Posted at 1:20 PM (CST) by & filed under In The News.

Dear CIGAs,

This morning’s most entertaining event was on F-TV.

The drama of breaking news took place twice with the second figure being worse than the first. There was a moment of silence on the housing news, faces showed shock and voices took a few words to recover.

The confidence figure fell 1 1/2% yet they could not recognize the fact. They actually announced the figure as improved.

This is second only to the Bernanke hearing where they showed dissenting speeches with the speaker’s mouth moving, but no sound as the F-TV money bunny spoke over the speech on other totally divergent subjects.

You must never lose your sense of humor or all is lost. F-TV is becoming funnier than the comedy channel.

Jim Sinclair’s Commentary

Come on, have a little Christmas spirit! Thing are tough at the North Pole as well.

Santa Robs Bank On Old Hickory Boulevard
Posted: Dec 22, 2009 12:29 PM
By Jeff Tang


HERMITAGE, Tenn. "It was a little unbelievable. He was actually jovial which was scary. He explained he had to rob the bank because Santa had to pay his elves," said Jones.


Jim Sinclair’s Commentary

John Embry has the subject nailed!

Click here to view John Embry’s latest, titled "Gold Bull Has Many Years, Thousands Of Dollars To Go"…


Jim Sinclair’s Commentary

Let us test a few more of those reverse repos, but test is all there will be.

The Fed has no tools to drain the international liquidity they have created. Talk about that is total bull.

Please note there are other ways to do interest rate swaps, but the risk is the same or more.

From Harvey Organ’s – The Daily Gold

Note: the fall in the Long Bond to 116.09. You will recall that the centre of the huge derivative bonds is the so called interest rate swaps.

Here JP is the largest player. In simplistic terms, the trade is as follows:

JP shorts the 3 month treasuries with a yield of .09% and buys 30 yr bonds with a yield of 4.5%, all in the future.

The total future bond purchases are in the hundreds of trillions of dollars.

Kirby has identified this in his article the Elephant in the Room.

Suffice to say, this move forces mega purchases of real bonds and keeps interest rates low. However, if bond yield rise above 5% or if the price of the bond falls below 116.00, then

JP would face a huge loss that they cannot pay.

We believe that they themselves own over 100 trillion dollars of these future bonds.

A one percent rise in yield or a fall in price of 1% would cause a loss of $1 trillion dollars to JP. (100 trillion dollars x 1% equals 1 trillion dollars).

This is the neutron bomb that will level the entire banking field.

The US Government has exactly the same problems as Iceland, Greece, Dubai, the UK, Spain, Italy, and all the East European countries (to single out only the worst offenders!) in that more and more debt is being written against a rapidly declining tax base. Even the best economic recovery that can be hoped for in the US will never generate enough increase in GDP that the debt burden can be paid back through increased tax receipts. If Treasury Debt prices start to fall this will be obvious to everyone. The markets are threatening such a fall and this puts the US Government in "cornered wild animal syndrome".



Jim Sinclair’s Commentary

Sure, the Fed is going to retire its buying from mortgage rates instruments.


"If there is one thing the Fed hates more than losing control of the stock market, it is losing control of the mortgage market. In the past few days, in addition to FFIP going off the charts as Fed Fund futures traders start panicking, we have seen a gradual divergence in the 10 Year – 30 MTG spread. Will this continue? Yes, until such time as Goldman HoldCo and OpCo decide to kill equities one more time before the March expiration of QE. The rush to safety (which unfathomably still includes MBS and agencies) should collapse the spread for the last time before the hyper [deflationary/inflationary] collapse finally sets in. In the meantime equity traders, i.e., the guys who trade 3 shares amongst each other, are hoping the top is at least one more day away. But at this point who cares about a bid-less market: with so many HFT programs, it just. can’t. happen."


Jim Sinclair’s Commentary

Pretend and Extend is a loser in the mortgage business.

Only a long moratorium will MOPE the figures.

Freddie Mac sheds mortgage assets, delinquencies up
Wed Dec 23, 2009 9:04am EST

NEW YORK, Dec 23 (Reuters) – Freddie Mac’s (FRE.N) mortgage investment portfolio shrank in November while the rate of delinquencies on the loans in guarantees escalated, the U.S. home funding company said on Wednesday.

The unpaid principal balance of its mortgage-related investments fell at a 12.9 percent annual rate last month to $761.8 billion, for a 5.8 percent drop through the first 11 months of the year.

At the 2009 peak, the retained mortgage assets were about $867 billion in March.

The steady decline comes as mortgage securities got rich to purchase while the Fed has sopped up more than $1 trillion of the securities to help keep down mortgage rates and revive the housing market.

The company, as well as Fannie Mae (FNM.N) — both taken under government control in September 2008 as loan failures ate away at capital — is mandated to reduce the portfolio by 10 percent annually starting in 2010.


Jim Sinclair’s Commentary

Why not. They certainly do not want dollars.

Flaherty Says Russia, China May Buy Canada Dollars
December 23, 2009, 10:44 AM EST
By Theophilos Argitis and Christopher Fournier

Dec. 23 (Bloomberg) — Canada’s Finance Minister Jim Flaherty said China, with the world’s largest currency reserves of $2.3 trillion, may be poised to buy Canadian dollars as it seeks to shield its reserves against the U.S. dollar’s decline.

“It does not surprise me that China and Russia would take greater positions in the Canadian dollar than they have previously,” Flaherty, 59, said during an interview in his office in Ottawa. “I would expect countries looking around the world to invest in market currencies that are reliable.”

The U.S. dollar has declined against all but one of the 16 most-active currencies this year, prompting major reserve- holding countries such as Russia and China to express concern about their U.S.-denominated investments. Russia last month said it will add Canadian dollars to its reserves to lower its dependence on the U.S. currency.

The Bank of Canada has warned “persistent strength” in the currency is a main risk for the economy, potentially acting as a “significant” drag on growth. Canada’s currency has gained 15 percent this year against the U.S. dollar. Chinese purchases of Canadian dollars would also cement growing economic links between the U.S.’s two largest trading partners.

Chinese Premier Wen Jiabao said in March that the nation was “worried” about the safety of its investment in U.S. debt, as a weakening dollar eroded the value of its reserves. China’s currency regulator said earlier this month it will “improve” its utilization of foreign-exchange reserves.



Jim Sinclair’s Commentary

When a person is out of work, cut back on hours, or collecting unemployment, only a moratorium of payments will keep the house.

The approach of Pretend and Extend on in default mortgages is clearly the ultimate waste of time and a very weak attempt at MOPE.

