Posted at 4:05 PM (CST) by & filed under In The News.

Dear CIGAs,

Remember less than six weeks ago the prevailing opinion of the talking heads was that the euro was stone dead? The wrong basis for this opinion was that Euroland was in much more trouble than the USA.

The hedgie’s raid was on against the Middle European currencies (still in force) and the prevailing opinion in the financial media is that they are dead. In dollar terms they are all going to look a lot better, especially the healthier ones.

 

Jim Sinclair’s Commentary

You and I know Putin has not been far off the mark in his recent general comments on monetary policy. These comments have not been well entertained by the US media.

Putin is spot on here.

Putin Warns Against Printing Money to Cover Deficit
By Alex Nicholson

March 19 (Bloomberg) — Russia won’t resort to printing money to cover budget deficits that Prime Minister Vladimir Putin said are likely to continue for the “next few years.”

The government should tackle the deficit “by using the reserves that have been accumulated in recent years, or if necessary by borrowing under market conditions,” Putin told the Cabinet in Moscow today, adding that Russia doesn’t yet need to borrow and won’t seek loans abroad. “Resorting to a printing press would be unwise and extremely dangerous.”

Finance Minister Alexei Kudrin said the government plans to borrow 410 billion rubles ($12.3 billion) more than it repays on the domestic market this year, which amounts to about 1 percent of gross domestic product.

Russia’s revised 2009 budget contains a deficit of 2.98 trillion rubles, or 7.4 percent of planned GDP of 40.4 trillion rubles. Kudrin said on March 14 that the deficit may exceed 8 percent of GDP. The deficit will be reduced to 3 percent of GDP in 2011, according to a draft of the government’s anti-crisis plan distributed to reporters.

The government approved the plan and the revised budget with Russia’s first deficit in a decade as it attempts to stabilize the economy with a 1.6 trillion ruble bailout modeled on plans developed by the U.S. and U.K.

More…

 

Jim Sinclair’s Commentary

Financial crimes are not victim-less. The way to correct the criminal element (suits) is to make financial crimes, in which a death is a result, a capital crime. They are capital crimes, you know!

Without buyers, Bank Medici to give up its license
Thursday, March 19, 2009

VIENNA: Bank Medici, which managed $3.2 billion in funds that were invested in the Ponzi scheme operated by Bernard L. Madoff, will return its banking license after talks with possible buyers of the bank failed, the Austrian lender said Thursday.

The bank said it would probably not be able to strike a deal soon because market conditions had cast a shadow over negotiations with investors who it had said might be interested in its banking license.

‘‘Market turbulences have heavily influenced talks to potential investors, and a transaction in the near future is unlikely,’’ Bank Medici said.

‘‘Under the current circumstances, it is not possible to build a substantial new banking business to substitute lost revenue,’’ it added. ‘‘Therefore the supervisory board decided yesterday to return the banking license.’’

Medici was the investment manager for the Herald Lux Fund and a distributor for both Herald Lux and another fund, Herald, which had a combined $2.1 billion under management before Mr. Madoff’s fraud was exposed. It was also the investment manager for the Thema International Fund, which had $1.1 billion under management.

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Jim Sinclair’s Commentary

Recall our conversation concerning the decline in the dollar from the algorithm driven dollar bear market rally being akin to a person walking into an elevator only to find no elevator car, but only an elevator shaft straight down.

China backs talks on dollar as reserve -Russian source
Thu Mar 19, 2009 11:24am EDT
By Gleb Bryanski

MOSCOW, March 19 (Reuters) – China and other emerging nations back Russia’s call for a discussion on how to replace the dollar as the world’s primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday.

Calls for a rethink of the dollar’s status as world’s sole benchmark currency come amid concerns about its long-term value as the U.S. Federal Reserve moved to pump more than a trillion dollars of new cash into the ailing economy late Wednesday.

Russia met representatives of China, India and Brazil ahead of the G20 finance ministers meeting last week, as the big emerging powers seek to up their influence on decisionmaking globally. Their first ever joint communique did not mention a new currency but the source said the issue was discussed.

"They (China) did not formally put forward their position for the G20 summit but unofficially they had distributed their paper regarding the same ideas (the need for the new currency)," the source told Reuters, speaking on condition of anonymity.

The source said the Chinese paper envisaged the International Monetary Fund’s Special Drawing Rights (SDRs) being first assigned a role of a clearing currency on some transactions and then gradually becoming the main global reserve currency. "They said that the role of reserve currency should be given to SDR," the source said.

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Jim Sinclair’s Commentary

The end is precious!

Jim Sinclair’s Commentary

Back door or front door, no matter what it is getting bailed out which will lead to hyperinflation.

It must be obvious to you now that there will be no limit to bailouts short of a new revolution in the USA.

Parts makers are surging on the stock exchange because they are broke and getting bailed out to go broke again.

It should also be obvious to you that when I sent you an email titled "This is It," it was in fact "It."

I do not send emails unless there is large interest and the content is need to know.

U.S. to Aid Auto Industry With $5 Billion for Suppliers
By BILL VLASIC
Published: March 19, 2009

DETROIT — The Obama administration moved on Thursday to stabilize the American auto industry by creating a $5 billion fund to support troubled parts suppliers.

The Treasury Department said the program would guarantee payments to suppliers for products shipped to ailing car companies.

The supplier fund is the first direct action taken by President Obama’s auto task force to prop up the auto industry, which has suffered big losses from the steep decline in new-vehicle sales.

“The Supplier Support Program will help stabilize a critical component of the American auto industry during the difficult period that lies ahead,” Treasury Secretary Timothy F. Geithner said in a statement.

The presidential task force is continuing to review requests for additional federal aid from General Motors and Chrysler, both of which are subsisting on government loans.

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Jim Sinclair’s Commentary

No wonder Spitzer got set up. He asked for it. He may be asking for it again as below.

This also speaks to the strategy of setting up and then knocking down the straw man to create a diversion from the real for the general public.

The Real AIG Scandal
Tuesday 17 March 2009
by: Eliot Spitzer  |  Visit article original @ Slate Magazine

It’s not the bonuses. It’s that AIG’s counterparties are getting paid back in full.

