the large decline in the labor force (-422,000). Workers facing hiring freezes, fewer full-time jobs and jobs at lower wages are leaving the labor force.


Posted at 12:13 AM (CST) by & filed under Jim's Mailbox.


Follow not the individual data points but rather their trend in both time and price.


U.S. Economy: Sales Unexpectedly Decrease as Job Losses Mount
By Timothy R. Homan

Aug. 13 (Bloomberg) — Sales at U.S. retailers unexpectedly fell in July, raising the risk that consumers will keep cutting back as job losses mount and temper a recovery from the worst recession since the 1930s.

Purchases decreased 0.1 percent, the first drop in three months, as shrinking demand at department stores such as Macy’s Inc. and Wal-Mart Stores Inc. overshadowed a boost from the cash-for-clunkers automobile incentive program, Commerce Department figures showed today in Washington.

A separate government report today showed more Americans than forecast filed claims for unemployment insurance last week, underscoring the threat to spending from the continued deterioration in the job market. Treasury securities jumped and the dollar fell after the reports, and some economists lowered estimates for growth this quarter.



Dear Mr. Sinclair,

There are those that feel certain areas are immune to the real estate and greater economic downturn. This morning I received the Massey Knakal 1st Half 2009 Queens, NY Building Sales Report and the dollar volume decline in sales is absolutely staggering.

I will type in the data contained in the pamphlet referencing the decline below:

Dollar Volume

"The aggregate sales consideration in 1H09 was $253,879.227.  This figure was down 80.4% from 1H08 and down 81.8% from the peak half year of 2H06 during which consideration was $1.4 billion."

This is alarming!

Best Regards,

Posted at 4:33 PM (CST) by & filed under General Editorial.

Dear CIGAs,

At long last we are now offering Compendium Version 2 for sale. There will also be a very limited printing of Compendium Version 1 for sale as well. If you want a copy I suggest you order it while you have the chance. We release Compendiums every couple years to help cover the operating costs of running a site like JSMineset. Over the years we have gotten quite large and these costs have grown substantially. If you like what we do here please purchase a copy – you will be supporting a good cause and allow us to continue providing this service free of charge.

**ANY COMPENDIUM PURCHASE WILL ALSO GET YOU THE LINK TO JIM’S 3 HOUR CIGA MEETING IN TORONTO FROM FEBRUARY 2009 – Email [email protected] if you have not received the link**


What you will receive with each set:

Compendium Version 1 ($50 USD): (VERY FEW LEFT!!!)

Compendium Version 1 includes all articles posted from the inception of JSMineset in 2002 to December 2005. It comes packaged as a searchable PDF database and includes several thousand articles on Gold and financial markets. As a bonus, a separate Technical Analysis video disc by Jim Sinclair is included in the package. This video is viewable on a computer only and is both PC and Mac compatible.

Compendium Version 2 ($80 USD):

Compendium Version 2 includes all articles posted from December 2005 to the end of October 2008. All articles are categorized and presented in HTML format and are PC and Mac compatible. Several thousand articles are again included in this archive disc which makes up literally thousands of pages of market commentary from Jim himself. Compendium Version 2 also includes an hour long DVD video commentary on financial markets by Jim Sinclair. This disc is playable in any DVD player and any computer that supports DVD playback.

Compendium Version 1 & 2 Package ($130 USD):

This package includes both compendium 1 & 2 which are shown above. As you have noticed by this point, JSMineset does not subsidize costs with garbage advertising nor do we ever promote products through our free eblast system. If you feel JSMineset has helped you over the years purchase Compendiums 1 and 2 and help keep us alive! For the price you pay the information you receive is unbeatable and you know it is going to a good cause.

All prices are in US dollars and include shipping and handling.

Thank you all for your continued support!

Dan Duval
JSMineset Editor

Posted at 8:14 PM (CST) by & filed under General Editorial.

Dear Extended Family,

The economic intervention so far in this crisis has been limited in focus and vast in size.

