Posted at 8:15 PM (CST) by & filed under In The News.

Dear CIGAs,

You will love this.

I had an opportunity to take someone to the local ER. Between the outside door and the inside ER door there is a large sign. This sign outlines all the symptoms of the flu informing the reader that if you ANY of these symptoms "DO NOT ENTER THIS BUILDING."

The signature on the sign is not from the hospital, but rather the Center for Disease Control.

What are you supposed to do? I guess it means crawl home and die. This world seems to be devolving into the 10th hell of Dante at warp speed.

Yesterday CNN informed us that the military will be used to assist local authorities this flu season. After my visit to the hospital, I imagine they will be deployed to keep people out of the ER.

Will the presidential emergency order allow the military to use deadly force?

 

Jim Sinclair’s Commentary

Never ask a modern hedge fund manager what he is doing for his clients.

Look at his or her personal book to know what has been done with their money.

Gold lures inflation-wary hedge fund chiefs
Thu Jul 30, 2009 8:15am EDT
By Martina Fuchs

LONDON (Reuters) – U.S. hedge fund managers are increasingly likely to buy gold to protect their personal wealth against inflation, an investment management firm said on Thursday.

London-based Moonraker said a survey it carried out in the United States found that 20 out of 22 fund managers interviewed bought physical gold for personal investment on concerns the U.S.’ quantitative easing programme may lead to higher prices.

"Gold is the ultimate currency, performing best when economies are at extremes, whether that is inflationary or deflationary," Jeremy Charlesworth, chief investment officer at Moonraker, said in a statement.

"The managers I met in the U.S. know that if the politicians get the quantitative easing programme wrong, then the value of money relative to real assets will dwindle," he added.

Gold was seen as a safe haven asset during the financial crisis, as many investors considered it a less risky investment than stocks and shares.

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Jim Sinclair’s Commentary

CIGA Green Hornet says "Give them billions more… What a great country! Not!"

Pakistan president Asif Zardari bans jokes ridiculing him
Posted by Desta Bishu | July 30th, 2009 at 6:12 am |

Pakistan’s president, Asif Zardari, has been accused of suffering from a sense of humour failure after banning jokes ridiculing him.

Pakistanis who send jokes about Asif Zardari by text message, email or blog risk being arrested and given a 14-year prison sentence.

The country’s interior minister, Rehman Malik, announced the Federal Investigation Agency (FIA) had been asked to trace electronically transmitted jokes that "slander the political leadership

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Jim Sinclair’s Commentary

How about they got short by selling the products naked to willing buyer clients?

Mortgage Melt-Down Investigation: Goldman Sachs and Deutsche Bank Get Served
July 30, 2009

Goldman Sachs (GS) and Deutsche Bank (DB) got served by the US Senate which is investigating fraud in the mortgage meltdown last year. Several other financial institutions may also have received subpoenas from the sub-committee that is headed by Senator Carl Levin.

WSJ said the focus of the investigation is on whether internal communications show executives at the banks had private doubts on the soundness of the mortgage-related securities they were putting together. Anyone want to take a guess on what they will find?

I am sure there are plenty of emails and other electronic messages floating around to get someone in trouble. I never understand how people have not realized that email is forever. Regardless, they will clearly find something, but they should look at the trading in their accounts versus what was being sold to their clients, that is the real evidence.

We all know Goldman traded against sub-prime mortgages, I do not know about Deutsche Bank. Now, if Goldman traded $20 billion against these securities, but their institutional side sold these same products the firm was short, then I think there will be a problem. If the committee does their homework and actually investigates this thing then we might have our first “perp walk” for the carnage these lovely people brought upon us.

There could be nothing here, but if I were a betting man I would take the other side of that trade.

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Jim Sinclair’s Commentary

These are the people that will appoint and look over management of nationalized companies in the US.

House Seems To Be Set on Pork-Padded Defense Bill
By R. Jeffrey Smith
Washington Post Staff Writer
Thursday, July 30, 2009

The Democratic-controlled House is poised to give the Pentagon dozens of new ships, planes, helicopters and armored vehicles that Defense Secretary Robert M. Gates says the military does not need to fund next year, acting in many cases in response to defense industry pressures and campaign contributions under an approach he has decried as "business as usual" and vowed to help end.

The unwanted equipment in a military spending bill expected to come to a vote on the House floor Thursday or Friday has a price tag of at least $6.9 billion.

The White House has said that some but not all of the extra expenditures could draw a presidential veto of the Defense Department’s entire $636 billion budget for 2010, and it sent a message to House lawmakers Tuesday urging them to cut expenditures for items that "duplicate existing programs, or that have outlived their usefulness."

While the administration won a big victory when the Senate voted July 21 to end the F-22 fighter-jet program, the House’s imminent action demonstrates its continued rebellion on many other Obama administration military spending priorities. Gates continues to struggle with lawmakers on both sides of the aisle who are loyal to existing military programs benefiting contractors that provide jobs and large campaign donations.

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Jim Sinclair’s Commentary

If I recall correctly, I told you this more than 3 years ago.

GE Capital: Next CIT?
by Tyler Durden

GE Capital (GE), aka the next CIT, is practicing its recently acquired hypnosis skillset (perfected via daily lessons from CNBC anchors) which has culminated with a 63 page presentation replete with far too much empty verbiage and green shootery.

The take home message:

* H1 Net Income has plunged to $1.7 billion on $557 billion in total assets, and only thanks to firing pretty much everybody: $1.9 billion in SG&A savings
* This is down $24 billion from Q4 as GECC is "continuing to rapidly reduce balance sheet"
* Loss reserves are skyrocketing: currently at $6.6 billion, up one billion from Q1 (and much lower than reality)
* 2009 TY original outlook: $5 billion; Fed base case: $2.0-$2.5 billion, Fed adverse case: $0
* How many more people can GECC fire as its balance sheet implodes?
* Oh yeah, and if CRE really blows up, CIT, here we come

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Jim Sinclair’s Commentary

Here is an uplifting story as soon as you got your brother to hide the Rotty.

Looks like a relative of my companion, Mr. Fred.

Missing dog Muffy found after nine years
Sophie Tedmanson in Sydney
July 30, 2009

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Just like Lassie the adventurous collie dog, a scruffy pet named Muffy will finally return home after a nine-year, 2000km (1250 mile) odyssey down the east coast of Australia.

The terrier-cross (or "bitsa" as her type of cross-breed is more affectionately known) was last seen by her owners on the Gold Coast in Queensland in 2000 ago when she took off from a friend’s house one day and never came back.

The Lampard family had given her up for dead and even replaced her with a Rottweiler named Jack, who died of cancer four months ago.

Incredibly, earlier this month, Muffy was discovered in Melbourne, Victoria, by the RSPCA, who had been tipped off by a good Samaritan concerned about a sickly looking, flea-ridden dog living in decrepit surroundings in a suburban backyard.

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Jim Sinclair’s Commentary

Think about this. The FDIC sells the good parts, which of course do not equal the bad part because if they did there would not be insolvency.

The FDIC eats the crap which is another way of saying that we, our kids, and our kid’s kids eat the bad paper.

FDIC Poised to Split Banks to Lure Buyers
JULY 31, 2009
BY ROBIN SIDEL

The Federal Deposit Insurance Corp., grappling with the worst banking crisis since the 1990s, is poised to start breaking failed financial institutions into good and bad pieces in an effort to drum up more interest from prospective buyers.

