Posted at 10:10 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Aussie unemployment numbers just came out and were much better than expected!

DEBT,DEBT,DEBT for that theme was alive and well in the world today.

Hirohisa Fujii the finance minister of Japan was raising concerns about the recent sell off in JGBs as the rates on ten year Japanese debt have risen 20 basis points over the last 2 weeks. There is growing concern that Japan will have trouble financing their growing national debt that is now over 200% of GDP. This is not a new story but one that has been kicked around for several years and seems to be gaining adherents in the world because of all the other government debt that has been floated since the global recession has deepened. We will pass this off as a concern of crowding out – as the low yields on JGBs cause them to be replaced by other sovereign debt.

Yesterday that great luminary of credit analysis, FITCH, raised a warning about British gilts being downgraded from AAA which caused the sterling to be sold off.

We will note that this that warning the gilts have been up for 2 days so something else must be bothering the pound, like resistance, so we send you to the charts to see if the sterling can hold support.

The Greek government has also come under attack for budgetary malfeasance but that is a problem for the European Union so its impact is diluted. But if these DEBT concerns rattle the Japanese and the BRITS, what about the U.S. budgetary morass? Anybody want to buy 30 year treasuries? And the talking heads proclaim that GOLD is devoid of reality.

We also remind those who are quick to criticize the Japanese that 95% of JGB’s are held domestically while the holdings of U.S. debt are global. We are back to good old John Connelly – it is our dollar but your problem but with Mr.Obama in Japan and China next week we will see for how long this tired old phrase holds.

There was an interesting story out on Tuesday that the Chinese Investment Corp [CIC] has agreed to purchase a 15% stake in the large U.S. energy company AES. The agreement also includes the buying 35% of the firm’s wind power unit for another $570 million for a total investment of 2.1 billion dollars. This may not be deemed a significant amount of money but its importance lies in the concept that the Chinese are testing the Americans to see if they will block this deal under the auspices of CIFIUS.

Remember the last few times the Chinese have attempted to buy into U.S. assets they were rebuffed under the guise of strategic value to the U.S. With Obama in China pressing for possible appreciation of the Renminbi? The trade off may well be allowing the Chinese to purchase high technologically valued assets in the U.S. If the CIFIUS committee were to block this deal, we won’t know for a while, look for great friction to develop between the U.S. and China

Also out of Asia, tonight the Taiwan central bank announced that they are banning foreigners from putting money in bank time deposits. This is a new type of effort to place constraints on capital flows like the Brazilian 2% tax announced last week. We must stay alert to more of these actions as emerging markets attempt to halt the rapid appreciation of their currencies. The impact on the Brazilian REAL has been negligible but we can look for continued efforts to do so. If this becomes contagious the equity markets will be the recipient of that pain.

From the realm of the absurd we have our man Timmy Geithner in Japan reiterating his strong dollar mantra. Do they ever tire of looking like idiots on the world stage? The last time Geithner was in China college students openly laughed at him in a Q and A session he was having and that was in June.

What exactly has the Secretary of Treasury done to put any bite in that statement? We want to report that the Rick Mishkin piece in the FT elicited a couple letters to the editors that followed upon our criticism. One was written by an economist we admire greatly, Andrew Smithers, who noted that of course you can discern a bubble. Smithers has done a great deal of work on valuing Wall Street by using Tobin’s Q theory so when he is critical you should take notice. There are no good bubble periods for they only create pain further out in time as we saw with the bursting of the bubble. The Fed held rates far too low for too long and created the housing bubble. Enough said. And then his eminence Sir Alan followed Mishkin with a speech in which he discussed how the recent equity rally was smoothing the way for recovery. Oh the rehabilitation of Greenspan is a work in progress. Reminds one of Lin Piao.

Yra Harris

Posted at 4:05 PM (CST) by & filed under Guild Investment.


Does the Obama Administration want the U.S. dollar to decline?  We believe it does.  On November 5th, the U.S. Federal Reserve announced that they intend to keep “interest rates exceptionally low” for an “extended period of time.”  Given that the U.S. Dollar is already under pressure due to low interest rates, the Fed’s announcement is the equivalent of saying: “go ahead and short the dollar”.  In our opinion, it is clear that this announcement ushers in a period of extreme volatility and a continued downward bias for the U.S. Dollar.

During the Clinton and GW Bush administrations, it was common for U.S. Treasury officials to make statements about the need for a strong dollar.  Historically, financial leaders have been circumspect about declaring that their currency is overvalued.  This is especially true for countries like the U.S. where the government is trying to sell trillions of dollars of debt to investors to finance the immense current and expected future budget deficits.  We therefore find it shocking that the world’s most important central bank has made statements that strongly encourage a decline in its currency.

However, an examination of the current administration’s economic approach provides a possible reason.  On November 2nd 2009, President Obama called for a new “post bubble growth model” with a greater focus on exports, and referenced the fact that Germany, which he called “a wealthy, highly unionized industrial nation,” has been a very successful exporter.  It does not take a rocket scientist to understand that his goals include more unionization and more exports.  And because U.S. union workers are in general much more generously compensated than non-union workers, we believe that the only way that the U.S. can achieve higher exports is to devalue the dollar.  We therefore believe that it is a goal of the Obama administration to see the dollar decline.

These events add credence to our view that one should avoid the U.S. dollar for major cash balances and instead hold the Australian, Canadian, Norwegian and Brazilian currencies.  We also continue to believe that investors should continue to hold oil, gold, and foreign stocks for the long term.  In our opinion, the profits in these areas may be just beginning to occur.


November 5, 1999 was the 10 year anniversary of the removal of Glass Steagall.  We believe as do many others that the removal of Glass Steagall directly led to the financial melt down of the last two years.  Please see below for the New York Times article about the subject. 

By Stephen Labaton
Published: Friday, November 5, 1999

Congress approved landmark legislation today that opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another’s businesses.

The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.

”Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” Treasury Secretary Lawrence H. Summers said. ”This historic legislation will better enable American companies to compete in the new economy.”

The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation’s financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.

To read the full article, please visit our website:

This week we are celebrating the 20 year anniversary of the fall of the Berlin Wall.  As an international power Russia seemed quiescent 20 years ago.  Today, there is no doubt that the relative harmony of the Gorbachev years has given way to the militarism and bullying of the Putin years.


Maria Bartiromo of CNBC interviewed Paul Volcker on November 3, 2009. She entitled her interview with Mr. Volcker  “The Silencing of Paul Volcker.”

Ms. Bartiromo evidently believes that Mr. Volcker is unable to speak his mind about the need for separation of the banking activities of major banks from their trading activities.  As we stated in last week’s letter, Mr. Volcker has voiced the opinion that banks and their lending functions should be regulated by the Federal Reserve and that trading institutions should be separate from the bank lending system.

In GIM’s opinion, these trading activities, which employ immense leverage, are dangerous.  We believe that trading excesses could cause immense losses and instability to the entire banking system at any time.  And it is not hard to imagine that such a crisis would require further taxpayer bailouts for institutions that are “too big to fail.”


In effect, the G-20 said all systems are go for economic expansion globally.  The G-20 said in their news release, “Economic and financial conditions have improved following our coordinated response to the crisis.  However, the recovery is uneven and remains dependent on policy support. We agree to maintain support for the recovery until it is assured”

May we translate?  All systems are go for global economic expansion.  When this news became public the U.S. dollar fell and gold rose substantially.



U.S. money supply is rising rapidly and this is another indicator of coming inflation and higher commodity prices in years ahead.  When combined with a lower dollar, this type of indicator has quite frequently led to inflation.  It is for this reason among others that we call for a resurgence of inflation in 2011.


Many had feared that the IMF’s pre announced sales of 400 tons of gold would hit the market and cause the gold price to plummet.  We have long held that this decade, as in past decades, IMF gold sales are always taken by central banks that want to diversify out of currencies and into gold for part of their reserves.

Currently, the central banks of many emerging countries hold only about 3.5 percent of their assets in gold while developed countries have about 35 percent of their reserves in gold.  It is no secret that many emerging countries want to buy the IMF gold in order to raise their status in the community of nations and diversify their holdings out of the declining dollar.

India bought half the gold one month after it went on the market (a record quick sale) and Sri Lanka bought gold for their reserves in the open market.  Both purchases were at prices above $1,000 per ounce.  The purchase raises India’s gold holdings to 6 percent of their reserves from 4 percent. China’s gold percentage to total reserves is lower than India’s.  It seems obvious to us that many other nations will buy up any gold offered by the IMF or other central banks at market prices.  If they do, we expect the price of gold to rise much higher to accommodate a rise to 10 percent in India and China’s gold reserves.  China mines a great deal of gold internally.  If they decide to hold their domestic production to add to their reserves as Chinese financial figures have suggested they do, we could see gold move to much higher prices.


China’s next President will probably be the current Vice President, Xi Jinping.  He will inherit a number of problems that are developing in China such as public dissatisfaction with high home prices and public irritation with corruption and favoritism.  We anticipate he will favor the current policy of growing the economy with a well-planned series of goals to develop infrastructure, consumer spending and to provide new jobs in healthcare, consumer areas, education and construction to complement the existing factory job growth.


This week’s pronouncements by President Obama and by the Federal Reserve add further conviction to our long held view that the U.S. Dollar will continue to slide in value. The GD-20 indifference to a declining dollar just raises the bearish thermometer. We remain bullish on oil, gold, non-U.S. currencies and foreign stock markets in fast growing parts of the world.

Thanks for listening!

Monty Guild and Tony Danaher

Posted at 4:01 PM (CST) by & filed under Jim's Mailbox.

This Professor is a Genius – The Future of the West


An economics professor at a local college made a statement that he had never failed a single student before, but had failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on the present administration’s plan".

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.

As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.

Could not be any simpler than that.

Bond Market:  The Historic Bull & Bear Battle
By CIGA Eric  11/10/09

The intense and historic battle between the bull and bears continues to rage in the long bond market.  It certainly looks as if the June-Oct 09 consolidation pattern has been broken to the downside.  The June 09 lows are now pulling like a magnet.  Symmetry and cycle lows imply that the neckline of the large head and shoulders formation could be tested as soon as January 2010.  The resolution of this battle will have far reaching consequences for all Americans.

Click charts to enlarge in PDF format


Hi, Jim,

I wonder if the following new junior gold fund will have the shorts a tad bit concerned.

Have a wonderful day,
CIGA Anthony

GDXJ – Welcome to the Party!
By: Adam Brochert

The Junior Gold Miner ETF (ticker: GDXJ) from Van Eck Global is now in business. Though I have a problem with putting larger silver miners in this ETF as the heaviest-weighted holdings (get info from the Van Eck website here), I will be participating. This is a good vehicle for those looking to get into the more speculative side of the Gold patch without doing all the homework. It also provides a measure of international exposure.

As Gold continues to surprise to the upside, much to the paperbugs’ dismay and astonishment, the Gold miners are likely to continue to play "catch up" to the Gold price. The all-time highs for many Gold stocks are now within reach (if they haven’t been exceeded already). I can only hope that GDXJ will catch on rapidly so that long term LEAP options will become available soon.


Dear Anthony,

Unless they are brain dead it should concern them.


Dear Chris,

The cause of the Western financial disaster is all in the OTC derivatives, and no one is going screw up the tons of money Wall Street is making in those, so please do not blow smoke.


Chris Dodd On "Morning Meeting": We Have Financial Regulations From ‘The 19th Century’

Calling our current financial regulatory regime "more an accident than anything else," Sen. Chris Dodd (D-Conn.) appeared on Dylan Ratigan’s Morning Meeting to discuss the sweeping reform bill he unveiled yesterday.

Dodd’s bill has been called far more aggressive than the financial reform bill being weighed in the House of Representatives. Under the proposed measure, the Federal Reserve would be stripped of much of its power and in its place will be a new regulatory council to oversee systemic risks to the economy. The bill, Ratigan said, has several promising components, including crackdowns on derivatives, increasing capital requirements for banks and a clause that would allow the government to clawback pay from execs at publicly traded companies.

Here’s Dodd:

"We have an architecture of federal regulatory structure — some of it dates to the 19th century… It’s just so outdated. It’s a hodgepodge. It’s an accident more than anything else… If there’s any silver lining in the last several years of this very dark cloud in our economy it is that I think we got a chance to do what you very effectively described as [something], bold."


Posted at 3:51 PM (CST) by & filed under In The News.

Dear CIGAs,

Good night to my extended family.

Her name is Pink. She is a pig, but don’t tell anyone.