Borrowers with modified loans falling into trouble
Report says homeowners whose loan payments are cut by 20 percent or more still falling behind
By Alan Zibel, AP Real Estate Writer , On Monday December 21, 2009, 4:43 pm EST

WASHINGTON (AP) — One of the biggest challenges to ending the foreclosure crisis is this: A surprising number of homeowners who get their monthly payments reduced fall behind again within a year.

When borrowers get into financial trouble, lenders have several ways to help. They can offer grace periods, longer repayment schedules, lower interest rates or reduced balances.

But nearly 40 percent of homeowners who had their monthly payments cut by 20 percent or more last year were delinquent again within a year, according to a report Monday from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

With the economy still weak and employers continuing to cut jobs, "even if you’ve gone through a modification, your situation may deteriorate," said Fred Phillips-Patrick, director for credit policy at the thrift office.

That’s an ominous sign for the Obama administration’s plan to stem the foreclosure crisis. Lenders participating in the program have offered trial loan modifications to 760,000 eligible borrowers since it was launched in March. As of last month, just 31,000 of them had been made permanent, which requires at least three on-time payments and proof of income. Nearly the same number had dropped out of the program or were found to be ineligible.


Jim Sinclair’s Commentary

This is why the Lobby business is booming. Buy your politician now, and avoid the New Year rush! No returns or store credits entertained.

This is a classic sign of a Democracy that isn’t and why new jails will have to be built called the Iron Lobby.

There is an ancient belief that where the world becomes so depraved a divine personality takes birth.

Keep an eye on all the maternity wards and no-vacancy inns.

Big payoffs to senators on health bill stoke public anger
By: Susan Ferrechio
December 23, 2009

With the approval rating of Congress sinking in the polls and public opinion of their health care plan going down along with it, Democrats may have done themselves one favor too many this week when they riddled the bill with special deals for individual lawmakers.

As Senate Majority Leader Harry Reid, D-Nev., struggled to pull together his 60 Democratic-controlled votes needed to pass the bill, certain holdout lawmakers were able to carve out extra money, benefits or exemptions that senators from other states didn’t get.

Reid said the deal making is just part of how legislation gets done in the Senate.

"It’s not different from other pieces of legislation," Reid said. "We work compromises. That’s what legislation is all about, the art of compromise."

He added that for those senators who did not carve out something for themselves, "it doesn’t speak well of them."


Jim Sinclair’s Commentary

The Fed, even if they wanted to drain it, can’t.

The "Peanut Brittle Recovery" has no capacity to handle that without rolling over into something worse than the Great Depression.

Thank you all you pig rich OTC derivatives manufactures and distributors still deeply in the continuing practice of an economic mortal sin.

Sales of U.S. New Homes Unexpectedly Fell in November (Update2)
By Bob Willis

Dec. 23 (Bloomberg) — Purchases of new homes in the U.S. unexpectedly fell last month, indicating a recovery from the worst housing slump since the Great Depression will be slow to develop.

Purchases dropped 11 percent to an annual pace of 355,000, lower than the lowest estimate of economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. The median sales price decreased 1.9 percent from November 2008.

The prospect that a government tax incentive would expire, combined with a 10 percent jobless rate and competition from foreclosed properties may have hurt builders such as Beazer Homes USA Inc. Last month’s decrease signals a sustained housing recovery may be difficult to secure without additional assistance from policy makers.

“The tax credit put a Band-Aid over the housing problem and in October and November we ripped it off” as it was set to expire, said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected sales would fall. “Demand for housing is not likely to pick up on a consistent basis until we start to see some improvement in employment.”

Stocks dropped following the report, erasing earlier gains. The Standard & Poor’s 500 Index was little changed at 1,116.97 at 10:25 a.m. in New York. The S&P Homebuilder Supercomposite was down 0.2 percent.



Jim Sinclair’s Commentary

Your word is your bond? Death before dishonor?

You live your life in training for the moment your code of honor demands a decision.

AIG bonus return pledge goes mostly unfulfilled
Executives give back only about $19 million of $45 million promised
By Brady Dennis

When word spread earlier this year that American International Group had paid more than $165 million in retention bonuses at the division that had precipitated the company’s downfall, outrage erupted, with employees getting death threats and President Obama urging that every legal avenue be pursued to block the payments.

New York Attorney General Andrew M. Cuomo threatened to publicize the recipients’ names, prompting executives at AIG Financial Products to hastily agree to return about $45 million in bonuses by the end of the year.

But as the final days of 2009 tick away, a majority of that money remains unpaid. Only about $19 million has been given back, according to a report by the special inspector general for the government’s bailout program.


Posted at 4:21 PM (CST) by & filed under In The News.

Dear CIGAs,

The Peanut Brittle Recovery:



Jim Sinclair’s Commentary

"Thou shalt not Lie" –Moses Tablets.

Wall Street’s 10 Biggest Lies of 2009

Say goodbye to 2009, the worst economic year since the Great Depression.

Say hello to the billionaire bailout society in which the super-rich gamble, lose and get bailed out by the rest of us.

To save the system from total collapse we poured trillions of dollars into the financial sector. The result? Banks still are refusing to lend. Thirty million Americans are looking for full-time jobs and 49 million are skipping meals including one out of four children. But Wall Street again is reaping record profits and bonuses.

Not only are we richly rewarding those who wrecked our economy, but also, we have to put up with hundreds of fabrications about how the big banks got us here. Here is my biggest, fattest lies list for 2009:

1. "Government programs for low-income home buyers caused the financial crash." Wall Street defenders were quick to blame the Community Reinvestment Act, which urges banks to loan money in minority communities. In fact, almost none of the CRA loans are sub-prime and the vast majority are doing well, thank you. Blaming government programs deflects us from the real cause: Wall Street’s incredibly reckless creation, marketing, selling and trading of "innovative" new securities that supposedly removed the risk from pools of risky debt. It didn’t work. Wall Street, not the poor, crashed our economy.

2. "Income inequality is good for everyone." Lord Brian Griffiths, Vice-Chairman of Goldman Sachs at least had the nerve to say what so many of the super-rich really believe:

"We have to accept that inequality is a way of achieving greater opportunity and prosperity for all."

Unfortunately, the facts suggest otherwise. There is a high correlation between the mal-distribution of income and economic crashes. The last time our wealth and income distribution was as skewed as it is today was 1929, and that’s not an accident. When too much money is in the hands of the few it runs out of real world investment and gravitates towards speculative investments. This inevitably creates asset bubbles and crashes. Record pay and bonuses on Wall Street and high unemployment are connected. (See The Looting of AmericaChapter 11).