The strategy, which is likely to begin soon, is aimed at selling the most distressed hunks of failed banks to private-equity firms and other types of investors who may be more willing than traditional banks to take a flier on bad assets. The traditional banks could then bid on the deposits, branches and other bits of the failed institution that are appealing.

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Jim Sinclair’s Commentary

Ok, I am prejudiced, but more so, I am proud.

Tanzania to Reach 5% Growth Target, Central Bank Says  
By Sarah McGregor

July 30 (Bloomberg) — Tanzania will probably achieve its economic growth target of 5 percent in 2009 as stimulus spending provides a boost to industries worst affected by the global financial crisis, Enos Bukuku, deputy governor of the Bank of Tanzania, said.

On June 10, Tanzania President Jakaya Kikwete unveiled a 1.7 trillion shilling plan to help local companies and agricultural cooperatives weather a decline in global growth.

“It’s working and we are in a good position,” Bukuku said today in an interview following a presentation in the Kenyan capital, Nairobi. “No other country in the region has a similar rescue plan.”

The stimulus package will directly compensate exporters for losses, guarantee debt rescheduling and boost loans to farmers especially for seeds, fertilizer and tractors. It will be funded by the current budget for the fiscal year ending June 30, 2010, of which about a third is being funded by outside donors. In May, the International Monetary Fund approved a $330 million loan for the country.

The east African nation’s foreign exchange reserves stood at $2.9 billion at the end of June, which gives “adequate comfort” from potential external shocks, Bukuku said.

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Jim Sinclair’s Commentary

There is no end to this. The dollar is doomed. There are only 100 days to go.

Fannie, Freddie Regulator Sees More Capital Injections by Treasury
Thursday, July 30, 2009

The director of the Federal Housing Finance Agency predicted the Treasury Department will have to make billions of dollars in additional capital injections into Fannie Mae (FNM: 0.5725, -0.0075, -1.29%) and Freddie Mac (FRE: 0.6, -0.0189, -3.05%) in the next 12 months — and that taxpayers will lose some of their investment in the companies.

“There will certainly be significantly more [Treasury investment] in the future” because of continuing problems in the housing market, James Lockhart said in an interview with FOX Business.

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Jim Sinclair’s Commentary

The only thing that will result in Bernanke being sent back to Princeton to teach is a failure to take QE to infinity.

Then Summers will.

Reappoint Ben Bernanke? No Way
Richard Bernstein|Jul. 30, 2009, 9:34 AM

Should we have re-elected Jimmy Carter in 1980 for his stewardship of the US economy?  Of course not.  Should Ben Bernanke be reappointed as Chairman of the Federal Reserve for his stewardship of the banking and credit systems?  Of course not.

Certainly, the Fed under Mr. Bernanke is not solely responsible for the environment that produced the biggest credit bubble and credit deflation of our lifetimes, but Jimmy Carter wasn’t solely responsible for the late-1980s inflationary spiral.  Mr. Carter was not re-elected, and similarly Mr. Bernanke should not be reappointed.  Simply put, how can Washington even consider keeping Mr. Bernanke as Fed Chairman when the US banking system effectively failed on his watch?

I have the highest respect for Mr. Bernanke as an academic and economic historian.  Nonetheless, there are several reasons, in my opinion, why someone else needs to be the Fed Chairman.

Need for Volker-like Leadership

If one thing positive can be said about Carter’s economic policies, it is that he appointed Paul Volker as Chairman of the Federal Reserve in 1979.  The US economy was in the midst of a vicious inflation spiral, but Mr. Volker initiated dramatic changes to monetary policy.  Those policies were extremely painful in the short-term, but they stymied inflation and significantly strengthened the US economy’s long-term growth path.

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Jim Sinclair’s Commentary

What is good for financial institutions is a disaster for the average guy.

Unemployment spreads distress in U.S. home loans
Thu Jul 30, 2009 1:23am EDT
By Lynn Adler

NEW YORK (Reuters) – Cities in the U.S. Sun Belt states of California, Florida, Nevada and Arizona dominated the record foreclosure spree in the first half of the year, but distress in other regions emerged as joblessness spread, RealtyTrac said on Thursday.

Metro areas with populations of at least 200,000 in those four states accounted for 35 of the 50 highest foreclosure rates.

Mortgages have failed the fastest in the areas with the greatest overbuilding, purchases by speculators and reliance on riskier loan products to improve affordability.

But the source of the mortgage trouble has swung from lax lending standards to unemployment.

Some of the areas with the most severe foreclosure activity have started to show improvement as price cuts and first-time buyer tax credits lure purchasers.

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Jim Sinclair’s Commentary

One out of ten are out of work. The average person is not sleeping nights concerned about mortgage foreclosures. School systems are going broke. RI is putting over 1000 businesses out for taxes due.

These guys got bonuses of more than they earned on our backs. Where is the outrage?

NY AG Andrew Cuomo details how much TARP recipients like Citigroup, Merrill Lynch paid in bonuses
BYDOUGLAS FEIDENAND GREG B. SMITH
DAILY NEWS STAFF WRITERS
Thursday, July 30th 2009, 11:45 AM

The top banks that got billions in taxpayer bailout money doled out bonuses that exceeded their net profits or while losing money, a new report says.

After last year’s brutal economic downturn, more than 4,700 employees at nine top banks received bonuses of more than $1 million each while accepting billions of public aid through the Troubled Asset Relief Program (TARP).

Of that, 836 received bonuses in excess of $3 million each, a new report released Thursday by New York Attorney General Andrew Cuomo found.

The payouts came as profits fell and, in some cases, losses mounted. This was especially true at two of New York’s biggest TARP beneficiaries, Citigroup and Merrill Lynch.

Citi lost $27 billion in 2008, but handed out bonuses of more than $1 million each to 738 executives, including 44 who pocketed payouts of $5 million or more.

The taxpayer helped pay for all of this: Citi received a $45 billion TARP bonanza.

"There is no clear rhyme or reason to the way banks compensate and reward their employees," Cuomo said. "When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well."

Cuomo noted three top TARP recipients -Goldman Sachs, Morgan Stanley and J.P. Morgan Chase – all handed out bonuses that exceeded their net profits. They were able to do this, in part, because they received billions from the taxpayers.

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Jim Sinclair’s Commentary

Maybe investors have taken to reading the prospectus?

Gold tunes out weak ETF buying as speculation soars
Wed Jul 29, 2009 9:42am EDT
By Jan Harvey – Analysis

LONDON (Reuters) – Gold prices are ignoring dwindling inflows into bullion-backed exchange-traded funds, with prices supported as investors switch their interest to the U.S. futures market and outright purchases of physical metal.

Investors are increasingly embracing riskier assets like stocks, leaving less of an impulse to hoard gold as a hedge against the unknown, lending support to its appeal as a buffer to dollar weakness and future inflation.

Consequently, while interest in gold-backed ETFs has tailed off after unprecedented buying in the first quarter, other forms of investment, such as positioning on the New York Comex futures exchange, have increased and underpinned a firm price.

Spot gold has held firm above the $900 marker since early May, with the psychologically key $1,000 level in reach.

"The slack created by slower ETF demand hasn’t gone away completely, it’s just been replaced by more speculative interest," said Barclays Capital analyst Suki Cooper.

"The position on Comex has picked up quite sharply."