So far all that has happened of note is that the losing side of the OTC derivatives have been bailed out to pay off the winning side. Yes, there has been some direct economic stimulus, but in comparison it is very small.

There has been much talk about regulating new OTC derivatives but this has nothing to do with the huge and growing mountain of WMDs outstanding. Exchanges have been studying listing derivatives, but so far no exchange can devise a method of accurate valuation and as a result no clearinghouse function is possible. No clearinghouse means no listing of the OTC form of derivative. This also has no application to the standing mountain of WMD paper.

All of the above speaks to financial intervention that has not been focused on offsetting the problem of a mountain of worthless paper that still threatens the financial system and therefore in time, as now, the real economy.

Intervention to stop a downward spiral must be focused on the primary economic factor causing the economic downward spiral. It has not been and now the real economy is in trouble.

The standard principle of Management of Perspective Economics is that markets will impact the thinking of all levels of business. Therefore a positive stock market can offset a deep recession and planners have taken comfort in the appreciation of world equity market indices.

The reason that this is a 1932 type rally is twofold. Nothing has really been done that can be called focused intervention to offset the economic downward spiral, and because problems have spread out of finance into the real economy.

Stay the course.

Do not be diverted by MOPE, SPIN or strong PR of technical opinions to the contrary, a form of spin.

We are far from the end to our problems. Very far.

Respectfully yours,

Banks’ Toxic Assets Still There: The Accounting Cannot Be Trusted
By Dirk Van Dijk on August 12, 2009

The Congressional oversight panel (COP) of the TARP program is just out with its August report ( In it, it warns:

“Treasury‘s choice to pursue direct capital purchases resulted in a notable stabilization of the financial system, and it allowed the write-down of billions of dollars of troubled assets and reserve building. But, it is likely that an overwhelming portion of the troubled assets from last October remain on bank balance sheets today.

“If the troubled assets held by banks prove to be worth less than their balance sheets currently indicate, the banks may be required to raise more capital. If the losses are severe enough, some financial institutions may be forced to cease operations. This means that the future performance of the economy and the performance of the underlying loans, as well as the method of valuation of the assets, are critical to the continued operation of the banks.

“For many years, banks were required to mark their assets to market, meaning they listed the value for many assets based on what those assets would fetch in the marketplace. In response to the crisis, banks have been allowed greater flexibility in the way they value these assets. In most cases, we would expect the new rules to have permitted banks to value assets at a higher level than before. So long as they do not sell or write-down those assets, they are not forced to recognize losses on them.

“The uncertainty created by the financial crisis, including the uncertainty attributable to the troubled assets on bank balance sheets, caused banks to protect themselves by building up their capital reserves, including devoting TARP assistance to that end. One by-product of devoting capital to absorbing losses was a reduction in funds for lending and a hesitation to lend even to borrowers who were formerly regarded as credit-worthy.

“The recently conducted stress tests weighed the ability of the nation‘s 19 largest bank holding companies to weather further losses from the troubled assets and assessed how much additional capital would be needed. However, the adequacy of the stress tests and the resulting adequacy of the capital buffer required for future financial stability depend heavily on the economic assumptions used in the tests. As more banks exit the TARP program, reliance on stress-testing for the economic stability of the banking system increases.”


Posted at 8:11 PM (CST) by & filed under In The News.

Dear CIGAs,

So much for the dozens of news reports touting the Fed’s cancellation of this program!

Bernanke’s survival as Chairman and whatever independent power the Fed has depends on Bernanke’s use of QE to whatever degree is required to offset the shortfall of buying in the ever increasing size of the US bond offerings. Bond offerings must continue to grow because of the flop in Federal tax revenues. That drop off a cliff means an exponential growth of the US Federal Deficit as tax revenues collapse and spending rises.

I would say this is a firm indication that Bernanke wants to remain the Chair of the Fed.

The question remains that even if he does become an Administration team player, will he remain so. If the Administration distrusts him he is out anyway and the Fed becomes a policeman.

Increased QE means an increase in the supply of dollars. Consider this when a technician advises you to be bullish on the US dollar.