3. "The rising number of billionaires is a sign of economic health." It’s accepted media wisdom that the more billionaires the better. China with 130 billionaires now trails only the US, which has 359, according to Forbes magazine. But in our billionaire bailout society, the rising number of billionaires signals a collapsing middle class. Ponder this statistic: In 1970 the ratio of the compensation of the top 100 CEOs compared to the average production worker was 45 to 1. By 2006 it was an astounding 1,723 to one. Does that look healthy to you?


Jim Sinclair’s Commentary

Here is the Year End Dollar Party as we head into 2010.



Jim Sinclair’s Commentary

Here is the Great Housing Recovery of 2009.

One of Five Modified Loans Fails in 90 Days
Published: Dec. 22, 2009

Mortgages that were modified in the second quarter of 2009, which had a greater proportion of modifications that reduced monthly payments, are re-defaulting at a lower than those modified earlier. But nearly one out of five borrowers is still re-defaulting only three months after the lowered payments took effect.

That’s the good and bad news from the latest Mortgage Metrics Report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Lowering payments by reducing both the principal and interest is the strategy behind the Administration’s $75 billion Making Home Affordable program. Though the program has completed only 31,000 modifications, the goal has been to reduce re-defaults, which exceeded 50 percent in modifications older than a year.

Modifications on loans held in the servicers’ own portfolios continued to perform better after modification than loans serviced for others. This difference may reflect differences in modification programs and additional flexibility to modify terms to achieve greater sustainability.

Reasons for re-defaulting on a modified loan are similar to those causing initial defaults: high unemployment, depressed property values and excessive borrower leverage. However, the report found that re-default rates were lowest for modifications that reduced monthly payments. The data also show that the larger the reduction in monthly payment, the lower the subsequent re-default rate. For servicers and investors, determining the optimal type of modification often requires weighing the reduction in cash flow from loan terms that reduce monthly principal and interest payments, along with the possible costs of delaying foreclosure, against the potential for longer term sustainability of the payments and ultimate repayment.


Jim Sinclair’s Commentary

The Dollar firms on dicey housing data. Banks pay back TARP to bonus themselves freely.

Lack of Bank Liquidity Threatens Commercial Real Estate Market

According to Remington Financial Group, a capital services company based in Scottsdale, Arizona, a lack of bank liquidity poses a severe threat to the commercial real estate market.

“The commercial real estate industry is a disaster waiting to happen,” said Andy Bogdanoff, founder and chairman of the company. “With U.S. banks in a deep and continuing liquidity crisis and with $1.2 trillion in commercial debt due to mature by 2012, thousands of real estate owners and developers across the country will soon find themselves between a rock and a hard place when their loans mature.”

However, bank liquidity isn’t the only threat to commercial real estate. Bogdanoff said it is estimated that two-thirds of the securitized loans and half of the whole loans due to mature between 2010 and 2013 would not quality for refinancing due to today’s more stringent banking standards. He said the problem is further compounded by the combination of the unprecedented high cost of funds and the 40 percent decline in real estate values since 2007.

“With property values less than the original debt, thousands of owners and developers may have no choice but to sell their properties at a loss or face bankruptcy

when their loans mature,” Bogdanoff said. “If the problem isn’t solved soon, the result could be a disaster for the commercial real estate industry and the U.S. economy as a whole.”


Jim Sinclair’s Commentary

MOPE to the level of stand up comedy.

Fed Drains $225 Million From Banking System With Reverse Repos
By Liz Capo McCormick

Dec. 9 (Bloomberg) — The Federal Reserve drained $225 million in temporaryreserves from the banking system when it arranged one-day tri-party reverse repurchase agreements.

The transaction is one of the possible tools for an eventual withdrawal of the central bank’s unprecedented monetary stimulus. Fed officials said when the tri-party reverse repo operational readiness program was announced on Nov. 30 that the actions themselves don’t represent any change in policy.

The repos settle tomorrow and mature Dec. 11. In a reverse repo, the Fed sells securities for a set period, temporarily lowering the amount of money available in the banking system. At maturity, the securities are returned to the Fed and the cash to the 18 primary dealers that act as counterparties for central bank transactions.

In a tri-party arrangement, a third party functions as the agent for the transaction and holds the security as collateral. JPMorgan Chase & Co. and Bank of New York Mellon Corp. are the only banks that serve in a trade-clearing capacity in the tri- party repo market.

Policy makers led by Fed Chairman Ben S. Bernanke are considering how to withdraw the more than $1 trillion they have pumped into the financial system to combat the deepest recession since the 1930s. Along with raising the overnight bank lending rate, Fed officials have said they may use reverse repos, pay interest on excess bank reserves and sell securities directly to investors to withdraw or neutralize cash in the banking system.


Jim Sinclair’s Commentary

Compromise. The reason government never works.

Why the lobbyist prosper.
Why the public suffers.
Why the fat cats get fatter.

Special deals, carve-outs keep health care afloat
December 22, 2009 11:56 a.m. EST

(CNN) — Democrats call it compromise. Republicans call it bribery. But both sides agree that special deals are why the Senate is on track to pass a health care bill by Christmas.

It wasn’t clear whether Senate Majority Leader Harry Reid had the support needed to move ahead with his chamber’s health care bill until Sen. Ben Nelson, the last Democratic holdout, had a change of heart this weekend.

He agreed to support the bill in return for compromise language on federal funding for abortion and more money for his home state of Nebraska.

As a part of the deal, the federal government will pay 100 percent of Nebraska’s tab indefinitely for expanding Medicaid for low-income Americans.

Despite the benefit for his state, Nelson’s fellow Nebraskan, Republican Sen. Mike Johanns, was not pleased.

"There should be no special deals, no carve-outs for anyone in this health care bill; not for states, not for insurance companies, not for individual senators," he said.


Jim Sinclair’s Commentary

You need extremely rose colored glasses to like the dollar

Chinese Dynamics Mean Exploding Global Inflation

"In order to prevent a collapse of international trade next year as the dollar collapse (See 2010 Food Crisis), China will be forced to allow the settlement of cross-border trade in Yuan as well as allowing financial companies and importers to purchase Yuan more freely for investment and trade. In effect, the dollar’s instability in 2010 will [necessitate??] for the Chinese Yuan to assume the role of reserve currency. Needless to say, this will compound the dollar’s troubles, accelerating the currency’s freefall.


Jim Sinclair’s Commentary

As yes, applaud the growth, and then comes the revisions.

Reefer Madness was nothing compared to MOPE Madness.

