Posted at 12:42 PM (CST) by & filed under Jim's Mailbox.

Dear Friends,

Our dear long term friend and all around great person, CIGA Carl Seaman, recently passed.

He left a note asking that we be informed.

Carl you will be sorely missed.

Those, like yourself who have so dearly cared for others, must be seen again.

Rest well,
Jim

To CIGA C. Murr,

Thank you for your note. It did not have a return address.

You are quite a courageous and class lady.

I will emulate your strength.

Respectfully yours,
Jim

 

Jim,

Everything is fine over here in the good ole US of A. Just a mild recession.

CIGA BJS

Arizona to cut 5,500 school jobs
Thu, 23 Apr 2009 17:18:48 GMT

n the US state of Arizona around 5,500 school employees, including 4,000 teachers at 120 schools, are on the verge of losing their jobs.

According to a report released by the Arizona Republic on Tuesday, 5,500 school employees and teachers have been given their layoff notices.

School officials blame the new tide of pink slips on the lack of approval of a state budget for the new fiscal year set to begin on July 1.

They further claim that the government has required them to tell teachers by April 15 whether they would keep or lose their jobs.

More…

Dear Jim,

This one says it all.

All the best,
CIGA Olivier

clip_image001

Jim,

What have we learned in the last two millenia??

CIGA Richard

"The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."
– Cicero , 55 BC

Evidently, not a damn thing…

Posted at 2:23 PM (CST) by & filed under General Editorial.

Dear Friends,

Please do not let spin, hatchet jobs, or any other means part you from your gold insurance. If I was nobody and my efforts were going nowhere there would never be attacks.

“This is it” is now behind us.

Pakistan is a disaster domino for Afghanistan, Iraq and Iran.

Pakistan is a master stroke for those whose battle strategy is to break Western capitalism and demolish the US dollar.

Economically, the West, but specifically the USA cannot afford any more wars on a simple dollar cost deficit spending basis.

Gold is your lifeline, so think hard and do your homework before you let your emotions force you to lose your grip on things.

Think about how India, with the population from the Tea Wallahs to the Prime Minister, love gold as a trustworthy bank will do when Pakistan goes total Taliban.

Stand tall and face this threat knowing what it means. Take care of yourself and do not waver.

Today seems quiet, but it is anything but.

As the sign in the park says incorrectly, the end is not near, it already happened.

Gold is your lifeline to more than just your financial needs.

Respectfully yours,
Jim

Clinton: Pakistan ‘Mortal Threat’ to World
Published: April 22, 2009 at 1:24 PM

WASHINGTON, April 22 (UPI) — Nuclear-armed Pakistan is becoming a “mortal threat” to the world, U.S. Secretary of State Hillary Clinton told the House Foreign Affairs Committee Wednesday.

“Pakistan poses a mortal threat to the security and safety of our country and the world,” Clinton said. “And I want to take this occasion … state unequivocally that not only do the Pakistani government officials, but the Pakistani people and the Pakistani diaspora … need to speak out forcefully against a policy that is ceding more and more territory to the insurgents … .”

Taliban militants Tuesday took over the northwestern Pakistan district of Buner, just 60 miles from the capital of Islamabad. Militants were patrolling its streets with no signs of government law enforcement personnel, Pakistan’s English-language newspaper Dawn reported. The move came after the Taliban last week imposed Shariah, or strict Islamic law, in the neighboring Swat Valley as part of a peace agreement with the government.

“(We) cannot underscore the seriousness of the existential threat posed to the state of Pakistan by the continuing advances now within hours of Islamabad that are being made by a loosely confederated group of terrorists and others who are seeking the overthrow of the Pakistani state,” Clinton said.

“I don’t hear that kind of outrage or concern coming from enough people that would reverberate back within the highest echelons of the civilian and military leadership of Pakistan,” Clinton said.

More…

Clinton Rallies Attention to Growing Extremist Threats in Pakistan
Wednesday, April 22, 2009

WASHINGTON — U.S. Secretary of State Hillary Clinton today voiced alarm about a rising extremist presence inside Pakistan, which she said “poses a mortal threat to the security and safety of our country and the world” (see GSN, March 16).

“We cannot underscore the seriousness of the existential threat posed to Pakistan by the continuing advances — now within hours of Islamabad — that are being made by a loosely confederated group of terrorists and others who are seeking the overthrow of the Pakistani state,” Clinton testified before the House Foreign Affairs Committee.

