I am preparing to leave for Tanzania today. Please consider these thoughts as I will be in the air for nearly 19 hours.
There is NO way the debt disaster is going away. There is no way that the US dollar is a store house of value.
The US and Great Britain have the most serious debt problems and it is still growing. Gold will trade at $1650 and above. According to Martin the action of the gold price is a perfect setup cycle wise for a major April – October rally.
Seasonality does not now exist in gold, but it does exist in gold trader’s minds.
Lipsky Says Debt Challenges Face Advanced Economies (Update1)
By Joyce Koh
March 21 (Bloomberg) — Advanced economies face “acute” challenges in tackling high public debt, and unwinding existing stimulus measures will not come close to bringing deficits back to prudent levels, said John Lipsky, first deputy managing director of the International Monetary Fund.
All G7 countries, except Canada and Germany, will have debt-to-GDP ratios close to or exceeding 100 percent by 2014, Lipsky said in a speech today at the China Development Forum in Beijing. Already this year, the average ratio in advanced economies is expected to reach the levels seen in 1950, after World War II, he said. The government debt ratio in some emerging market nations had also reached a “worrisome level.”
“This surge in government debt is occurring at a time when pressure from rising health and pension spending is building up,” Lipsky said. Stimulus measures account for about one-tenth of the projected debt increase, and rolling them back won’t be enough to bring deficits and debt ratios back to prudent levels.
Rising public debt could lead governments to seek to eliminate it through inflation or even default if they fail to carry out fiscal measures in time, Mohamed A. El-Erian, co-chief investment officer at Pacific Investment Management Co. warned earlier this month. Nassim Nicholas Taleb, author of “The Black Swan,” a book arguing that unforeseen events can roil markets, said March 12 he is concerned about hyperinflation as governments around the world take on more debt and print money.
Trader Dan’s Commentary
It is not a good idea to go out of your way to insult your banker.
China warns US against sanctions over currency
China warns US against sanctions over currency dispute, says may report trade deficit in March 22, 2010
Gillian Wong, Associated Press Writer, On Sunday March 21, 2010, 6:08 am EDT
BEIJING (AP) — China’s commerce minister warned the United States on Sunday against imposing trade sanctions over Beijing’s currency controls, and said his country was likely to report a trade deficit in March.
Washington and other trading partners are pressing China to ease controls that have kept its yuan currency steady against the dollar for 18 months to help its companies compete amid weak global demand. Some U.S. lawmakers have demanded to have China declared a currency manipulator in a U.S. Treasury Department report due out next month, which could precede possible trade sanctions.
Asked what measures China would adopt if the Treasury Department declared it a currency manipulator, Chinese Commerce Minister Chen Deming said China would not sit idly by and reiterated Premier Wen Jiabao’s statement a week ago denying that the yuan was undervalued.
"If (the Treasury Department’s) reply is accompanied by trade sanctions and trade measures, we will not ignore it," Chen said. "If it is followed by any international legal lawsuit against China, we will take them on."
Business groups say China’s currency controls keep the yuan undervalued by up to 40 percent, giving its exporters an unfair price advantage and swelling its multibillion-dollar trade surplus.
Jim Sinclair’s Commentary
Over the past three years a Russian economist has predicted what is occurring below, taking it to an extreme by suggesting the unthinkable, a breakdown of the union into economic alliances.
One thing is for sure – hopeless change.
States rebel against Washington
The pushback against federal power began under Bush, but may now be accelerating.
There’s an old joke in South Carolina: Confederate President Jefferson Davis may have surrendered at the Burt-Stark mansion in Abbeville, S.C., in 1865, but the people of state Rep. Michael Pitts’s district never did. With revolutionary die-hards behind him, Mr. Pitts has fired a warning shot across the bow of the Washington establishment. As the writer of one of 28 state "sovereignty bills" – one even calls for outright dissolution of the Union if Washington doesn’t rein itself in – Pitts is at the forefront of a states’ rights revival, reasserting their say on everything from stem cell research to the Second Amendment.
Washington can be a bully, but there’s evidence right now that there are people willing to resist our bully," said Pitts, by phone from the state capitol of Columbia.