US third-quarter growth revised down to 2.2 percent
Published: Tuesday December 22, 2009

The US economy limped forward at a 2.2 percent pace in the third quarter, according to government figures Tuesday that showed a downward revision of gross domestic product (GDP).

The downward revision from last month’s estimate of 2.8 percent growth came primarily from a weaker contribution from business investment, as well as slightly slower consumer spending growth.

The report nonetheless confirms that the world’s biggest economy swung back to growth in the July-September period after four quarters of contraction in the worst recession in decades.

The Commerce Department revision indicates the economy’s momentum in the third quarter was weaker than anticipated, suggesting that the recovery from recession may be tepid.

"The recovery is underway, but this does raise concerns about its strength and the prospects for a turnaround in the labor market," said Augustine Faucher at Moody’s


Jim Sinclair’s Commentary

All is well according to the dollar bulls. The problem is that it isn’t all well, at all

More prime mortgages default in 3rd quarter
Also: Many homeowners with modified mortgages fall behind again. And the number of homes in foreclosure rises, though new foreclosures are steady, report shows.
By Jim Puzzanghera
December 22, 2009

Reporting from Washington – Troubled home loans continued to mount in the nation’s banks in the third quarter as even once-solid borrowers increasingly fell behind on their mortgage payments.

For the first quarter ever, the number of homes in foreclosure with mortgages serviced by U.S. national banks and savings and loans topped the 1-million mark, according to figures released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

The percentage of prime borrowers whose loans were 60 or more days past due doubled from the July-to-September period a year earlier. And more than half of all homeowners whose payments had been lowered through modification plans defaulted again.

The report, which covers about 34 million loans, or about 65% of all U.S. mortgages, underscores the obstacles to strengthening the nation’s rickety housing market. Stubborn unemployment is making it tough for millions of homeowners to pay their debts. In addition, many people whose monthly installments have been lowered still are unable to keep up with their payments.

Of the mortgages serviced by national banks and thrifts, only 87.2% were current and performing. It was the sixth straight quarter that the quality of those home loan portfolios had slipped.


Jim SInclair’s Commentary

John Wiliams focuses his for subscription essay on the very present tool, revisions.

- GDP Growth Still Overstated 
- Economic and Liquidity Crises Face New Down-Legs

"No. 267:  Third-Quarter GDP Revision"

Jim Sinclair’s Commentary

Think the State of California.

Moody’s downgrades Greece.
Moody’s threw its hat in with S&P and Fitch, which earlier this month cut the government bond ratings of Greece, as the country struggles to emerge from its economic crisis. But, the one-notch cut was less severe than the other two agencies – sparking a rally in Greece’s bonds. The less-aggressive move eased concerns that the country’s debt would be ineligible as collateral at the ECB. Moody’s, which also cut the ratings of several Greek banks, said the government’s long-term credit strength was "eroding materially," and cut the bond ratings to A2 from A1. It also issued a Negative outlook and said future ratings decisions will depend on whether the government makes good on deficit-reduction plans.

Jim Sinclair’s Commentary

Houses under foreclosure, jobs lost, yet the financial industry set takes record gifts for Christmas.

AIG exec wins big payday.
An unnamed AIG (AIG) executive will get $3.26M in a deferred stock grant thanks to a nod from paymaster Kenneth Feinberg. The unnamed top-25 executive will also get an annual long-term incentive award of as much as $1M. "AIG has indicated that the employee is critical to AIG’s long-term performance and stability, and that his continued employment by AIG will significantly aid AIG’s ability to repay the taxpayer," Feinberg said, explaining his decision.

Posted at 3:18 PM (CST) by & filed under General Editorial.

Dear CIGAs,

The US dollar represents a common economic union of states as much as the euro does.

40 US states are on the very edge of bankruptcy.

Be serious and think about it. Don’t fluff it off because you prefer flag waving and pleasing your readers.

The difference is the euro would be stronger without Greece, Spain and Ireland. Also, don’t forget Turkey.

Gold will trade through $1224 to $1278 and then onward to $1650. After $1650 has been achieved, we will move on to Alf and Martin’s numbers.

China is trying to operate the gold market because they want the rest of the IMF’s gold.

Unemployment funds going ‘absolutely broke’
40 state programs to be emptied by the jobless tsunami within two years
By Peter Whoriskey
updated 2:08 a.m. ET, Tues., Dec . 22, 2009

The recession’s jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.

The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.

Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.


Jim Sinclair’s Commentary

Come on, let’s be serious.

Look through the MOPE. Recognize that you would need 4 Greeces to equal 1 California in terms of GDP contribution to the whole.

This dollar rally is built on MOPE, hot air and the "let’s kill the carry trade," which you cannot do unless shorts rates such as Libor rise.

Have you seen Libor lately?

Moody’s downgrades Greek government bonds

ATHENS — Moody’s Investors Service on Tuesday became the third major ratings agency to downgrade Greece’s credit rating this month but said it saw limited risks in the country’s short-term prospects.

Moody’s, whose action follows sharper downgrades by Fitch and Standard & Poor’s, said the eurozone country’s problems lay in the long-term as Athens seeks to reduce a big public deficit that has dented its international credibility.

"Moody’s Investors Service has today downgraded Greece’s government bond ratings to A2 from A1," it said in a statement, adding that the outlook for the eurozone country was "negative."

The agency also cut the ratings of three Greek banks, including the country’s largest, National Bank of Greece (BNG).

BNG’s rating was downgraded to Aa3 from A1, while the notations for EFG Eurobank Ergasias and Emporiki were lowered to A2 from A1.


Posted at 1:20 PM (CST) by & filed under Jim's Mailbox.

Dollar and Long Bonds
Tuesday, December 22, 2009

Volume continues to shrink within gap resistance. This suggests upside force is waning.

UUP (U.S. Dollar Index ETF):

Swing high breached with volume confirmation despite the pre-holiday session. This implies lower bond prices or high yields over the short-term. The intermediate-term magnets as illustrated in the Shearson T-Bond Long-Term Price Index are pulling hard. The long bond market warrants close attention.

TBT (2x Inverse Long Bonds ETF)

See full posting here…

Posted at 4:42 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

There appeared to be more carry trade unwinding in today’s session with noisy chatter about the “improving” US economy engendering an interest rate hike next year. I don’t buy it but it is the current market psychology. That, in combination with the woes besetting some of the various Euro member countries, has resulted in an exodus out of the Euro and into the Dollar. Even the Yen is getting sold down today. Down went most of the commodity world once again with very few exceptions. That is the proof that the gold selling is related to the carry trade unwind.