She noted that the risks are particularly heightened by the existence of Pakistan’s nuclear arsenal, which many analysts are concerned might fall into the hands of Islamic extremists should the central government be overthrown. Islamabad is estimated to have roughly 60 nuclear weapons.

“I don’t hear that kind of outrage or concern coming from enough people that would reverberate back within the highest echelons of the civilian and military leadership in Pakistan,” Clinton said.

In particular, she urged the Pakistani diaspora in the United States to “speak out forcefully against a [Pakistani] policy that is ceding more and more territory to the insurgents — to the Taliban, to al-Qaeda, to the allies that are in this terrorist syndicate” (Elaine M. Grossman, Global Security Newswire, April 22).

More…

Posted at 2:15 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

More unmistakable proof of The Formula in action.

Best regards,
CIGA Richard B.

Soaring U.S. Budget Deficit Will Mean Billions in Bond Sales
By Michael McKee

April 22 (Bloomberg) — Millions of lost jobs mean billions in lost tax revenue for the U.S. government, and billions in additional Treasury debt to fund a federal budget deficit that may soar to more than four times last year’s record $454.7 billion.

Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April — the biggest month for tax collection — are likely to come in well below April 2008, analysts said.

With spending on unemployment insurance and other safety- net programs rising, the deficit is already at a record $956.8 billion six months into the fiscal year. To help close that gap, the Treasury Department has more than quadrupled borrowing, pushing the government deeper into debt.

More…

Dear Mike:

The J’s Formula, and the 13 Holes in all OTC derivatives, is all that was required to have been understood in 2004-2006 to have avoided this worldwide economic and in time social disaster. That is assuming there was ever a desire to prevent it.

Those two criterion alone could have saved the world from all of this.

Respectfully,
Jim

Jim,

This article prompts a review of the formula!

CIGA Marc

Jim’s Formula:
September 1, 2006

5. Lower profits leads to lower Federal Tax revenues.
6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.
7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.
8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).
9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.
10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.
11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.
12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

Soaring U.S. Budget Deficit Will Mean Billions in Bond Sales

April 22 (Bloomberg) — Millions of lost jobs mean billions in lost tax revenue for the U.S. government, and billions in additional Treasury debt to fund a federal budget deficit that may soar to more than four times last year’s record $454.7 billion.

Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April — the biggest month for tax collection — are likely to come in well below April 2008, analysts said.

With spending on unemployment insurance and other safety- net programs rising, the deficit is already at a record $956.8 billion six months into the fiscal year. To help close that gap, the Treasury Department has more than quadrupled borrowing, pushing the government deeper into debt.

“Tax receipts are just collapsing,” said Chris Ahrens, head of interest-rate strategy at UBS Securities LLC in Stamford, Connecticut, one of 16 primary dealers required to bid at Treasury auctions. The need to sell more debt “is a big issue in the Treasury market and it is ongoing. The surging budget deficit is the primary cause.”

More…

Posted at 12:15 PM (CST) by & filed under In The News.

Dear CIGAs,

Tore up $38.6 TRILLION in overlapping contracts?

That sound like an interesting financial transaction.

I think we need a tad more explanation of this massive disappearing act.

Credit Swaps Market Cut to $38 Trillion, ISDA Says
2009-04-22 07:59:13.968 GMT
By Katrina Nicholas and Abigail Moses

April 22 (Bloomberg) — Credit-default swap dealers cut the volume of outstanding trades to $38.6 trillion last year as they tore up overlapping contracts amid pressure from regulators to scale down the privately negotiated market and reduce risk.

Outstanding contracts fell 38 percent in 2008, the New York-based International Swaps and Derivatives Association said in a survey released in Beijing today. It’s the first annual decline, after the market increased 100-fold over the previous seven years as investors used the derivatives to protect against bond losses and speculate on creditworthiness.

Traders have been rushing to cancel redundant trades as federal authorities seek to impose regulations on the market for the first time since it was created a decade ago. After the collapse of Bear Stearns Cos. last year, 17 banks that handled about 90 percent of trading in default swaps agreed to initiatives including trade compression to help reduce day-to- day payments, bank staff paperwork and potential for error.

“In the current environment, firms are intensely focused on shrinking their balance sheets and allocating capital most productively,” said ISDA Chief Executive Robert Pickel, whose group represents dealers that control trading.

More than 2,000 banks, hedge funds and asset managers trading credit-default swaps agreed to a “Big Bang Protocol” this month that aims to improve transparency and confidence in credit-default swaps. It changes the way the swaps are traded so that it’s easier to eliminate offsetting trades and move them through a clearinghouse.

