Lets never forget to honor our fallen heroes, even if the war they fight is total madness.
They took an oath to serve, and do so at the command of their officers bravely and selflessly.
God Bless them and theirs forever.
Jim Sinclair’s Commentary
Finally the message given here on JSMineset, "CONSEQUENCES" is being picked up by others. The message will now spread and communicate.
CONSEQUENCES" cannot be voided by any method. They will occur.
The Coming Consequences of Banking Fraud
September 09, 2009
J. S. Kim
The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud. The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks. If the mission of this current manufactured leg-up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until this point, the mission has been a resounding success. For those unfamiliar with the term “blowback”, it’s a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.
Though this term has primarily been used to describe the consequences of covert military operations, “blowback” is an appropriate term to use to describe the coming consequences of banking fraud because the US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future. In fact, I predict that the blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people.
In an article I wrote three months ago, on June 10, 2009, titled, “Can Rising Stock Markets Serve as a Confirmation of a Crashing Economy?”, I stated, “Whether I am right or wrong about US markets tanking by summer’s end/fall’s beginning, if [we] position [our] investment assets based upon an understanding of the fraudulent monetary system, [we] can still continue to create wealth.” While true, I was a bit early in raising the proposition of a stock market correction the month before; I amended my prediction in June upon realizing the breadth of the manipulation schemes occurring in Western stock markets. In today’s markets, only a complete investment novice would try to predict market behavior without accounting for the massive government intervention schemes and forays into stock markets as well as the computerized manipulation of daily trading volume. One of the main reasons, but not the only one, that I amended my target for the end of this rally this past June to the fall season is the fact that fall normally marks the return of much higher daily trading volume from the traditional summer lulls. Thus, it is a much more difficult proposition for Central Banks and computerized trading programs to manipulate a continued rise in stock markets in the face of higher daily trading volumes.
However, should daily trading volume remain surprisingly low or muted this fall, as is also a possibility, I have no doubt that this market rise can persist for an extended period longer before these false gains are eventually flushed away (but, of course, not before all US financial executives have had ample time to exit their positions quietly). In fact, the development of this false rally was the main topic of my article. The other scenario, one that includes a significant rise in daily trading volumes that trigger the start of a second massive decline in Western stock markets, would not surprise me either. It’s just a matter of observing the signs that forecast the waning efficacy of the fraudulent stimulus of Western markets (or for this matter, the fraudulent stimulus of Chinese stock markets too).
Remember that it is only the timing of this decline that I am uncertain of, but I am very certain that a significant decline of a shocking nature is coming. The last time I issued an adamant warning of a similar nature was on April 23, 2008, when again, the only issue about a market crash was timing, though the US S&P 500 index peaked just 18 business days after I wrote that article and proceeded to fall by more than 50%.
To truly gain more clarity regarding this recent Western stock market rally, consider a hypothetical scenario in which a person was kept ignorant of any action in the US stock markets for the entire previous six months. Instead, imagine that he or she was given the task of predicting US market behavior over the past six month period solely based upon cold, hard US financial and economic data stripped bare of any of the media-slanted headlines that perpetually spin bad economic data as positive or “less bad” than it truly is. Based upon the economic data produced from the last six months, what do you think this person would conclude? That stock markets have soared during this time or that they had crashed?
Of course, factor in the plethora of evidence about numerous PPT interventions to “save” markets during this time, and the strong US stock market rally no longer seems so illogical. But strip away any evidence of free-market manipulation and interference and in the face of true, undistorted economic data, our current market rally would be enormously puzzling. And this point alone should be sufficient to tell you how this rally will end. The inevitable conclusion of this rally isn’t just about the unsustainability of the massive bailout programs implemented by global Central Banks that have engineered this current market rally out of thin air, but its manifestation should trigger an investigation into the outright fraud committed by Wall Street, banking institutions, and Central Banks that has been aided and abetted by financial journalists.
