In The News Today

Posted at 3:32 PM (CST) by & filed under General Editorial.

Jim Sinclair’s Commentary

This means a massive loss of confidence in more paper assets.

U.S. Mutual Fund Withdrawals a Record as Investors Choose Banks
By Sree Vidya Bhaktavatsalam

Oct. 9 (Bloomberg) — Investors pulled a record $72 billion from U.S.-managed stock and bond mutual funds in September, seeking the safety of government-insured bank deposits as the financial crisis worsened.

Shareholders took $43.5 billion from stock funds last month and $28.8 billion from bond funds, according to data compiled by TrimTabs Investment Research in Sausalito, California. The exodus continued in the first week of October, with an additional $49.3 billion of outflows.

“People are scared,” Conrad Gann, TrimTabs’ chief operating officer, said in an interview. “This market is different from what we’ve seen before.”

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Jim Sinclair’s Commentary

This is no more than a rehash of previous statements

U.S. Treasury May Buy Stakes in Banks Within Weeks (Update1)
By Robert Schmidt and Rebecca Christie

Oct. 9 (Bloomberg) — The government is planning to buy stakes in a wide range of banks within weeks as the credit freeze increasingly threatens to tip the U.S. economy into a deep recession.

Treasury Secretary Henry Paulson and top aides are still considering options on how the purchases would work, including having the government acquire preferred stock, two officials informed of the matter said.

The move would be a shift in emphasis in Paulson’s original intention for the $700 billion bailout package passed by Congress last week. While the Treasury still aims to buy troubled mortgage-backed securities from financial institutions, a direct capital injection would offer more immediate relief.

“The Treasury is no longer looking for one silver bullet,” said Steve Bartlett, president of the Financial Services Roundtable, which represents 100 of the biggest firms in the industry. “They have to proceed on all fronts.”

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Jim Sinclair’s Commentary

This is once again OTC derivatives of yet another form. At this time these are financial planetary killers

Iceland Takes Over Kaupthing as Biggest Banks Fail (Update5)
By Tasneem Brogger

Oct. 9 (Bloomberg) — Iceland’s government seized control of Kaupthing Bank hf, the nation’s biggest bank, completing the takeover of a financial industry that collapsed under the weight of foreign debt.

Iceland is guaranteeing Kaupthing’s domestic deposits and helping manage the banks to provide a “functioning domestic banking system,” the country’s Financial Supervisory

Glitnir Bank hf, Landsbanki Island hf and Kaupthing are unable to finance about $61 billion of debt, 12 times the size of the economy, according to data compiled by Bloomberg. Their collapse has affected 420,000 British and Dutch customers, and frozen assets held by universities, hospitals, councils and even London’s police force. The government is seeking a loan from Russia and may ask for aid from the International Monetary Fund to help guarantee deposits.

“This looks like a total collapse,” said Thomas Haugaard Jensen, an economist at Svenska Handelsbanken AB in Copenhagen. “It’ll take several years before the economy can start to return to growth.”

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Jim Sinclair’s Commentary

Do you think the brothers are happy under $90? Keep in mind that when, not if, Pakistan implodes crude will rise $100 from wherever it is trading within 60 days.

OPEC to Meet Nov. 18, `Likely’ to Cut Oil Production (Update3)
By Grant Smith and Ayesha Daya

Oct. 9 (Bloomberg) — OPEC is “very likely” to cut oil production at its extraordinary meeting in Vienna on Nov. 18 because prices have fallen “dramatically,” the group’s President Chakib Khelil said today.

The Organization of Petroleum Exporting Countries announced the meeting today after the global financial crisis sent crude prices below $90 a barrel.

“The Organization is concerned about the deteriorating economic conditions with contagion risks,” OPEC’s Vienna-based secretariat today said in an e-mailed statement. The gathering will “discuss the global financial crisis, the world economic situation and the impacts on the oil market.”

Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah and Shokri Ghanem, chairman of Libya’s National Oil Corp., had earlier told Bloomberg that they backed such a summit next month. OPEC had been scheduled to next meet on Dec. 17 in Algeria.

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Jim Sinclair’s Commentary

This is looking forward and therefore rather meaningless to the present situation.

You can be absolutely sure the exchanges doing this will get themselves into big trouble if they don’t bankrupt the clearing house and the exchange. I am eager to see what financial responsibility will be taken to guarantee these new WMFDs. You cannot accurately value CRAP even if Geeks say they can.

Citadel, CME add platform for swaps
By James P. Miller | Chicago Tribune reporter
October 8, 2008

Chicago Mercantile Exchange parent CME Group Inc. and hedge-fund operator Citadel Investment Group LLC on Tuesday disclosed plans to create an electronic platform to trade the complex financial instruments known as credit-default swaps.

The platform would compete with a format being put together by a Chicago-based consortium of investment banks and swaps brokers, known as Clearing Corp.

The plans are designed to bring new standards and transparency to the credit-default swaps sector, which ran into difficulties because it has been largely unregulated.

Originally designed as a safe and simple form of bond-default insurance, swaps morphed into a speculative derivative product that investors used to make highly leveraged bets on companies. Parties to such agreements agreed to insure the other side of the swap against loss if the debt issuer defaulted, but because they considered the prospect of a default unlikely, many agreed to assume potential obligations far greater than their own worth.