More…

Jim Sinclair’s Commentary

Prestidigitation increases home values in the last reporting month.

Stock rallies are breaking out of short term down trends.

Wall Street expresses surprise and glee.

Bottoms seen by AOs.

Housing bubble smackdown: Huge “shadow inventory” portends a bigger crash ahead

Mike Whitney
Wednesday, April 22, 2009

In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before–nearly perpendicular. Housing prices are not falling, they’re crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It’s a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?

600,000 “DISAPPEARED HOMES?”

Here’s a excerpt from the SF Gate explaining the mystery:

“Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

More…

Jim Sinclair’s Commentary

Keep an eye on this development.

If you catch one mouse in your house, how many do you have inside the walls?

Turkey: Police arrest Al-Qaeda suspects in raids

Istanbul, 21 April (AKI) – Turkish police on Tuesday arrested at least a dozen suspected members of Al-Qaeda in simultaneous raids across four provinces, Turkish media reported.

While the exact number of suspects was still to be confirmed, at least 12 suspects were arrested in raids in the southeastern provinces of Gaziantep and Sanliurfa, the central province of Konya and southern city of Adana, said Turkish daily Hurriyet.

Earlier this month, seven people were arrested on charges of links to the extremist network following simultaneous operations in the western province of Eskisehir.

A Turkish newspaper reported in March that Ankara had received US intelligence that Al-Qaeda militants could be plotting attacks on foreign targets in Turkey.

A Turkish Al-Qaeda cell was held responsible for truck bomb attacks against two synagogues, the British consulate and a British bank in Istanbul in 2003.

More…

Jim Sinclair’s Commentary

Whatever needs bailouts will be bailed out. Eventually the dollar will, by severe depreciation, bailout the bailout debt. REALLY!

‘Deeper’ recession ahead says IMF
By Steve Schifferes
Economics reporter, BBC News

The global economy is set to decline by 1.3% in 2009, in the first global recession since World War II, the International Monetary Fund (IMF) says.

In January, the IMF had predicted world output would increase by 0.5% in 2009.

It now projects that the UK will see its economy shrink by 4.1% in 2009, and by a further 0.4% in 2010.

But other major economies are predicted to shrink even more, with Germany declining by 5.6%, Japan by 6.2%, and Italy by 4.4% in 2009.

The prospects for the advanced economies are not much brighter in 2010, with an overall forecast of zero growth.

The IMF says this represents “by far the deepest post-World War II recession” with an actual decline in output in countries making up 75% of the world economy.

Currently, output is falling by an “unprecedented” 7.5% annual rate in the rich countries in the last quarter of 2008, and the IMF expects the same rate of decline in the first quarter of this year.

Only a recovery in developing and emerging market countries will propel the world economy back into positive growth in 2010, albeit at a relatively weak level of 1.9%.

The prospects for world trade are even gloomier, with the IMF now forecasting world trade volumes to decline by 11% in 2009, and barely grow at all in 2010.

After 60 years as the engine of world growth, the sharp fall in trade is now hitting many of the leading exporting nations, particularly in Asia.

More…


Posted at 11:20 PM (CST) by & filed under In The News.

Dear CIGAs,

As goes Motors, so goes the USA.

GM to close down 1,700 dealerships by June 1st
tryme submitted on 4/16/2009 Official AutoSpies Timestamp: 7:06:28 AM

GM has accelerated its restructuring as the impending June 1 deadline approaches along with Chapter 11 speculations.http://tenzing.fmpub.net/?t=z&n=227&fleur_de_sel=1414059436523748

The carmaker has informed its dealers that it will expedite the close down of about 1,700 dealerships, an insider has said. At present, there are around 200 dealers that were shut down in this year’s first quarter.

Although the closure of such large numbers of dealers was not confirmed by GM officially, a spokesman did confirm GM-dealers meetings. The insider refused to comment on what happened behind the closed doors of the meeting. General Motors is counting on either the demise or sale of Saturn and Hummer. If GM succeeds in getting rid of these liabilities, the dealerships for these brands will also follow. GM can get rid half of the 1,700 dealerships it intends to close from the Saturn and Hummer brands alone. This will mean that there will be no buy-outs for the respective dealers together with those which GM will deem to be underperformers, whose franchise will ends by the first of June. Dealership closures will take place, whether GM goes bankrupt or not. One of the suggestions offered for the survival of the dealers is for them to acquire Saturn.