Ominously, bonds have crashed through very strong support at the bottom of what has been a 5 month long trading range. Should they fail to recover this level before Christmas, that market could be sending a signal that long term interest rates are on the rise. There is still some chart support just above 115 with major support near 112^ 16 that would have to give way however before we could say that with certainty. I am sure that the home building industry is cheering such an occurrence on!

Strength in the equity markets has brought price up near the 1110 level on the S&P with the bulls hoping to force an upside breakout and a new leg higher. Glad to know that the equity crowd feels such warm and fuzzy feelings towards the prospects of the US economy moving forward particularly in light of the despicable manner in which the political hacks managed to buy and bribe enough Senators to corral 60 votes guaranteeing a government takeover of 1/6 of the entire US economy. Maybe Wall Street figures that will be good for business. Excuse me while I note one more nail in the coffin of the US Dollar.

The Dollar however, for now, continues moving higher and is now about 100 points away from the 40 week moving average that comes in near 79.36. I am still waiting to see if it can best that level. Foreign Central Banks are beginning to take note and getting ready to act accordingly in their divestment programs.

As long as the greenback continues to hold steady and move higher, gold will have difficulty shrugging off a “sell the rally” mentality among stale longs and eager shorts. It is going to take a violation of technical levels in the Dollar to the downside and in gold to the upside to force Dollar long liquidation and gold bear short covering. So far we are not yet seeing any of that. The problem that gold now has is that the hedge funds are on the sell side and until those algorithms of theirs flip to buy mode, the carry trade unwind is going to continue. Markets that live by the technical breakout also die by the technical breakdown and for now, momentum is with the move lower. When that downside momentum dries up, price will reverse. Until then, we just sit and observe.

A large portion of the price gains that the HUI made during the month of November have now gone up in smoke but that index is approaching oversold levels on its daily price chart. One would therefore expect that selling pressure should begin to subside here. Given the decreasing levels of liquidity, the price swings back to the upside could be just as violent in nature as the sell offs have been. Personally, the last two weeks of the trading year are a general waste of time as people are buying and selling for book-closing purposes, vacations, etc. so like I have said repeatedly, try not to get too worried about price gyrations during this time frame. They really do not mean as much as some analysts would have you believe.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini


Posted at 3:27 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Gold is now a matter of national security in the USA.

This requires serious consideration.

Chinese Group Won’t Buy U.S. Gold Mining Concern
Published: December 21, 2009

WASHINGTON — A company controlled by the Chinese government has notified the Obama administration that it was withdrawing its application to buy a Nevada gold mining company to avoid a conflict after federal officials raised “serious, significant and consequential national security” concerns.

The decision by Northwest Nonferrous International Investment Company, at least for now, eliminates a showdown over the tiny company, the Firstgold Corporation. The Treasury Department on Monday was prepared to recommend that President Obama block the deal.

“It is disappointing,” the chief executive of Firstgold, Terry Lynch, said on Monday. “It means the whole deal is over. It won’t go to the president, because there is nothing to send to him for approval.”

Officials at the Treasury Department, which oversees the review panel known formally as the Committee on Foreign Investment in the United States, have not publicly said what the explicit cause of the security concern is, as the process is confidential.

But in meetings with Firstgold executives, the federal officials cited the proximity of the company’s four Nevada properties — most of which operate on leased federal land — to the Fallon Naval Air Station, as well as “other sensitive and classified security and military assets that cannot be identified,” according to a summary of a conference call held last week.



Jim Sinclair’s Commentary

You are awash in MOPE so accept this as balance.

The Second Wave of Mortgage Defaults
By Jim Nelson

12/21/09 Baltimore, Maryland – Our economy is about to relapse into the disease that sent us into the Great Depression: Part Deux. Subprime loans caused the initial illness. Option-ARMs will cause the relapse.

In the first half of the past decade, subprime loans were king. They were cheap and easy to get approved. Along with the subprime boom came subprime adjustable-rate mortgages (ARMs), which were equally easy to afford…for a while.

Of course, the “A” and the “R” in ARM meant that the interest rate borrowers pay changes, or resets. The majority of these resets occurred between the summer of 2007 and the summer of 2008.

This period saw a massive amount of mortgage interest rate hikes, which caused millions of foreclosures. Things spiraled down from there, eventually freezing nearly all credit and causing the panic of 2008.

Of course, that’s the 50-cent version of recent history. There were plenty of other financial calamities that went along with this, including the bundling of mortgage-backed securities and risky derivative products.

If you believe the Obama White House and the glass-half-full press corps, you’d think this mess is now behind us. We are, after all, in a recovery…right?


Jim Sinclair’s Commentary

This is a Western problem, not a unique British problem.

The only difference is Management of Perspective Economics in US media.

Largest 200 pension schemes in deficit by £100 billion
Britain’s largest private pension schemes are more than £100 billion in deficit for the first time, it was disclosed yesterday.
By By Myra Butterworth, Personal Finance Correspondent
Published: 4:11PM GMT 21 Dec 2009

The 200 schemes include the pensions of some the country’s best known companies, such as British Airways, Shell and BT.

Millions of people are members of the lucrative final salary schemes, which pay out an annual pension based on a member’s final salary.

The schemes have been in deficit for the past year, but it is the first time that the deficit has split into triple figures.

Experts said the deficit would continue to grow and predicted a major company would go bankrupt because of its pension deficit in 2010.

Ros Altmann, a pension’s expert, said: “Companies are being dwarfed by these deficits and yet the authorities are just burying their heads in the sand.”

It is understand that the 200 schemes have between 10 and 15 million members, including current employees, those who used to work at the companies and those who have retired.


Jim Sinclair’s Commentary

All of this is looking forward and doable to a degree. It has NO reference to the mountain of OTC derivatives out there lacking standards.

The clearing of these entities going forward will offer great risk in keeping up with margin and valuation should a bankruptcy come out of nowhere, as they tend to.

The clearing house will itself be a weapon of mass financial destruction because of valuation and margin problems if bankruptcies are not very slow train wrecks.

OTC Derivativesclip_image002

To safeguard investors, the federal regulatory umbrella must cover all aspects of financial services. The financial crisis has amply demonstrated how problems in exotic products and investment firms that cater to sophisticated investors can ripple throughout the markets, causing harm to all investors.

Unregulated trading in over-the-counter (OTC) derivatives contracts, especially credit default swaps, was at the heart of the global financial crisis. The global OTC derivatives market is huge and exempt from virtually all regulation under the Commodity Futures Modernization Act of 2000. Prices are hidden, speculation is rampant and leverage is high. Derivatives contracts can help manage risk. But they can also be used for turbo-charged speculation that multiplies risk, increasing the possibility of enormous financial damage. That’s why financier Warren Buffett has called derivatives “financial weapons of mass destruction.”