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Jim Sinclair’s Commentary

Normally you would take this as cold war rhetoric, however since the USA manufactures more OTC derivatives by a factor of 100 and therein bankrupting the planet, it might just be taken seriously.

Russia supplies a lot of gas and energy to Euroland. When Pakistan implodes that is going to be a huge factor.

Russian president Dmitry Medvedev calls for Europe to freeze out US
The Russian president, Dmitry Medvedev, has called on European leaders to create a new world order that minimises the role of the US.
By Adrian Blomfield in Moscow
Last Updated: 6:33PM BST 08 Oct 2008

Confident that a spat with Europe prompted by Russia’s invasion of Georgia in August was over, Mr Medvedev arrived in the French spa town of Evian determined to woo his fellow leaders into creating an anti-US front.

Gone was the kind of war time rhetoric that saw Mr Medvedev lash out at the West and characterise his Georgian counterpart Mikheil Saakashvili as a “lunatic”. Instead Mr Medvedev spoke of a Russia that was “absolutely not interested in confrontation”.

Yet there was little doubt that Mr Medvedev was playing the divide-and-rule tactics of his predecessor Vladimir Putin by seeking to pit the United States against its European allies.

In a speech delivered to European leaders at a conference hosted by President Nicolas Sarkozy of France to discuss the international financial crisis, Mr Medvedev sought to show that the United States was at the root of all the world’s problems.

He blamed Washington’s “economic egotism” for the world’s financial woes and then accused the Bush administration of taking Europe to the brink of a new cold war by pursuing a deliberately divisive foreign policy. He also maintained that the United States was once again trying to return to a policy of containing Russia.

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Jim Sinclair’s Commentary

Westerners still don’t understand that when in the East you cannot oblige, you simply speak obligingly and then do whatever you want to.

North Korea reported ready to fire more missiles
Thursday, October 9 07:18 am

SEOUL (Reuters) – North Korea has deployed more than 10 missiles on its west coast for what appears to be an imminent launch, a South Korean newspaper said on Thursday, two days after the North fired two short-range missiles into the Yellow Sea.

It would be an unprecedented test if the North fired all of the surface-to-ship and ship-to-ship missiles, but intelligence sources quoted by the Chosun Ilbo paper said they thought the North may launch five to seven of them.

The North has forbidden ships to sail in an area in the Yellow Sea until October 15 in preparation for the launch, an intelligence source told the paper.

The North fired two missiles on Tuesday in routine military drills, South Korea’s defence minister said on Wednesday.

“If the North fires a large number of missiles, it would be difficult to see it as routine exercise,” the source was quoted as saying.

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Jim Sinclair’s Commentary

Anyone need some fertilizer for fall planting?

Lehman Brothers CDS Credit Event Auction
10th October 2008

On Friday 10th October 2008, the auction to settle the credit derivative trades for the Lehman Brothers Holdings Inc. is to be held.

The results will be published here on the day of the auction. Initial results are due to be published at 10:30 NY Time and final results at 14:00 NY Time.

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Jim Sinclair’s Commentary

These are the fellows that screwed it up.

How does the screwor fix the dilapidated screwed?

World finance chiefs heading for Washington for crunch talks
Oct 9 02:01 AM US/Eastern

Finance chiefs from the world’s richest nations are set to meet in Washington for a crucial but uncertain meeting at a time of unprecedented fear about the global financial system.

The Group of Seven meeting will bring together finance ministers and central bankers on Friday from the United States, Germany, Japan, France, Britain, Italy and Canada for some collective-thinking on the credit crunch and crashing stocks.

They are to be joined by counterparts from emerging markets including Brazil, Russia, India and China for an impromptu gathering of the expanded so-called G20 group.

The United States finds itself in a rare position of weakness, facing many allies that have been highly critical of its economic policy and regulatory system blamed for the problems.

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Jim Sinclair’s Commentary

I wonder if this fellow owns any junior metal shares…

Cops: Stamford Man Threatened Bank Over Financial Losses
Last Edited: Wednesday, 08 Oct 2008, 5:49 PM EDT
Created: Wednesday, 08 Oct 2008, 5:49 PM EDT

MyFoxNY.com  —  Cops say the Wall Street crisis has had a disturbing affect on one disgruntled investor. Police charged a 60-year-old man with threatening to blow up a bank branch in Stamford. Authorities say he was angry about his investment losses, so he walked into a branch and said he would kill everyone inside

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Jim Sinclair’s Commentary

Concerning the shortage of the hard stuff, that is real. The paper gold market demonstrates that by the violence now on the buy side as well as the sell side.

Bullion will take out paper.

Gold, silver in short supply for those getting out of stocks
By Doug Page
Staff Writer
Wednesday, October 08, 2008

DAYTON – If you are thinking of diversifying your portfolio to include gold and silver, you may have to stand in line.

Richard Hana of Belmont Coin said his shop ran out of pure gold and silver coins two weeks ago.

“We people come looking for gold or silver, we take their name and when something comes in, we call them,” Hana said Wednesday, Oct. 8. “In a sense, it is already sold before it comes in the door.”

Hana said business is up 300 percent to 400 percent, particularly in the past weeks.

“People are scrambling to buy gold and silver,” said Ed Fritz of Centerville Coin & Jewelry Connection.

“There is huge shortage worldwide. People are pulling money out of economy, which has created a huge demand,” said Fritz, who has been in the business for 40 years.

Gold was selling around $910 a troy ounce by midday and silver at $11.70.

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