For example, consider the following stories:
Demographers recently reported that Florida, the state known as the “mecca” for wealthy retirees in America, suffered its first population decline last year in more than 60 years, an event that delineates the collapse in wealth of American retirees and an event that is likely to repeat this year.
At the end of this past July, one of the largest ports in America, Long Beach, reported that the 20% year-over-year cargo business decline is among the sharpest since the Great Depression. This is not a trend specific to Long Beach. “It’s phenomenal how much things fell away even since December,” said Paul Bingham, managing director of global trade and transportation for IHS Global Insight, the business research firm that monitors North America’s biggest ports for the National Retail Federation.
As of September 4, 2009, shadowstats.com reported that unemployment in the US is now near 21% and is showing no signs of improving any time soon (when factoring in discouraged workers, part-time workers that can’t find full-time work, unemployed workers that have fallen off the unemployment roll, etc.). In fact, yesterday, Manpower’s Employment Outlook Survey reported that US employers’ hiring plans for the upcoming fourth quarter dropped to the lowest level in the history of its survey which dates back to 1962.
On August 15th, when BB&T (BBT) purchased failed US bank Colonial Bank, it wrote down Colonial Bank’s loans and real estate collateral by 37% and Colonial Bank’s construction loans by 67%. Yes, 67%! The severe markdowns of Colonial Bank’s assets should have set off warnings akin to a five-alarm fire among the financial media, but it did not, for the media increasingly caters to the interests of the elite bankers of this world at the cost of truth and freedom. If there are several things we can deduce from Colonial Bank’s failure, it is the following.
Though the Federal Deposit Insurance Corporation (FDIC) refuses to disclose the names of the banks on its “watch list”, it can be safe to assume that a bank just does not go bankrupt overnight and that the process of going bankrupt can be predicted many months in advance by personnel with access to a bank’s financial statements and knowledge of its true financial condition. In fact, various newspaper articles reported that Colonial Bank was in negotiations with the FDIC as early as March, 2009, yet not one time, did the FDIC force Colonial Bank to come clean regarding its true financial health before it finally shuttered the bank five months later.
The fact that the FDIC is spotting massive trouble in the American banking system and covering it up should be massively worrisome to Americans. Because revelations regarding the truth about a US bank’s health only seem to occur after it fails, the favored handling of American banks with kid gloves by the FDIC should immediately beg the question, “How many more US banks are legitimately bankrupt today and just operating on fumes?”
Personally, I would not be surprised if sometime within the next six months, a considerably larger US bank failure causes a massive ripple effect of much greater consequence. Banks that are currently struggling with unreported and covered-up deepening problems of loan delinquencies such as Wells Fargo (WFC), may be among the large banks that are candidates for future bankruptcy despite the public categorization of such institutions in the “too-big-to-fail” category. Unfortunately, Wells Fargo, from a political standpoint, does not have the “most favored bank” status of a Citigroup (C) or JP Morgan (JPM), two institutions deserving of bankruptcy but clearly favored by the US Federal Reserve and the US government.
When one considers the fact that all government or state produced economic statistics have been massively distorted towards the side of optimism and away from reality throughout this global financial crisis, one should be even more worried when the occasional sparse negative statistic is reported, for it is likely that these statistics too are misrepresenting the truth. Thus, in the face of all negative news that points to zero foundation and zero economic structural improvements, how has a multi-month stock market rally been able to spread across Asia, Europe and the US? Again, the answer is fraud, and thus should be analyzed through the prism of fraud and not the false prism of “economics”. There is no “economics” behind this latest global stock market rally, only fraud.