Standardized and standardizable OTC derivatives contracts should trade on regulated exchanges.That’s the best way to ensure effective government oversight and a stable trading environment. Exchange trading provides the transparency that lets investors comparison-shop and ultimately pay lower fees. Every company has a seemingly good reason why its contracts are exceptional “customized” products that should trade privately. In reality, most derivatives contracts are standardized, or standardizable, and can trade on exchanges just fine.

Decisions about what should be cleared centrally should not be left to clearinghouses. Some of these facilities are owned by banks that have strong incentives to maximize their profits by pushing derivatives contracts into the shadows. The financial institutions whose reckless trading brought the U.S. financial system to the brink of disaster should not be allowed to dictate how trading is regulated.


Jim Sinclair’s Commentary

Yes, there is China and Tanzania.

The One Western World Government is what is coming forth, not a One World government.

Asia and Africa will not fall into line because of their growth of wealth and functional leadership.

Tanzania is China’s best friend on the African continent with a strong democratic government run by a man who is a Muslim.

There’ll be nowhere to run from the new world government
‘Global’ thinking won’t necessarily solve the world’s problems, says Janet Daley
By Janet Daley 
Published: 7:24PM GMT 19 Dec 2009

There is scope for debate – and innumerable newspaper quizzes – about who was the most influential public figure of the year, or which the most significant event. But there can be little doubt which word won the prize for most important adjective. 2009 was the year in which "global" swept the rest of the political lexicon into obscurity. There were "global crises" and "global challenges", the only possible resolution to which lay in "global solutions" necessitating "global agreements". Gordon Brown actually suggested something called a "global alliance" in response to climate change. (Would this be an alliance against the Axis of Extra-Terrestrials?)

Some of this was sheer hokum: when uttered by Gordon Brown, the word "global", as in "global economic crisis", meant: "It’s not my fault". To the extent that the word had intelligible meaning, it also had political ramifications that were scarcely examined by those who bandied it about with such ponderous self-importance. The mere utterance of it was assumed to sweep away any consideration of what was once assumed to be the most basic principle of modern democracy: that elected national governments are responsible to their own people – that the right to govern derives from the consent of the electorate.

The dangerous idea that the democratic accountability of national governments should simply be dispensed with in favour of "global agreements" reached after closed negotiations between world leaders never, so far as I recall, entered into the arena of public discussion. Except in the United States, where it became a very contentious talking point, the US still holding firmly to the 18th-century idea that power should lie with the will of the people.


Jim Sinclair’s Commentary

Surprise, surprise. Where is he? Who has him?

Iranian nuclear scientist goes missing in Saudi Arabia
By Hannah Allam | McClatchy Newspapers

CAIRO, Egypt — An award-winning Iranian nuclear scientist traveled to Saudi Arabia earlier this year to perform a religious pilgrimage. He never returned.

Shahram Amiri’s mysterious disappearance is turning into a Middle Eastern whodunit involving nuclear secrets and political intrigue, with a new round of accusations emerging this week and the U.S. government still refusing to comment.

There are two big questions: Was Amiri spirited away by Saudi-backed American covert agents? Or did the scientist seize the chance to defect to the West, offering sensitive information in exchange for asylum?

Finger-pointing in Amiri’s case has heightened tensions between Iran and Saudi Arabia, which are bitter rivals for regional dominance and self-proclaimed guardians of Islam’s two main sects. Iran claimed earlier this week that Saudi Arabia conspired with U.S. agents to abduct Amiri in June and transfer him to the U.S., presumably for interrogations about Iran’s controversial nuclear program.


Jim Sinclair’s Commentary

No bees, no bats, no food.

Expect Another 35% Loss in U.S. Bees to Colony Collapse Disorder This Winter
Beekeepers faced a devil’s bargain this year: Honey and money now, at the expense of their hive’s health.
December 21, 2009 at 6:49AM by Kim Flottum

Beekeepers have to scratch this season to find much to be thankful for.

Too-cool, too-rainy weather almost everywhere gave American farmers great soybean and field corn crops this season, but kept summer blossoms from producing much nectar and kept bees from gathering what little there was. In lots of places (the Dakotas and Midwest and much of the east) the bees were barely able to keep up with feeding themselves and their young this summer. Everything they gathered they turned into more bees … and, unfortunately, more mites. Excess honey just wasn’t in the equation, leading to the worst honey crop ever, as reported here.

Down south and out west the dry, hot conditions accomplished basically the same thing. There was just enough, and too often not quite enough food to keep the bees going. They barely made it though the early and mid part of the season. Lots of bees, but no honey. Then, in the Midwest, especially the bountiful Dakotas and the surrounding states, the weather took on a kinder, gentler attitude in late summer, and beekeepers and their bees actually began gathering more honey than they could use. Surplus is what we call that honey … and it puts food on the table and pays the bills. But there’s a hitch.

Good varroa mite management dictates that beekeepers strive to reduce the number of varroa in a colony as early in the spring as possible so there’s hardly any stress from varroa during the summer while the bees are raising brood and making honey. More importantly, all treatments have to be removed before the bees start making honey so that honey and varroa treatment chemicals don’t mix.


Jim Sinclair’s Commentary

Here is your over the top death rattle story regarding Greece which inherently refers to Spain and Ireland.

Has anyone ever considered what a default looks like for a sovereign entity? When the country in default also prints its own currency the country cannot go into default, all it can do is destroy its own currency.

Therefore if Greece was to default it has two options:

1. Seek Euro financing from the ECB, which may not be an option.
2. Withdraw from the European Economic Union, which would strengthen the Union by taking away a liability which could be a cash drain.

That strengthening of the Union by dumping one or more of their liability entities should wash the default on Greek bonds denominated in Euros. Greece would then print the hell out of a confetti currency, the drachma.

Here is MOPE in action.

Debt default in a developed country is unthinkable – or is it?
By John Dizard
Published: December 20 2009 20:01 | Last updated: December 20 2009 20:01

Greece’s fiscal travails and ratings downgrades have provided some year-end trades for the speculators who have been betting against the bonds of the least flush euro area governments, and a great deal of material for professionally gloomy commentators such as myself.

Most of the product of the euro-commentariat has stopped short of predicting outright default. That would, it is generally understood, be unthinkable for a developed country. It’s the sort of thing done by the Argentines of the world, not Europeans or Americans.