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Jim Sinclair’s Commentary

Wall Street’s control of Washington has resulted in the Administration’s total conviction that what is good for financial institutions is good for America.

Sadly, it isn’t, and therein is the extreme risk of secondary OTC derivative failure and 1933 to 1940 experience in business times 10.

1 In 59 Chicago Area Homes In Foreclosure
First Posted: 07-30-09 10:01 AM   |   Updated: 07-30-09 10:07 AM

CHICAGO (AP) — The Chicago-Naperville-Joliet metropolitan area had the highest home foreclosure rate in Illinois for the first half of the year.

A report released Thursday by Irvine, Calif.-based RealtyTrac show more than 63,500 foreclosures filings from January through June. That’s one in every 59 houses, and 30 percent higher than the same period last year.

Foreclosure activity was up 15 percent in the Rockford area and 40 percent in the metro area that includes Rock Island and Moline and Davenport, Iowa.

Increases are blamed on growing unemployment rather than risky mortgages.

On the bright side, foreclosure activity fell 22 percent in the Peoria area, 29 percent around Springfield and 11 percent in the Champaign-Urbana area from last year.

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Jim Sinclair’s Commentary

With Wall Street in charge of Washington, what did you expect?

Naked credit default swaps are weapons of mass financial destruction on a global scale.

Who needs Terrorism when we have this type of at home thinking running finance?

Derivatives Plan Leaves Open ‘Naked’ Swaps Issue
By Dawn Kopecki and Robert Schmidt

July 30 (Bloomberg) — A new U.S. regulatory regime being pushed by Representatives Barney Frank and Collin Peterson for the $592 trillion over-the-counter derivatives market leaves open for debate whether to ban so-called naked trading.

The legislative proposal, which would push most derivatives onto an exchange or clearinghouse, fails to resolve the issue of outlawing credit-default swaps where the buyer doesn’t own the underlying asset. A three-page summary of the plan also shows lawmakers haven’t agreed on disclosure rules and trading limits, or how to divide oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

“None of the remaining areas are deal breakers,” Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, said at a news conference in Washington today touting the plan. He said “we are very close,” and a bill may pass Congress by the end of the year.

At a minimum, hedge funds and other companies using credit- default swaps would have to report to regulators any short positions related to those contracts, according to the proposal. The bill, which may change as it works its way through committees and the House floor, includes most of what the Obama administration has been pitching to rein in the derivatives market, including clearinghouses and margin requirements.

“We clearly want to err on the side of too much regulation rather than too little, given what we’ve been through,” Peterson, a Minnesota Democrat and chairman of the House Agriculture Committee, said at the news conference.

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Jim Sinclair’s Commentary

China bashers insist that China is financially imprisoned and therefore compromised because they hold $800 billion in US dollars out of reserves of $2 trillion.

The US just flushed $12 trillion into the collapsed OTC derivative positions of financial institutions which most certainly involve large losses and non recoveries.

Do you really believe that China cannot afford to write off $400 billion if they decided to prevent future losses and take over the world economic leadership after the event horizon of that action?

Jim Sinclair’s Commentary

I do hope that the USA knows since China has now won the economic game partly due to low cost labor, China will take it all the way as the "go to country" for lower priced and fabulous high tech.

China is already outcompeting both RSA and Australia in new mining techniques and equipment.

U.S. may OK hi-tech exports to China

BEIJING, July 30 — The U.S. has agreed to loosen restrictions on the export of hi-tech goods to China and speed up its recognition of the nation’s market economy, Vice-Premier Wang Qishan said on Tuesday after the China-U.S. Strategic and Economic Dialogue (SAED).

"The U.S. pledged to facilitate exports of high-technology products from the U.S. to China," he said, while calling the SAED a "full success".

Sino-U.S. trade has grown massively since China "opened up" 30 years ago. Last year – in spite of a seven-year low in China’s rate of growth because of the global financial crisis – the volume of trade between the countries amounted to 333.7 billion U.S. dollars. The number was 2.5 billion U.S. dollars 30 years ago.

However, despite the massive volume of trade, the U.S. suffers from a significant trade deficit with China and has blamed China’s "undervalued" yuan for the fact that more goods flow from China into the U.S. than in the other direction.

Analysts have said the reluctance of the U.S. to export hi-tech products is partly to blame and noted that unrestricted sales of hi-tech goods would help balance bilateral trade.

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Jim Sinclair’s Commentary

After 2 bomb out auctions of course it is.

How much QE was part of this?

The future of the Fed hangs on the success of the bond offerings.

Playing games with the Euro yesterday would not make today’s auction a success.

Only the action of those international investment banks making so much money from Fed guarantees on their borrowings could.

Treasury’s Auction of 7-Year Notes Is Better Than Expected
Thursday, 30 Jul 2009 | 1:15 PM ET
By: Jeff Cox

The bond market got a bit of relief Thursday, as a $28 billion auction of seven-year notes went somewhat better than expected.

The auction saw a yield of 3.369 percent on a bid-to-cover ratio of 2.63 as the price tag continues to increase for the government’s massive debtload.

The bond market this week already has weathered two tepid auctions, for two- and five-year notes. With today’s auction of $28 billion in seven-year  notes sending investors even further out on the yield curve, there was little optimism that things would change.

"As an investor you’ve always got to look at how much debt is too much debt," says Bill Walsh, president of the Walsh & Hennion trading firm in Parsippany, N.J. "It’s a lot of supply for the market to absorb. The actual buyers, the investors, are questioning at what rate should we be buying this stuff."

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Jim Sinclair’s Commentary

This is the FUBAR agency lacking capital that guarantees the nation’s retirement programs.

Sure, all is well.

Pension Agency Would Be Revamped Under Measure in U.S. Congress
By Holly Rosenkrantz

July 30 (Bloomberg) — The government agency that guarantees the pensions of more than 44 million Americans would be restructured under legislation introduced in the U.S. Senate.

The Pension Benefit Guaranty Corp.’s finances and structure need revamping as “several of the country’s largest automobile and manufacturing companies are teetering on the edge of bankruptcy,” Senator Herb Kohl, a Wisconsin Democrat and a sponsor of the measure, said in a statement.

The agency, created by Congress in 1974 to protect the pension programs of bankrupt companies, reported in May a deficit of $33.5 billion, triple that of six months earlier. Last week it took over the pension plan of Delphi Corp. the auto-parts maker in bankruptcy since 2005.

The agency is also facing increased scrutiny after a report by its inspector general in May found its former director, Charles E.F. Millard, had inappropriate communication with eight of 16 Wall Street firms that bid last year to manage $2.5 billion of the agency’s $48 billion.

Millard, a Bush administration appointee, may have violated “blackout” rules that prohibited him from contacting bidders on three contracts for “strategic partnerships” that were to involve investments in stocks, real estate and private-equity assets. The House Education and Labor Committee is investigating whether any laws were broken.

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Jim Sinclair’s Commentary

This is bureaucratic genius.

Shut down the businesses rather than look for funds due for settlements or structure payout plans.

Put people out of work and let the unemployment lines get longer. Then the state runs into increased cash drains. The state then has to pay its obligations in IOUs.

This type of thinking and pedigree is what is going to run the nationalized US industries.

1,200 R.I. businesses face closure over sales tax
01:00 AM EDT on Thursday, July 30, 2009
By Cynthia Needham and KATHERINE GREGG

PROVIDENCE — State tax officials have put more than 1,200 businesses across the state on notice this week that they are out of business unless they pay their overdue sales taxes immediately.