Everybody is rushing to condemn AIG’s bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman’s collapse, they feared a systemic failure could be triggered by AIG’s inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG’s trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG’s counterparties are justified with an appeal to the sanctity of contract. If AIG’s contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

But wait a moment, aren’t we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes – income taxes to sales taxes – to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won’t be laid off. Why can’t Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn’t we already give Goldman a $25 billion capital infusion, and aren’t they sitting on more than $100 billion in cash? Haven’t we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn’t they have accepted a discount, and couldn’t they have agreed to certain conditions before the AIG dollars – that is, our dollars – flowed?

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Jim Sinclair’s Commentary

1. Please note that financial news services this morning are mating the word FRAUD with NAKED SHORT SELLING. The case being quoted is the raid on Lehman after Bear Stearns collapsed. If one entity goes down on this then all entities who have practiced this become targets of successful slam dunk civil litigation. The need is only to review fails to deliver, using "discovery" for the details.

2. Conversations on reinstatement of the "Up Tick Rule" in the US are picking up speed at exchange management and legislative levels. The question is will Canada enforce the rules they have or keep the only onus on the broker to ask if their client intends to make delivery. If the client says yes it all ends there. Market makers in Canada and the US are beards for naked short selling brokerage house income. I have been in this business for 50 years now. There is little I do not know about the cheaters.

3. Banks who are predicting positive earnings in the first quarter of 2009 are relying on a abrogation of the mark to market rules of FASB. Please note Monty’s excellent review of the impact of such a change posted yesterday here…

Bankers don’t give a damn about the damage they do as long as their ends are accomplished. That is the UGLY face of personal enterprise, not a form of capitalism but instead more fascism.

Respectfully yours,
Jim

 

Jim Sinclair’s Commentary

A more accurate depiction of the AIG bailout:

AIG-Robber

 

Jim Sinclair’s Commentary

A very good, simple and clear representation of the problem lacking a practical solution.

clip_image001

 

Jim Sinclair’s Commentary

Here is the reason behind the Fed action to buy Treasuries thereby monetizing in a form, itself.

Allure of US Treasuries set to fade
By Wang Xu (China Daily)
Updated: 2009-03-18 07:27

Holdings of US Treasury bonds rose in January, but the increase is the slightest since last June, indicating the country’s appetite for the securities is set to diminish as a result of the falling trade surplus and rising concern over investment security.

image The country’s reserves of US Treasuries rose by $12.2 billion to $739.6 billion by the end of January, according to the latest International Capital Report by the US Treasury Department. Although China remained the largest creditor of the US government, analysts say its future purchases would shrink.

Treasury debt holdings grew by $14.3 billion in December.

"Purchases of US Treasuries are set to decline, given the fall in the trade surplus," Erh-Cheng Hwa, chief economist of Bank of Communications, told China Daily.

China ran hefty trade surpluses in the past years and accumulated $1.95 trillion in foreign exchange reserves by the end of 2008. In an attempt to seek stable returns, most of the reserves were channeled to low-risk assets such as US Treasury bonds.

The nation’s trade surplus dropped to $4.8 billion in February, down 87.6 percent from a year earlier. Some analysts say it may decline further as the nation’s stimulus package props up demand for foreign goods while doing little to boost exports.

Sun Mingchun, economist with Nomura International, estimates that the trade surplus is likely to fall to $155 billion this year, only about half of last year.

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Jim Sinclair’s Commentary

This is nothing compared to what is coming in the midst of rotten business.

Consumer prices rise 0.4 percent in February
Consumer prices rise in Feb. by largest amount in 7 months as gasoline, clothing prices jump
Martin Crutsinger, AP Economics Writer
Wednesday March 18, 2009, 3:42 pm EDT

WASHINGTON (AP) — U.S. consumer prices rose in February by the largest amount in seven months as gasoline prices surged again and clothing costs jumped the most in nearly two decades.

But the increase appeared to ease many economists’ concerns about dangerous price movements in either direction. The recession is expected to dampen any inflation pressures for at least the rest of this year, while the slight uptick in prices over the last two months also has made the possibility of deflation more remote.

The Labor Department reported Wednesday that consumer inflation rose 0.4 percent in February, the biggest one-month jump since a 0.7 percent rise in July. Two-thirds of last month’s increase, which was slightly more than analysts expected, reflected a big jump in gasoline pump prices.

Core inflation, which excludes food and energy, rose 0.2 percent in February, also slightly higher than the 0.1 percent rise economists expected.

The Federal Reserve, meanwhile, said Wednesday it would spend up to $300 billion to buy long-term government bonds, a new step aimed at lifting the country out of recession by lowering rates on mortgages and other consumer debt. The central bank also will spend another $750 billion on mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, bringing its total purchases of those securities to $1.25 trillion.

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Jim Sinclair’s Commentary

New $1 buying power note identified at the Treasury printing press.

Zimbabwe demands apology from USA regarding monetary policy criticisms

new dollar

 

Jim Sinclair’s Commentary

What you will not see on Bloomberg

Jim Sinclair’s Commentary

The dollar rally has fundamentally been a joke since it started.

The dollar rally was technical money flows that triggered algorithms firing illogical signals bound to bury the computer trader.

.7200 on the USDX is not a fundamentally defendable level.

.5200 to .6200 is the magnet.

By the way, $887.50 on gold wasn’t too bad either.

Dollar Rally Crumbles as Fed Ramps Up Printing Press
By Oliver Biggadike and Ye Xie

March 19 (Bloomberg) — The rally that pushed the dollar to the highest levels since 2006 is in danger of crumbling as the Federal Reserve starts buying Treasuries and ramps up its purchases of mortgage debt, adding to a flood of greenbacks.

“The implications of today’s Fed decision are unambiguous,” currency strategists at Citigroup Inc. wrote in a research report within a half hour of the Fed’s decision yesterday. The dollar “should weaken,” they said.

Fed policy makers said yesterday they plan to buy as much as $300 billion of U.S. government bonds and step up purchases of mortgage bonds, expanding the central bank’s balance sheet by as much as $1.15 trillion. The extra supply of dollars threatens to overwhelm investors just as the budget deficit swells.