She thinks she is a Hot Dog. The other Hot Dogs agree, especially her Hot Dog mother.


Jim Sinclair’s Commentary

Now they have lost their minds. They are going to bail themselves out with TARP funds.

Who ever came up with that one should be sent to the front lines in Afghanistan, if anyone could find the front lines.

White House Aims to Cut Deficit With TARP Cash

NOVEMBER 12, 2009

WASHINGTON — The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter. It is also expected to lower the projected long-term cost of the program — the amount it expects to lose — to as little as $200 billion from $341 billion estimated in August.


Jim Sinclair’s Commentary

How will Karzai do that? He would have to fire himself and his #1 son.

U.S. Seeking a Lever in Kabul
Published: November 11, 2009

WASHINGTON — When President Obama delivered a rare and public calllast week for President Hamid Karzai to crack down on corruption in Afghanistan, there was one glaring omission from his remarks — an “or else.”

Mr. Obama’s exclusion of the obvious threat — that he will pull American troops out of Afghanistan if Mr. Karzai does not comply — reflects a stark conundrum: How much leverage does the United States really have over the Afghan leader?

“You know that scene in the movie ‘Blazing Saddles,’ when Cleavon Little holds the gun to his own head and threatens to shoot himself?” asked Ronald E. Neumann, a former ambassador to Afghanistan.

“The argument that we could pull out of Afghanistan if Karzai doesn’t do what we say is stupid. We couldn’t get the Pakistanis to fight if we leave Afghanistan; we couldn’t accomplish what we’ve set out to do. And Karzai knows that.”


Jim Sinclair’s Commentary

You have to love how legislation today is named exactly what it is NOT.

"The derivatives Markets Transparency Accountability Act of 2009"

Jim Sinclair’s Commentary

Do not phone, write, fax, or email anything you would not want to see in a headline in the New York Times. Be advised.

Every phone call, email and internet click stored by ‘state spying’ databases
Every phone call, text message, email and website visit will be stored for a year for monitoring by the state.
By Richard Edwards, Crime Correspondent
Published: 9:00PM GMT 09 Nov 2009

All telecoms companies and internet service providers will be required by law to keep a record of every customer’s personal communications, showing who they are contacting, when, where and which websites they are visiting.

Despite widespread opposition over Britain’s growing surveillance society, 653 public bodies will be given access to the confidential information, including police, local councils, the Financial Services Authority, the Ambulance Service, fire authorities and even prison governors.

They will not require the permission of a judge or a magistrate to access the information, but simply the authorisation of a senior police officer or the equivalent of a deputy head of department at a local authority.

Ministers had originally wanted to store the information on a massive Government-run database, but chose not to because of privacy concerns.

However the Government announced yesterday it was pressing ahead with privately-held "Big Brother" databases which opposition leaders said amount to "state-spying" and a form of "covert surveillance" on the public.


Jim Sinclair’s Commentary

Relax. Gold is going to $1224, $1278, $1650 and then on to Alf’s numbers.


Jim Sinclair’s Commentary

Position limits in a global market borders on a joke.

All it will do is drive specs to others international exchange markets and forms.

Money is so big now that oil specs can lease and fill tankers if they wish.

This has PR value, but no real lasting impact on prices other than hurting local exchange volume and increasing international exchange volume. It could actually backfire by sending big money to little exchanges.

Leave it to governments to screw it up.

Exclusive: Chilton sees decision in December on position limits
Tue Nov 10, 2009 5:19pm EST

WASHINGTON (Reuters) – The Commodity Futures Trading Commission is moving toward adopting a proposal in early December to rein in excessive speculation in energy markets by setting hard limits on positions investor entities can hold in a contract.

Bart Chilton, one of five CFTC commissioners, said until a draft is completed it will be difficult to determine where the commission stands as an entity, but there is a broad understanding "that there are issues that need to be addressed and that doing nothing is not an option."

"I think there will be" position limits, Chilton told Reuters in an interview.

"I don’t want to prejudge where we’ll be specifically but if I had to guess where we’ll come out ultimately I believe that there will be hard position limits … for energy commodities and for other physical commodities" such as metals, he said.



Jim Sinclair’s Commentary

You think the Fed is getting the message of more QE and will stop all the silly talk they were doing about draining?

You can bet the last Fed statement was in light of this bill. Such bills are no surprise to anyone in DC circles as the content is well known before it is publicly discussed.

Goodbye dollar. Alf and Armstrong are right.

Fed Faces Biggest Blow to Authority in Dodd Proposal (Update1)
By Scott Lanman and Craig Torres

Nov. 11 (Bloomberg) — The Federal Reserve faces the biggest blows to its authority and independence in five decades under legislation championed by its lead overseer in the U.S. Senate.

The financial-regulation overhaul proposed yesterday by Senator Christopher Dodd would strip the Fed of its role as a bank supervisor and give Congress a greater voice in naming the officials who set interest rates. The measure opens the door to interference from politicians who might disagree with any move by the Fed to raise rates from record lows, former central bank officials said.

“If you were worried that the Fed will be pressured to remove its accommodation while the unemployment rate is still very high, you’ve got to look for leverage,” Vincent Reinhart, a former director of the Fed’s Monetary Affairs Division, said in an interview. Dodd is aiming for “some political reach into all the voters” on the Fed’s Open Market Committee, which decides the benchmark U.S. interest rate, added Reinhart, now a resident scholar at the American Enterprise Institute.

U.S. stocks, bonds and the dollar would collapse if investors perceive Congress violating the independence of the policy-setting panel, former Fed Governor Laurence Meyer, now vice chairman of Macroeconomic Advisers LLC, said last month.

Dodd’s measure would also curb the Fed’s ability to make emergency loans to individual companies. The Fed’s response to the financial crisis prompted increased scrutiny of the central bank, especially after it used its emergency powers to bail out Bear Stearns Cos. and American International Group Inc.


Jim Sinclair’s Commentary

This is not for Devali. Go India gold investors!

India’s gold import rises 45 pc to 48 tonnes in October
11 Nov 2009, 2132 hrs IST, PTI

NEW DELHI: India’s gold imports surged by over 45 per cent in October at 48 tonnes on the back of rising demand, the country’s largest state-run gold importing firm MMTC said today.

India, the world’s largest gold consumer, had imported 33 tonnes in the corresponding period last year, it said.

"Gold imports rose due to a sharp rise in jewellery demand and pick up in investment," MMTC Chairman and Managing Director Sanjiv Batra told reporters here.

Consequently, MMTC purchased 15.13 tonnes from the global market last month as against 10.42 tonnes in the same period in 2008-09, he said.

However, gold imports till October this fiscal remained lower at 510 tonnes, compared with 635 tonnes in the year-ago period, he noted.


Jim Sinclair’s Commentary

All this could have been avoided, but then who am I to tell Barrick’s then president anything about the price of gold?

Oh yes, it has deeply hurt them if you have a brain to understand.

Want to buy the world’s cheapest and in my opinion best new nickel project cheap? Call them. Tell them Jim sent you.

Barrick shuts hedge book as world gold supply runs out
Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world’s top producer Barrick Gold.
By Ambrose Evans-Pritchard, International Business Editor
Published: 7:20PM GMT 11 Nov 2009

Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

"There is a strong case to be made that we are already at ‘peak gold’," he told The Daily Telegraph at the RBC’s annual gold conference in London.

"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.

Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa’s output has halved since peaking in 1970.

The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday. The key driver over recent days has been the move by India’s central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.


Jim Sinclair’s Commentary

Truth has a clear ring to it. Please read the excerpt from the official report on commercial real estate in California.

So many of these losses sit on the books of banks and have not been written down.

After FASB sells out you only write up, never down!

California Controller: Overview of the Commercial Property Markets

Buried in the California Controller’s November analysis is a guest article: Overview of the Commercial Property and Capital Markets with Implications for the State of California by Dr. Randall Zisler. (ht picosec)

Here are some excerpts:

Whereas excessive and imprudent leverage fed the bubble, deleveraging not only popped the bubble, but, in the process, destroyed record amounts of equity and debt. Most deals financed with high leverage from 2005 to the present are under water. The equity is gone and the debt, if it trades at all, trades at a deep discount to face value. Most leveraged equity invested in real estate has evaporated since property prices, if marked to market, have fallen 30% to 50%.

The chart [right] shows overall U.S. property total returns, quarterly (at annual rates) and lagging four quarters. This appraisal-based, lagging index shows sharp negative returns exceeding the deterioration of the RTC (Resolution Trust Corp.)
period of the early 1990s. (See Chart 1.) Second quarter 2009 returns indicate the possibility that total returns, while still negative, may have hit a point of inflection. We expect that property values in many sectors, especially office, retail, and industrial, will likely deteriorate further in 2010 with improvement beginning sometime in 2011.


Jim Sinclair’s Commentary

I will never understand why people think that governments, not markets, make currency value in terms of a trend.

Markets rule!

Obama Dollar to ‘Devalue the Way to Prosperity’!
Posted by Dean Popplewell at 5:48 am EST, 11/11/2009

Contrarian long USD positions remain costly. Forget the Japanese housewife, it’s the Brown’s, Smiths, Jones etc who have been piling into a global carry trade, similar to Japans’ lost years, using the USD as a vehicle currency. It will end in tears. Is the Obama’s administration policy one of quiet, steady dollar devaluation? A weaker domestic currency gives way to cheaper exports and the potential for increased employment opportunities. With a 26-year high unemployment rate sitting at 10.2%, itching to go higher (real rate supposedly near 17%), is begging Obama to ‘devalue the way to prosperity’!

The US$ is weaker in the O/N trading session. Currently it is lower against 14 of the 16 most actively traded currencies in a ‘subdued’ trading range.

Fed voting member Janet Yellen and her dovish comments gave little support to her domestic currency yesterday. She stated the obvious when committing the Fed to a tighter monetary mandate ‘at some point’ in the future. She highlighted that US unemployment could stay elevated ‘for years to come’, and that the countries recovery will ‘be gradual and vulnerable’ to shocks. The Fed expects the commercial real estate sector to weigh down this recovery as their prospects are rather ‘worrisome’ to the committee. Despite the equity rally going some ways to rebuild household wealth, ‘strength, durability of expansion are in question’, as prospects for ‘consumer spending remain cloudy’. Not a strong endorsement to wear a train driver’s hat Buffett style.

The USD$ is currently lower against the EUR +0.35%, GBP +0.18%, CHF +0.35% and JPY +0.00%. The commodity currencies are stronger this morning, CAD +0.35% and AUD +0.22%. At 96c or 1.0417 expect the BOC to be drawing ‘their’ line in the sand. Governor Carney has insisted that they will use a combination of currency intervention, credit and quantitative easing options to influence the loonies’ value. The BOC believes that a strong currency is detrimental to economic growth. In the O/N session, the loonie has appreciated to its strongest level in 2-weeks vs. its southern trading partner on the back of the G20 maintaining their economic stimulus measures. Keeping the status quo is boosting speculators risk appetite for the higher yielding asset classes and commodity based currencies. Last week the Canadian economy managed to pare -43k jobs in Oct. (the market was expecting a gain of +10k) and push the unemployment rate up 2-ticks to an unexpected +8.6%. The data provides much stronger evidence that Canada has some ways to go to exit this recession, but, the data will make it easier for Governor Carney to follow through on his pledge to keep borrowing costs at record lows until June of next year to promote growth unless of course the inflation outlook changes materially. For now the loonie remains in a tight 3cent trading range with dealers continuing to play the support and resistance levels until fundamentally or technically told otherwise or commodity prices start to fall off a cliff!



Jim Sinclair’s Commentary

Lets crank out those loans so we can rescue the Too Big To Fail one more time.

I could use a billion. I think I will apply.

FDIC boss: Big banks still aren’t lending enough
Large banks aren’t ‘stepping up to the plate providing credit,’ Bair says
updated 5:09 p.m. MT, Tues., Nov . 10, 2009

NEW YORK – The head of the Federal Deposit Insurance Corp. said Tuesday she’s "very worried" that the nation’s biggest banks aren’t lending enough and warned the economy could take another turn for the worse without increased access to credit.

FDIC Chairman Sheila Bair said the FDIC’s upcoming quarterly report would show that "not many large institutions are doing a very good job of lending." Instead, she said, some are taking advantage of near-zero interest rates by borrowing dollars cheaply to buy higher-yielding assets like stocks or commodities — a move known as the "carry trade."

"I don’t see much money going out (from banks). I see a lot of carry trade," Bair told a banking conference in New York. "It used to be you take deposits and you lend out money. We’d like to see more of that."