The price of gold is tied today tick by tick with the USD.

Fed to Extend Bond Buying Through End of October
Published: Wednesday, 12 Aug 2009 | 1:49 PM ET

The Federal Reserve said it will extend to the end of October a program to buy longer-term government securities, and it kept interest rates steady near zero as expected.

The Fed slashed interest rates to a range of between zero and 0.25 percent in December and has pumped hundreds of billions of dollars into the economy to stimulate economic activity in the worst recession in decades.

The Bank of England stunned markets last week by expanding its program of bond purchases by a much larger amount than expected, saying the recession is deeper than it had forecast.

Norway’s central bank held rates steady on Wednesday and opened the door to raising borrowing costs sooner than expected on the belief the Nordic country is faring better with the global downturn than western peers.

Economic data has shown improvements in the manufacturing sector and less weakness in housing, but consumers remain reluctant to spend.

U.S. imports rose for the first time in 11 months in June, the Commerce Department reported on Wednesday, although gains were largely due to higher oil prices and imports of consumer goods dropped to their lowest since November 2005.



Jim Sinclair’s Commentary

The desire for dollar diversification is planetary even among those nations with a tradition of close relationships.

Consider this if a technician tells you to be long the dollar.

Bank of Israel halts daily dollar-purchase program
Aug 11, 2009 10:10

The Bank of Israel on Tuesday will stop its program of buying $100 million on a daily basis but reserve the right to intervene in the foreign-currency market, the bank announced Monday.

"As already announced [last Monday], the Bank of Israel will act in the foreign-exchange market in the event of unusual movements in the exchange rate that are inconsistent with underlying economic conditions, or when conditions in the foreign-exchange market are disorderly," the central bank said in a statement. "The new operating policy of the Bank of Israel in the foreign-exchange market will provide a better response to the economy’s needs."

The central bank said it would discontinue its program of daily purchases, which began in July 2008, because the targeted level of foreign-currency reserves had been achieved. Foreign-currency reserves stood at $52 billion at the end of July; the target set by the central bank in November was between $40b. to $44b.

Following the announcement, the dollar dropped 1 percent to NIS 3.87.

The Bank of Israel said it could now buy or sell foreign currency in response to exchange-rate movements.

"The governor of the Bank of Israel’s announcement is maybe the most expected surprise seen in the capital market in a long time," Tal Avda, deputy head of investments at Clal Forex, said Monday. "History has shown that the only significant factor influencing the shekel-dollar exchange rate in the long term is the value of the greenback in the global-currency market, and [Bank of Israel] Governor Stanley Fischer knows that."

Last week, Fischer said the central bank could not beat the market in the long term and would not continue to buy foreign currency indefinitely.


Jim Sinclair’s Commentary

The price of crude in dollar terms can and will be high as we move into 2010. It will not require a pickup in demand, even if demand is less. That is something the talking heads cannot and will not ever understand.

U.S. trade gap widens on oil prices
Posted 2009/08/12 at 8:34 am EDT

WASHINGTON, Aug. 12, 2009 (Reuters) — The U.S. trade deficit widened in June to $27.0 billion, as goods imports increased for the first time in 11 months on the back of higher oil prices, a Commerce Department report said on Wednesday.

Analyst surveyed before the report had expected the monthly trade gap to widen to around $28.5 billion. But stronger foreign demand for U.S. goods and services offset some of the impact of the oil price increase on the deficit.

Both U.S. exports and imports remained sharply below year-ago levels, before the global financial crisis began wreaking a savage toll on international trade.

The trade gap for the first six months of 2009 totaled nearly $173 billion, down more than 50 percent from the same period last year. At the current pace, the U.S. trade deficit for all of 2009 would be the lowest since $265 billion in 1999.

U.S. imports of goods and services rose 2.3 percent in June to $152.8 billion, the highest since January. Higher oil prices accounted for much of increase, and imports of consumer products fell to the lowest since November 2005.