The trade-weighted Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, tumbled 2.7 percent to 84.595, its biggest one-day drop since 1971. That pushed its decline to 5.6 percent since reaching 89.62 on March 4, the highest in almost four years.

It fell yesterday by the most in nine years versus the euro, to $1.3474, and traded at $1.3631 as of 12:01 p.m. in London. The dollar dropped today against Japan’s currency to a three-week low of 94.72 yen.

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Jim Sinclair’s Commentary

Hyperinflation is caused by inventing money out of thin air in significant size.

The following Times article defines yesterday’s announcement for Fed initiative action as "a tactic that amounts to creating vast new sums of money out of thin air.

Fed Plans to Inject Another $1 Trillion to Aid the Economy
By EDMUND L. ANDREWS
Published: March 18, 2009

WASHINGTON — The Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed’s measures in the last year.

The action makes the Fed a buyer of long-term government bonds rather than the short-term debt that it typically buys and sells to help control the money supply.

The idea was to encourage more economic activity by lowering interest rates, including those on home loans, and to help the financial system as it struggles under the crushing weight of bad loans and poor investments.

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Jim Sinclair’s Commentary

Looks like the Fed and Treasury want a 1930′s type rally.

Don’t feed the bears
Commentary: SEC should restore the uptick rule to calm financial markets
By Chuck Jaffe, MarketWatch
Last update: 10:40 p.m. EDT March 17, 2009

BOSTON (MarketWatch) — The government is stressing that it doesn’t want companies — especially financial firms — to collapse. Now it looks like Washington may finally offer some support by reinstating a rule that was foolishly removed after working for more than 65 years.

Forget for a moment that trading rules always sound like inside baseball because the logic behind both the rules and stock trading can be hard to follow. But if you follow the string out long enough, you will quickly figure out how one little rule change probably made your bad market ride even worse.

On Monday, a bipartisan bill was introduced in Congress that would require the Securities and Exchange Commission to reinstate the "uptick rule," which from 1938 until 2007 prevented traders from making a short sale unless the price of a stock in its most recent trade had been up from previous levels. It was the second Congressional push for the rule this year, and this time it appears the calls for action will be answered because, just last week, the SEC announced plans to revisit the rule — and to consider other short-selling regulations — on April 8.

Short shrift

A short sale is a bet against a stock, and typically involves borrowing shares, selling them, and waiting for the stock’s price to decline before buying the shares back on the open market. The borrower gets the stock back, and the short-seller keeps the difference between the higher selling price and the lower repurchase price.

The basic reason for the uptick rule is that requiring the market to have an upward move makes short sales more difficult, easing some of the downward pressure that builds when a market is in a free-fall.

Critics noted that traders and market sharpies never worried much about the uptick rule, knowing that plenty of stocks that are dropping will take a momentary pause for a quick upside trade. Moreover, short-sellers and their trading partners would sometimes create those upside trades just so they could follow suit with the short sale they really wanted to do.

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Jim Sinclair’s Commentary

The inviting conclusion to the panic tactics of the US financial leaders is that the entire mountain of OTC derivatives have rolled over as a domino impact of the Lehman collapse.

The question now is if the rating agencies will keep US debt AAA.

I would guess the rating agencies will remain a degraded, untrustworthy bunch and keep the rating.

What the Pros Say: US Is Now ‘Bankrupt’
19 Mar 2009 | 06:04 AM ET

Global stocks traded higher, as did the dollar against the euro, Thursday after the Federal Reserve’s surprise announcement it would buy $300 billion in US Treasurys in order to help the ailing economy.

But experts tell CNBC they have concerns over the Fed’s latest move and that the current national balance sheet is a disaster.

US is Already ‘Bankrupt’

Technically, the U.S. is already "bankrupt" because it has a debt that is almost four times the size of its economy, says Puru Saxena, CEO of Puru Saxena Wealth Management. He tells CNBC that the U.S. is at risk of hyperinflation.

Fed to Buy Treasurys is Not a Good Sign

Stephen Roach, chairman for Asia at Morgan Stanley does not view the Fed’s plan to buy $300 billion worth of long-dated government debt as a constructive sign for prospects going forward.

Fed’s Move Unlikely to Help Economy

The Fed pumping money into Treasurys won’t help, says Martin Weiss, president of Weiss Research. He also discusses what can be done to turn the US economy around.

The US Stuck in Zero-Rate Mode?

America is arrogant to deny their similarity to Japan’s economy, says Stephen Roach, chairman for Asia at Morgan Stanley. He tells CNBC that the US economy is in a "zero-interest rate" mode, like Japan.

Quantitative Easing & the Fed’s Balance Sheet

Thomas Lam, vice president and senior treasury economist at UOB, says the Fed’s latest moves such as to buy long-dated Treasurys will stretch its balance sheet and pump more liquidity into economy.

Tackling US Economy

Housing problems need to be tackled before the U.S. economy can pick up, according to Adam Carr, senior economist at ICAP.

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Jim Sinclair’s Commentary

You have to see the mindset of the "I deserve it all, and I deserve it NOW!"

The public is starting to get very angry at this "screw you" attitude.

That is taxpayer’s money they are squandering on a bunch of idiots that caused all the problems in the first place.

Four Fannie Mae execs to get big bonuses
updated 1:00 a.m. EDT, Thu March 19, 2009

NEW YORK (CNN) — Troubled mortgage giant Fannie Mae planned to pay four top executives retention bonuses ranging from $470,000 to $611,000, according to a February SEC filing.

Executive vice presidents Kenneth Bacon, David Hisey, Michael Williams and Thomas Lund will be receiving bonuses of close to half a million dollars each. Bacon supervises community development for the company, Hisey is its deputy chief financial officer, Williams is its COO and Lund oversees the single-family mortgage business.

By contrast, Fannie Mae CFO David Johnson received no bonus on top of his salary of $625,000, while CEO Herb Allison received no compensation or bonuses in 2008 or 2009.

A spokesman for Fannie Mae deferred comment on the bonuses to the Federal Housing Finance Agency.