For many weeks in August, just four stocks accounted for as much as 40% of composite volume on the NYSE: Citigroup, Bank of America (BAC), Freddie Mac (FRE) and Fannie Mae (FNM). In early 2007, Citigroup, Fannie Mae and Freddie Mac accounted for roughly 1% -3% of NYSE volume, a far cry from its recent 35%+ collective weight of the composite NYSE volume. Remember that this huge volume anomaly persisted not just for one day but for weeks on end during August. If Citigroup, Bank of America, Fannie Mae and Freddie Mac were a pharmaceutical collective that just discovered a cure for cancer and AIDS, then such volume anomalies would make sense. However, such massive trading volumes, as a percent of composite volume for the entire NYSE index, makes zero sense for companies, that for all intents and purposes, are on government bailout lifelines. It makes no sense, that is, unless massive free-market intervention is occurring in an attempt to save these firms.
Again, when viewed through the “fraud prism”, such activity makes complete sense. It is obvious that the “Rise of the Machines” has created markets that are now dominated by computerized high frequency trading programs that can execute trades as quickly as 0.5 milliseconds and have as their sole purpose the creation of short-term market distortions driven by statistical arbitrage that can be used to game the system and cheat their clients. Though this link describes how this scheme works in commodity markets for those that have been following the New York Stock Exchange, the use of high frequency trading programs to game the system at the expense of the retail investor has been glaringly obvious especially in the trading behavior exhibited this past summer.
The ironic part of this huge scam that has merely just re-inflated another massive stock market bubble is that the segment of the public that is so easily angered by government bailouts, billion dollar bonus plans for Wall Street executives and the chicanery of JP Morgan and Goldman Sachs (GS) (and justifiably so), are the very same people that so passively accept the mountain of lies that passes for financial reporting today (inexplicably so). It is ironic that this same collective of people, instead of rejecting this mountain of lies, continues to listen to their financial advisers at global commercial investment firms, even though these advisers are the same group of people that miserably failed to see the crash that started in the spring of 2008, when the factors behind the pullback back then was just as clear as the factors behind the future pullback that will occur in the near future. It is ironic that this same group of people continues to support, participate and fund a system that cares only about using their clients’ money to lie, cheat and steal from them when a simple withdrawal of funds from the system is the antidote to ignorance-induced paralysis that will once again create massive crisis-induced losses in the future. Pulling one’s money from one’s current firm and switching to another firm that participates in this web of lies and deceit is not a solution either.
It is ironic that it is the same group of people that so readily accepts the Western media’s correct analysis of China’s stock market as a huge bubble through the lens of Austrian economic principles that simultaneously rejects any similar notion as applicable to US or UK stock markets, and instead, readily embraces heavily flawed and unsound Keynesian economic principles when evaluating Western stock markets. It is ironic that the same group of people that foolishly equates being “American” with blind support of the US stock market (i.e. “being bearish on the US market is un-American!”) is also completely ignorant of both the massive fraud that is perpetrated in US stock markets as well as the tenets of the US Constitution that sound great objections and warnings to the ruinous and foolish monetary policies that are implemented by bankers as their “solution” to our current economic crisis. And finally, the greatest irony of all is that the anger that brews inside those that have been tragically hurt by this crisis can coexist with the failure to recognize that it matters not in America if the President has the last name Clinton, Bush or Obama – that monetary and fiscal agenda inside the US for the last 17 years has not wavered nor changed one iota during this period of time because it was not these men that have been in charge of the economy but the men that manufactured these men’s rise to power and that control the US Federal Reserve and the world’s Central Banks, and thus the global monetary policy.
If one can not see the connection between Presidents, Prime Ministers and the banking families that rule Central Banks, one merely needs to open up a newspaper and follow their lives after they leave government office. It is not just a coincidence that ex-British Prime Minister Tony Blair, after leaving office, took a part-time consulting job with JP Morgan’s Jamie Dimon that reportedly pays him $5 million per year as well as another well-paid consulting position with Zurich Financial Services. In office, Mr. Blair was a consultant to the banking oligarchs in secret; out of office, he is free to be a consultant publicly. And one can be certain that current UK Prime Minister Gordon Brown and US President Barack Obama will be offered very considerable salaries and fees by the world’s top financial oligarchs as thanks for their current and past service to them once they leave office as well (especially Gordon Brown, for selling out his countrymen and selling more than half of England’s bank reserves to ensure that the financial oligarchs could maintain the US dollar as the de-facto international currency for 10 additional more years than it deserved to hold this status).