Jim Sinclair’s Commentary

The answer is, respectfully, NO.

Has Clinton visit helped offset China’s clout in Africa?
August 12th, 2009
Posted by: Issac Esipisu

U.S Secretary of State Hillary Clinton’s 10 day trip to Africa ends this week with many commentators viewing it at least partly as being aimed at offsetting China’s growing economic clout on the African continent.

In public, Clinton has delivered Washington’s traditional messages on the importance of fair elections and of fighting corruption and human rights abuses.

But the fact that top oil producers Angola and Nigeria are both on the tour has made clear the importance of the visit from the perspective of ensuring access to resources – an area of huge importance to China too.

China’s trade in Africa hit $107 billion in 2008 and there are now 750,000 Chinese workers living and working in Africa. Sources in both Washington, D.C. and Africa confirmed that Clinton’s subtle diplomatic strategy is to offer African leaders infrastructure assistance in exchange for oil resources and increased energy investments on the African continent.

China, meanwhile, may be marshalling reserves to help kick start African economies and fuel demand as well as to secure access to its resources.


Jim Sinclair’s Commentary

Before you even think about going long the US dollar please thoroughly read the following article.

Yes, Virginia, There Are No Reserve Requirements (PART 2/2)
August 12, 2009

Since the 1990s, the FED has change accounting rules so even the loose ~10% fractional reserve requirement could be thwarted. We live in an era of paper tickets.

In Part 1, Fractional Reserve Banking in Pictures, we saw how the banking system creates fraudulent money by creating new money on top of old. The reserve requirement limit used in the example, 10%, is the figure usually given, which means that from a $10 deposit the banking system could generate $90 of new money. Also, the FED uses Open Market Operations to create new money by writing a check upon itself.

This article will demonstrate that reserve requirements are effectively not in existence and easily avoided by accounting tricks in the U.S. banking system. In my view, the evidence is unrefutable as the sources are from the FED and documentation from Citigroup. Although I have tried my best to keep the following simple and source my data, please feel free to comment or question and I will do my best to reply.

The first chart is from the FED’s latest Purposes and Functions from 2005 on page 51 of 146.



Jim Sinclair’s Commentary

This is a critical development for many.

US, Swiss cement deal on secret UBS bank accounts

(AP:MIAMI) Lawyers for the U.S. government and Swiss banking giant UBS AG say they have an agreement in a case involving secret Swiss bank accounts.

The U.S. government had sought the names of some 52,000 Americans believed to be hiding nearly $15 billion in secret accounts.

The deal was announced Wednesday during a telephone conference with a judge that lasted only long enough for lawyers to say that an agreement had been reached. No details were announced.

The Swiss and U.S. governments previously announced an agreement in principle on major issues. They had hoped to present a final deal at a hearing last week, but resolving the details has taken longer.


Jim Sinclair’s Commentary

Please think twice before you downsize you transportation, even if it is named a Smart Car.


Jim Sinclair’s Commentary

Unfortunately the report that TRUTH IS DEAD is accurate. Not much else is.

Green Shoots Everywhere (Except They’re Actually Weeds)
August 12, 2009

The media has been working overtime to convince everyone that things are great and there are green shoots everywhere. From a half backed GDP report, which revised 1Q09 down by .9% which you then add in inflated government spending and you magically have good news, to a fully backed jobs report they have managed to turn one bear, Roubini, into a green shoot advocate.

In other news, mortgage applications plunged again this month thanks to higher interest rates, not sure what to really think about a 5.38% mortgage rate being “high,” but somehow this was spun as sales contract numbers rose, slightly. Contracts really mean nothing as they have a high, relatively high, cancellation rate and I have never based any decisions about the market over this type of data point, it is really a nothing in the big scheme of things. Now if we were talking sales then that is a different story as sales mean something. Regardless, mortgage applications dropped which should make yesterdays CNBC story about optimism in the housing market obsolete and defunct as the story was obviously spun to make things look better.