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Jim Sinclair’s Commentary

This is our money all these bankster types are paying out.

Judge orders release of Merrill bonus recipient names

NEW YORK (CNN) — New York State Supreme Court Justice Bernard Fried ordered Bank of America on Wednesday to disclose information about nearly $3.6 billion in bonuses Merrill Lynch paid employees just before it was acquired by the bank.

The judge’s decision concluded weeks of back-and-forth between New York Attorney General Andrew Cuomo and Bank of America regarding the release of the information. Cuomo is leading an investigation into whether Bank of America and Merrill failed to properly disclose to shareholders details about the bonuses.

"Today’s decision in the Bank of America case is a victory for taxpayers," Cuomo said in a statement. He added, "Fried’s decision will now lift the shroud of secrecy surrounding the $3.6 billion in premature bonuses Merrill Lynch rushed out in early December. "

Bank of America spokesman Scott Silvestri said the bank would abide by the judge’s ruling.

"We will, of course, comply with the order of the court and turn over the information requested. We will continue to cooperate in the attorney general’s investigation," Silvestri said.

A petition to keep information including bonus details confidential was initially filed by Bank of America in New York state court on March 4. At the time, Bank of America spokesman Robert Stickler said, "We do this out of concern for the privacy of our employees and because we think disclosure would create a competitive disadvantage."

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Jim Sinclair’s Commentary

This is simple, predictable and unavoidable no matter how creative purchases via the Caribbean can be. This is the primary reason for the Fed committing to purchases US Treasuries, the value of which is a number certain to grow in size over time.

Quantitative Easing here is Easing of Credit Markets due to the externally falling sales by the US Treasury more than actual sales by non US entities.

Foreign debt purchases fall sharply in January
Offshore banking centers sell Treasurys; central banks sell agencies
By Laura Mandaro, MarketWatch
Last update: 3:59 p.m. EDT March 16, 2009

SAN FRANCISCO (MarketWatch) – A big jump in foreign sales of long-term U.S. securities raised concerns Monday that the U.S., in the midst of a massive debt issuance to fund its economic revival plans, may run into trouble getting other countries to finance its deficit.

Foreign purchases of long-term U.S. Treasurys, Fannie Mae (FNM) and Freddie Mac (FRE

) bonds, corporate debt and stocks — netted for acquisitions of foreign debt from U.S. residents — dropped to negative $43 billion in January from positive $34.7 billion in December, said the Treasury Department Monday.

January’s sales marked a record low, said currency strategist Michael Woolfolk, and the reasons for the plunge could spell bad news for the U.S. dollar.

"This was a truly awful report, throwing into question the funding of the U.S. current account deficit," said Woolfolk, senior currency strategist at the Bank of New York Mellon, in emailed comments.

Economists anticipate the U.S. current account gap, or the balance of trade with other countries in goods, services and investments, narrowed to a deficit of about $137.5 billion in the fourth quarter. The Commerce Department releases that report Wednesday.

Concerns that U.S. creditors could balk at buying more U.S. debt were thrown into relief last week after China, the biggest holder of U.S. government debt, said it was worried about the safety of its U.S. bonds.

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Posted at 3:11 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Here comes the index funds and the hedge funds on the return to the “anti-dollar” move.

You will recall they all began a mass exodus beginning in July of last year that took many months to complete as they had built a massive long position across the entire gamut of commodity markets. Those long positions were as much a play on the weaker dollar as they were on a move to hard assets or tangibles as investors were fearful of the spectre of runaway inflation with the Dollar the probing new life time lows. That all came to a screeching halt as risk aversion and the need for cash to meet both redemption requests and margin calls resulted in a wholesale repatriation of funds from emerging markets abroad and a huge reversal in the Yen carry trade. We all know the results of that by now having watched it unfolding before our eyes – the Dollar embarked on a sharp move higher which sent commodity prices crashing alongside of equities as every single commodity market was crushed with not even gold being spared for a short season before it took on its historic safe haven role.

What we are now seeing continue this morning after beginning yesterday, are these same exact players who bailed out en masse, now returning en masse to the commodity markets as the long term implications of the Fed’s announcement becomes crystallized in the minds of investors world wide. The death knell of the US Dollar was just rung by Bernanke and company – we wonder how many heard it. Their action guarantees that the US will experience at some point in the not-too-distant future soaring inflation with the increasing likelihood of a hyperinflationary event following.  Think about what they announced and sweep aside all the high-sounding phrases and flowery rhetoric – they are going to create in excess of US $1 trillion out of thin air and buy US debt . This is the very monetization that we have been predicting they would be forced to resort to but which we were somehow hoping could be avoided for the sake of our nation’s future.

The cards have been dealt and the Fed has shown its hand – with the US embarking on a spending spree that makes the word “orgy” too mild to describe it, they have decided to devalue the currency and debauch our Dollar. They have no other choice now short of defaulting on our debt obligations. I am not sure how this is going to go down with the Chinese who have become our largest holder of US debt but I would strongly suspect that the Chinese will move with even greater speed in their reserve diversification process. I also suspect that the recent chatter coming from several quarters about the need to have a new global reserve currency or some combination thereof is going to garner more earnestness.  If the path which the Fed has chosen to follow were being implemented by any other nation on the face of this earth, the currency of that nation would immediately become practically worthless overnight. The only thing that allows the Fed to get away with this con is the fact that the Dollar is the global reserve currency. How do you think this is going to sit with other nations around the world? I am both sickened and angered by what these men, who were given a stewardship of our national currency, have done to us. As I have said many times before, I would much prefer to see a sound US economy, sound monetary policy, a balanced budget and responsible spending and taxing policies. Instead we have the worst of all possible worlds. All we can now do is to attempt to protect our wealth from the ravages that are going to be inflicted upon it. It is coming and nothing can avoid the consequences of this action.