For most, that action came in the form of a personal visit from the state Division of Taxation, ordering business owners to lock their doors at once.

By Wednesday, a line of people had queued up inside the Department of Administration building on Smith Hill, waiting their turn to plead their case to a state revenue agent. Some were angry. Others frustrated.

“I understand the state needs money, but to put pressure on the small guy or the moderate guy that’s struggling, it’s not going to do any good,” said Mike Suriani, who owns an electrical supply company in South Providence.

In Suriani’s case, it may have been a bookkeeping error that landed him in the three-hour line. Suriani says he paid his taxes in full — albeit a little late –– and had copies of the cancelled checks from the state showing he had indeed turned over the sales taxes he collected.

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Tanzania Choosing Investors For Coal Project, 400 MW Pwr Plant
DOW JONES NEWSWIRES

The Tanzanian government is in the process of selecting investors to develop its Mchuchuma coal project and build a 400 megawatt power plant, the state-run National Development Corp. said Thursday.

In a statement, NDC said a 200-kilometer high voltage power lines would also be constructed linking Mchuchuma, in the south western region, with the national grid.

Tanzania is in the process of connecting its vast gold mines located around Lake Victoria to the national grid.

Up to 48 foreign and local companies have expressed interest to develop the Mchuchuma project, which has up to 125.3 million metric tons of coal deposits, and the winner will be announced before the end of the third quarter.

According to the Ministry of Energy and Minerals Development the companies that have expressed an interest include Singapore-based Nava Bharat, which won a bid to acquire Zambia’s largest coal mine Maamba Collieries early this year. Others include diversified miners BHP Billiton PLC (BHP.LN) and Rio Tinto PLC ( RTP), Australia-based Western Metals Corp. (WTLC), India’s Tata Steel Co. ( 500470.BY) and China’s CAMC Engineering.

Development of the Mchuchuma coal project is expected to cost up to $660 million and a power plant would be completed three to four years after the start of construction work.

Analysts say Tanzania needs more power plants to meet rising demand occasioned by massive investment in the gold mining sector since the start of the decade. Most gold mines still rely on fuel-fired plants to run operations because they aren’t connected to the national grid.

Tanzania is Africa’s third largest gold producer.

Link to article…

Posted at 7:58 PM (CST) by & filed under Jim's Mailbox.

Jim,

This is quite funny that this man’s gold is missing in the mail. The royal canadian mint is missing theirs on an inside job.

CIGA BJS

Iranian wants his $18.5 bn back from Turkey
Wed, 29 Jul 2009 22:03:19 GMT

A Turkish lawyer has claimed that his Iranian client has transferred an $18.5-billion treasure from Iran to Turkey through courier services.

Senol Ozel told Turkey’s independent “Kanal D” channel that his client, “Esmael Safarian-Nasab,” is a respected Iranian businessman and has transferred the money to Turkey through legal means.

The container-load of US dollars and gold bullion was delivered to Ankara Customs Office on October 7, 2008, Ozel said.

He noted that the container contained $7.5 billion and 20 metric tons of gold.

In a recent speech, Turkish Prime Minister Recep Tayyip Erdogan had boasted of the huge fund transfer as an indictor of his government’s success in attracting foreign investment despite the economic downturn in the world.

Erdogan had not revealed anything about the origin of the wealth.

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Come on BJS,

You ripped off this fellow’s container didn’t you?!

Jim

 

Hi Jim,

Can you believe this BS? Banks want limits set on energy trading, with exemptions to their trades. Didn’t Goldman call $200 oil?

That rage you keep asking about, it’s here with me.

All the best,
CIGA Omid

Two leading investment banks embraced the US regulator’s plan for stringent caps on energy trading but insisted on maintaining exemptions from them.

Goldman Sachs, one of the top two banks in commodities, and JPMorgan, on Wednesday acquiesced to the Commodity Futures Trading Commission’s proposal to control the size of energy traders’ holdings on futures markets and in off-exchange venues. They said these limits should apply to the holdings of individual investors who trade commodities with banks and not to banks’ overall presence in the market.

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Dear Jim,

I have to say I’m stunned by the arrogance and stupidity of anyone who takes the position that the Chinese are "trapped" by their holdings of US debt instruments. (I have to take your word that there are miscreants stupid enough to espouse such a belief. I long ago swore off all Financial TV and most mainstream media because of what it was doing to my blood pressure).

First, in a world where there are $1.4 quadrillion in over the counter derivatives how hard do people believe it is to hedge an $800 billion position? I saw one recent commentary pointing out the Chinese government could simply take out non-recourse loans using the US Treasuries as collateral and use the proceeds to purchase natural resources, which is most likely in effect what they are doing.

Second, don’t these commentators recognize the disconnect between their smugness in describing the Chinese "trap" in owning $800 billion of US debt and their expectation that China and other foreign buyers will be willing to take on $2 trillion more US debt per year for the foreseeable future?

The Chinese will act intelligently in the interest of their people as they have for the past three decades. Indirectly, they will save what is left of our society by putting a stop to the insane machinations of our government. I don’t see any other way the self-destructive, sociopathic behavior of the financial establishment and our co-opted government can be stopped.

Best wishes,
CIGA Richard B

Dear Jim,

I keep asking myself this question – why would Jim focus on this MOPE concept so heavily? We all know it has been a constant swirl in the "spin" cycle ever since Clinton came to office and really started tinkering with the numbers. But that is the point in itself – each administration from Clinton till now has spun, pumped, controlled, shaved, rigged, wagged, covered, suppressed, changed, reconfigured, etc. in order to MOPE their administration just over the bar into the land of legacy and library

CIGA Ken

Dear Ken,

MOPE is an economic philosophy. Spin is a tool of MOPE.

Jim

Jim,

You wrote about Goldman talking their book for the Euro. That’s a real shocker. Talk their book to control the Euro, which sets up the USDX swaps on the Fed’s books.

Operation control the dollar’s decline:

Euro comprises 57% of the USDX.  Control the Euro to control the USDX.

Still within circle 1 of the dollar which equates to chop in gold.  Soon that will change and gold will lead the way.

CIGA Eric

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Posted at 3:09 PM (CST) by & filed under General Editorial.

Dear CIGAs,

The dollar rallied in terms of the USDX yesterday, and the Euro came under pressure as Goldman Sachs repudiated a longstanding Euro buy and hold recommendation by issuing a sell Euro recommendation as the 5 year US Treasury bond auction went sour.

Logic has nothing to do with day to day trading. We all know the games that are played by big money interests with their lightening fast privileged information, goosed bids and offers, market manipulation (just in case you did not know exactly what that is all about) plus gold and silver market bravado bids and offerings to force price and neither buy or sell quantity.

Logic does have a lot to do with trends.

Let’s look at the logic of yesterday, forgetting the manipulative market intervention.

If you were to believe the market,you run out and BUY the US dollar to avoid risk BECAUSE MAJOR INTERNATIONAL INTERESTS WERE NO LONGER INTERESTED IN ACCUMULATING MAJOR ADDITIONAL DOLLAR DEBT ITEMS WHICH EQUATE TO THE DOLLAR ITSELF BEARISHLY. That is SIMPLE LOGICAL supply versus demand reasoning.

Now that is an exercise in INVESTMENT INSANITY.

Now here are today’s items concerning dollar fundamentals.