With Roubini now in the camp of the recession will end by December 31st, 2009 the bulls have declared victory and are dancing in the streets. They even got him to say that asset prices should go higher and the risk of a double dip recession is low, all of which is nonsense. After being misquoted a few times and constantly bashed by most people on CNBC it is clear that he has had enough and decided to side with the path of least resistance.

However, I have to disagree with him on equity prices. As I see it, the S&P 500 have priced in perfection and has set itself up for a big fall. However, even I admit that the inflation of the money supply is making things unpredictable as much of that money ended up in equities. Even so, I think we are in for a wild ride in the near future.

With mortgage applications down and mortgage rates up I think it is safe to assume that the residential housing market will continue to languish in the near future. That is until the Fed magically lowers rates again through quantitative easing, monetizing our debt, but I am fairly convinced that will not do much to spur sales. People are funny, when they see prices continuing to fall they tend to stop buying and wait for a bottom which creates a paradox for the real estate market as they need buyers to stop prices from falling.


Jim Sinclair’s Commentary

Housing is a key victim of the OTC meltdown.

Prices of homes decline at an accelerating rate. Other statistics will follow suit.

This is a redo of the 1932 rally both in some biz statistics and the world equity markets.

Home Price Declines Accelerate in Second Quarter
By Kathleen M. Howley and Brian Louis

Aug. 12 (Bloomberg) — Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosuresweighed on values.

The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and fell 2.9 percent from 2008’s second quarter.

Prices fell in 129 out of 155 metropolitan areas from a year ago and 39 states experienced sales increases from the first quarter, the Chicago-based realtors group said. Sales in U.S. housing market at the heart of the global recession are beginning to stabilize, said Patrick Newport, an economist for Lexington, Massachusetts-based IHS Global Insight.

“I don’t think we’re at a bottom yet in home prices,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. “There’s also a pretty big shadow supply of houses. People are kind of waiting for the bottom but there’s a pent-up supply out there.”

Home prices are falling even as a survey of economists indicates that the U.S. economy is recovering from the worst recession since the 1930s. The economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly Bloomberg News survey.



Jim Sinclair’s Commentary

Israel might feel threatened regardless of which way their US relationships turn. That type of thinking can easily lead to a miscalculation.

Hizbollah ‘stockpiling weapons’ as fears of new offensive grow
Hizbollah has been stocking up on arms since its war with Israel in 2006 and is now stronger than it was during the conflict.
Published: 12:37PM BST 05 Aug 2009

The militant group now has up to 40,000 rockets, according to Israeli intelligence estimates, and is training its forces to use ground-to-ground missiles capable of hitting Tel Aviv.

Brigadier-General Alon Friedman, the deputy head of the Israeli Northern Command, told The Times that the peace of the past three years could "explode at any minute".

His warning comes after a Sheikh Hassan Nasrallah, Hizbollah’s leader, said last month that if the southern suburbs of Beirut were bombed as they were in 2006, he would strike back against Tel Aviv, the largest Israeli city.

The scale of Hizbollah’s new arsenal was revealed after an explosion at an ammunition bunker in the village of Khirbet Slim, 12 miles from the Israeli border, last month.

Surveillance footage obtained by the newspaper showed Hizbollah fighters trying to salvage rockets and munitions from the site.

Alain Le Roy, the head of UN peacekeeping operations, told the Security Council that the explosion amounted to a serious violation of UN Resolution 1701, which imposed a ceasefire and arms ban after the war.


Jim Sinclair’s Commentary

The answer is ABSOLUTELY YES!

Stocks: The latest Fed bubble
Are the government programs supporting the financial sector reinflating global stock markets even as economies stumble?
By Colin Barr, senior writer
Last Updated: August 12, 2009: 3:52 AM ET

NEW YORK (Fortune) — The Federal Reserve has spent the past year cleaning up after a housing bubble it helped create. But along the way it may have pumped up another bubble, this time in stocks.

To head off the worst downturn since the Great Depression, the central bank has slashed interest rates while funneling money to banks.