Gold continued its torrid reversal off the lows made early in yesterday’s session. It experienced a bit of selling during the Asian session last evening as shorts were trying to push it back below the technically significant $930 level. They failed. It ran right on into the heavy resistance band on the charts near $960 this morning which is the level that is so critical for the shorts to defend if they are going to prevent an almost immediate return to the $1000 level. A breach of $960 that can hold that level for a couple of hours and many of the shorts will cover. That will also bring in fresh money from the momentum funds which have been sitting on the sidelines who are watching to see if that level will fall before their algorithms kick in.  See the chart for the technical levels…

Yesterday’s volume readings in gold were huge with over 269,000 contracts trading hands. I have not yet had time to check it against the data base but it certainly was one of the largest volumes I can recall seeing. Interesting enough open interest increased only a relatively minor amount in that wild session indicating that a whole lot of hurt was administered to both longs and shorts yesterday.

The HUI and the XAU both ran right up their recent swing highs and are attempting to gather enough momentum to break above those levels. For the HUI that means a breach of the 326- 328 level need to occur and hold to set up a solid trending move higher. The XAU looks a bit stronger technically than the HUI as it breached its former swing high near 135 but it needs to push above there a bit further for a bona fide breakout to occur. The move in both indices is occurring with several technical indicators on the daily charts not yet in the overbought zones so they are primed technically for further gains if the bulls can perform and the shorts will blink. Stay tuned on this one. The weekly charts show both indices right on the 50 week moving average so how they can finish out this week will tell us a great deal about what to expect moving forward. If they can best the 50 week average, then the next target is the 100 week moving average.

The Dollar – what can one say about it now except that the charts have turned decidedly ugly. A look at the weekly continuous chart shows what could very well be a long term double top at the 90 level on the USDX. It would take a weekly close below the 79 level to confirm that but all of the technical indicators are showing very strong bearish divergence signals on that same chart. There is support at the 40 week moving average near 81.60 and then again at the 50 week moving average near the 79.90 – 80.00 level. If those were to fail, it would not take a lot of time to see the dollar move back down towards it all time lows. Remember that there is or should I say was, a sizeable speculative long contingent in the Dollar according to the recent COT reports. Those folks rushing into the long side of the dollar for a safe haven play were blindsided by Bernanke and company. Nothing like a long side spec flush as the friends of gold can well attest to after having watched so many of them for the last 8 years.

I have been monitoring the action in the bond market this morning as I was particularly interested in seeing whether we would get much more in the way of upside action after that mind-boggling, stunning move yesterday. The Fed has obviously moved to put at least a short term bottom in the bond market – technically it cannot be argued otherwise, but what I am personally watching is to see just how high bond traders can take this thing especially with outside support that in the past was forthcoming from foreign Central Banks, particularly the Chinese, Japanese and the OPEC block of nations. Keep in mind that with the slowdown in global trade and the drop off in Chinese and Japanese exports, not to mention the big drop off in OPEC oil revenues, there is a lot less in the way of Dollars that need to be recycled into US Treasuries from those sources. That is a very large chunk of buying that has evaporated from the bond markets at the same moment in time that the supply is being ramped up exponentially. That is not going to be lost on traders although many shorts are no doubt a bit hesitant to step back in front of those things after the shellacking they received yesterday. The question traders will be asking is whether the announced Fed buys will be sufficient to offset the drop off in buying from abroad. We will see soon enough.

Equities gave up a good portion of their gains from yesterday (at least they have as I am writing this). Perhaps the euphoria has run smack dab into reality.

I might mention here that the Fed’s quantitative easing looks to have been the spark that took crude oil up and over the $50 level. That is no mean feat especially considering the fact that we were swimming in a sea of the stuff for the immediate term. You might recall that crude oil became a proxy for the ills of the US Dollar back during the commodity boom of recent memory with many investment funds pouring money into the black gold as an inflation hedge. At the time many commercials were bewailing the fact that the specs were driving prices beyond the boundaries of fundamental value but they were powerless to halt the rise. With the global economy as sick as it currently is, the conditions are obviously different than before the bubble burst but the fact remains that many investors have come to view crude oil as a play on inflation. That must be respected. We would all do well to also recall Monty’s recent missive on crude oil and his astute observations on the long term outlook for the gooey stuff (how is that for  proper, sophisticated nomenclature?).

Let’s keep watch also on the commodity currencies, the Aussie, Kiwi and Loonie to see how they fare. All are up today against the greenback. If the focus of the markets shifts to inflation fears away from deflation fears, those currencies should benefit. I am wondering what the Swiss monetary authorities must now be thinking after watching every single bit of the fruits of last week’s foray into the Forex markets to knock the props out from under the Swissie go up in smoke. The Swissie not only took back all of its losses; it even added more gains just for spite. I am curious whether they will come back in and try again.  I would also venture to say that the Swiss monetary authorities must be FUMING at the US Fed right about now. With the Dems in Congress poking them in the eye over Swiss bank secrecy and picking on UBS, it is not too much of a stretch of the imagination to state that US/Swiss relations are probably at an all time low. The only question I have now is who is going to be next in this game of musical chairs of currency devaluation that is taking place.

One last thing – the collapse in the Dollar with the subsequent strong move higher in the competing major currencies has pushed the gold price down in those terms. We will want

to see how gold responds to this in the days ahead as the ideal environment for the yellow metal is a simultaneous move higher in terms of all major currencies, and not just in US Dollar terms. I would prefer to see Euro-priced gold keep its footing near the €700 level and British Pound priced gold hovering near the 650 level and then moving higher. That would indicate that the ferocious gold buying that had been coming out of Europe and Britain a few weeks ago was not just a flash in pan but can be sustained.

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

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Posted at 7:20 PM (CST) by & filed under Guild Investment.

Dear CIGAs,

FASB 157: Be careful what you wish for.

Removing the mark to market rules may give a short term rally to bank stocks, but it could easily turn out to be a disaster for banking, for the US taxpayer and the US economy.

For those who remember the Japanese banking crisis and ensuing malaise, Japan is moving toward 2 decades of deflation and low or no economic growth.

In Japan, failure to fairly value bank assets kept banks from writing off bad assets and thus kept them from performing their first function, to make loans and act as a clearing agent for economic activity. Watch out and be very careful what you wish for… the same thing could and possibly will happen in any country that removes mark to market requirements.