Many banks have tightened lending standards following a wave of residential and commercial property defaults. Others say they want to lend but see little demand as consumers and businesses seek to pay off debt, not take on more.

The lack of lending by large banks is dangerous at a time when many small and midsize banks are teetering on the brink amid the economic downturn, Bair said.


Jim Sinclair’s Commentary

I thought you might like to read the New York Stock Exchange Midday Report to listed companies.

Please pay attention to the last point below.

Apparently management has not yet realized that equity strength is a direct result of the dollar’s poor action as well as a few trillion in liquidity injections.


DOW 10,275 (+27 points), S&P500 1096 (+3 points), Crude $78.85/barrel (-$0.20)

MARKET DRIVERS: {3 Drivers today: 1) “Fed-speak”. 2) New lows for the dollar 3) Strong Chinese economic numbers…}

Several Fed officials yesterday, (including Dallas Fed President Fisher last night), talked about either the lack of inflation or implied that monetary policy will remain easy for some time.   Predictably, the Dollar Index is hitting new lows, commodities and commodity stocks are again up.

These days, we watch Chinese Industrial Production as closely as U.S. Industrial Production…the Chinese October IP was up 16.1% (a 19-month high). Japanese Machine Orders were also up over 10 percent..

UPS CEO, Scott Davis, told Reuters that volumes will turn positive next year as the economy improves, and that he will increase shipping prices as well.  Fedex also announced that they would increase prices earlier.

Gold has jumped to another record high. (What else is new…)

Jim Sinclair’s Commentary

All governments at all levels speak their case.

Stimulus job boost in state exaggerated, review finds
Errors, incomplete data, estimated positions go into federal report

While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started.

While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started.

The Globe’s finding is based on the federal government’s just-released accounts of stimulus spending at the end of October. It lists the nearly $4 billion in stimulus awards made to an array of Massachusetts government agencies, universities, hospitals, private businesses, and nonprofit organizations, and notes how many jobs each created or saved.

But in interviews with recipients, the Globe found that several openly acknowledged creating far fewer jobs than they have been credited for.


Jim Sinclair’s Commentary

Now here is a confidence building action.

Geithner Affirms Strong Dollar Policy
NOVEMBER 11, 2009, 12:39 P.M. ET

TOKYO — U.S. Treasury Secretary Timothy Geithner said Wednesday that maintaining a strong dollar is "very important" for the country’s economy, sticking to his mantra on foreign-exchange policy as the U.S. currency continues its broad downtrend.

"I believe deeply that it’s very important for the U.S. and the economic health of the U.S. that we maintain a strong dollar," he said at a roundtable discussion with Japanese reporters. "We bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence not just among American investors and .. savers but investors around …


Jim Sinclair’s Commentary

Pakistan today. Plan A was a real bomb.

Now on to plan B. We then shoot Plan B up the flag pole to see if it gets saluted.

US denies Pakistan nuclear report

The US government has rejected a report that Washington has a team ready to secure Pakistan’s nuclear arsenal due to fears that the country is unstable.

Ian Kelly, a state department spokesman, dismissed the report by Seymour Hersh in the New Yorker which said that the US has a special force in place that would move to secure Pakistan’s nuclear weaponry in the event of a crisis.

"The US has no intention of seizing Pakistani nuclear weapons or material – we see Pakistan as a key ally in our common effort to fight violent extremists and to foster regional stability," Kelly said.

He said the US was "working very closely with Pakistan on a number of important initiatives regarding regional security".

"We do provide them with assistance, as you know," he said, but added: "We have confidence in the ability of the Pakistani government to provide adequate security for their nuclear programmes and materials."


Blast kills 20 in NW Pakistan
Attack is third in days in area where army is taking on Taliban
By Pamela Constable and Haq Nawaz Khan
Washington Post Foreign Service 
Wednesday, November 11, 2009

ISLAMABAD, PAKISTAN– A suicide bomber rammed his car into a donkey cart in the northwest town of Charsadda on Tuesday, killing more than 20 people and wounding 45, officials said. It was the third suicide bombing since Saturday in the volatile border region, where army troops have battled Taliban forces for a month.

The three blasts in North-West Frontier Province have killed at least 40 people in four days, including a mayor who once backed the Taliban but later led a militia against it. He died Sunday when a suicide bomber set off a blast in a livestock market, where people were buying goats to sacrifice for the upcoming Eid holiday.

The latest bombings, all carried out against nonmilitary targets, highlight the human cost of Pakistan’s decision to launch a major army offensive against one of the Taliban’s main tribal strongholds. The violence increasingly has spilled into heavily populated areas nearby.

Army officials say the operation in the South Waziristan tribal area is going well and has strong support among the Pakistani public. But analysts said the militants’ aggressive moves beyond tribal borders — especially against local officials who defy them — is opening a deadly new front in a war that could still lose crucial public support.

Moreover, regional leaders and analysts said they are worried that the central government, by failing to follow up a series of army operations with rehabilitation aid and economic development, is opening the door for Taliban forces to return and regain influence over an impoverished, long-neglected tribal populace that has little loyalty to the state.


Jim Sinclair’s Commentary

Chavez was quoted as saying, "Where did they come from?"

Venezuela’s Chavez Denies He Called Troops to War, Caracol Says
By Helen Murphy

Nov. 11 (Bloomberg) — Venezuelan President Hugo Chavez last night denied he had called for war with Colombia and said his comments to make preparations were defensive, Caracol Radio reported.

Chavez criticized Colombia’s decision to allow the U.S. to use seven military and air bases inside the Andean nation and said his comments on Nov. 8 were aimed at preparing his armed forces to defend the nation from attacks from the seven bases, Caracol cited Chavez as saying yesterday in Caracas.


Jim Sinclair’s Commentary

Tanzania just grows and grows. It is amazing what great leadership will do for you.

Vodacom Business takes aim at corporate Tanzania
11 November, 2009

Vodacom Business has established a new unit in Vodacom Tanzania

According to Vodacom Business the new unit will pave the way for Vodacom Tanzania to provide new technologies and value-add solutions to meet the mobile and fixed voice-, video- and data requirements of Tanzanian businesses.

Wally Beelders, chief officer of Vodacom Business Africa, says the establishment of this business unit is a result of the need to increase the focus and align the strategic fit of Vodacom Tanzania with the directional growth of Corporate Tanzania.

“Vodacom Business is all about changing the way our clients do business, by providing world class managed and converged communication solutions to the African market”, he says.

“At the heart of changing the Tanzanian market are innovation and simplicity. Under the direction of Dylan Lennox, managing executive of Vodacom Business Tanzania, we will offer managed and converged solutions under three main product portfolios; voice, internet and data; providing tools for Tanzania to unleash its business potential by marrying the best the world has to offer with the realities on the ground.”


Jim Sinclair’s Commentary

The March towards major external currency moves on in China.

Their plan unfolds. The West has no plan so therefore nothing unfolds.

No plan is perfect as it produces nothing. Nothing unfolds whatsoever.

HSBC facilitates trade settlement using Chinese’s Renminbi currency clip_image003 2009-11-11 14:07:49

JAKARTA, Nov. 11 (Xinhua) — The Hong Kong Shanghai Banking Corporation (HSBC) launched trade transaction service with Chinese currency Renminbi here, makes Indonesia the sixth country in ASEAN countries enjoying the service, a senior HSBC official said here on Wednesday.

China will continuously play an important role as the main trade partner for Indonesian businessmen. "The Chinese government’s policy to allow Renminbi as trade payment currency would improvethe trade between the two countries," Head of Trade and Supply Chain HSBC Indonesia Vincent C. Sugianto said.

Citing the results of its Trade Confidence Index survey for the fourth quarter this year, he said the Indonesian businessmen wish to improve their businesses with their Chinese counterparts.

The commencement of HSBC’s trade payment with Chinese Renminbi currency service in Indonesia was marked with a transaction conducted by one of HSBC Indonesia’s customers PT Duta Permata Murni with its business counterpart in Shanghai, China recently.

The other ASEAN (Association of Southeast Asian Nations) countries served with HSBC’s Renminbi Trade Settlement service are Malaysia, Thailand, Singapore, Vietnam and Brunei Darussalam.


China to guide yuan with eye on major currencies
By Zhou Xin and Jason Subler
Wednesday, November 11, 2009; 5:11 AM

BEIJING (Reuters) – China said on Wednesday it will consider major currencies in guiding the yuan, suggesting a departure from an effective dollar peg that has been in place since the middle of last year.

The reference to a new set of benchmarks for determining the value of the yuan holds out the possibility of a departure from recent practice, which has seen the currency held steady since mid-2008 around 6.83 per dollar.

"Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange rate formation mechanism," the central bank said in a 46-page monetary policy report.

It was the first time since the landmark revaluation and launching of forex reforms in July 2005 that the People’s Bank of China has strayed from the language of keeping the yuan "basically stable at a reasonable and balanced level" when discussing future forex reforms in such quarterly reports.


Jim Sinclair’s Commentary

As paper gold exchanges proliferate, more real bullion will be required for warehouse stock to give the paper contracts some semblance of reality.

Delivery problems will also increase as trader/investor interest in gold internationally increases because gold dealers tack on premiums not existent in the paper for delivery market.

The last day of gold ETF greatness is the first day a paper exchange has a public problem with delivery anywhere.

Be advised.

Hong Kong Mercantile to Offer Gold Futures Contract 
By Debra Mao

Nov. 11 (Bloomberg) — The Hong Kong Mercantile Exchange aims to start a gold futures contract by January, the company’s maiden offering as it seeks to take advantage of rising investor demand in the metal, which traded today at a record.

“We foresee Hong Kong establishing benchmark pricing of gold in the Asian time zone,” Chairman Barry Cheung said today at the Foreign Correspondents’ Club in Hong Kong. “Priorities changed” from an initial plan to begin business with a fuel-oil contract amid a shift in customer interest, Cheung said.

Gold has surged to an all-time high, driven by a weaker dollar and mounting investor concern that increased government spending worldwide to combat the global recession will debase paper currencies and fuel an increase in inflation.

Still, “Asian markets will still follow international markets for the time being” for gold, said Qu Mingyi, a dealer at Bank of China Ltd. in Shanghai. “It’s not like copper, because speculation and investment interest in gold is higher.”

During Asian hours, gold futures are traded in yuan on the Shanghai Futures Exchange and in dollars on the Comex division of the New York Mercantile Exchange. Hong Kong Exchanges & Clearing Ltd., Asia’s third-largest stock market, also began offering futures trading on Oct. 20, 2008. Hong Kong Mercantile’s planned contract is denominated in dollars.


Jim Sinclair’s Commentary

You can make money long, with close technical analysis respect, with whatever base metal China is buying regardless of the expert opinions prolifically offered by the investment/commodity industry. It will be wild but right.

Copper Rises as Chinese, Japanese Factories Signal Metal Demand
By Anna Stablum

Nov. 11 (Bloomberg) — Copper rose to the highest price this month in New York and London as industrial production climbed in China, the world’s largest metals user, and machinery orders exceeded forecasts in Japan, the fourth biggest.

China’s industrial production climbed 16.1 percent in October, the most since March 2008, the statistics bureau said today. Japanese orders gained more than twice the pace economists estimated in September, signaling that a recovery in the world’s second-largest economy may be sustained.

“The data is showing strong growth in China,” Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London, said by phone. “The Japanese numbers were better than expected so maybe there is some light at the end of the tunnel.”

December-delivery copper gained 5.5 cents, or 1.8 percent, to $3.0155 a pound on the New York Mercantile Exchange’s Comex division at 8:17 a.m. local time. It reached $3.0375 earlier, the highest intraday price since Oct. 30. Copper for three-month delivery rose 1.7 percent to $6,642 a metric ton on the London Metal Exchange.

The Dollar Index, a six-currency gauge of the greenback’s performance, fell as much as 0.3 percent to its lowest level since August last year. A weaker U.S. currency makes dollar- priced metals cheaper to those with other monies.


Jim Sinclair’s Commentary

How much of this is dollar related? I would think most of it over the last 60 days.

Weimar, here we come. The equity gang should love it when the dollar trades at USDX .6200

What would be required on the dollar for Dow 30,000? How about under USDX .5200

S&P 500 Climbs to Near 13-Month High as Commodities Rally
By Mary Childs

Nov. 11 (Bloomberg) — U.S. stocks extended a global advance, sending the Standard & Poor’s 500 Index to near a 13- month high, as China’s industrial production surged and policy makers signaled interest rates will remain at a record low. Gold jumped to a record.