The Fed has mostly won praise for its efforts. The pace of job losses has slowed, and there has been a modest recovery in output.

At the same time, stocks have bounced back with startling speed. Since global markets hit their bottom in March, the S&P 500 has jumped 51% — even as the outlook for economic recovery remains dim.

"This is the most speculative momentum-driven equity market since the early 1930s," Gluskin Sheff economist David Rosenberg wrote in a note to clients Monday.



Jim Sinclair’s Commentary

Now all we need is a 1/10% drop so all will be well.

U.K. Unemployment Climbs to Highest Level in 14 Years  
By Brian Swint

Aug. 12 (Bloomberg) — U.K. unemployment rose to the highest level in 14 years as companies continue to cut jobs even as the worst recession in at least a generation begins to ease.

The number of people seeking work in the three months through June rose 220,000 to 2.44 million, the most since 1995, the Office for National Statisticssaid in London today. A separate measure showing claims for jobless benefit climbed by 24,900 in July to 1.58 million. The median forecast of 24 economists in a Bloomberg News survey was for a 28,000 increase.

Mounting job cuts threaten to hinder Prime Minister Gordon Brown’s re-election campaign for a vote he must hold by June 2010. The Bank of England today said it expects unemployment to keep climbing after the recession has ended, limiting the pace of recovery. Governor Mervyn King said the bank decided last week to expand its bond-buying program to prevent a “protracted” period of inflation below the 2 percent target.

“Unemployment is unlikely actually to start falling until gross domestic product growth has returned to its trend rate of 2.5 percent or so,” said Vicky Redwood at Capital Economics Ltd. in London. “The labor market looks likely to continue weighing on household spending for some time yet.”

Overall unemployment, as measured by International Labour Organization standards, rose to 7.8 percent between April and June, the most since 1996. That compares with 9.4 percent in the U.S. in July, 9.4 percent in the euro region in June and 5.4 percent in Japan.

The employment rate fell to 72.7 percent from 73.6 percent, matching the biggest quarterly drop since 1971. The weaker job market is keeping a lid on pay. Average earnings excluding bonuses grew an annual 2.5 percent, the least since records began in 2001.



Jim Sinclair’s Commentary

CIT must be rescued. The implications on the real economy are enormous. They cannot be allowed to be another Lehman. The domino impact of CIT is in the REAL ECONOMY

CIT Delays Filing Quarterly Report Amid Restructuring

NEW YORK — CIT GroupInc. on Tuesday delayed filing its quarterly report with the Securities and Exchange Commission, as it continues to hammer out a restructuring plan with its bondholders.

In a regulatory filing, CIT said it couldn’t meet Monday’s deadline "without unreasonable effort and expense" during its restructuring. It said it expects to file its earnings statement by Monday.

CIT stressed that its steering committee of bondholders doesn’t intend for the company to file for bankruptcy protection but "rather will pursue restructuring efforts as part of the comprehensive restructuring plan to enhance the company’s liquidity and capital …


Posted at 7:34 PM (CST) by & filed under General Editorial.

Dear CIGAs,

OK, I am proud because I have been a part of this progress since the late 1980s.

Tanzania to Spend $5 Billion on Transport Upgrade

Aug. 12 (Bloomberg) — Tanzania will spend $5 billion over the next five years to upgrade its transport system, Infrastructure Development Minister Shukuru Kawambwa said.

The project is part of the East African nation’s transport investment program, which will run over two five-year phases and will develop roads, ports, railways, airports and ferries, Kawambwa said at a conference in the commercial capital Dar es Salaam today.

“It is expected that by 2018, all trunk roads will be paved, thus enabling all regional centers to be linked with paved roads and all district headquarters to be linked with all weather roads,” he said.

Due to low levels of investment, Tanzania’s transport infrastructure is inadequate to cope with growing demand, Kawambwa said.

The government can “ill afford” to develop the system alone, and needs to partner with the private investors, he said, without adding more detail.

The country is in talks with the Japanese government to secure funds to build flyovers in Dar es Salaam to ease traffic congestion, Prime Minister Mizengo Pinda said on July 27.