Oh, sorry, strike the last statement. A developed, advanced, government-of-laws-not-men such as that of the US couldrepudiate its debt, and it did so in 1933. In March of that year, the US passed a law effectively repudiating the “gold clause”, incorporated in public and private bond documentation, that promised payment in currency equivalent to a fixed mass of gold, or “weight”, as non-physicists say.

The private ownership of monetary gold was outlawed, and creditors were instead told that they would be paid in “legal tender coin or currency.” The US declared that the gold private citizens could not own was now worth $35 per ounce, rather than $20.67, for an effective devaluation of 41 per cent.

That devaluation was more than twice the post-euro-entry increase in the real effective exchange rate (Reer) of Greece, more than the Reer increase of Spain and Italy, and just a little less than the Reer increase of Hungary over the same period.


Jim Sinclair’s Commentary

You think the capitulation of FASB might have given the financials a boost without any boost behind it?

S&P Cuts Banking Sector Opinion On US, UK Amid Ongoing Woes

Standard & Poor’s Ratings Services lowered its opinion on the U.S. and U.K.’s banking sectors, citing an erosion of underwriting standards in the U.S. and a high debt burden in the U.K.

The ratings agency moved the nations’ Banking Industry Country Risk Assessment ratings down one level each to group 3. Group 1 is the highest, and where both countries had been before being cut to group 2 about a year ago in the midst of the financial crisis.


Jim Sinclair’s Commentary

Unemployment is what MOPE says unemployment is in the present time market sense.

Unemployment becomes real unemployment when it comes to a sustained real economic recovery.

Hidden unemployment raises total by 70%
Most of the people who have despaired of finding employment are women.
Adrian Filut 21 Dec 09 17:36

The Central Bureau of Statistics has published new data which shows that unemployment is actually 70% higher than the latest figures indicate. In its report "Alternative Definitions of Labor Force 2001-2007), the Central Bureau of Statistics said, "When you also add to the unemployed according to official definitions, those who have despaired of looking for work, and those who are employed only part time through no choice of their own, the number of unemployed rises by 70%. For example, in 2007 the percentage of unemployed among those aged 15-64 was 7.3% but after including additional groups it was 12.7%.

The report also found that unemployment among women was higher and when relating to hidden unemployment the gender gap grew even more. The Central Bureau of Statistics found that most people who could only find part-time work, or had despaired of finding work altogether, were women.


Jim Sinclair’s Commentary

Nor will they in 2010.

The new Resolution Trust is now the FDIC. The Bad Bank is the Fed balance sheet.

Bank Failures Get No Holiday
December 21, 2009
Richard Suttmeier

I thought that the FDIC would suspend bank failures for the Holidays – I guessed wrong.

The FDIC closed seven banks on Friday with a total estimated cost of $1.8 billion to the Deposit Insurance Fund. The Deposit Insurance Fund is now in arrears by $18.6 billion.

Members will pony up $45 billion in prepaid fees for 2010 through 2012 by the end of this year. This funding has already been 41% pre-spent. I predict that the FDIC will have to tap its $500 billion temporary line of credit with the US Treasury by mid-year in 2010.

As of December 18th, the tally for banks failures has reached 165 since “The Great Credit Crunch” began at the end of 2007. There were 25 failures for all of 2008, 21 in the first quarter of 2009, 24 in the second quarter, 50 in the third quarter, and now 45 in the fourth quarter.

The total cost to the FDIC Deposit Insurance Fund in 2009 comes to $37.7 billion, which is another justification for using TARP money to replenish the fund. This $37.7 billion could have been used to help homeowners stay in their homes and to increase lending to small businesses.


Jim Sinclair’s Commentary

This must have been one hell of a depressing get together, but still it is the truth.

Jim Rogers and Marc Faber See Disaster Looming, Blame The Fed
Posted on 12/21/09 at 11:47am by Bud Fox

Legendary investors Jim Rogers and Marc Faber have similar outlooks on the financial crisis and the efforts of the Federal Reserve to revive the U.S. economy. What do they think of the Fed’s quantitative easing policy? In a word, it is a recipe for disaster.

According to Rogers, governments have not addressed the underlying problems which triggered the crisis, but instead have "flooded the world with money." He argues that trying to solve the problem of too much consumption and too much debt with more consumption "defies belief," and will result in epic failure.

Faber’s outlook echoes the sentiments of Mr. Rogers. He says, "If we agree that excessive credit and excessive leverage led to the crisis, then what the Federal Reserve is doing is giving a wrong medicine to the patient—they are giving the drug addicts more drug instead of sending them to rehabilitation, which is not good for the economy. So I think that the whole policy will eventually end in another disaster but we don’t know when and many things can happen in between."

So where do Faber and Rogers see opportunity? Well, both are extremely bullish on agricultural commodities and companies. Rogers says that it will be farmers not bankers driving Ferraris in the coming decades. Faber likens investing in agriculture to investing in oil in 2001 or 2002.



Jim Sinclair’s Commentary

From Russia without love.

Consequences of attack on Iran would be unpredictable – Mid-East expert
Published 21 December, 2009, 19:28

An attempt to solve Iran’s nuclear issue by an attack on its facilities would lead to "horrible and unpredictable consequences," former Russian Prime Minister Yevgeny Primakov has said.

That would only further radicalize the Islamic Republic and even if it does postpone the development of nuclear weapon by Iran, that would not be for longer than two years, he said.

"In that situation, Iran could consider it absolutely vital to have nuclear weapons," Primakov is quoted as saying by Ria Novosti agency.

Yevgeny Primakov served as Russia’s Foreign Minister, Prime Minister, the last Speaker of the Union for the Supreme Soviet of the Soviet Union, and chief of intelligence service. The 80-year-old is an academician and a member of the Presidium of the Russian Academy of Sciences.


Jim Sinclair’s Commentary

Things in Pakistan are on the world center stage.

Turmoil in Pakistan hampers U.S. fight against al-Qaida
By McClatchy Newspapers
Monday, December 21, 2009

WASHINGTON — Less than a month after he revealed it, President Obama’s Afghanistan strategy is in trouble, overtaken by political unrest in Pakistan that threatens to distract its bickering leaders from the fight against al-Qaida and its Afghan and Pakistani allies.

Washington and Islamabad were already embroiled in a nasty quarrel over U.S. demands that Pakistan "do more" to eliminate Afghan guerrilla and al-Qaida sanctuaries on its side of the remote border with Afghanistan.

Resolving the dispute now may have to await the outcome of what could be a long, messy battle for survival by the ruling Pakistan Peoples Party-led coalition against the judiciary, the opposition and the powerful military.