In the end, what is the most frustrating facet of these huge con games executed by the financial oligarchs is that the group of people that this article is most intended to help is often the group of people that will take most offense to this article and most steadfastly refuse to see the truth. Instead, they will only realize the truth when the economic future unfolds to the blueprint of those of us the media labels as “gloom and doomers” because we base our predictions on reality instead of fantasy and lies. Instead of labeling us as “gloom and doomers”, if the media at large ever conducted an unbiased analysis of the predictions of the “gloom and doomers” for the past 3 years, they would discover that the “gloom and doomers” have been spectacularly accurate in the majority of their calls while the financial demagogues they continually fawn over (that only serve the interests of the bankers) have been spectacularly wrong in the vast majority of their predictions. Yet, those that serve the international banking cartel with glowing and rosy predictions of economic recovery never suffer the negative consequences of being wrong all the time as the mass media all too happily continues to provide the largest public platform and the loudest voices to these people. Perhaps, if it is accurate to label “gloom and doomers” as realists, then one should label the optimists that make their calls based upon perpetrated fraud as banking shills and cogs in the investing machine, for their societal contribution of greatest significance is an opiate cocktail for the masses that is a mixture of deceit and lies mixed with unbridled optimism.
As they often say that life imitates art, I close my article today with a speech from the film “V for Vendetta” that is frighteningly relevant if you listen to this speech with a critical ear and replace the references to the war on terror in this speech with the current war the bankster fraudsters are committing against the people. A sound money backed by precious metals, can be the people’s liberation from this war. Anything that falls short of such a solution will be just another scam in an already long line of scams, of a solution sold to the masses, that in reality, is no solution at all.
Jim Sinclair’s Commentary
What the original plaintiff seems not to have done, Fox News has.
Fox News appeals ruling for U.S. Fed over bailout
Wed Sep 9, 2009 7:05pm EDT
Friday, 28 Aug 2009 11:46pm EDT
* Different judge ruled for Bloomberg News in similar case
NEW YORK, Sept 9 (Reuters) – Fox News Network LLC on Wednesday appealed a U.S. judge’s decision not to force the U.S. Federal Reserve to reveal the names of participants in its emergency lending programs.
The news network, part of Rupert Murdoch’s News Corp. (NWSA.O) filed with the 2nd U.S. Circuit Court of Appeals seeking to over turn a July 30 ruling by U.S. District Judge Hellerstein that denied the network’s Freedom of Information Act (FOIA) request of the U.S. central bank.
In a similar case in late August, the chief district judge of the same court – the U.S. Court for the Southern District of New York – ruled for Bloomberg News and ordered the Fed to release the names and amounts
Chief District Judge Loretta Preska ruled in favor of Bloomberg News and against the Fed saying the central bank had to release the names of the banks that participated in its emergency lending programs.
The Fed appealed Preska’s ruling and now both cases are before the 2d Circuit.
Jim Sinclair’s Commentary
Here is a cheat sheet on how to react to market data releases in a 1932 or hyperinflation type equity market rally:
Weak data = Fed ease, stocks rally
Consensus data = lower volatility, stocks rally
Strong data = economy strengthening, stocks rally
Bank loses $4bln = bad news out of the way, stocks rally
Oil spikes = great for energy companies, stocks rally
Oil drops = great for the consumer, stocks rally
Dollar plunges = great for multinationals, stocks rally
Dollar spikes = lowers inflation, stocks rally
Inflation spikes = will inflate all assets, stocks rally
Inflation drops = improves earnings quality, stocks rally
Thanks to CIGA Udoran.
Jim Sinclair’s Commentary
We have dropped to the lowest levels possible.
The translation of this is bankers want international financial leaders to intervene to stop FASB from requiring fair valuation of assets that banks carry so they can continue to overvalue (falsify) their assets.