This is a key issue and one which Jim Sinclair knows a great deal. Listen carefully to his wise advice on this subject.

In other news, Competitive Devaluations of currencies are underway.

Time line… Britain(a few weeks ago) introduces Quantitative Easing. Result: the Pound falls decisively.

Then we saw Swiss intervention to lower the Swiss Franc… then US Quantitative Easing (QE) today.

This means although major nations such as these talk free trade and no tariffs or only limited tariffs they are actually fighting a trade war with competitive devaluations of their currencies.

The US is the latest to announce the obvious. They are using QE to devalue the dollar and to serve other purposes as well. This can only be very positive for gold and negative for the US dollar long term.

Jim Sinclair has called for this repeatedly and he is once again correct.

Some of you did not listen to him and bought gold or gold shares on margin. Some people further aggravated the problem by buying the rallies and selling the declines. You were in effect doing the opposite of what Jim instructed you to do.

In my opinion, the first characteristic of successful investors and traders is that they take responsibility for their own actions.

Respectfully yours,

Monty Guild
www.GuildInvestment.com

Posted at 7:16 PM (CST) by & filed under Jim's Mailbox.

Dear Friends,

If the Comex thinks they have me scared of gold suggest they look at this.

http://sendables.jibjab.com/view/wehWidIODtlC0vk0

Regards,
Jim

Jim,

Ha:

"The International Monetary Fund is poised to embark on what analysts have described as "global quantitative easing" by printing billions of dollars worth of a global "super-currency" in an unprecedented new effort to address the economic crisis. "

Amazing what is spun as anti-gold. Super currency? Who are they fooling?

CIGA Eric

Posted at 5:16 PM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

The events that have transpired since the writing of my midday commentary are so stupendous that I felt a few comments were in order.

The news that the Fed would be buying $300 billion of long-dated Treasuries sent the bond market into what can only be called a frenzy. In all the years I have been trading, I have never seen anything quite like it. We are talking about a move that carried from 123^25 to 132^18. The drop in yield was nothing short of breathtaking. The effect on the yield curve was to flatten it considerably. If the idea was to give the banks some ability to borrow short and lend long and profit from the recently steepening curve, that just went up in smoke but apparently the thinking is that the Fed can artificially force down long term interest rates and this will have a beneficial effect on the comatose housing market. Hey you morons – why not just hand out money directly to every taxpaying citizen in the country? After all, you can just print more of it whenever we need it… God help us all…

The effect on both the Dollar and the gold price was instantaneous. The Dollar collapsed as well it should have while gold shot up nearly $60 of its worst levels of the session.

Folks – it is my sincere conviction that this current administration is absolutely CLUELESS in how to solve this problem and are flailing in the wind. They are throwing anything that they can think of at a wall and hoping that something will stick. These theoreticians and academics, none of whom can probably even balance their own damn checkbooks, are now attempting to run the monetary system. In the process they have just destroyed our Dollar and make no mistake about this – they are now monetizing debt – which is another way of saying they are printing money out of thin air. Is it any wonder that the Dollar cratered and gold shot up so sharply?

As a long term friend of gold I am of course pleased to see gold moving higher but as an American citizen who loves this nation, I am both sickened and angered at the amateur hour that has taken over in Washington D.C. While the Fed burns down the Dollar, the same dipsticks who helped create this mess are worried about $165 million in bonuses when they are spending over $3 trillion in debt that my children will be saddled with. And to see the chief ringleaders, Barney Frank and Chris Dodd, feigning outrage and attempting to hop on the populist bandwagon to distract attention away from the gargantuan sum of indebtedness that they have just chained to the next generation makes my blood boil.

Wake up America – these damn fools are destroying what is left of our Constitutional republic.

Obviously the technical action in gold completely erases that which transpired before the Fed announcement. Now we have to see if gold can sustain a footing above the $930 level. If it can, and it must if it is going to have a chance at trending higher, then it has a very good shot at $960. That level is what will need to be taken out in order to challenge $1000.

The mining shares as evidenced by the HUI and the XAU both launched technical breakouts smashing above the 40, 50 and 10 day moving averages and taking out horizontal resistance levels in the process. The HUI needs to take out 320-323 to set up a trending move.

Please see the gold chart below for the levels…

Click the chart below to enlarge today’s hourly action in Gold in PDF format as of 3:00pm CDT with commentary from Trader Dan Norcini

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Posted at 4:38 PM (CST) by & filed under In The News.

Dear CIGAs,

I would honestly suggest with today’s action this young man make his total $36,000,000 by the time he is 11.

Only 8 years old

Jim Sinclair’s Commentary

Mugabe is the Chairman of the Federal Reserve.

What a horrible mistake this is! Now you can count on Confetti Money.

Now you know how truly horrible the OTC derivative meltdown is. What a mess the main manufacturer and distributor of this toxic paper, the USA, is in

There is no practical solution to this problem so ignore the ignoramuses on the Comex. Use the Comex to buy every time the ignoramuses raid and sell the short squeeze if you must trade.

Fed to Buy $1 Trillion in Securities to Aid Economy
By EDMUND L. ANDREWS
Published: March 18, 2009

WASHINGTON — Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.

“Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending,” the Fed said, adding that it would “employ all available tools to promote economic recovery and to preserve price stability.”

As expected, the Fed kept its benchmark interest rate at virtually zero. But in a surprise, it dramatically increased the amount of money it will create out of thin air to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.

Indeed, the immediate effect on the bond markets was striking, with prices rising and yields dropping sharply on the news. The yield on the 30-year Treasury bond, about 3.75 percent before the announcement, fell quickly to 3.4 percent and remained volatile. At the same time, the dollar plunged about 3 percent against other major currencies.

Stocks moved higher on the Fed action. The Dow Jones industrial average was down about 50 points before the 2:15 p.m. announcement, but within an hour it was up 120 points for the day.

More…

Jim Sinclair’s Commentary

This is right out of the Great Depression 101 text book.

We are embarking on the 1930s Civilian Conservation Corp of a modestly different mode.