Bank of America Corp. and Home Depot Inc. led the Dow Jones Industrial Average above its highest close since October 2008. Toll Brothers Inc. led homebuilders higher after saying orders surged and cancellations slowed. Barrick Gold Corp., the largest producer of bullion, and Alcoa Inc. climbed with metals prices. The MSCI Emerging Markets Index rose 0.8 percent, lifting its six-day rally to 7.5 percent.

The S&P 500 increased 0.1 percent to 1,094.49 at 11:56 a.m. in New York and climbed as high as 1,105.37, above its highest close since Oct. 2, 2008. The Dow added 11.94 points, or 0.1 percent, to 10,258.91. Almost three stocks gained for every two falling on the New York Stock Exchange.

“You got people out there saying the bear market rally’s over,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which manages $214 billion. “I think they’re smoking dope.”


Jim Sinclair’s Commentary

And so it goes in a planetary sense.

Gold is going to $1224, $1278, $1650 and then on the Alf’s numbers.

Vietnam to allow gold imports to stabilise market
11.11.09, 06:25 AM EST
clip_image001By John Ruwitch and Ho Binh Minh

HANOI, Nov 11 (Reuters) – Vietnam’s central bank on Wednesday lifted a 1-1/2-year-old ban on gold imports in a bid to stabilise the market after a sharp rise in prices helped drive the country’s dong currency to a record low.

‘The State Bank of Vietnam will allow gold imports with a volume sufficient to intervene in the market in order to stabilise the market, combat speculation and prevent an impact on the interests of the people,’ the central bank said on its Web site,

Five or six companies would be allowed to import unlimited quantities of gold, state-run news Web site quoted State Bank of Vietnam Governor Nguyen Van Giau as saying on Wednesday afternoon.

He did not give details or a timeframe.

The ban on gold imports since May 2008 led to a gap between domestic and international prices, and recently traders say that spread, plus the rise in gold prices globally, triggered a surge in demand for dollars.


Jim Sinclair’s Commentary

What is wrong with Mr. Zoellick? Does he not watch F-TV?

This is the new normal. People don’t have to work to have Wall Street booming. All that is required is $12 trillion from the Treasury and Federal Reserve.

The bubble machine will save us.

World Bank warns unemployment threatens US economy

SINGAPORE — Stubbornly high joblessness threatens to trigger loan defaults and drag on consumption next year, hobbling a U.S. economy struggling to rebound from recession, World Bank President Robert Zoellick said Wednesday.

Zoellick warned that the U.S. unemployment rate, which jumped to a 26-year high of 10.2 percent in October, will likely remain elevated in 2010.

"You’re going to have problems with delinquencies of credit card loans, consumer loans, people won’t be able to pay their mortgages," Zoellick told reporters in Singapore. "Some banks are going to continue to be troubled by bad loans."

Government stimulus spending will likely fuel economic growth through the middle of next year, Zoellick said. After that, consumer spending and business investment must take the baton to boost expansion, he said.

"If you’ve got large scale unemployment, if you’ve got consumers rebuilding savings and deleveraging, I don’t think the consumer is going to play that role," he said. "What’s the other source of demand?"



Jim Sinclair’s Commentary

No problem. Just watch the movie "Armageddon" starring Bruce Willis.

It is time well spent as it is a lesson in "exploration drilling 101."

Bear is my favorite driller in that movie.

Asteroid passes just 8,700miles from Earth – with only 15 hours warning
By Claire Bates
Last updated at 10:01 AM on 11th November 2009

Although no one noticed at the time, the Earth was almost hit by an asteroid last Friday.

The previously undiscovered asteroid came within 8,700miles of Earth but astronomers noticed it only 15 hours before it made its closest approach.

Its orbit brought it 30 times nearer than the Moon, which is 250,000 miles away.

But before you head for the nuclear bunkers you will be relieved to learn the tumbling rock was only 23ft across. Similar sized objects pass by this close to Earth about twice a year and impact on the planet about once every five years.

Astronomers believe the object, called 2009 VA, would have almost completely burned up while entering Earth’s atmosphere, causing a brilliant fireball in the sky but no major damage to the surface.


Jim Sinclair’s Commentary

Turkey is playing with fire. They really are not up to the game they are playing.

Turkey runs hot and cold
By Andrew Novo

Autumn has proved a busy season for Turkey as the nation of more than 76 million continues to establish itself as a regional hegemon while pursuing a policy of "no problems with neighbors". While the process of reconciling with neighbors – a tenuous agreement with Armenia, de-mining the border with Syria, a new energy deal with Russia and open amity with Iran – is yielding results, "no problems with neighbors" may mean new problems with old friends.

Turkish foreign affairs have made recent headlines: on October 10, Turkey signed an agreement normalizing relations with Armenia. The border between the two countries, closed since 1993, was opened. Two days later, Turkey canceled a joint air force exercise with Israel. A few days after that, the European Union released its annual report on the progress made by countries aspiring to EU membership.

Naturally, Turkey figured prominently in the report, which many commentators saw as a balancing act, pitting Turkey’s progress – improvements in relations with Armenia and Syria abroad, and more rights for Kurds and improved civil-military relations at home – against its shortcomings: a lack of progress on the Cyprus issue and the recent ruling and fine against the Dogan Media Group.

The dichotomy inherent in the EU report mirrors larger questions not only about Turkish politics and society but also about the country’s diplomatic posture. Turkey is familiar with occupying a unique position in world affairs. As recently as the early 20th century, it was a polyglot Muslim empire with deep roots in Europe. In the time-worn but geographically accurate phrase, it is the bridge between Europe and Asia.


Posted at 2:21 PM (CST) by & filed under General Editorial.

Dear CIGAs,

The currency intervention, both real and oral, is a waste of time as the euro will trade well above the $1.50 level. This is not because it is worth it but it is another inverse to the US dollar which is headed considerably lower.

The mistake that governments always makes in its assumed omnipotence is that intervention, certainly at a key number like $1.50, is that when the market realizes it is over moving momentum goes ballistic on the upside. That renders all the talk, skewed figures and wasted intervention money as not only useless but contra-productive.

In a floating system governments should know they cannot not enforce currency parity rates.

Parity rates are fixed currency highs and lows from the Bretton Woods days.

All talking heads on this subject were gleams in the eyes of their parents back then, not even in diapers, but do claim expertise.

Posted at 6:58 PM (CST) by & filed under In The News.


Jim Sinclair’s Commentary

Gold is going to $1224, $1278, $1650 and then on to Alf’s numbers.

Gold’s Swiss Stair action is dynamic, making Alf’s numbers look much better than mine.

The Swiss Stair action here is the process of governments who have entered the gold market. When governments enter COT loses.

Hold Cheer Until Gold Hits $1,500
By Patrick A. Heller
November 10, 2009

Perhaps the most significant news involving gold in the past week was the pattern of gold trading after last Friday’s Bureau of Labor Statistics announcement of the U.S. unemployment rate.

According to the BLS, the U-3 definition of the unemployment rate had jumped 54.5 percent in the past 12 months to 10.2 percent. This is the most commonly reported unemployment rate.

The BLS also reported that the U-6 definition of unemployment had climbed 45.8 percent from a year ago to its current level of 17.5 percent.

As those who have read my past columns understand, both of these reported figures understate U.S. unemployment. According to John Williams’ Shadow Government Statistics (, using the BLS methodology before it was changed under President Clinton, the current U.S. unemployment rate is about 22 percent.

A poor unemployment report reflects negatively on the U.S. economy with the result that the U.S. Treasury would have to pay a higher interest rate on its debt. One way to offset the poor unemployment news would be by having the U.S. dollar show strength against the price of gold (i.e., having the price of gold drop).


Jim Sinclair’s Commentary

Ah yes, our financiers are again doing the work of god.

The only problem is that this is a minor god named Mammon.

Where is the RAGE? Nowhere.

Barclays’ Remarkable Bargain
Published: November 9, 2009

When is a good deal too good?

That question is being whispered around Wall Street these days, a year after Lehman Brothers went bust in the biggest bankruptcy ever.

Sure, the panicked days of last autumn might seem like ancient history. After all, for much of Wall Street, the financial crisis is receding quickly, and many banks are minting money again.

And yet all these months later, heads are still being scratched over the way Barclays managed to scoop up the remains of Lehman.

Barclays, it turns out, cut itself a remarkably good deal. A recent court filing — this one free of redactions — even accuses Barclays of making off with $5 billion without anyone noticing, an amount that Lehman’s creditors seem to think should be treated as the largest theft in banking history.


Jim Sinclair

In Wall Street there is no white lies and minor fibs that do no count.

These are but venial sins.

Other major Wall Street personalities are doing the work of God! Heaven on Earth is located at Broad and Wall.


Bear Stearns Managers Acquitted of Fraud Charges
Published: November 10, 2009

Federal prosecutors suffered a setback Tuesday after a jury acquitted two former Bear Stearns hedge fund managers of lying to clients about the health of their investments.

The jury, which deliberated for less than two days, acquitted the two men, Matthew Tannin and Ralph Cioffi, of securities, wire and mail fraud.

Shortly after the verdict, Mr. Cioffi was seen with his lawyers rushing to a parked car. He was smiling and pumping his fist. “I’m happy,” he told The Associated Press.

Mr. Tannin’s lawyer Susan Brune, in a statement, called it “a very happy day for Matt and his family.”

The case was the first against high-profile Wall Street executives charged with fraud stemming from the financial crisis and had been closely watched. Many legal analysts considered it a test of whether the government could successfully prosecute financial fraud in an era when complex investments like collateralized loan obligations can confuse jurors with little background in finance.


Jim Sinclair’s Commentary

Just write those credit default swaps, an OTC derivative on anything, take in the cash, and forget about having enough capital to make even a fraction of the OTC derivative paper functional.

The OTC derivative problem has not gone away.

The winners just got paid and the losers are all still sitting there praying for a miracle.

That is FACT.

Ambac warns it may file for bankruptcy protection
Bond insurer says it may not have enough money to meet payment due in 2011
Nov. 10, 2009, 1:17 p.m. EST
By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) — Ambac Financial Group shares fell 12% Tuesday after the bond insurer said it may file for bankruptcy protection.

Ambac said in a regulatory filing late Monday that it should have enough liquidity to satisfy its needs through the second quarter of 2011.

But Ambac also warned that in the long term its main bond insurance unit, Ambac Assurance, may not be able to pay enough dividends to the holding company. That means the company may not have enough money to pay operating expenses and debt it owes, including a payment that’s due in August 2011, the company explained in the filing.

Ambac Assurance isn’t allowed to pay dividends in 2009 and will likely be unable to pay dividends next year without special approval from its main regulator, Wisconsin’s Office of the Commissioner of Insurance. That will limit Ambac’s main source of liquidity.

Ambac also warned that it could run out of liquidity before the second quarter of 2011.


Jim Sinclair’s Commentary

The Green Hornet submits this as the economic Ebola of the Western World and the Wall Street Bankster’s Great Train Robbery.

Financial innovation is Wall Street’s new ‘soul sickness’
Commentary: New mutant American capitalism has no moral compass
By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) — Could our headline just as easily read: "Financial innovation: Wall Street’s biggest con game?" How about: Rip-off? Joke? Oxymoron? Maybe "Wall Street’s big lie?" Or something darker: "Financial innovation: Wall Street’s deadliest sin, greatest evil, even soul-sickness?"

In fact, they all fit. Each reveals Wall Street’s dark side: Why are they at war to keep financial innovation secret, hidden, without public transparency? And why is Wall Street spending millions on lobbyists to kill financial-regulation reforms? Why? Because Wall Street rakes in tens of billions of dollars annually from their financial innovations, gambling in the shadowy $670 trillion global derivatives market. And Wall Street does not want government, investors or competitors digging into their "financial weapons of mass destruction," as Buffett calls them.

Swine-flu uproar on Wall Street

Goldman Sachs, Morgan Stanley and Citigroup are among several large New York City employers that got doses of the H1N1 vaccine, which remains in short supply. WSJ’s Betsy Mckay discusses Wall Street’s latest public relations nightmare on The News Hub.

Remember, financial innovation is just a Wall Street code word. Translated it simply means derivatives and other proprietary secrets like the high-frequency trading algorithms used by their quants. Yes, Wall Street wants you to believe that financial innovations also help Main Street, but that’s just Wall Street lobbyist propaganda to mislead the public, regulators and legislators. Remember when Washington proposed standardized mortgages as a way to help consumers? Wall Street attacked, spending millions to kill it.