There is no hope.
Bankers Want G-20 to Rein in FASB, IASB
(SEPTEMBER 10, 2009)
The American Bankers Association has written to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke asking them to raise accounting issues at the upcoming G-20 meeting in Pittsburgh in order to curb efforts by standard-setters to expand mark-to-market accounting to loans and debt instruments.
In the letter, ABA president and CEO Edward Yingling claimed that the mark-to-market accounting changes proposed by the Financial Accounting Standards Board and the International Accounting Standards Board are at odds with the changes recommended by the G-20 in a statement last week.
“Most experts, including banking leaders, believe that repairs are needed to the accounting model, particularly in the area of provisioning for loan losses,” wrote Yingling. However, he argued that the FASB and IASB proposals go too far and “would undermine the G-20’s efforts to strengthen the financial system.”
The FASB and the IASB are proposing to increase the use of mark-to-market measurements in accounting for loans and debt securities. The IASB is scheduled to finalize its rules by the end of 2009, and FASB is scheduled to issue final rules in the second half of 2010.
Yingling argued that an expansion of mark-to-market accounting would lead to reduced lending, changes in the product types available to customers, an increased cost of capital to the banking system, and higher cost of credit to borrowers.
Thoughts of the Day:
1. This morning around 8am an interviewer asked a talking head "In the cold reasoning of Wall Street why do we care?" concerning those who purchased Lehman paper from their local banks only to find out that their saving were totally wiped out.
That approach simply explain the heart of the problem. Wall Street, the Banksters and Federal Agencies simply so not care. They never cared and they never will care. It is a form of "the public be damned," and they have been.
2. I refer you back to one of Martin Armstrong’s best lessons. The article he wrote is titled "How all systems can collapse overnight." This is exactly how the dollar will behave. It will move lower, slowly with on balance decline and inter-day or inter-week rallies. The weight on price will grow and grow and then the bottom will fall out. This will happen as a product of loss of confidence both in economic and political leadership.
The coming winter is going to be very difficult on the US dollar. Be prepared!
Jim Sinclair’s Commentary
I find reviews of this type of development to be depressing.
It is enough to say what you see is what you get for a long time to come.
The MOPE will not agree, but that is the purpose of Management of Perception Economics, an economic theory.
U.S. Foreclosure Filings Top 300,000 for Sixth Straight Month
By Daniel Taub
Sept. 10 (Bloomberg) — Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month as job losses that boosted the unemployment rate to a 26-year high left many homeowners unable to keep up with their mortgage payments.
A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18 percent from a year earlier, and down 0.5 percent from July, the Irvine, California-based company said in a statement. One in 357 households received a filing.
Foreclosures rose from a year earlier as companies cut payrolls by 216,000 workers last month, boosting the U.S. jobless rate to 9.7 percent, according to Labor Department data released last week. The rise in unemployment is having a bigger impact than an effort by the U.S. government and banks to modify mortgages and prevent foreclosures, said Morris A. Davis, an assistant real-estate professor at the Wisconsin School of Business.
“The foreclosure numbers are largely unemployment related,” Davis, a former Federal Reserve Board economist, said in an interview. “As long as 15 million Americans are unemployed, record foreclosures will continue.”
Foreclosures aren’t abating even as demand is returning to the U.S. housing market after a three-year slump. The number of contracts to buy previously owned homes rose more than forecast in July and increased for a record sixth consecutive month, while mortgage buyer Freddie Mac said the average price rose 1.7 percent in the second quarter.
Jim Sinclair’s Commentary
Is the UN saying no to the US crack cocaine finance? China has.
The dollar is going to experience a very cold winter.
UN Says New Currency Is Needed to Fix Broken ‘Confidence Game’
By Jonathan Tirone
Sept. 7 (Bloomberg) — The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.
UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.
China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since World War II. China, the world’s largest holder of dollar reserves, said a supranational currency such as the International Monetary Fund’s special drawing rights, or SDRs, may add stability.