Posted at 4:59 PM (CST) by & filed under General Editorial.

Dear CIGAs,

China is making aggressive moves on Canadian Royalties.

China makes unexpected grab for Canadian miner
State-controlled Jilin Jien launches a surprise bid for Canadian Royalties, a stark change in tactics for the Asian superpower

From Tuesday’s Globe and MailLast updated on Wednesday, Aug. 12, 2009 02:44AM EDT

China’s insatiable hunger for natural resources has officially turned hostile.

State-controlled Jilin Jien Nickel Industry Co. Ltd. launched a surprise $148.5-million unsolicited takeover bid for Canadian Royalties Inc. yesterday, marking one of the first times the Asian economic superpower has gone after foreign resource assets without first winning a friendly agreement with management.

China has become an active acquirer of foreign resources amid the global economic crisis, investing in copper, oil and iron ore needed to fuel its fast-growing economy. But despite massive financial resources and a mandate to diversify its $2-trillion (U.S.) in foreign exchange holdings into so-called hard assets such as commodities, most of China’s resource deals have been friendly.

The hostile offer comes as federal Finance Minister Jim Flaherty is in Beijing on a trade mission to encourage Chinese investment in Canadian companies.

"China has a need for resources. China has … substantial U.S. dollar cash reserves," Mr. Flaherty told reporters yesterday. "China is looking for investments abroad. Commercial investments, subject to proper governance, are welcomed in Canada."

Mr. Flaherty wants China to invest in publicly traded Canadian companies. His comments suggest that, despite political andsecurity concerns , Ottawa is comfortable with such an investment structure. Mr. Flaherty plans to meet today with Lou Jiwei, chairman of China’s $200-billion sovereign wealth fund.

The unexpected bid for Canadian Royalties, which is developing the Nunavik nickel project in northern Quebec, marks a significant change in tactics for a Chinese state entity. "This is new. … This could be the tip of the iceberg," one mining investment banker said.

Glenn Mullan, chairman and chief executive officer of Canadian Royalties, said the takeover offer blindsided his company. Neither Jien nor its Canadian partner, Goldbrook Ventures Inc. of Vancouver, which has a 25-per-cent stake in the company created to make the bid, contacted Canadian Royalties’ management before launching the offer.

"This one has a long way to go. I think you’ll see lots of interest in Canadian Royalties going forward," Mr. Mullan said in an interview.

Canadian Royalties was a market darling during nickel’s heyday in 2007, when the price of the metal used to make stainless steel soared above $20 a pound.

However, the commodities crash and the credit crisis last fall resulted in a sharp reversal of fortune for the Montreal company. Financing for the $500-million Nunavik project collapsed and Canadian Royalties was forced to put the operation on care and maintenance.

Mr. Mullan said Jien and Goldbrook are taking a run at the weakened company in an attempt to pick up its valuable resources on the cheap. The Nunavik project contains approximately 20 million tonnes of ore, grading about 1 per cent nickel and 1 per cent copper. Because of its small size, the bid would not require Ottawa’s approval under the Investment Canada Act.

"At the end of the day, this is all about assets, commodities – nickel specifically – and China’s appetite for commodities," Mr. Mullan said.

The company has hired advisers and expects to officially respond to the bid soon.

In 2004, a bid for Canada’s Noranda by state-backed China Minmetals Corp. fell apart amid pressure from Canadian politicians to scrap the takeover. In 2005, China National Offshore Oil Corp. pulled an $18.5-billion offer for Unocal Corp. following a firestorm of opposition from U.S. legislators. Australia recently blocked a $1.7-billion bid for Oz Minerals by Minmetals, citing national security concerns. The deal had to be restructured to exclude a key mine asset near an Australian military site.

In a more typical, friendly, deal struck last month, sovereign wealth fund China Investment Corp. (CIC) agreed to invest $1.74-billion to become the largest B-class shareholder in Teck Resources Ltd., Canada’s biggest base metals miner.