Keep in mind that if Bernanke does not support these US Treasury bond auctions without limit via QE, Bernanke whose term is coming up, is out, the Fed is a relic, and QE will support the auctions.

Chairman Bernanke’s decision is to either go full blast with QE or go back to teaching at Princeton while having chaired the demise of the Federal Reserve.

Volcker won it all. Greenspan gave it all way and more.

Bernanke will have chaired the demise of the Federal Reserve and its transition into something with teeth like the Department of Commerce plus an office for two lower level employees acting as financial traffic cops.

New jobless claims rise more than expected
Jul 30, 8:59 AM (ET)
By CHRISTOPHER S. RUGABER

WASHINGTON (AP) – The number of newly laid-off workers filing first-time claims for jobless benefits rose last week, the government said, though the increase was mostly due to seasonal distortions.

The number of people remaining on the jobless benefit rolls, meanwhile, fell to 6.2 million from 6.25 million, the lowest level since mid-April.

The Labor Department said new claims for unemployment aid increased by 25,000 to a seasonally adjusted 584,000. That’s above analysts’ estimates of 570,000.

A department analyst said the increase comes after claims were artificially depressed earlier this month by the timing of temporary auto factory shutdowns, which happened earlier this year than in most years. Still, this week’s total is below the 617,000 initial claims reported in late June before the seasonal distortions began. It reflects a trend that economists say indicates a slowing pace of layoffs.

The four-week average of claims, which smooths out fluctuations, fell to 559,000, its lowest level since late January.

But jobs remain scarce and the unemployment rate, which hit 9.5 percent for June, is expected to surpass 10 percent by year’s end.

More…

May-June joblessness up in 90 pct of metro areas
By JEANNINE AVERSA (AP) – 12 hours ago

WASHINGTON — More than 90 percent of the nation’s largest metropolitan areas saw their unemployment rates climb in June from the previous month.

Some of the biggest increases hit college towns, where the annual summertime exodus of students causes bars, restaurants and other businesses to cut staff. The Detroit area, hit hard by manufacturing layoffs tied to the beleaguered auto industry, also got stung in June.

Unemployment rates rose from May to June in 348 of more than 370 metro areas, according to an Associated Press analysis of Labor Department data released Wednesday.

The figures aren’t adjusted to account for seasonal trends, such as lifeguards hired during summer or retail clerks let go after the holiday shopping season. So they tend to be volatile from month to month.

The Labor Department does not provide seasonally adjusted metro area unemployment data. It does adjust the national unemployment rate for seasonal factors. The U.S. jobless rate, which hit 9.5 percent in June, is expected to rise to 9.7 percent when the department reports the July rate next week.

Tuscaloosa, Ala., home to the University of Alabama, suffered the biggest monthly increase in unemployment from May to June. Its jobless rate jumped to 12.5 percent in June, up 3.8 percentage points.

More…

Posted at 2:44 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

The CCI (Continuous Commodity Index) bounced from near the 50% retracement level of its move up from the December low as money flooded back into the commodity sector after that same money flooded out of it yesterday. The idiocy and madness continues unabated it seems. Trying to read too much into any one day’s price action has become the sport of fools so let’s not get snared in that net. Rather let’s try to use the longer term charts to see if we can see how the battle between the deflationists and the inflationists is faring.

Obviously with crude oil and copper soaring, gold was not going to stay down today, and with the equities continuing their orchestrated low volume move higher, the good times were here again in the minds of the hedgies, or better yet, their trading algorithms which were busy jettisoning everything that looked remotely like a commodity yesterday.

The grain pits, led by the soybean market, tore higher today as news of Chinese buying set a fire under those markets. When you get a combination of the energy markets (crude and natural gas) moving higher alongside the grains, you are not going to get serious selling pressure in gold outside of the bullion banks as nearly all of the spec funds will be buying.

I marvel at the copper market which is flirting once again with its highs made just a few days ago having quickly shrugged off the weakness of the past two days. It is difficult to argue with the trend in there but it sure makes once wonder if that market either knows something that the rest of us do not or if it is beginning to get ahead of itself.

Bonds – well, they are becoming almost completely unpredictable… down sharply at one point on the surging commodity markets and higher equities only to miraculously come soaring back after news that the auction on 7 years went very well (at least that is what we are supposed to believe). Apparently some feel that yields are at decent levels and want to own them but who really knows what games are being played in that market behind the scenes. There is simply way too much government intervention in the bonds with QA buys and such taking place to know how strong demand really is.

Gold managed to climb back above support down near the $932-$930 level which gave way yesterday. That is a good sign but I will not rest easier until price gets back above $940 and remains there. Only then can one say that the bears’ advantage has been lost. For now, $930 is a key support level that must remain intact to keep price from dropping down below $920. Only a climb back above $950 turns the tide in the favor of the bulls.

Open interest shows that the longs are indeed being forced out in gold with bullion bank short covering occurring.

That’s it for today as I have to keep things rather abbreviated.

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

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Posted at 9:31 PM (CST) by & filed under In The News.

Dear CIGAs,

Goldman is out there doing the public a service again by making a bear recommendation on the Euro at the exact same time as the US 5 year bond issues went begging.

I imagine that Goldman is a large short in the Euro, so why wouldn’t they talk it down if they could?

 

Jim Sinclair’s Commentary

Exactly as it occurred in the 70s, exactly as I told you it would occur in 2008-2012

"However, with bullion an increasingly attractive portfolio diversifier for central banks after a period of instability in the currency markets, fewer are selling gold, while talk emerged earlier this year of Asian banks considering new purchases."

Cenbank sales under gold pact well below limit: WGC
By Jan Harvey

LONDON (Reuters) – Official sector gold sales under the Central Bank Gold Agreement (CBGA) have totalled only 140 tonnes so far in the pact’s final year, well short of the maximum 500 tonnes allowed, the World Gold Council said.

France and Sweden are the two principal remaining sellers, the WGC said in an emailed statement on Wednesday, although the possibility exists for a further sale by the European Central Bank.

The 15 signatories of the pact, which also include the central banks of Spain, Germany and Italy, agreed in 2004 to limit gold sales to the market to 500 tonnes in any one year.

"With 140 tonnes of sales, according to our numbers, it looks like we have had over 100 tonnes less than was sold over the same period of last year," said Barclays Capital analyst Suki Cooper.

"Given the current pace, it is likely this is going to be the lowest annual sales-per-quota year since the start of the very first agreement."

The first CBGA was signed in 1999, and limited sales to 400 tonnes per year to avoid flooding the market with bullion and consequently destabilising the gold price.

More…

Jim Sinclair’s Commentary

Interested in buying Hartford or Albany?

I hear that someone is shopping an Alt A mortgage application on a large, historic and old white house in Washington.

State may sell Capitol buildings, others
Under GOP plan, government would pay to lease back most of the sites
by Matthew Benson and JJ Hensley – Jul. 29, 2009 12:00 AM
The Arizona Republic

Call it a sign of desperate times: Legislators are considering selling the House and Senate buildings where they’ve conducted state business for more than 50 years.

Dozens of other state properties also may be sold as the state government faces its worst financial crisis in a generation, if not ever. The plan isn’t to liquidate state assets, though.

Instead, officials hope to sell the properties and then lease them back over several years before assuming ownership again. The complex financial transaction would allow government services to continue without interruption while giving the state a fast infusion of as much as $735 million, according to Capitol projections.