“There’s a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management,” Heiner Flassbeck, co-author of the report and a UNCTAD director, said in an interview from Geneva. “An initiative equivalent to Bretton Woods or the European Monetary System is needed.”
The 1944 Bretton Woods agreement created the modern global economic system and institutions including the IMF and World Bank.
Jim Sinclair’s Commentary
What is really happening is an exponential growth in Hebrew fundamentalism in Israel.
This group is primarily made up of Israeli army members in active duty from the settlements. They see the defense of Israel as a religious duty.
Yesterday a major error was made by Israeli military leaders which was broadcast by BBC news. The military said that this fundamentalism was unacceptable and that "We (the military) control their spirit."
Now that was world class stupid when addressing fundamentally religious people threatened by Iran who are in uniform with guns.
Netanyahu draws fire in Israel over secret trip
Thu Sep 10, 2009 7:49am EDT
By Jeffrey Heller
JERUSALEM (Reuters) – Prime Minister Benjamin Netanyahu drew the wrath of Israel’s most influential newspapers on Thursday over what they described as lies issued by his office about a secret flight to Russia.
Netanyahu’s first major media fiasco since taking office six months ago began with a simple question many Israelis, using their leader’s nickname, asked on Monday: Where’s Bibi?
Explaining why he had disappeared from public view for a day, a statement issued on Monday by the prime minister’s office quoted his military attache as saying that Netanyahu had visited a security installation in Israel.
Israeli media reported he had toured a facility belonging to the Mossad intelligence agency.
But on Wednesday, Israeli daily Yedioth Ahronoth reported that Netanyahu had, in fact, flown secretly to Moscow to voice concern over the possible sale of Russian anti-aircraft missiles to Iran.
Jim Sinclair’s Commentary
This could be the left hand not knowing what the right hand is doing. It is a tad stupid when you might wish some life to remain in the US dollar.
China condemns US tariffs on steel pipes
BEIJING — China on Thursday condemned a US decision to slap tariffs on steel pipes from the mainland, as US President Barack Obama mulled whether to also curb tire imports from the Asian giant.
The twin disputes are a litmus test for Obama’s trade policy with Beijing, and are coming to the forefront ahead of his highly anticipated first presidential visit to China set for November.
In July, Obama laid out his vision of "cooperation, not confrontation" between Washington and Beijing, saying the relationship would "shape the 21st century" — but the thorny trade issues could throw a spanner in the works.
The US Commerce Department said Wednesday it had made a preliminary decision to impose duties of as much as 31 percent on Chinese carbon or alloy tubular steel products used in oil and gas wells, following claims they were backed by unfair subsidies.
That announcement drew a quick and angry response from Beijing.
Jim Sinclair’s Commentary
Here is an unusual approach to take in conversations with your banker who can control the future of the US dollar.
U.S. Says China Violated Trade Law
Tariffs Imposed as Subsidies to Pipe Makers Called Illegal
By Peter Whoriskey
Washington Post Staff Writer
Thursday, September 10, 2009
In one of the largest U.S.-China trade cases ever, the U.S. Commerce Department has issued a preliminary finding that Chinese steel pipe producers have received government subsidies in violation of trade law, helping them overrun the competition.
The volume of steel pipes imported from China more than tripled between 2006 and 2008, rising from $632 million to $2.6 billion, according to the Commerce Department.
The subsidies from the Chinese government allowed the firms to overwhelm their U.S. rivals, according to six U.S. companies that filed the complaint along with the United Steelworkers union. The companies alleged that their Chinese rivals received discounts on raw materials and loans from government-owned firms.
To even the playing field, the Commerce Department has ordered that tariffs ranging from an estimated 11 percent to 31 percent be imposed on the steel pipes from China.
The steel pipes at issue in the case are those used primarily by the oil and gas industry. They are known as "oil country tubular goods." By dollar volume of imports in the industry, the case represents the largest U.S.-China trade case ever, attorneys said.