Jim Sinclair’s Commentary

Come on now! The Bear Stearns guys got off today.

All statistics are fudged. It is only a little fib. No problem.

Oil reserves data being fudged by US: Report
Tuesday, November 10, 2009, 13:41 IST

Zeenews Bureau

Washington: In a startling revelation, a senior official associated with the International Energy Agency (IEA) has claimed that the data relating to global oil reserves has been twisted under pressure from the US.

The official, on the condition of anonymity, has disclosed that IEA has been constantly underplaying a looming shortage of oil as the US feared that original estimates would actually trigger panic buying.

In a sense the energy watchdog misguided nations about the rate of decline of oil from the existing fields and also deliberately predicted the chances of finding more reserves.

The allegations, in totality, suggest that the oil reserves across the world will decline at a much faster rate that what has been predicted by the IEA under the US influence.

The revelations also raises a question mark mover the legitimacy of the World Economic Outlook on oil demand and supply presented by the IEA since the figures are used by several nations and oil giants in formulating their business strategies and policies related to the climate change.


Jim Sinclair’s Commentary

All the winners on the OTC derivatives have been paid off, leaving the corpse to collapse. This is a dead entity walking – a financial ZOMBIE.

Lloyds Bank cutting or moving 5,000 more jobs
Lloyds Banking Group says 5,000 jobs affected in latest cuts as it reorganizes operations
* On 7:00 am EST, Tuesday November 10, 2009

LONDON (AP) — Britain’s Lloyds Banking Group PLC said Tuesday that it plans to cut about 4,300 jobs and transfer 680 more in a series of reorganizational moves in its group operations, insurance and retail division.

The bank, which was bailed out by the government, had already announced a total reduction of 6,400 jobs in the first half of the year. It employed about 118,000 people at the end of June.

It said the latest round of job-cutting would affect 5,000 employees, including about 2,400 contractors, temporary staff and offshore personnel.

Lloyds said 680 of the affected positions will be redeployed to one of seven sites in its retail division.

"This Lloyds Banking Group announcement of 5,000 job losses demonstrates the depth of corporate arrogance within this taxpayer-supported bank," said Rob MacGregor, a union national officer.


Jim Sinclair’s Commentary

State by state, the state of affairs worsens. It is just as the Formula outlined for you years ago.

It is a downward spiral where the intervention only intervened to make the Banksters trillionaires.

A downward spiral that fails to have effective intervention goes to its natural target, which is zero.

The dollar is in real trouble. The only effect of modest intervention and verbal intervention is so it declines slowly, thereby trapping the many.

Paterson: NYS Will Be Broke Before Christmas
Delivers Scary News To Legislature, Says Only Way To Fix Problem Is To Have Immediate Cuts To Education, Hospitals

Nov 10, 2009 6:18 am US/Eastern

ALBANY (CBS) ― Governor David Paterson called an unusual joint session of the Legislature Monday to implore recalcitrant lawmakers to close the state’s huge budget gap before New York runs out of money.

To some lawmakers it’s nothing more than a photo op to help Paterson get re-elected. But the governor is dead serious. He said if the Legislature doesn’t cut the budget now the state could run out of money by next month.

"We’re going to run out of cash in four and a half weeks. We are going to run out of money. Unless we do something about it, (it will) threaten generations," Paterson said.

And so began what is turning out to be a tense tug of war between Gov. Paterson and the Legislature.

The governor says $3.2 billion in cuts must be enacted how — or else. The cuts range from $500 million in agency spending to over $1 billion in already committed in aid to school districts and hospitals.


Jim Sinclair’s Commentary

China will own Africa, displacing the RSA guys who made an early attempt to buy the continent.

China keeps its purse open for Africa
By Antoaneta Bezlova

BEIJING – China, which pledged this week to offer full assistance to Africa in agriculture and infrastructure, hard on the heels of a decision to extend US$10 billion over the next three years in concessional loans to the continent’s countries, has garnered applause for its no-strings-attached foreign aid.

At the Forum on China-Africa Cooperation in the Egyptian resort of Sham el-Sheikh, Beijing’s approach was held as an example for development worth emulating by countries around the world.

Brushing off accusations that its investment is denuding Africa of precious natural resources, China has pledged "going all-out" to help African countries overcome poverty and fight new threats like climate change.

"China has been able to develop its economy without plundering other countries, and the Chinese economic miracle is indeed a source of pride and inspiration," Zimbabwe President Robert Mugabe told the forum. Beijing’s engagement with the continent was a model the rest of the world should adopt, he said.


Jim Sinclair’s Commentary

China is big in saving face. India called their bluff of hanging back with their bid.

The real question is will Russia front run China?

Will China Buy 203 Tons of Gold from IMF?
Source: Commodity Online 11/10/2009

Where is China? That is the question several market analysts are asking after IMF sealed its deal with India to sell 200 tons of gold.

In fact, the market was expecting China to buy the IMF gold as the Communist country was desperate to diversify its reserves following the uncertainty over dollar after the recession.

When IMF declared that it would be selling its 403.3 tons of gold, most analysts thought China would be the first buyer to go for the IMF bullion.

However, India moved fast and snapped up the 200 tons of gold. Now, the question is who is the second buyer of the remaining over 203 tons of gold? Some analysts say China is still a contender. But many are still not sure whether China will go for the IMF gold. China is now the world’s largest producer of gold, and could buy its own output. That would reduce its risk of exposure to the market prices that India had to pay.

As such, the higher gold prices rise, the less likely China will be interested in IMF gold and the less likely the remainder of the sales will be completed off-market in 2009–2010.


Jim Sinclair’s Commentary

China is no fool. Just saying no to OTC derivatives is like just saying no to financial crack cocaine.

The only difference is the sellers of crack do less damage to their clients.

Chinese derivatives rules hit global banks
By Robert Cookson and Jamil Anderlini
Published: November 10 2009 19:06 | Last updated: November 10 2009 19:06

Many of the world’s biggest banks are in effect locked out of China’s small but fast-growing derivatives markets after refusing to sign new trading agreements with the Chinese institutions that control the market.

The stand-off has caused foreign banks’ share of local derivatives trading to plummet, undermining their ambitions to expand their Chinese interest rate, foreign exchange and credit derivatives operations.

China’s four largest state-owned banks control the vast majority of the onshore derivatives markets.

They are requiring locally incorporated foreign banks to secure contractual guarantees from their global headquarters to guard against trading defaults before dealing with them in the derivatives market.

The request is unprecedented and “makes a mockery of the requirement that foreign banks incorporated locally in the first place”, according to one senior China-based western banker who asked not to be named because of the sensitivity of the subject.


Jim Sinclair’s Commentary

Remember what I told you about the July 09 China/USA financial summit meeting as part of the countdown towards the US dollar’s expiration yesterday?

Well here is the reminder right on time.

The G20 reported very little progress on the Super Sovereign Currency, therefore nothing requested by China at that summit has been delivered.

Look for the elevator heading to the bottom floor of the dollar very soon.

What is the appropriate size? A quadrillion to balance the OTC derivative mountain?

China’s Wen urges U.S. to keep deficit at ‘appropriate size’
By Laura Mandaro, MarketWatch

SAN FRANCISCO (MarketWatch) — Chinese Premier Wen Jiabao on Sunday exhorted the U.S. to keep its deficit in control to stabilize the U.S. dollar exchange-rate, according to media reports.

"I hope that as the largest economy in the world and an issuing country of a major reserve currency the United States will effectively discharge its responsibilities," Wen said at a news conference in Egypt, according to wire reports.

China is the largest foreign holder of U.S. Treasurys.

Earlier this year, Chinese officials expressed concern about the continued value of those holdings as the U.S. pumps trillions of dollars into the financial system to pull the economy out of a severe recession. The U.S. Treasury has been issuing record amounts of debt to close the country’s budget gap.

"Most importantly, we hope the U.S. will keep its deficit at an appropriate size so that there will be basic stability in the exchange rate and that is conducive to the stability and recovery of the world economy," he said.

Since early March, the U.S. dollar index /quotes/comstock/11j!i:dxy0 (DXY 75.04, +0.02, +0.02%) , which tracks the dollar’s value against a basket of major rivals, has fallen about 15%, in part due to the Federal Reserve’s loose monetary policy.


Jim Sinclair’s Commentary

Clearly the US is negotiating a financial deal to buy the privilege of guarding the Pakistani Nukes.

In the grand scheme this may be one of the reasons the opposition to Kharzi in Afghanistan withdrew from the runoff elections. It certainly fits with others things that I have heard, but as all geopolitical cash for courtesy deals are, convoluted beyond complexity.

The simple reality is that anti- Americanism in Pakistan would explode if the present Pakistani government made a deal letting US troops into their nuclear facilities.

If you planned to radicalize Pakistan there could not be a better strategy. This bag of worms is the world’s greatest present challenge.

Remember how silly it sounded when I first told you about the following combination:

1. Israel makes a major miscalculation.
2. Pakistan goes Taliban.
3. Turkey is a victim.

In an unstable Pakistan, can nuclear warheads be kept safe?
by Seymour M. Hersh NOVEMBER 16, 2009

In the tumultuous days leading up to the Pakistan Army’s ground offensive in the tribal area of South Waziristan, which began on October 17th, the Pakistani Taliban attacked what should have been some of the country’s best-guarded targets. In the most brazen strike, ten gunmen penetrated the Army’s main headquarters, in Rawalpindi, instigating a twenty-two-hour standoff that left twenty-three dead and the military thoroughly embarrassed. The terrorists had been dressed in Army uniforms. There were also attacks on police installations in Peshawar and Lahore, and, once the offensive began, an Army general was shot dead by gunmen on motorcycles on the streets of Islamabad, the capital. The assassins clearly had advance knowledge of the general’s route, indicating that they had contacts and allies inside the security forces.

Pakistan has been a nuclear power for two decades, and has an estimated eighty to a hundred warheads, scattered in facilities around the country. The success of the latest attacks raised an obvious question: Are the bombs safe? Asked this question the day after the Rawalpindi raid, Secretary of State Hillary Clinton said, “We have confidence in the Pakistani government and the military’s control over nuclear weapons.” Clinton—whose own visit to Pakistan, two weeks later, would be disrupted by more terrorist bombs—added that, despite the attacks by the Taliban, “we see no evidence that they are going to take over the state.”

Clinton’s words sounded reassuring, and several current and former officials also said in interviews that the Pakistan Army was in full control of the nuclear arsenal. But the Taliban overrunning Islamabad is not the only, or even the greatest, concern. The principal fear is mutiny—that extremists inside the Pakistani military might stage a coup, take control of some nuclear assets, or even divert a warhead.

On April 29th, President Obama was asked at a news conference whether he could reassure the American people that Pakistan’s nuclear arsenal could be kept away from terrorists. Obama’s answer remains the clearest delineation of the Administration’s public posture. He was, he said, “gravely concerned” about the fragility of the civilian government of President Asif Ali Zardari. “Their biggest threat right now comes internally,” Obama said. “We have huge . . . national-security interests in making sure that Pakistan is stable and that you don’t end up having a nuclear-armed militant state.” The United States, he said, could “make sure that Pakistan’s nuclear arsenal is secure—primarily, initially, because the Pakistan Army, I think, recognizes the hazards of those weapons’ falling into the wrong hands.”

The questioner, Chuck Todd, of NBC, began asking whether the American military could, if necessary, move in and secure Pakistan’s bombs. Obama did not let Todd finish. “I’m not going to engage in hypotheticals of that sort,” he said. “I feel confident that the nuclear arsenal will remain out of militant hands. O.K.?”


Jim Sinclair’s Commentary

This statement is:

1. an attempt at verbal intervention of the euro.
2. True all over the world because all the loser’s derivatives are still there whilst the winner who seems to always be the same people are paid off in spades.

Merkel Says Worst Still Ahead in Germany
Published: November 10, 2009

BERLIN — After basking for days in the limelight of Germany’s reunification celebrations, Chancellor Angela Merkel returned to the political fray Tuesday when she presented her government’s priorities, warning that the worst effects of the global financial crisis would hit Germany next year.

Making her first policy speech since being sworn in for a second four-year term two weeks ago, Mrs. Merkel gave a pessimistic assessment of the German economy, something she rarely did when the global financial crisis began to pummel Germany earlier this year. Back then, Mrs. Merkel, who was facing re-election, said Germany might even weather the storm.

But her hour-long speech to legislators in the Bundestag, or lower house of Parliament, was often blunt as she hammered home the point that Germany had some way to go before emerging from the economic crisis.