This along with the central bank monetizing your own debt (Zimbabwe 2005-2009), the reinstitution of the failed SDR and the political AIG bonus straw man means that this thing is so out of control our leadership is flailing wildly in the wind.

We are in huge trouble as a nation.

Alf you are so right!

House Readies Passage of Volunteerism Bill Critics Call Pricey, Forced Service
The legislation will expand the 1993 AmeriCorps program to match the renewed interest in national service since President Obama’s election, which backers say is crucial in tough economic times.
By Kelley Beaucar Vlahos
FOXNews.com
Wednesday, March 18, 2009

WASHINGTON — The House of Representatives is expected to pass a measure Wednesday that supporters are calling the most sweeping reform of nationally-backed volunteer programs since AmeriCorps. But some opponents are strongly criticizing the legislation, calling it expensive indoctrination and forced advocacy.

The Generations Invigorating Volunteerism and Education Act, known as the GIVE Act — sponsored by Reps. Carolyn McCarthy, D-N.Y, and George Miller, D-Calif. — was approved by a 34-3 vote in the House Education and Labor Committee last week.

The legislation would create 175,000 "new service opportunities" under AmeriCorps, bringing the number of participants in the national volunteer program to 250,000. It would also create additional "corps" to expand the reach of volunteerism into new sectors, including a Clean Energy Corps, Education Corps, Healthy Futures Corps and Veterans Service Corps, and it expands the National Civilian Community Corps to focus on additional areas like disaster relief and energy conservation.

It is the first time the AmeriCorps program, which was created by President Clinton in 1993, will be reauthorized, and supporters say it will have additional funding to match the renewed interest in national service since President Obama’s election and the acute need for volunteerism and charity in tough economic times.

More…

Jim Sinclair’s Commentary

Surprise, surprise, the straw man is falling

A.I.G. Chief Expected to Offer Bonus Compromise

Edward M. Liddy, the embattled chief of American International Group, is expected to tell a House committee that he will ask employees who received widely criticized bonuses last week to give half the money back.

WASHINGTON — As the lucrative bonuses paid to employees of the American International Group fueled fresh outrage at the White House and on Capitol Hill on Wednesday, the embattled chief executive of A.I.G. said that he had asked some recipients to give at least half the money back.

The chief executive, Edward M. Liddy, made the announcement during his testimony on Wednesday afternoon before a Congressional committee investigating the problems at the insurance giant.

“I have asked the employees of A.I.G. Financial Products to step up and do the right thing,” Mr. Liddy told lawmakers. “Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments.”

The A.I.G. chief said that some recipients had already offered to give up all of their bonuses, and he added later that he expected to get most of the money back.

More…

 

Jim Sinclair’s Commentary

No need for the UN to propose this dollar position as it about to occur in the marketplace.

U.N. panel says world should ditch dollar
Wed Mar 18, 2009 11:16am EDT
By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) – A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value — though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel’s recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.

More…

Posted at 2:52 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

It looks to me like gold’s inability to climb back over $1,000, or at the very least get back over $960 to resume an uptrending move,  in the face of such an horrific financial meltdown, brought about a wholesale liquidation of stale longs who have bailed out in both disappointment and disgust. I will continue to maintain that only the Almighty knows how much of our own TARP money was used by the bullion dealers at the Comex to overwhelm the bids that came into that paper market. As I have said before, throw a few $billion here and a few $billion there in my direction and I could have all kinds of fun with a few commodity markets. Since all of the idiots who voted in favor of this execrable bailout haven’t the faintest clue as to where the money is going or for that matter, what it is being used for, is it that far-fetched to think that a portion of it is being used by these paragons of virtue, the bullion banks, to destroy the only thing honest that is left in the financial world, namely the yellow metal? These are some of the same people who would package their grandmothers together and sell them off to a hedge fund if they thought they could make a quick buck off of it.

No matter – technically gold is looking heavy and will need to hold above today’s session low to prevent a potentially bearish head and shoulders pattern from forming on the daily price chart. Rest assured if I can see it, those same folks mentioned above can see it also. If the chart painters can prevail and force that pattern to form, we are probably going to have to sit through another one of those frequent technical washouts that have marked this bull market in gold for many years. A case could be made from the charts that a move down to near the $800 level is not out of the question although we should see quality buying enter at  the 50% retracement level near $853 on down to the 100 day moving average around the $847 level. Gold needs to hold here and hold now!

I want to mention that I am seeing a great deal of red in just about all of the various commodity markets this morning with the energies getting hit particularly hard and the grains also swooning. That indicates index fund selling which is one of the reasons gold also dropped so severely. They bail out or move into most commodity markets in sync as their nature requires them to buy or sell a broad basket of commodities when filling orders for clients. Not to mention the fact that these bear raids on gold almost always coincide with either option expiration or rollover periods, the latter which we are now seeing as the twits that run the funds must roll from April to June gold or else take delivery, something which they are apparently allergic to but which would put an end to this endless charade at the Comex. Open interest indicates that the rollover has begun.

For those of you who are so inclined to continue filling my inbox with your foul mouthed emails whenever gold moves lower, please spare me your rants about how the US economy has hit bottom and the worst is behind us and thus gold is now doomed. If you really and sincerely believe that, then please, please, put all of your money into Treasuries and stop reading the web site.

The mining shares are actually holding up pretty well considering the mauling that gold is receiving today. Then again the day is yet young.

As I am still attempting to catch back up from vacation my comments will be abridged today. Please see the chart for some additional technical aspects.

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

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Posted at 2:17 PM (CST) by & filed under In The News.

Dear CIGAs,

Remember our repeated discussions a while back about the Slowest Train Wreck in History, Fannie and Freddie? How many times were the shorts run out? The answer is on every rally in the general indices.

Gold is exactly the same in reverse. At every opportunity the Comex paper shorts raid gold and run out the longs.

Just like the shorting of Fannie and Freddie turned out to be one of the best and safest plays in the market, long gold will also prove to be a safe play as it rises to my and maybe Alf’s goals, supported by Armstrong’s research.

Today you are being had yet again.

 

Jim Sinclair’s Commentary

Today’s decline in gold has nothing to do with SDRs.