"Everyone’s attention in Pakistan will be on the new political order," said Nasim Ashraf, a scholar with the Middle East Institute who served in Pakistan’s former military-run regime.

Even without the crisis, Pakistani generals were unmoved by American denials Obama’s engagement in Afghanistan is limited, and they still view Afghan militants as their best tools to stop rival India from enlisting Afghanistan in a plot to "encircle" Pakistan after a U.S withdrawal, many experts believe.


Jim Sinclair’s Commentary

This is another confirmation of central bank interest in gold and a mile marker for Russia.

Russia transfers $1 Bln worth gold to Central Bank
December 21, 2009, 10:13AM ET

Russia’s Finance Ministry has sold 30 metric tons of gold to the country’s Central Bank for $1 billion, an official said Monday, saying the cash will be use to help ease the crisis in the country’s budget.

The cash slightly reduces Russia’s deficit — reportedly around 7.3 percent of gross domestic product this year. The Central Bank is the only government body mandated to engage in foreign commodity and currency trade.

The deal marks the first large sale of gold from Russian coffers since the collapse of the Soviet Union. Russia is weathering its worst financial crisis in a decade.

Russia’s finance minister said in October that Moscow was considering a gold sale on world markets to cash in on high prices as the government faces its first budget deficit in a decade.

A Finance Ministry spokesman said the deal was struck last week. The spokesman, who declined to be identified because he was unauthorized to comment on the deal, would not say what the Central Bank planned to do with the gold, but Finance Minister Alexei Kudrin said in October that Moscow was considering selling gold on world markets to cash in on high prices and further replenish the budget.


Jim Sinclair’s Commentary

These fellows really like High Stakes Poker.

Iraq sends forces to oil well seized by Iran
The Associated Press

BAGHDAD — Iraq deployed security forces Saturday near a remote oil well seized by Iran, officials said, and its government pressed Tehran to withdraw its forces from the area along their disputed southern border.

U.S. officials applauded Iraq for standing its ground against Iran — an uneasy ally that analysts said was aiming to remind its neighbor of its economic and political pull in its takeover of the oil well Thursday. The site is located in one of the largest oil fields in Iraq and has about 1.5 billion barrels in reserves.

The standoff was a dramatic display of the occasionally tense relations between the two oil-rich nations that fought an eight-year war in the 1980s but now share common ground in Shiite-led governments.

"Again, we ask Iran to be committed to the good relations that they announced with Iraq and its nation, and to withdraw its forces immediately," Iraqi government spokesman Ali al-Dabbagh told Al-Arabiyah TV. "This is the demand of Iraq, and we call Iran to be committed with that."

Iran, however, appeared undeterred.

In a statement, the Iranian military denied it violated Iraq’s sovereignty and cited a 1975 border agreement in claiming the oil well as part of Iran’s territory.


Jim Sinclair’s Commentary

These two more hot spots will at least cost the West money.

Chavez: US spy plane violated Venezuela’s airspace
Dec 20 08:10 PM US/Eastern

CARACAS, Venezuela (AP) – President Hugo Chavez on Sunday accused the U.S. of violating Venezuela’s airspace with an unmanned spy plane, and ordered his military to be on alert and shoot down any such aircraft in the future.

Speaking during his weekly television and radio program, Chavez said the aircraft overflew a Venezuelan military base in the western state of Zulia after taking off from neighboring Colombia. He did not elaborate, but suggested the plane was being used for espionage.

"These are the Yankees. They are entering Venezuela," he said.

"I’ve ordered them to be shot down," Chavez said of the aircraft. "We cannot permit this."

Chavez has accused Colombia of allowing the United States to use its military bases to prepare a possible attack against Venezuela.


Jim Sinclair’s Commentary

If this article is true is it the same as if the development of the American West depended on the Clanton Brothers.

Please note the Afghani honor guard’s weapon magazines and white gloves are all over the place and not lined up. Nobody is looking the same way, and each person is a different height than the person on either side.

That is no US Marine honor guard.

Maybe those crooked magazine and hands tell us a message.

In Afghanistan, U.S. Success Depends On Karzai
December 21, 2009


One of the primary elements of the Obama administration’s new strategy in Afghanistan is a stable government in Kabul. The United States needs a reliable partner so that programs and policies can be implemented.

If [Afghan President Hamid Karzai] fails, the Afghan people will fail and the international community will fail.

- Haroun Mir, director of the Afghanistan Center for Research and Policy Studies

Last month, Afghan President Hamid Karzai was inaugurated in an elaborate ceremony with an array of foreign diplomats in attendance.

But that didn’t mask the fact that Karzai’s second — and under the constitution, his final — term as president was being ushered in after a messy and fraudulent election that has left lingering questions about his legitimacy.

"President Karzai is not an elected president; he was declared winner by the Independent Election Commission," says Haroun Mir, director of the Afghanistan Center for Research and Policy Studies, a think tank in Kabul. Members of the commission were named by Karzai.



Jim Sinclair’s Commentary

Honestly, please think about this concept. China is taking all energy and natural resource projects available.

The US has no such interest. The US seems to own financial institutions instead.

The once a long time ago North American extractive industry underwriters have turned adversary on what gave them their foundation.

This is total and complete madness.

China Secures Oil and Gas Resources: U.S. Fiddles with ‘Green’ Energy
by Mary Hutzler
December 21, 2009

Around the world, China is investing in oil and gas resources to fuel its booming manufacturing industries and transportation sector to continue its sky-rocketing economic growth. China is not endowed with very much oil and gas resources of its own. Thus, it needs to partner with countries around the world to ensure availability of future supplies of oil and natural gas that it will need to keep up its current pace of economic growth.

The U.S., which does have oil and gas resources, is not following China’s lead in investing in these resources. Instead, the U.S. is looking toward wind and solar technologies to fuel its economy. However, wind and solar power are generating technologies and will not help where oil is needed in the transportation and industrial sectors.

Further, wind and solar power have capacity factors that cannot compete with those of fossil fuel generating technologies, and they can create instability issues with the electrical grid. They are also more expensive technologies and must have government support through tax credits to compete at all with fossil-fuel generating technologies.

China’s Investment in Oil and Gas

China has seized on the global recession to gain access to oil and gas resources and supplies. The atmosphere is ripe for Chinese firms to invest in these resources because:[i]

Acquisitions are now more favorable than they were in early 2008, due to lower oil prices and, hence, lower asset prices.

China is less constrained than many of its international counterparts in terms of where they can invest (e.g. Iran).

Financing is not a problem, because Chinese banks are willing and able to provide needed funds.