Saying that the “full force of the economic crisis will hit us next year,” Mrs. Merkel told legislators that “The problems will get bigger before things can get better.”

Indeed, she said, Germany faced “a challenge the likes of which it has not seen since reunification,” a reference to the immense costs of raising the social and economic conditions of what had been communist East Germany to the levels of the rest of the country. Such efforts have already cost €1 trillion, or $1.5 trillion, according to the Finance Ministry.


Jim Sinclair’s Commentary

Here is a gun fight at the OK Corral of sorts.

Korean naval ships clash at sea

A South Korean warship has exchanged fire with a North Korean naval vessel, reports from both countries say.

Officials in Seoul say the South Korean vessel opened fire when the Northern ship crossed a disputed sea border. The North Korean vessel then fired back.

North Korea insists its ship did not cross the border, and has demanded an apology, according to news agency KCNA.

The two navies have engaged in deadly exchanges twice along their western sea border in the past decade.

The incident comes days before US President Barack Obama visits Asia, with North Korea seeking direct talks on its nuclear programme.


Jim Sinclair’s Commentary

Sure, because Cash for Clunkers is not dead, it is only resting. Soon you will have Federal Cash for Volts. $7500 if you buy the Chevy.

Who knows how much if you buy the Caddy.

What this means is that Uncle puts you in the driver’s seat. GMAC will lend money to Mr. Fred to buy one, then a big success will be declared for the Volt that drops dead electronically at 40 miles and does zero to sixty in a week. Maybe it takes 45 miles for the Caddy to drop dead electronically if you avoid jack rabbit starts or starts at all.

Then comes the repo man.

This is no Energizer Bunny. Used car bids are not going to be strong in six months.

Report: GM Will Build Chevy Volt-Based Cadillac Convertible
Posted: Nov. 10, 2009 10:11 a.m.

There will be a Cadillac version of the highly-anticipated Chevy Volt Extended-Range Electric Vehicle (E-REV), according to the Detroit News.

"General Motors Co. has decided to produce the Cadillac Converj" coupe, the News explains. "Cadillac included the Converj, a concept car that wowed industry critics and the public at the 2009 North American International Auto Show, in a presentation made to the automaker’s board of directors Nov. 2, according to sources familiar with the production plan."

An E-REV, like a hybrid, uses both gasoline and electricity. Unlike a hybrid, however, an extended-range electric car can travel on battery power alone at full speed. GM claims that the Volt and Converj will be able to travel about 40 miles before using their first drop of gasoline – meaning that many owners will be able to get through an average day on electricity alone. On longer trips, when the battery is depleted, the gasoline engine will start. The engine will not power the wheels directly, instead acting as a generator to recharge the battery. The cars will also recharge from a standard home electrical outlet, enabling owners to rely on cheaper electricity for most of their driving, using more expensive gasoline only for unusually long trips.

The Converj shown at auto shows over the last year is a two-door, four-seat car design with Cadillac’s uniquely angular styling and a huge egg-crate grille.

Autoblog notes that GM vice chairman Bob Lutz "has previously gone on record as a champion of a production Converj, and he has said that a serial version would look very similar to the 2009 showcar – in much the same way that the Camaro evolved from concept to production. As the concept was gorgeous, we’re down with that."


Jim Sinclair’s Commentary

Here is the Administration’s answer to China’s message today on "Watch your Deficit Spending."

All this is spot on in time and exactly what I told you. The dollar is getting quite close to the cliff.

Fighting with your banker is a really bad idea when they are NOT dollar bound. They pay up on all their mineral purchases of last year, and voila, they are not dollar bound.

Obama: strains unless U.S., China balance growth
Tue Nov 10, 2009 11:28am IST
By Simon Denyer and Caren Bohan

WASHINGTON (Reuters) – The United States sees China as a vital partner and competitor, but the two countries need to address economic imbalances or risk "enormous strains" on their relationship, President Barack Obama said on Monday.

Three days before leaving on a nine-day trip to Asia, Obama said the world’s two most powerful nations need to work together on the big issues facing the globe, and any competition between them has to be fair and friendly.

"On critical issues, whether climate change, economic recovery, nuclear nonproliferation, it is very hard to see how we succeed or China succeeds in our respective goals, without working together," he told Reuters in an interview.

Speaking in the Oval Office, he warned that the economic relationship between the two countries had become "deeply imbalanced" in recent decades, with a yawning trade gap and huge Chinese holdings of U.S. government debt.

Obama said he would be raising with Chinese leaders the sensitive issue of their yuan currency — which is seen by U.S. industry as significantly undervalued — as one factor contributing to the imbalances.



Jim Sinclair’s Commentary

This being true, the US dollar will remain the Carry Trade currency of choice for years.

U.S. job woes behind need for low rates, Fed officials say
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve’s historic zero-interest-rate policies remain necessary because the outlook for the U.S. labor market remains grim, two senior Fed officials said on Tuesday.

They were 1,800 miles apart as they delivered their speeches, but the remarks of Federal Reserve Bank of San Francisco chief Janet Yellen and her Atlanta Fed counterpart Dennis Lockhart bore some similarities — namely, as near as they could tell, the nation’s economic recovery was likely to be subdued.

These comments are important because they are the first by Fed officials after their closed-door policy meeting on monetary policy and rates last week.

At their meeting, they voted to keep rates at historic lows and said in the policy statement that these "exceptionally low" rates would be needed for an "extended period."


Jim Sinclair’s Commentary

When you privatize war you get private companies playing as governments.

Governments do not go to jail when they buy armies that do bad things, but private contractors will, maybe.

Blackwater Approved $1 Million in Iraqi Payments After ’07 Shootings

WASHINGTON — Top executives at Blackwater Worldwide authorized secret payments of about $1 million to Iraqi officials that were intended to silence their criticism and buy their support after a September 2007 episode in which Blackwater security guards fatally shot 17 Iraqi civilians in Baghdad, according to former company officials.

Blackwater approved the cash payments in December 2007, the officials said, as protests over the deadly shootings in Nisour Square stoked long-simmering anger inside Iraq about reckless practices by the security company’s employees. American and Iraqi investigators had already concluded that the shootings were unjustified, top Iraqi officials were calling for Blackwater’s ouster from the country, and company officials feared that Blackwater might be refused an operating license it would need to retain its contracts with the State Department and private clients, worth hundreds of millions of dollars annually.

Four former executives said in interviews that Gary Jackson, who was then Blackwater’s president, had approved the bribes and that the money was sent from Amman, Jordan, where the company maintains an operations hub, to a top manager in Iraq. The executives, though, said they did not know whether the cash was delivered to Iraqi officials or the identities of the potential recipients.

Blackwater’s strategy of buying off the government officials, which would have been illegal under American law, created a deep rift inside the company, according to the former executives. They said that Cofer Black, who was then the company’s vice chairman and a former top C.I.A. and State Department official, learned of the plan from another Blackwater manager while he was in Baghdad discussing compensation for families of the shooting victims with United States Embassy officials.


Jim Sinclair’s Commentary

Turkey is doing more than attempting to grow in influence in the Middle East. It is moving directly into significant harm’s way.

TURKEY: Re-Writing The Middle East?

ISTANBUL (IDN) – In a record time, Turkish diplomacy has managed to put together several pieces in its Middle East puzzle — in fact it has struck strategic deals with three key regional players: Iran, Iraq, and Syria. A new ’quartet’ has been formed. The question is what kind of music can it play?

The Turkish shift towards the Middle East jumped visibly to the news earlier this year, when Prime Minister Recep Erdogan walked out of the World Economic Forum in Davos, to signal his strong protest against Israeli massive attacks on Gaza, which killed around 1,500 Palestinians, many of them civilians, for which the UN charged Tel Aviv with war crimes.

Shortly after, Turkey was invited to attend Arab League’s Foreign ministers meetings as an active observer. The Arab League comprises only the 22 Arab countries.

Last summer, Ankara accepted a challenging plan, promoted by Damascus, to form a new Middle East bloc between Turkey, Iraq, Iran and Syria itself.

As a starter, and in spite of its threatening drought, Turkey agreed to Syrian and Iraqi petition to maintain the volume of waters (500 cubic meters per second) pouring from its mountains into River Euphrates which flows through its two neighbours.

In September, Erdogan announced the cancellation of the annual joint military manoeuvres with U.S. and Israeli troops. The reason, according to Turkish prime minister, is that his country does not want Israeli war fighters, which killed innocent civilians in Gaza to fly its skies.


Posted at 6:32 PM (CST) by & filed under Jim's Mailbox.

Jim Sinclair’s Commentary

A man I respect, an old African hand, wrote this great review. It is packed with the most important concepts that need now to be understood concerning why gold has only begun its bull market.

I might add that it is simply illogical to assume the Gold ETFs have all or even most of the gold they claim to have in bullion form. There simply isn’t that much gold in the gold cash market.

Size like that only trades between central banks that report their holdings. Their holding have not dropped without tracking sales enough to offset even a part of those positions.

World production versus industry off takes denies these positions.

The prospectus of the major ETF should be read as they clearly state without any question that the fund is NOT required to hold bullion gold.


The CIGAs may find interesting some alternate non-US perspectives on where we are at, just random thoughts for the mailbox in no particular order:

1)  The investment liquidity overhang. Notwithstanding the commercial credit squeeze worldwide there are huge amounts of investable money sitting on the sidelines watching, waiting, fearful, frustrated. Whilst we see equity and other markets somewhat higher and well off their lows, volumes reflect hesitance. Much of the significant funds withdrawn from the equity markets – both private and institutional – has not yet come back into play. It sits in short term liquid instruments distrustful of what is considered a Bear rally rather than a recovery. This is substantial money, badly frightened in the downturn. The private investor also holds his liquidity out of concern at the threat posed by the deteriorating economy. However the money grows restless: interest rates are unattractive, currencies are volatile, general equities are distrusted, bonds are likely to deliver a religious experience. Gold has barely begun to reflect on the wider "public" investment horizon. When it does and even some portion of this frustrated investment capital comes to the sector… on to Alf’s numbers…

2)  Martin Armstrong. Some CIGAs may consider Armstrong’s writings as emotionally tainted by his conflict with the US Judiciary and the US State. However it comes as a shock to encounter his brilliance in the very events and influences he writes of unfolding in the markets! From theory into practice. Who would conceive of a day where respected international financial institutions advise their clients that they will no longer be offering services into the US exchanges or capital markets and that their clients should consider extracting themselves from any US investments? Quietly, but emerging publicly, it is happening! Refer Armstrong’s (and others’) writings on the Obama "green book" fiscal proposals with for eg US Estate Tax liability by non-resident non-citizen foreign investors and you see why. In the light of the UBS experience (who apparently were kind of reckless and deserved the attention of the IRS… imagine the mountain of anti-UBS litigation yet to come… ouch!) even fully-compliant institutions cannot be blamed for reconsidering doing business under ever more onerous US requirements.

3)  The timing of the above withdrawal of foreign investments could not be worse (for the US). Whilst the IRS may gain some tax dollars the US as a whole will be chasing away international investment capital in the trillions… at a time when the world doesn’t exactly appear to be queuing up to continue financing the US deficits. The US could become very unattractive to foreign capital.

4)  Flash-trading and dark pool facilities for the favoured… the arrogance of the US exchanges. That went down really well in Europe…

5)  Coming shock in Precious Metals ETFs? Gold coins and bars… the barbaric relic held in the hand represents wealth free of any encumbrance or anyone else’s liability. This is the key characteristic of physical gold: it does not represent someone else’s liability. It does not draw its worth from the strength of a transactional counterparty. Suddenly we are asked the same question by two separate Swiss brokers: How much actual physical Gold do we think the various ETFs really have? These are clever people who within their separate institutions have already reached an opinion and are testing that opinion… and here they are thinking along the lines oft expressed on JSMineset that amongst the ETFs lies the possibility of a counterparty or custodian default. All the gold is there (maybe)… or not there (maybe)… The ETFs provide a convenient trading facility but for CIGA core holdings why own something Gold that isn’t, so to speak? The small inconvenience to take delivery of your Comex or other Metal Account holdings is inconsequential should a future squeeze on physical or custodial problems occur. The risk is there otherwise these folks would not be asking the question…

6)  Finally one of my favourite perspective pieces is that from CIGA Pedro at: well worth a re-read!

As always thank you for your untiring efforts to our benefit.