Just as California under President Bush asserted itself on issues ranging from gun control to medical marijuana, a motley cohort of states – from South Carolina to New Hampshire, from Washington State to Oklahoma – are presenting a foil for President Obama’s national ambitions. And they’re laying the groundwork for a political standoff over the 10th Amendment, which cedes all power not granted to Washington to the people.
Jim Sinclair’s Commentary
Failed banks will be pasted up as long as possible to keep the number down.
The Federal Deposit Insurance Corp. reported the failure of 7 more banks this week, bringing this year’s total to 37, representing a pace that will easily surpass last year’s total of 140 bank collapses.
Through the end of March last year, 21 banks had failed.
Crippling loan losses propelled by a still peaking commercial real estate crisis prompted the FDIC to act against banks in Alabama, Georgia, Minnesota, Ohio and Utah.
“We have the capacity and tools necessary to effectively and efficiently handle the expected 2010 level of insured depository institution failures,” said Mitchell L. Glassman, director, Division of Resolutions and Receiverships for the FDIC, in testimony before a House subcommittee in January.
FDIC Chairman Sheila Bair has also said the regulator expects this year’s bank failures to exceed the 2009 tally, which was the highest in nearly two decades.
Advanta Bank Corp., of Draper, Utah, with about $1.6 billion in assets and $1.5 billion in deposits, was the largest failure. And the only bank that wasn’t assumed by another institution, forcing the FDIC to cover accounts up to $250,000. The regulator said checks for those insured deposits would be mailed to account holders on Monday
Jim Sinclair’s Commentary
What is the difference between the effects of a REPO 105 and what Greece did? In a practical sense, nothing whatsoever.
How many other US financial entities and maybe public bodies have used this hide a debt technical maneuver? Balance sheets everywhere are total cartoons.
Lehman vice-president lost job after raising Repo 105 ethical concerns
Christine Seib and Alexandra Frean
March 17, 2010 10:42AM
A KEY witness in the damning inquiry into the collapse of Lehman Brothers was laid off by the bank a month after he raised concerns about the way it had accounted for $US50 billion ($54.2bn) of risky loans.
Matthew Lee, a senior vice-president in Lehman’s accounting division, warned senior executives on May 16, 2008, that the bank was hiding huge risks from investors and regulators when it reported its quarterly figures.
By the end of June, Mr Lee had lost his job “as part of a wider restructuring”. He had worked for the bank for 14 years.
Erwin Shustak, Mr Lee’s lawyer, told The Wall Street Journal: “It was easier just to shut him up and let him go. Mr Lee provided key evidence to the investigation by Anton Valukas into what drove Lehman into Chapter 11 bankruptcy in September 2008.”
The 2200-page report by Mr Valukas, which was released last week, implicated British law and accountancy firms in Lehman’s controversial accounting method, called Repo 105.
Jim Sinclair’s Commentary
Junk is the kindest of descriptions. Most of these items are worthless and will never recover.
Lies are everywhere. Creative bookkeeping is everywhere.
Repos are sold for no business purpose other than hiding debts. This cannot win the day.
New York Fed Warehousing Junk Loans On Its Books: Examiner’s Report
03-22-10 01:12 PM
As Lehman Brothers careened toward bankruptcy in 2008, the New York Federal Reserve Bank came to its rescue, sopping up junk loans that the investment bank couldn’t sell in the market, according to a report from court-appointed examiner Anton R. Valukas.
The New York Fed, under the direction of now-Treasury Secretary Tim Geithner, knowingly allowed itself to be used as a "warehouse" for junk loans, the report says, even though Fed guidelines say it can only accept investment grade bonds.
Meanwhile, the Fed and Geithner both strongly oppose a congressional measure to authorize an independent audit of the central bank and its lending facilities. The provision passed the House but is under attack in the Senate, where Banking Committee Chairman Chris Dodd (D-Conn.) says he hopes to stop it.
Without an audit, the Fed is able to conceal the specifics of what it holds on its balance sheet. If the Lehman deal is any indication, the Fed is hiding billions of dollars in toxic loans on its books.
"The Fed legally is forbidden from taking such assets. There’s a legal requirement that the Fed’s assets be investment grade," Rep. Alan Grayson (D-Fla.) told HuffPost. Grayson, who is the cosponsor of the Grayson-Paul Audit the Fed measure that passed the House, said the Lehman scandal shows precisely why such an audit is needed.