For investors, the arrangement means long-term lease payments from a stable source.

Once any deals are approved, money could begin flowing into state coffers in as little as 90 days.

The plan has bipartisan backing, but that doesn’t make the prospect of paying rent for buildings once owned free and clear by taxpayers any easier to swallow.

"We’ve mortgaged the legislative halls," said an exasperated state Rep. Steve Yarbrough, a Chandler Republican. "That just tells you how extraordinary the times are.

More…

Jim Sinclair’s Commentary

Here is a video of Rick Santelli today reporting on the 5 year US Treasury auction:


 

Jim Sinclair’s Commentary

Polls are a politician’s sustenance If this is a crack in the armor then it has serious ramifications for a MOPE based Administration.

Poll Shows Obama’s Clout on Health Care Is Eroding
Wednesday, July 29, 2009 — 6:52 PM ET

President Obama’s ability to shape the debate on health care appears to be eroding as opponents aggressively portray the effort as a government-takeover that could limit Americans’

ability to chose their doctor and course of treatment, according to the latest New York Times/CBS News poll.

Americans are concerned that overhauling the health care system would reduce the quality of their care, increase their out-of-pocket health costs and tax bills and limit their options in choosing doctors, treatment and tests, the poll found.

More…

Jim Sinclair’s Commentary

Let’s see if the true believers in MOPE can spin this problem away.

California pensions next state financial crisis
Wed Jul 29, 2009 5:01pm EDT
By Jim Christie – Analysis

SAN FRANCISCO (Reuters) – On the heels of closing a $24 billion state budget deficit, California faces new financial trouble — from its public pensions.

The loss incurred by California’s biggest pension fund in the last year is more than half the size of the state’s spending plan, and financial analysts say the market on its own will keep the pension hole open for years or longer, a challenge public pension funds across the United States will also face.

"Pensions will be a major issue, sooner more likely than later, because they’re going to bankrupt many jurisdictions," said Bob Stern of the Center for Governmental Studies in Los Angeles.

Governor Arnold Schwarzenegger on Saturday in a radio address put the California Public Employees’ Retirement System, the biggest U.S. public pension fund that is best known as Calpers, on notice that its cost to the state government is in his sights.

"In these challenging economic times, we cannot afford everything we have funded in the past," he said. "And we will take on pension reform to cut down on unfunded liabilities and save the state billions of dollars."

By Monday, Calpers officials were discussing how to respond to Schwarzenegger — and others who may take aim at the fund.

More…

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Jim Sinclair’s Commentary

This is total nonsense when it comes to the gold market. It will never see the marketplace. This is purely spin for the shorts.

In the 70s this was the singular most bullish event as it allowed huge buyers in at one price.

With a planetary desire to diversify out of the dollar not changed in any way by three days of intervention and algorithm follow through trading how can you fall for this?

clip_image002IMF to sell gold within central bank pact-official
07.29.09, 12:42 PM EDT

WASHINGTON (Reuters) – The planned sale of 400 tonnes of IMF gold would take place within a new central bank gold sales agreement being negotiated, a senior International Monetary Fund official said Wednesday.

The IMF has provisionally agreed to sell the gold to raise resources for increased lending to poor countries. A final decision by all 186 IMF member countries on the sales is expected by IMF meetings in Istanbul in October and requires the support of 85 percent of the membership.

"We have committed as part of our new income model to have that gold sale, if done on the markets, to be done through the central bank sales mechanism," said Reza Moghadam, director of the IMF’s Strategy, Policy and Review Department.

Moghadam told a conference call the sales would take place through the central bank mechanism "all the time" and could take two to three years.

He said he hoped negotiations on the new Central Bank Gold Sales Agreement will also be finalized by October. The current 5-year agreement expires in September

More…

Jim Sinclair’s Commentary

This is so dollar negative it is hard to get worse.

What would be worse is 10 and 30 year bonds begging for buyers.

Now you see why it is QE to infinity or the Fed is toast, compliments of the legislative at the behest of the Administration.

Weak U.S. 5-year debt auction raises worries
Wed Jul 29, 2009 1:52pm EDT

NEW YORK, July 29 (Reuters) – The U.S. Treasury sold $39 billion in five-year debt on Wednesday in an auction that drew poor demand, raising worries over the cost of financing the government’s burgeoning budget deficit.

Demand overall was below average, measured by the bid-to-cover ratio of 1.92, the weakest in almost a year.

In a further sign of weakness, yields at the auction were well above expectations, known as a "tail" by market participants.

A key proxy for foreign interest, the indirect bidder category, was slightly above the average of auctions over the past year at 36.6 percent but far below the most recent sale.

"It was just a horrendous result," William O’Donnell, head of U.S. Treasury strategy at RBS Securities in Greenwich Connecticut, said about the auction.

"It was the weakest bid-to-cover since September 2008, and by my numbers it was the biggest tail since February 1993. It was just a very, very weak result."

More…

Jim Sinclair’s Commentary

Maybe they can talk this problem away.

California Can’t Stop IOUs Just Yet, State Controller Says
By Michael B. Marois

July 29 (Bloomberg) — California must continue paying some obligations with IOUs for at least another week while officials crunch numbers to see if a budget revision signed by Governor Arnold Schwarzenegger puts enough cash into state coffers.

Democratic Controller John Chiang’s office said he will determine when the IOUs will stop once he has received updated revenue projections from Schwarzenegger’s finance department, expected sometime next week, Deputy Controller Hallye Jordan said in telephone interview today. Schwarzenegger, a Republican, yesterday signed a revised $84.5 billion budget that lawmakers sent him July 24.

California, whose economy is the eighth-largest in the world, begin giving out IOUs on July 2 for only the second time since the Great Depression for everything from tax refunds to services and goods, after Schwarzenegger and lawmakers deadlocked over how to close a resurgent deficit that left the state without enough cash.

“It’s not going to happen overnight,” Schwarzenegger told reporters in his Sacramento office yesterday after he signed the revision.

Since July 2, Chiang has issued more than 200,000 of the IOUs worth $1.08 billion. The so-called registered warrants, mature in October and pay an annualized interest rate of 3.75 percent. The state has the authority to repay early if the money is available.

More…

Jim Sinclair’s Commentary

One out of ten put of work by OTC derivatives and we all subsidize the Banksters?

Where is the public outrage? God help us all.

Out of the TARP, But Still on the Dole
Posted by Mark A. Calabria

While banks such as Goldman and J.P. Morgan have managed to find a way to re-pay the capital injections made under the TARP bailout, their reliance on public subsidies is far from over. The federal government, via a debt guarantee program run by the FDIC, is still putting considerable taxpayer funds at risk on behalf of the banking industry.  The Wall Street Journal estimates that banks participating in the FDIC debt guarantee program will save about $24 billion in reduced borrowing costs of the next three years. The Journal estimates that Goldman alone will save over $2 billion on its borrowing costs due to the FDIC’s guarantees.

One of the conditions imposed by the Treasury department for allowing banks to leave the TARP was that such banks be able to issue debt not guaranteed by the government.  Apparently this requirement did not apply to all of a firm’s debt issues.  These banks should be expected to issue all their debt without a government guarantee and be required to pay back any currently outstanding government guaranteed debt.