CIGA Zacken


China decided to raise prices for gasoline and diesel fuel by up to 7.2%. Inflation is coming…

CIGA Christopher

Chinese oil-refining shares rise after fuel-price hike
By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) — China’s decision to raise prices for gasoline and diesel fuel by up to 7.2%, in line with rising global crude-oil prices, boosted shares of state-owned refiners such as Sinopec and PetroChina in Shanghai and Hong Kong trading Tuesday.

The price increase of 480 yuan ($70.3) per ton was announced by the National Development and Reform Commission and translates into a 6.5% increase in gasoline prices and a 7.2% rise for diesel prices, according to Dow Jones Newswires.

Goldman Sachs’s Fred Hu on China’s Recovery

WSJ’s Jason Dean speaks to Dr. Fred Hu, managing director of Goldman Sachs Group, about the biggest challenge in China’s recovery, at the China Financial Markets conference. He also discusses what China needs to do to sustain its growth.


China fuel price rise to add 0.12 points to Nov CPI
Tue Nov 10, 2009 7:36am IST

BEIJING, Nov 10 (Reuters) – China’s latest price hike on refined oil products will push the consumer price index up 0.12 percentage points in November, the National Development and Reform Commission (NDRC), the top economic planner, said.

China raised retail gasoline and diesel prices by 480 yuan ($70.32) per tonne from 1600 GMT on Monday. It also increased jet fuel prices by around 300 yuan per tonne. [ID:nPEK221762]

In a statement in its website,, announcing the price increase, the agency said China was not facing inflation risks for now as inventories of grains and edible oils were ample.


Dear Christopher,

As a product of the government support for education concerning gold and silver, new China wealth will hedge their own bets in the metal.

China is embarrassed about India front running them on buying the IMF gold so they have gone into freeze frame.

Russia is now a competitor for that gold.

Something is going to happen soon. This inflation in China will be a major positive for the gold and silver price.


Posted at 9:42 PM (CST) by & filed under In The News.

Dear CIGAs,

My friend, former partner, respected colleague and ace floor trader Yra Harris today said:

"Oh the birds are singing, the hills are alive with the sounds of music and the carry trade is in full swing. Today was the paradigm of the easy funding for the world for if you were an asset class that could not rally you must have been tied to causing the existence of flesh eating bacteria. With the G20 shown to be a paper tiger, the IMF giving its seal of approval to the debased dollar carry trade – the animal spirits ran wild. The dollar was down against everything but the yen for the yen is the second favorite funding currency with similar fundamentals to the dollar."

My comment is simple.

The floors of the dollar’s downward elevator are about to open up wide.

The freefall is near. Armstrong’s few days are just around the corner.

The Winter is going to be very cold for the US dollar Be advised. Take precautions immediately if you have not already.

Here Is Today’s Question:

Why did the legitimate winner of the Afghanistan Presidency withdraw from the runoff election?

Understand this intrigue, and you will understand the thinking that you can buy yourself out of modern wars. The problems is that you can’t buy zealots.

It only takes a few zealots with the right weapons to screw up the best of sell outs.


Jim SInclair’s Commentary

Gold at $1100 plus can get your attention. You know this is for real.

English bull dogs are not made too well. They overheat in a Siberian winter just because they looked at a picture of Florida. If they overheat, and you do not cool them down fast, you lose you pal.

She was watching the quote on gold too closely like some CIGAs I know. I so love bulldogs, but they are not easy, ever. When has anything worthwhile ever been easy?


Jim Sinclair’s Commentary

USA’s Veterans Day is coming.

All this sacrifice was given for freedom, for honor, for the constitution.

All at the orders to die came from old men who were not there.

Has it all been in vain?
Where is Honor?
Where is Freedom?
Where is the Constitution?

How many banksters have been in harms way in service of their country?


Jim Sinclair’s Commentary

This fellow will be found out when he is examined by the new in British service, "see you naked" airport scans.

Can you imagine how gross it is going to be looking at that scanner all day?

You will have sickening visuals that will stick in your mind for all eternity.


Jim Sinclair’s COmmentary

The question is how much of these two are related.

Keep in mind that the equity market in the Weimar Republic went to infinity and their currency went to zero. It is impossible to tell.

Note that the countdown of days is ending soon, and look at where gold and the dollar are.

Keep in mind that Armstrong is right in having said that when the currency goes into a freefall it happens all of a sudden without pre-announcement.

My view here is to stick with insurance and allow the wild people to play the general equities market.

Insurance will pay off.

You might recall my radio interview in March of this year. You also might recall Monty and Dan calling for a bottom in that period in the general equities markets.

Let me tell you bottoms are simple. Tops are hard. You leave when you are satisfied and a little at a time.

Click here to download Jim’s Bloomberg interview in MP3 format…


Jim Sinclair’s Commentary

My answer is probably not. The dollar looks just awful no matter how many patriotic talking heads think it is required to say otherwise.

Also what makes you think that the dollar carry trade is made up of long only investors? They are wild ass all sides traders.

The dollar carry trade, i.e. Wall Street, got the green light from the Fed for the next year at the least.

Does Disaster Loom from Dollar Funded Carry Trades?
November 09, 2009
Karl Denninger

The U.S. currency dropped against 12 of its 16 major counterparts asthe International Monetary Fund said traders are probably using the dollar to fund so-called carry trades around the world and it may still be overvalued.

I hope everyone here in The United States takes a moment to understand what this means. Let me lay it out for you:

When the global economy truly recovers oil will skyrocket up to or beyond the $150 where it was in late 2008. If the dollar is indeed still "overvalued" and going to 40 as many technicians predict, oil will likely reach $300 a barrel. This will in turn drive gasoline prices north of $6, heating oil will reach $7-8/gallon, and diesel will be commensurate with heating oil.

This will in turn decimate the trucking industry. Now you know why Buffett bought BNI. Many things he may be, but dumb isn’t one of them. Trucks will of course remain for terminal-to-door deliveries but for long-haul they will simply be uneconomic. Those who currently are employed in this business will lose their jobs. All of them.

The middle class will be decimated. Those who live in suburbia, who are primarily middle-class Americans, will find themselves faced with commuting costs that are double or more what they pay now. Those in the middle class who live in the Northeast where heating oil is the primary fuel for winter, where natural gas infrastructure does not exist to replace heating oil, will find themselves choosing between heat and food in large numbers.


Jim Sinclair’s Commentary

Arrogance, insensitivity and madness. The Demons of Lanka were saints compare to these guys. Ravana was Mother Theresa compared to these guys.

Who are these guys claiming to be doing the work of the Almighty?

Wall Street Bonuses Rise as Big 3 May Pay $30 Billion 
By Michael J. Moore and Ian Katz

Nov. 9 (Bloomberg) — Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank, survivors of the worst financial crisis since the Great Depression, are set to pay record bonuses this year.

The firms — the three biggest banks to exit the Troubled Asset Relief Program — will hand out $29.7 billion in bonuses, according to analysts’ estimates. That’s up 60 percent from last year and more than the previous high of $26.8 billion in 2007. The money, split among 119,000 employees, equals $250,400 each, almost five times the $50,303 median household income in the U.S. last year, data compiled by Bloomberg show.

The three will award more in stock and defer more cash payments under pressure from regulators to tie pay to long-term results, compensation experts said. They may still face public wrath over the size of bonuses after the government injected capital into all the major financial institutions following Lehman Brothers Holdings Inc.’s collapse in September 2008.

“Wall Street is beginning to resemble Clark Gable as Rhett Butler in the film ‘Gone With the Wind’: ‘Quite frankly, my dear, I don’t give a damn,’” Paul Hodgson, a senior research associate on compensation at the Portland, Maine-based Corporate Library, said in an e-mail. “It doesn’t seem as if even political threat, disastrous PR, envy, rising unemployment rates and home repossessions is enough to get any of these people to refuse the bonuses they have ‘earned.’”


Jim Sinclair’s Commentary

Yes, the death of the dollar is a slow death until one day soon at 11:14 AM when the bottom drops out.

As Armstrong so correctly has written, when it comes, it is sudden and out of nowhere without a specific reason.

It has always been that way and will always be that way.

Save all Armstrong articles and keep your Compendiums as record of history from the beginning of this mess.


Is the Dollar Dying a Slow Death?
Friday, Nov. 06, 2009

The U.S. dollar seems to have as many lives as a cat. Even before 2008′s financial crisis, as the dollar slumped against other major currencies, countless pundits and economists predicted its demise as the global economy’s No. 1 currency. The doomsayers seemed vindicated when the U.S. economy descended into the worst recession since the 1930s, with its financial sector in tatters. How could an already weakened greenback maintain its value as American economic prowess withered? But then — surprise! — investors around the world decided the good old greenback was a safe haven in a time of great uncertainty. The dollar was resurrected, reversing years of slow decline.

That strength turned out to be temporary. A ballooning U.S. budget deficit and escalating government debt has made the dollar currency non grata in many quarters once again. An index that measures the greenback’s value against a basket of major currencies, including the euro and yen, has fallen about 15% from a three-year high reached in March and is now hovering near a 14-month low. Economists and analysts expect the dollar to lose a lot more ground. Daisuke Uno, chief strategist at Japan’s banking giant Sumitomo Mitsui, believes the Japanese currency could strengthen to 50 yen to a dollar by 2011 (from around 90 today) due to continued weakness in the U.S. economy. Harvard historian Niall Ferguson says the dollar could slide by as much as 20% on a trade-weighted basis over the next 12 months. The process may be protracted, he argues, but the dollar is dying. In 10 years’ time, he said in October, "it won’t be such a dollar-dominated world. I’m sure of that."

So has the dollar finally used up the last of its nine lives? There are worrying signs that the world is losing its appetite for dollars. The International Monetary Fund announced on Nov. 2 it was selling 200 metric tons of gold to India’s central bank for $6.7 billion. News of the purchase sent gold prices to an all-time high. The move was widely seen as part of an effort by central banks around the world to diversify their extensive U.S. dollar holdings. Steven Englander, chief U.S. currency strategist at Barclays Capital in New York City, figures that in the second quarter, dollars accounted for only 37% of new reserves accumulated by central banks worldwide. That’s the lowest proportion on record for any quarter during which reserves increased significantly. At a time when many central banks are boosting their reserves, they are choosing to buy euro and yen instead. "Central banks are doing more than talking about reducing the concentration of [the U.S. dollar] in their reserve portfolios. They are actually acting on their statements," Englander wrote in an October report.


Jim Sinclair’s Commentary

As time goes on and men age, many seek redemption for their deeds. I once heard from a great teacher that "sincere regret extinguishes debt."

The emphasis is SINCERE.

Do you recall the last economic upset in Asia due to a currency raid that was blamed on one person who made billions?

Soros Calls for More Global Regulation of Currency
Written by Mike Telzrow
Monday, 09 November 2009 11:00

In an October 23, 2009 interview with Chrystia Freeland of the Financial Times, George Soros advocated a “new global currency system,” and called the decline of the dollar necessary. Under Soros’ new system, China would figure prominently in the creation of a new world financial order. “You need a new world order that China has to be part…they have to buy in, they have to own it in the same way that the United States owns the current order,” opined Soros. The man who once bet against the British pound stopped short of predicting the end of the dollar but characterized a managed decline in the value of the dollar as a "healthy, if painful adjustment," citing the United States as a drag on the world economy. He further conceded that the coordinated policies of the G20 have helped move the world in the direction of establishing a new financial world order.

When asked about the financial reforms in the United States, Soros called for greater bank regulation opining that financial markets do not “tend towards equilibrium,” but rather are prone to create asset “bubbles.”  Soros also advocated compensation regulation at the so-called “too-big-to-fail” institutions like Goldman Sachs.

As Charles Scaliger noted in his article "The Diminishing Dollar" in The New American magazine for November 9:

"The creation of a true global central bank is perhaps the gravest threat now under serious consideration to America’s financial sovereignty, but it is by no means the only one. A myriad of new proposals for international regulation of financial institutions and transactions is little less troubling."


Jim Sinclair’s Commentary

Doran the Man sends the community two very instructive articles.

Fascinating facts, history, and a list of all the world’s paper with ink on it.

Click here to read the article…

Click here for a book on the subject…


Jim Sinclair’s Commentary

Rumor mills blast out that Russia is a seller of gold and Russia says they are a buyer of gold.

Now which do you think got more media coverage?

You’re right, the sell rumor, not the buy fact.

UPDATE 1-Russia may cut rates again in ’09, buy gold
(AFX UK Focus) 2009-11-09 10:33
By Yelena Fabrichnaya

MOSCOW, Nov 9 (Reuters) – Russia’s central bank does not exclude further rate cuts before the end of 2009 and may buy gold from the state repository, Gokhran, the bank’s first deputy chairman, Alexei Ulyukayev, said on Monday.