More…

Posted at 7:20 PM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

The vast majority of those who read this site are fully aware of the shenanigans of the bullion banks over at the Comex and how they continue to bamboozle the hedge funds whose automaton-like response to momentum trading prevents them from beating this group at the paper game by standing for delivery in size. Additionally, their allegiance to system-trading and computer algorithms prevents them from thinking creatively and learning to take advantage of their enemies’ tactics against them. Good traders learn to adapt to changing market conditions and modify their strategies when confronted by successive losses – the hedge funds, however, when it comes to gold, do no such thing.

Keep in mind that the name of the game in gold, as far as the monetary authorities are concerned, is deception. By artificially suppressing the price of gold, for much the same reason as the Fed has been artificially attempting to suppress long term interest rates by a deliberate policy of quantitative easing, the money lords hope to cloud the signals that free market prices would generate to the investing public.

Remember when gold prices first spiked above $1,000.00 and all the coverage that was received on both the financial cable shows and the internet news sites? That is the last thing any Western Central Banker wants to see because it is in effect a condemnation of the policies and practices that they have embarked upon. So what to do? Simple, confuse the issue and distort the signal by working over the gold price to dampen down any potential excitement, not to mention attempting to kill a rival.

When one looks at the present price at the Comex as of today and the short term technical chart pattern, it is not particularly encouraging for the bulls so you could say that Central Bank efforts in conjunction with their favored insiders at the bullion banks have been somewhat effective of recent weeks. However, there is one thing that no amount of market intervention and price manipulation can succeed in doing and that is in changing the basic structure of the futures market as evidenced by the relationship of the front month contracts to the later dated contracts.

In trading terms, we refer to the “spread” between the front month and a back month/months or the difference in price between the two, as a gauge of demand for that particular commodity. As a general rule, when the front month trades at a discount to the next month or to a later-dated month, the structure of that particular commodity futures market is normal or in contango. A market in contango will see those distant month contracts trading at enough of a premium to the front month to account for any storage charges, insurance against loss and interest rates. Simply put, a seller has to be recompensed for his/her expense in storing a commodity while they wait to sell it into the market at some point in the future.

Whenever a market begins to see this “spread” between the front month and the next month or more distant months begin to tighten or narrow, then something is beginning to change regarding the demand/supply picture in that particular commodity. Why is this? Because the market is ratcheting up the front month price and attempting to send a signal to potential sellers that demand is increasing and that they are better served by selling sooner rather than later. Economically speaking, the incentive to store the commodity, pay all those storage costs, insurance costs, etc,. is not worth the increased cost that they might hope to receive at some point in the future. “Sell it to us now and we will pay you more for it than if you try to sell it later”, is the message the market is sending.

When markets begin moving in this direction, narrowing the spread, they are said to be moving towards a condition known as, “backwardation”. True backwardation occurs when the front month moves to a PREMIUM over the next month and particularly over the next set of three or four different contract months ( a note here – generally a market will not go into backwardation more than a few distant contracts out because it is assumed that the increased demand will result in increased production at some point and induce producers of that particular commodity to increase production on out into the more distant future bringing the demand/supply picture into more of an equilibrium. That will serve to bring the market back into a more normal structure of contango).

Backwardation is a powerful signal of very strong demand that is attempting to send a signal to the market that it needs more of that commodity to satisfy existing levels of demand. While market price manipulation can be somewhat effective short term for fogging signals generated from a rising price in gold for example, it is generally unable to affect the spread structure of the entire set of futures contracts listed on the board at any given time.

With this in mind, take a look at the April 09 Comex gold contract and its spread between the June 09 Comex gold contract. Notice the narrowing of the spread, or the move in the direction of backwardation. It is not there yet but the fact that this particular spread has narrowed so significantly is more than noteworthy. It is a mere $0.60 from moving into backwardation after having traded as wide as $6.50 at one point.

To show that it is not just an April/June phenomenon, but rather one that is beginning to characterize the structure market of the Comex gold contracts, please note that the EXACT same thing has been occurring in the April 09/Dec 09 Comex gold spread. It too has narrowed quite significantly.

While nothing is foolproof in this day and age of managed markets and official sector shenanigans, the timeless spread charts are telling us a story that even the best efforts (or worst efforts if you prefer) of the Western Central Bankers and their unending war on gold is drawing to a close in which their policies have all but ensured their defeat at the hands of the “barbarous relic”. Short term they can win many battles but long term they cannot prevail in the war against gold.

Click charts to enlarge in PDF format with commentary from Trader Dan Norcini

april-09-gc-versus-june-09-gc-spreadapril-09-comex-gold-versus-dec-09-comex-gold-spread