Jim Sinclair’s Commentary
Deficits count even though in the light of other problems it might seem small. I never thought I would say that about $36 billion.
WASHINGTON — The U.S. trade deficit shot up in July to the highest level in six months as a surge in shipments of foreign oil and autos pushed imports up by a record amount.
The Commerce Department said Thursday that the trade deficit rose 16.3 percent to $32 billion in July, much larger than the $27.4 billion imbalance that economists had expected. It was the largest imbalance since January and the percentage increase was the biggest in more than a decade.
Imports rose 4.7 percent, the largest monthly advance on records that go back to 1992, while exports edged up a smaller 2.2 percent. Both gains provided evidence that the most severe recession since World War II was beginning to lose its grip on the global economy.
The increase in imports pushed them to a total of $159.6 billion in July and marked the second consecutive monthly gain after imports had fallen for 10 straight months as demand in the United States plummeted in the midst of the prolonged recession.
The rebound in July included a 21.5 percent spike in imports of autos and auto parts, a gain that reflected in part a rebound in production at U.S. auto plants owned by General Motors and Chrysler. Those companies had curtailed production in May and June as they struggled to emerge from bankruptcy protection. Both companies as well as foreign automakers with plants in the United States make use of foreign-made auto parts in their U.S. manufacturing operations.
Jim Sinclair’s Commentary
Pension fund failure or payment restructuring will have a major impact on the Social Order and therefore CONFIDENCE.
State employees face changes to pensions: System is financially unsustainable
By Marc Kovac
COLUMBUS — State lawmakers will have to decide whether to increase retirement ages, require greater contributions from public employees and employers and/or decrease cost-of-living adjustments for pension payments.
That’s after a state panel heard recommendations Wednesday from Ohio’s five public employee retirement systems for dealing with the economic downturn.
The groups, representing police officers and firefighters, teachers and school employees and other public workers, have been hit hard by stock market declines. The separate boards that oversee each have outlined recommendations for reducing costs and ensuring adequate funds to cover retiree obligations in years to come.
“These are not easy decisions that we’re going to be dealing with,” said Rep. Todd Book, a Democrat from McDermott, who serves as chairman of the Ohio Retirement Study Council. “… We cannot invest our way out of this situation.”
The Ohio Retirement Study Council, which includes six lawmakers and three citizen voting members appointed by the governor, heard the recommendations during a meeting that lasted several hours Wednesday at the Statehouse.
Jim Sinclair’s Commentary
This is a natural course of action when your capital is depleted – reduce your guarantees by 50%.
FDIC Proposes Six-Month Extension for Debt Guarantees (Update2)
By Rebecca Christie
Sept. 9 (Bloomberg) — The Federal Deposit Insurance Corp. proposed a six-month, emergency-only extension to its debt guarantee program as regulators move to wean companies from federal aid approved at the height of last year’s credit crisis.
The five-member FDIC board today unanimously approved seeking comment for 15 days on extending the program. The FDIC now guarantees eligible debt issued before the scheduled Oct. 31 expiration by banks that get agency approval and pay a fee.
“It has been a successful program but we would like to end it,” FDIC Chairman Sheila Bair said at a Washington meeting. Credit markets are recovering and she doesn’t expect banks to need further access to the program, meaning the agency should now seek input whether to go “cold turkey” or offer an emergency mechanism for a final six months, she said.
Bankers have pressed the FDIC to spell out how it will end the program, which Federal Reserve Chairman Ben S. Bernanke has said was instrumental in keeping markets stable during the worst of the 2008 financial crisis. The program is part of the Temporary Liquidity Guarantee Program; a portion for business checking accounts was extended in August for six months.
“The point here is to allow for an orderly transition out of a government-backed system,” said Robert Strand, a senior economist at the American Bankers Association in Washington, in a telephone interview yesterday. The ABA had asked the FDIC to “worry about the cutoff points and the suddenness” of ending the guarantees, to make sure closing down the program doesn’t roil markets, he said.