"We will buy (gold) only if conditions are adequate," Ulyukayev told reporters.

Last month, Russian media reported that the government planned to sell 25 tonnes of gold, possibly on the local market, from the repository.

Ulyukayev said Monday that the regulator may further cut its benchmark lending rates this year. The central bank has administered eight cuts this year, bringing its benchmark refinancing rate to annualised 9.50 percent.

Easing inflationary pressures have been the main factor allowing the regulator to facilitate its monetary policy and provide a stimulus for domestic lending.


Jim Sinclair’s Commentary

Fly the friendly sky, but for your sake do not land in Pakistan.

Market Bomber Kills 13 in Northwest Pakistan
By Ayaz Gul
08 November 2009

Police in northwestern Pakistan say that a suicide bomber has killed at least 13 people and wounded dozens of others.  Taliban militants have stepped up attacks in the country in recent weeks in retaliation for a military offensive in South Waziristan. 

The deadly suicide blast occurred near a crowded market on the outskirts of northwestern city of Peshawar and was aimed at a local anti-Taliban mayor who died in the attack.

The slain tribal leader was once a Taliban supporter, but he switched loyalty to the government recently and mobilized villagers to form a tribal militia against militants in his area.  Since turning against the militants more than a year ago, Abdul Malik had survived several attempts on his life.  He had stopped near the cattle market, says an eyewitness, to meet his friends when the bomber struck.

The eyewitness says that a young man in his early 20s walked up to the mayor and blew himself up as soon as a security guard tried to check his identity.  He says the powerful explosion immediately killed most of the people, including the anti-Taliban mayor.

Taliban militants have repeatedly struck in different parts of Pakistan, killing scores of civilians and security forces.  Authorities believe the violence is retaliation for the ongoing military offensive in South Waziristan, where extremists linked to al-Qaida and Taliban have set up bases.  Late last month, a powerful car bombing in Peshawar left more than 100 people dead, all of them civilians.


Jim Sinclair’s Commentary

Wonder of wonders. Freddie is in the can.

Freddie Mac Loses $5 Billion in Third Quarter
11/09/2009 BY: BRITTANY DUNN

The third quarter results have been released, and Freddie Mac is posting a loss. A $5 billion loss.

Compared with the net income of $768 million during the second quarter, this $5 billion loss comes to a total of $6.3 billion after the dividend payment of $1.3 billion on its senior preferred stock to the United States Treasury.

The resulting net loss of $6.3 billion for common stockholders, or $1.94 per diluted common share during the third quarter increased significantly, compared to a net loss attributable to common stockholders of $374 million, or $0.11 per diluted common share, during the second quarter of 2009.

The GSE’s positive net worth during the third quarter increased to $10.4 billion, from $8.2 billion during the second quarter. Because of this, no additional funding was required from Treasuryfor the third quarter.

An $8.5 billion decrease in unrealized losses recorded in accumulated other comprehensive income (AOCI) is attributed to this improvement in net worth. This came as a result of improved fair values for the company’s available-for-sale (AFS) securities, partially offset by the third quarter 2009 net loss.


Jim Sinclair’s Commentary

Turkey is playing a field much too controverted for them.

You can be sure that they will be victims when the s**t hits the fan.

Iran, Turkey discuss Turkish role in nuclear fuel deal
Updated: Monday, November 09, 2009

Washington, 9 November (WashingtonTV)—Iranian and Turkish officials on Monday held talks on a proposal from the chief of the United Nations’ nuclear watchdog for Iran’s uranium to be sent to Turkey for temporary safekeeping, the Bloomberg news agency reported on Monday.

The option, suggested by International Atomic Energy Agency Director-General Mohamed ElBaradei, was discussed by officials from the two countries on the sidelines of an economic summit in Istanbul, said Turkish Foreign MinisterAhmet Davutoglu.

Iran has been reluctant to agree to an IAEA-brokered nuclear fuel deal, under which it would ship most of its low-enriched uranium abroad for further processing, to be used in a research reactor in Tehran.

In a bid to salvage the deal, ElBaradei has suggested that Iran’s low-enriched uranium be sent to a third country, such as Turkey, and held there until Iran gets the fuel for its reactor.

Asked how Turkey views the proposal, Davutoglu told Bloomberg news that Ankara “always wants to help” to resolve disputes.



Jim Sinclair’s Commentary

"Those whom the God’s wish to destroy, they make mad first."

Mad as in bonkers, nuts, paddles out of the water, elevators that do not go to the top floor…

The chief executive of Goldman Sachs, Lloyd Blankfein, believes banks serve a social purpose and are doing "God’s work."

"We help companies to grow by helping them raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. We have a social purpose," he said.

He also said he believed big profits and bonuses at banks were a sign that the world economy was recovering.

Click here to read the full article…

Jim Sinclair’s Commentary

CIGA Erik’s comment on Goldman doing the "Work of God" is precious:

"If there was a word it would be hublivious – a combination of hubris and oblivious until the end."

Trader Dan’s is a little more to the point. We do not dare mention this to Trader Dan as he was last seen screaming something about bringing back the inquisition. Never go near a professional trader when he/she is going wild!


Jim Sinclair’s Commentary

This is interesting when you consider it is from the New York Times that opted to take gold off its price reporting front page in the 70s.

Inside the Global Gold Frenzy
November 8, 2009

HERE, in a corner of Switzerland where Italian is spoken and roughly one-third of the world’s gold is refined into bars and ingots, business is booming. Every day, bangles, bracelets and necklaces arrive in plastic bags — from souks in the Middle East, from pawn shops in Asia and from corner jewelers in Europe and North America.

“It could be your grandmother’s gold or the gift of an ex-boyfriend,” said Erhard Oberli, the chief executive of Argor-Heraeus, a major refiner here that processes roughly 400 tons of gold a year. “Gold doesn’t disappear.”

Amid a global frenzy fed by multibillion-dollar hedge funds, wealthy speculators and governments all rushing to stock up on the precious yellow metal, the price of gold briefly surpassed $1,100 an ounce on Friday, a record high.

Long considered the ultimate refuge for nervous investors, gold has climbed as the dollar has steadily weakened, budget deficits have expanded in the United States and Europe, and central banks have continued to pump trillions of dollars into weak economies, creating fears of another asset bubble that will ultimately pop.

“It’s not that gold has changed, but gold buyers have changed,” said Suki Cooper, a precious-metals strategist for Barclays Capital. “It’s a structural shift we’re seeing on the investing side, from Asian central banks right down to individual investors buying ingots and coins.”


Jim Sinclair’s Commentary

The correct answer is that paper will always be there, and certain paper will be elected as a reserve currency.

Gold will come out on top for you and I as the only means of preserving the buying power of all we have worked for.

Which will come out on top: paper or gold?
Printing presses have been pumping out dollars and pounds. Little wonder many are seeking a more trusty store of value
William Rees-Mogg
November 9, 2009

Last week the price of gold rose to $1,100, the highest ever recorded. Gold is still an important measure of the world economy. The theory of the 19th-century gold standard was that gold was “real money” in the same way as landed property was “real estate”. All types of paper money are capable of being created by banks or governments, so the supply is potentially unlimited. It was observed that gold holds its purchasing power over centuries, whereas paper money tends to depreciate towards the value of zero.

Of course, the rise in the gold price reflects the weakness of the dollar as well the strength of gold. I have been writing about the significance of the gold price since the early 1970s. The latest rise in price reflects the significance of gold as part of the world’s monetary reserves.

The immediate cause of the rise was a purchase of 200 tonnes of gold bullion by the Reserve Bank of India from the International Monetary Fund. The Indian purchase is quite large in terms of the gold market, but not particularly large in terms of the Indian reserves. India’s reserves now amount to $277 billion, of which this new purchase of gold amounts to only $6.7 billion.

The significance of the purchase is that it may be the start of a new phase in the struggle between gold and paper. Since 1971, when President Nixon ended the convertibility of the dollar into gold under the Bretton Woods Agreement, the world’s central banks have tended to be net sellers of gold and net buyers of dollars. Now the Indians have decided that they have more dollars than they want.


Jim Sinclair’s Commentary

Whatever is required by any of the international good old boys will be provided to infinity. Now doesn’t $1650 sound a tad low for a projection on gold?

British government mounts world’s largest bank bailout
By Jean Shaoul
9 November 2009

Alistair Darling, the Chancellor of the Exchequer, has just announced the world’s biggest bailout for a single bank in a bid to rescue the Royal Bank of Scotland (RBS).

One year after an initial bailout, the government is to put an additional £25.5 billion into RBS, in which it already has a 74 percent stake. In addition it has set aside a further £8 billion in case the bank runs into further trouble, as is widely expected. While RBS insists it will only use this £8 billion in a dire emergency, the annual fee for this sum indicates a high probability of failure.

In order to maintain the fiction that this is still a private and not a publicly owned bank, the government’s additional equity stake, equivalent to a further 12 percent stake, will not have voting rights, allowing RBS to retain its listing on the London Stock Exchange.

Despite the bailout, there is to be no attempt to control the bank’s activities. It will be business as usual as far as proprietary trading is concerned—trading in risky financial instruments. While the government has announced a cap on cash bonuses for top banking executives, this is only a deferment for three years and still leaves numerous ways of circumventing the cap.

The Treasury will also underwrite £282 billion of its toxic assets, less than the £325 billion RBS had applied for in February. This is in return for the bank agreeing to accept a larger proportion of the costs should it prove unable to recover the book value of its assets.


Jim Sinclair’s Commentary

As long as the Fed cooperates with Wall Street and it is certain it will, no audit will take place.

Ron Paul: We need to audit the Federal Reserve, now more than ever!
Sunday, November 8, 2009
By NewsWax

Show: Morning Meeting
Channel: MSNBC
Date: 11/05/2009


Dylan Ratigan: The bill no longer audits the Fed. In fact, the legislation gives Congress no control over the Fed’s authority to make monetary policy. That, perhaps, is a worthwhile debate, but it does not require any transparency either in the Fed’s secret agreements with foreign central banks, not to mention the monies that are pushed out to our own banks. Committee chair Barnie Frank told his constituents back in August that Congressman Paul’s plan would pass, likely in October. For the record it is now November and there is still no vote and if there were to be a vote it would be on a gutted version of the bill! Thirteen committee Democrats currently signed on to this shell of the Fed audit bill and now we’ll wait up and see if they’ll stand up for real change or just push through more false solutions in Washington DC.

Joining us now is Republican Committee member Ron Paul who originally proposed Audit the Fed. He will present and amendment before the full vote to get real reform back into the legislation. Chrystia Freeland is also here.

Representative Paul, in brief explain to all of us why you think it is so important that the American taxpayer be able to see what is going on inside of the Federal Reserve? Why does that matter, why should we care so much?

Ron Paul: It’s because everybody uses dollars as our currency and it’s an international currency. So it is very, very important, and yet it’s managed by a small group of people really run by the Federal Reserve board chairman and they decide each and every day how much money there should be printed that week and what the interest rates should be. So they are the central economic planners. And since they can create credit out of thin air and take care of their friends and buddies, which means that the burden is placed on the taxpayers… not directly with a tax but indirectly by devaluing their money. And that means that every time a price goes up, whether it’s medical care cost or education, you’re really paying a tax.


Jim Sinclair’s Commentary

Judging from the level of courage amongst the sheeple and the use of armed forces to put down citizen demonstrations, the answer is NO!

As Foreclosure Nightmares Increase, Will More Homeowners Pay Off Their Bankers in Violence?
By Scott Thill, AlterNet. Posted November 9, 2009

The economic crisis revealed late-capitalism’s central offense: Human beings are being transparently treated if they were mere transactions. And they’re going postal over it.

Anger and discontent are reaching a boil as a lethal combination of economic corruption and political collusion are deleveraged across the United States.

From recent rampages in Orlando, Fla., to mortgage-related torture in Los Angeles, certain members of the citizenry seem to have had their fill of being manipulated for the financial gain of others, and they’re firing back with force.

And the situation threatens to burn hotter as the winter holidays — always a peak period for domestic violence, due mostly to financial stress — approach to spark its frazzled strands. The economic crisis revealed late-capitalism’s central offense: Human beings are being transparently treated if they were mere transactions. And they’re going postal over it.

"They left me to rot," Jason Rodriguez said when asked why he went on a shooting rampage at the Orlando engineering firm Reynolds, Smith and Hills that had fired him two years ago.