To add insult to injury, not only are banks reaping huge subsidies from the FDIC debt guarantee program, but the program itself is likely illegal.  The FDIC’s authority to take special actions on behalf of a failing ”systemically” important bank is limited to a bank-by-bank review.  The FDIC’s actions over the last several months to declare the entire banking system as systemically important is at best a fanciful reading of the law.

The FDIC should immediately terminate this illegal program and end the continuing string of subsidies going to Wall Street banks, many of which are reporting enormous profits.

More…

 

Jim Sinclair’s Commentary

Outside of us here, who cares about the average guy?

It is all Banksters, institutions and Fat Cats squashing the backbone of a nation, the blue collar citizen.

Good news, these guys shuffled paper. Yes, that is what this says.

I am sick to my stomach as I see the news pass in front on my eye. This is worse than when I listen to the F-TV hacks.

U.S. Banks Dodge Regulatory Bullet
By Dana Wiklund , IDG News Service , 07/29/2009

With the results of the government stress tests of the nation largest banks released it would appear that the banking system has dodged a regulatory bullet in terms of a potential need for massive new infusions of equity capital. What does this mean for the banking system and providers of technology to financial services?

The U.S. banking system has dodged a bullet. As the government has completed its stress testing of the nation’s top 19 (why not 20?) institutions, the capital adequacy of a few of the nation’s top banks have been called into question while many others have been deemed healthy — for the moment. What is the significance of these tests? Government regulators have for each bank simulated baseline and worst case scenarios for further deterioration in asset quality — the value of assets with each institution. The worst case scenario was very severe simulating economic conditions rivaling the great depression.

Regulators have drawn a line in the sand indicating which banks need additional equity capital to offset potential future devaluations in consumer, commercial or derivative assets. This is preventative medicine to ward off a future solvency crisis which would further aggravate global systemic risk, the risk of the global financial system freezing up with risk aversion. Banks need to lend to one another, lend to businesses and lend to consumers if the domestic and global economies are to turn a corner towards a return to modest growth over the next 18 months and in order for that to happen, relative stability and transparency regarding solvency risk with our largest banks is critical. Analysis, transparency and capital adequacy leads to improved market confidence.

The good news in these stress tests is that regulators feel that institutions will be able to raise additional equity either by re-jiggering of their capital structures by converting preferred stock or by raising additional common equity in the capital markets without the government directly infusing cash or taking equity positions in the banks.

More…

Jim Sinclair’s Commentary

I have said and will say again that the Federal Reserve has no practical tools whatsoever to be able to drain the massive increase in international liquidity regardless of the loud claims to have everything always under control.

Take a look at the Asian view on this subject.

No escape for Fed
By Hossein Askari and Noureddine Krichene

In contrast to Federal Reserve chairman Ben Bernanke’s testimony last week, we cannot see a safe "exit strategy" for the Fed from its current loose monetary policy. Bernanke’s ambivalent testimony of a safe exit strategy can only heighten uncertainty and exacerbate instabilities. Let’s explain.

In his recent testimony on July 21 before the Committee on Financial Services of the House of Representatives, Bernanke was felicitous that aggressive money policy had averted the collapse of the financial system. However, he omitted to say that the same policy had failed to avert a collapse of real gross domestic product (GDP) and private investment and rising unemployment.

The economic recession continues despite interest rates being near-zero, money supply rising at 22% a year, unprecedented stimuli packages, and record fiscal deficits reaching 13% of GDP in 2009. Bernanke and President Barack Obama’s team had clearly believed that a combination of aggressive money and fiscal policies would secure the return to full-employment and quickly. After all, Larry Summers had predicted the unemployment cresting at about 8%. These expectations were standard Keynesian predictions that have proven to be substantially off the mark.

As clearly implied by Bernanke himself, this policy has so far been self-defeating: "Aggressive policy actions taken around the world last fall may well have averted the collapse of the global financial system, an event that would have had extremely adverse and protracted consequences for the world economy. Even so, the financial shocks that hit the global economy in September and October were the worst since the 1930s, and they helped push the global economy into the deepest recession since World War II.

"The US economy contracted sharply in the fourth quarter of last year and the first quarter of this year. More recently, the pace of decline appears to have slowed significantly, and final demand and production have shown tentative signs of stabilization. The labor market, however, has continued to weaken."

More…

Jim Sinclair’s Commentary

This is very modest progress on short seller’s tactics.

SEC Sticks With Patchwork Fix For Naked Shorts
Liz Moyer, 07.27.09, 04:20 PM EDT

Regulator makes permanent an emergency rule that requires brokers to promptly buy or borrow security to deliver.

The markets will still have to wait for stricter rules to stop abusive short-selling.

On Monday, the Securities and Exchange Commission made a temporary emergency rule permanent that requires brokers to promptly buy or borrow securities to deliver on a short sale. But the agency stopped short of deciding on other hot issues, including the resurrection of the so-called uptick rule and circuit breaker restrictions. Instead, it said merely it would hold a hearing at the end of September.

That adds further delay to resolving a long-running debate at the agency and in the markets about whether existing rules are adequate to prevent abusive short-selling, whether those rules are being properly enforced and whether additional safeguards are needed.

The now permanent rule, which requires brokers to promptly buy or borrow a security to deliver, would have expired on Friday. It is aimed at stopping "naked" short-selling, where a trader doesn’t borrow or properly locate a stock before selling it, potentially allowing them to drive the price of the stock lower regardless of the supply/demand for the issue. The rule cleans up trades after the fact by ensuring that the stock is delivered to the buyer, closing out a failure to deliver. A great quantity of failures to deliver in any one stock can be a sign of abusive trading.

More…

Jim Sinclair’s Commentary

Exactly what will the military be doing? This is a CNN report.

Military planning for possible H1N1 outbreak
10:20 p.m. EDT, Tue July 28, 2009

WASHINGTON (CNN) — The U.S. military wants to establish regional teams of military personnel to assist civilian authorities in the event of a significant outbreak of the H1N1 virus this fall, according to Defense Department officials.

The proposal is awaiting final approval from Defense Secretary Robert Gates.

The officials would not be identified because the proposal from U.S. Northern Command’s Gen. Victor Renuart has not been approved by the secretary.

The plan calls for military task forces to work in conjunction with the Federal Emergency Management Agency. There is no final decision on how the military effort would be manned, but one source said it would likely include personnel from all branches of the military.

It has yet to be determined how many troops would be needed and whether they would come from the active duty or the National Guard and Reserve forces.

Civilian authorities would lead any relief efforts in the event of a major outbreak, the official said. The military, as they would for a natural disaster or other significant emergency situation, could provide support and fulfill any tasks that civilian authorities could not, such as air transport or testing of large numbers of viral samples from infected patients.

More…

Jim Sinclair’s Commentary

QE to infinity or the Federal Reserve into the round file, that is what this present game is all about.

Expect new legislation limiting the Fed’s power as part of transmuting the Fed into a financial police station.

Volcker won it all and Greenspan gave it all back plus more. Bernanke may well Chair the Fed out of business.

Gallup Poll: Americans Turning Against Federal Reserve

Opinions souring as efforts to audit the Fed gain momentum

As momentum builds for Ron Paul’s efforts to audit the Fed, a new Gallup poll shows that Americans are turning against the Federal Reserve, with just 30 per cent saying the agency is doing a good job.

35 per cent rate the job the Fed is doing as "only fair" and 22 per cent say it is doing a "poor" job.