There is nothing new in SDRs as they are 40 years old this year. Their introduction in 1969 was one of the reasons for the bull market in gold from 1968 to 1980.

What you are witnessing is the COMEX paper gold manipulators once again having their way with you.

Assuming no one of size wishes to take delivery out of the Comex warehouse, then this is a perma-experience as gold rises to $1224, $1650 and beyond.

It assures that very few of you will be left in gold or silver, having decided to go out into the cold. Some of you may even put all you have in SDR bonds.

Nothing assures a top in the US dollar better than SDRs.

Gold is a currency, has been a currency for all written history and will prove itself so in 2009.

The US dollar is as much a bubble as were tech stocks. The USDX is what an SDR is. The US dollar will trade at .8200, .7200, .6200 and below.

The frustration that the COMEX will deliver to you if unopposed will certainly take out 75% of whatever is left of the gold gang. It will prove once again that it is the Goldman’s of the world that make the real money in gold.

Today is a pure paper manipulation.

 

Jim Sinclair’s Commentary

I have two observations here:

1. The US dollar represents a banana republic monetarily.

2. Compared to the nominal amount of derivatives outstanding at above one quadrillion (past BIS truthfulness, a number that has since been degraded), 11 trillion is chump change.

3. If you throw your gold away for dollars you are mad victims of the majors on the Comex.

National debt hits record $11 trillion
By MANU RAJU | 3/17/09 6:42 PM EDT

The eye-popping national debt surpassed $11 trillion Monday, the largest in U.S. history.

The new Treasury Department figures on the national debt were released as the non-partisan Congressional Budget Office is expected to project that the annual budget deficit will be higher than previously estimated by the White House’s Office of Management and Budget. The debt, which refers to the cumulative amount of money the government owes, hit $10.9 trillion on Friday.

The whopping number has major ramifications for President Barack Obama, who is trying to push through a raft of big-ticket bills on health care, energy, education and climate change — while also attempting to stabilize the swooning economy.

Sen. Kent Conrad (D-N.D.), chairman of the Budget Committee, said Tuesday that the numbers could force Congress to make "adjustments" to Obama’s $3.6 trillion budget plan.

"It’s very important get a result for the American people and one that has the priorities that have been [announced] by the president in terms of reducing our dependence on foreign energy, that’s in all of our interests, excellence in education, health care reform and dramatic reduction of the deficit,” Conrad told reporters. “Those will be our guiding principles as we go forward, but as I say, we’ve not yet seen CBO’s new numbers. But I think we can all anticipate because they were done substantially later than OMB’s, that they are going to be more adverse. That that’s going to require all of us to make adjustments.”

More…

Jim Sinclair’s Commentary

Have you ever felt you might be on the wrong planet?

FDIC Criticizes Massachusetts Bank With No Bad Loans for Being Too Cautious
Tuesday , March 17, 2009

A Massachusetts bank that has defied the odds and remained free of bad loans amid the economic crisis is now being criticized by the Federal Deposit Insurance Corp. for the cautious business practices that caused its rare success.

The secret behind East Bridgewater Savings Bank’s accomplishments is the careful approach of 62-year-old chief executive Joseph Petrucelli.

"We’re paranoid about credit quality," he told the Boston Business Journal.

That paranoia has allowed East Bridgewater Savings Bank to stand out among a flurry a failing banks, with no delinquent loans or foreclosures on its books, the Journal reported. East Bridgewater Savings didn’t even need to set aside in money in 2008 for anticipated loan losses.

But rather than reward Petrucelli’s tactics, the FDIC recently criticized his bank for not lending enough, slapping it with a "needs to improve" rating under the Community Reinvestment Act, the Journal reported.

More…

Jim Sinclair’s Commentary

We do not need Russia to weaken the US dollar. The Fed and the Treasury are totally capable of that.

The dollar death nell is contained in:

SDRs (just as it was in 1969).

The Zimbabwean approach to monetizing your own debt as per the Fed purchase of US Treasuries.

Russia bids to topple cash system
MOSCOW
17/03/2009 1:00:00 AM

Russia has unveiled radical plans for sweeping global financial reforms designed to weaken US dominance and consign an ”obsolescent” world economic order to the past.

The Kremlin said in a six-page document addressed to the upcoming Group of 20 summit in London the downturn was the result of a collapse of the existing financial system due to poor management and inadequacy. It said the crisis showed the need to abandon traditional approaches and adopt collective and globally agreed decisions aimed essentially at developing a globalisation process management system.

The document spelled out five principles on which a ”new international financial architecture” should be based and offered proposals in eight specific areas for the G20 to consider, including reform of the international monetary and financial system, reform of the system’s institutions and tightening international regulation and financial supervision. Russia said the London summit should agree on ”parameters” of a new financial system but should be followed by an international conference to adopt conventions on new regulations. AFP

More…

 

Jim Sinclair’s Commentary

Ever heard of the political maxim of building a straw man and tearing it down to demonstrate you are doing something for the man in the street?

Outcry Builds in Washington for Recovery of A.I.G. Bonuses
By JACKIE CALMES and LOUISE STORY
Published: March 17, 2009

WASHINGTON — The bonuses that the American International Group awarded last week were paid to 418 employees and included $33.6 million for 52 people who have left the failed insurance conglomerate, according to the office of the New York attorney general.

The company paid the bonuses, including more than $1 million each to 73 people, to almost all of the employees in the financial products unit responsible for creating the exotic derivatives that caused A.I.G.’s near collapse and started the government rescue to avoid a global financial crisis.

A.I.G. has received nearly $200 billion in federal bailout funds.

The information adds to the firestorm confronting the Obama administration and Congress since the weekend disclosure that A.I.G., almost 80 percent owned by the government, paid out $165 million in bonuses.

Even before the New York attorney general, Andrew M. Cuomo, divulged the new data on bonus payments in a letter to Representative Barney Frank, the Massachusetts Democrat and chairman of the Financial Services Committee, the White House and Congress separately were rushing to get out in front of the mounting public furor. Officials and lawmakers condemned A.I.G., pointed fingers at each other and promised speedy action to recoup the taxpayers’ money.

More…