Jim Sinclair’s Commentary
If anyone should know it is the maker and the shaker.
Another financial crisis inevitable: Greenspan
Wed Sep 9, 2009 7:42am EDT
LONDON (Reuters) – Another global financial crisis is inevitable because human nature always reverts to "speculative excesses" during a period of sustained prosperity, former U.S. Federal Reserve Chairman Alan Greenspan said.
"The crisis will happen again but it will be different," he told BBC Two’s "The Love of Money" television series.
"That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that that will continue," he said.
Greenspan, speaking to the BBC to mark the first anniversary of the fall of U.S. investment bank Lehman Brothers, said Britain will be hit worse than the U.S. by the subsequent worldwide financial crisis and global recession because it has a globally-focused economy.
Countries, smarting from the near collapse of the banking system, will struggle to match their stated desire for increased regulation with their other stated need for free global trade.
Jim Sinclair’s Commentary
The apparently dumbest barrister in history said when making his case against the individual that removed the Flash Trading System from Goldman was that, "This system in the wrong hands could be used to manipulate markets." Of course, the assumption he hoped for was that Goldman would be considered the right hands and would never contemplate doing such a terrible thing.
It will be interesting to see what the Madoff effect will be on the SEC as they review (if the SEC can understand the systems) the real purpose of all the systems – to cheat.
These varied systems apply as much to gold and silver as it does to general equities.
SEC Probes Manipulation by ‘Advanced Trading Systems’ (Update1)
By David Scheer
Sept. 10 (Bloomberg) — The U.S. Securities and Exchange Commission is “rigorously” investigating whether traders are using technology to manipulate markets, the agency’s enforcement and inspections chiefs said today.
The regulator is probing suspected “market manipulation based on complex use of technology and advanced trading systems,” said SEC Enforcement Director Robert Khuzami and acting examinations director John Walsh in testimony prepared for a Senate Banking Committee hearing. They said the inquiry is among a list of active cases, also including unspecified Ponzi schemes, hedge-fund abuses and insider trading.
SEC spokesman Kevin Callahan said he couldn’t immediately comment beyond the testimony.
Lawmakers including U.S. Senator Charles Schumer have pressed the SEC to ban so-called flash trading, which gives firms a split-second advantage in viewing stock-trading requests. The agency said today it will consider proposing a ban at a Sept. 17 meeting.
Federal prosecutors also drew attention to potential abuses of automated trading in July, when they said software allegedly stolen from Goldman Sachs Group Inc. by a former programmer might be used to “manipulate markets.”
Computer-program trading represented almost 27 percent of volume on the New York Stock Exchange in the last week of August, according to the NYSE’s most recent report. Goldman Sachs, Morgan Stanley, Barclays Capital Inc., Bank of America Corp.’s Merrill Lynch subsidiary and Deutsche Bank AG’s securities unit accounted for the most volume, the data show.
Jim Sinclair’s Commentary
MOPE dictates what you have no practical means to do you state you do not choose to do at this time and into the future.
Fed’s Kohn says no exit for extended period
Thu Sep 10, 2009 4:15pm EDT
WASHINGTON, Sept 10 (Reuters) – Federal Reserve Vice Chairman Donald Kohn said on Thursday the U.S. central bank was developing tools to remove its extremely loose monetary policy, but this exit would not happen at all soon.
"Any combination of these tools, in addition to the payment of interest on reserves, may prove very valuable when the time comes to tighten the stance of monetary policy," Kohn said in remarks prepared in discussion of a paper presented earlier on Thursday at the Brookings Institution.
"As the FOMC has said, that time is not likely to come for an extended period," he said, referring to the policy-setting Federal Open Market Committee.
The paper, on the Fed’s track record since the failure of Lehman Brothers this time last year, noted that the Fed’s massive expansion of its balance sheet would not lead to inflation due to its ability to pay interest on reserves that are held with it by commercial banks.
(Reporting by Alister Bull, Editing by Andrew Hay )