The contrast compared with when the question was last asked in 2003 is clear. Six years ago, just 5 per cent thought the Fed was doing a "poor" job, while 53% thought it was doing a "good/excellent" job.

The Fed is bottom of the pile when compared to the ratings received by other agencies in the poll (we hesitate to call the Fed a "government agency" because it isn’t). The IRS and the FDA are the other two least popular agencies.

According to Gallup editor in chief Dr. Frank Newport, "Americans are blaming to some degree the actions or inactions of the Federal Reserve board" for the economic turmoil.

More…

 

Jim Sinclair’s Commentary

Here is an interesting review of the DTCC system that asks a most interesting question.

However if you believe in MOPE, why worry?

Who Really Owns Your Stocks? Hint: It’s Not You

So, do you think you own the stocks you’ve bought?

Think again.

For those of you who have not heard of the Depository Trust & Clearing Corp. (DTCC) and you own stocks … sit down.  This might change your your whole way of thinking.

Who is the DTCC and what does it do?  The DTCC actually provides clearing for 3.5 million securities from the United States and, get this, from 110 other countries and territories as well — all valued at roughly $28 trillion.  In 2008 alone, the DTCC settled more than $1.88 quadrillion in securities transactions.

The DTCC is also the registered owner and holder of your stock.

At present, the DTCC holds $23 trillion in assets.  It has a virtual monopoly on clearing.  In fact, 99% of all stocks in the USA are legally owned by it.

When Was the Last Time You Saw a Stock Certificate?

Remember the good old days when you bought a stock and received a certificate for it?  The SEC changed that law and went from stock certificates for individual investors to, well, your broker holding the certificate for you so that he or she will be able to legally trade it on your behalf.

The stock certificates were issued in the name of the brokerage … remember, just so they could trade them for you.  In reality, you became the beneficiary of the stocks you bought rather than the owner.

But the SEC, out of the goodness of its heart, changed the laws again, so that now the brokers can’t have the stocks in their name. Instead, the stocks must be placed in the name of "Cede & Co."

The excuse you’ll hear from your broker is that it is just a fictitious name used by the brokerage so it can trade your stocks for you because brokerages can’t, by law, put the stock certificates in their name any longer.

To Whom, Exactly, Have You ‘Ceded’ Your Stocks?

What we have now suddenly all come to find out is the Cede & Co is actually not a fictitious name, but a subsidiary company of DTCC.  In essence, DTCC owns probably 99% of all the stocks in the entire world.

This is how it works.  You buy some shares of stock at your brokerage.  Your broker tells you that, in order to do business on your behalf, you must give the brokerage power of attorney to buy and sell.

Therefore, your stock purchases are placed in a "street name" because, according to the SEC, no brokerage can place a stock in its own name.  The brokerage then notifies the DTCC of the transaction.

The DTCC is a banking trust company and, by SEC regulation, cannot own shares in its own name, either.  So it transfers the certificates to its subsidiary, Cede & Co.

What do you own?

How about nothing?

And now you are not even the beneficiary.  The brokerage is technically the beneficiary.  You are twice removed!

Guess Who’s Also Behind the Mortgage Mess

Recently, DTCC presented testimony before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.  The hearing was on "Effective Regulation of the Over-the-Counter Derivatives Markets," just a couple of weeks ago, and the transcripts were just released.

The subcommittee is attempting to find out how mortgages could come to be packaged and then sold, and then re-packaged and resold many times over.  Since DTCC owns 99% of all derivatives, it seems only fair that it would be called to give testimony.

Larry Thompson, general counsel for DTCC, applauded the good works of the DTCC.  In his opening statement, he said, "Now, many of you may not have heard of DTCC before. That’s purposeful. We have traditionally kept a low profile, given the critical nature of the role we play in U.S. financial markets."   (Dah … who would have guessed?)

In truth, DTCC knew all about the Collateralized Debt Obligation (CDO) markets, who owned what, how often the same collateral was used and repackaged, etc.  Why?  Because they own it all.

DTCC created a massive computer warehouse and keeps records of all CDO trades, all stock transactions, all derivatives, etc.  It has a monopoly on clearing.  And to justify its great job, Thompson added to his testimony.

"I’d submit to you Mr. Chairman, and Members of the Subcommittee, that had DTCC not had the foresight to create this Trade Information Warehouse and load the Warehouse with all these records of CDS trades in 2007, we might still be sitting here today in 2009 trying to sort out the total exposure of trading obligations following the Lehman bankruptcy, i.e., who traded with whom, at what point in time and at what price?”

Next time you are in the market to buy stocks, trade futures.  You’re only in the trade for four minutes or less.  Not enough time for Cede & Co. to get their mitts on your money. …

Barbara Cohen
Contributing Editor
The Tycoon Report

Posted at 2:26 PM (CST) by & filed under General Editorial.

Dear Friends,

Let’s keep the last three days simple.

You either like gold, or you like the dollar.

That is all there is to it.

Respectfully yours,
Jim

Posted at 2:20 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

In what is a continuation of yesterday’s deflationary trade, the US Dollar moved sharply higher today with crude oil getting whacked along with most of the rest of the commodity complex, including ol’ Dr. Copper. That allowed for further long liquidation in gold which as those of you who follow this site regularly understand, always tends to occur during rollover week as funds move positions out of the front month to avoid delivery issues. The perma bears generally tend to time their gold takedowns in association with these rollovers – no surprise there.

Open interest readings reveal sizeable long liquidation occurred in yesterday’s sharp plunge lower in gold. The recent Commitment of Traders report has shown the momentum following trading funds with a rather large net long position which caught the attention of the predatory bullion banks who dug in their heels above $958, sucked up all the bids and then rammed the market lower after which they stepped aside and let the computerized black boxes of the funds do their work for them as they are now covering those shorts put on above $955.

The only way to short circuit this rather simpleminded strategy of the bullion banks is for some of the big funds to simply stand for delivery and insist on taking the gold out of the warehouse but no matter how often we lay out a clear strategy for victory over the Comex gold goons, the hedgies simply cannot bring themselves to taking the necessary steps to prevent their own plundering at the hands of the bullion banks.

Open interest is shifting to the December contract which is now 4 times that of the August.

With the short term technicals having now turned in favor of the gold bears, the market will need to find support near the next level of $920. Failure there and it is back down below $910. Resistance is now $940 on the topside.

It appears that the fundamentals of large supplies in inventory are taking crude lower and when coupled with the stronger US Dollar, is resulting in a buyer’s strike across the entire commodity complex. That has taken the CCI (Continuous Commodity Index) down near its 50 week moving average on the price charts which is also quite close to the 50% Fibonacci retracement level from last December’s low to this June’s high. One has to think that if the inflation argument is winning, the commodity complex will find buying support rather soon. If not, we could drift down to near 380 on that index which I suspect will see a large amount of index fund money making its way back into these markets.

Once again the bond market is trading in an extremely erratic fashion. Early in the session it was the recipient of safe haven flows on the heels of the lousy durable goods number and the weaker stock indices. Additionally, the Fed was in there buying $3 billion worth of bonds as part of their Quantitative Easing program. As soon as that buying was over, the bonds began drifiting well off their highs and were stabilizing there until the results of the $39 billion auction of 5 years became known. They then took a sharp dive as poor demand at the auction raised fears about the massive amount of supply that is coming at the market. Pity the unfortunate mortgage outfit attempting to get a read on this screwed up market so that they can set up some sort of hedging program!

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

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