In The News Today

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Jim Sinclair’s Commentary

When this goes off crude will trade $100 higher within 60 days.

Pakistani politicians divided over action on terror
Parliament session split as extremists denounce Nato
Soaring poverty feared to increase suicide attacks

A deep rift over anti-terror policy has opened up within Pakistan’s political class, as extremist violence and an economic crisis push the country to the verge of collapse. A special session of parliament called by the government to forge a political consensus on the “war on terror” has backfired spectacularly as parties, including some in the ruling coalition, denounced the alliance with Washington and Nato rather than backing the army to take on the Pakistani Taliban.

A party in the coalition government, the religious Jamiat-Ulama-I-Islam party, has even demanded that, as parliamentarians had received a presentation from the army, Pakistan’s Taliban movement should also be allowed to address them. It comes as the political and economic situation worsens, with intensified suicide bomb attacks and an alarming depletion in Pakistan’s foreign exchange reserves. The country is seeking an emergency $10bn bailout from the international community, while a severe shortage of electricity is crippling business and punishing households.

Critics of the government, which is led by controversial president Asif Ali Zardari, complain that there is a paralysis of decision-making and policy. A leaked US top secret National Intelligence Estimate on Pakistan concludes that the country is “on the edge”. A US official was quoted summing up the assessment as “no money, no energy, no government”.

Yesterday a US missile strike inside Pakistan’s tribal border area with Afghanistan killed up to six suspected militants, and a suicide attack on a police station in the north-west killed three officers and wounded 15.

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Jim Sinclair’s Commentary

Follow the USA, the non-existent and overruled FASB and the SEC and you just can make up any price you want.

EU calls for clear plan on valuing derivatives
The Associated Press
Published: October 17, 2008

BRUSSELS, Belgium: European Union regulators called Friday for a clear plan on valuing some of the shadowy high-risk credit derivative investments estimated at around US$600 trillion (444 trillion) that are now a key issue in easing the global financialcrisis.

Billions of euros (dollars) have been wiped off banks’ balance sheets in recent months on fears that some complex investments may be based on assets that are nearly worthless such as housing loans that may not be paid back when a recession puts people out ofwork.

The market for derivatives boomed over the last decade as investors sought new ways to parcel out risk, with many jumping on a gravy train that few really understood. Billionaire investor Warren Buffett has been vocal in avoiding them, dubbing them “financial weapons of massdestruction.”

EU financial services chief Charlie McCreevy called on national supervisors and the financial industry to agree on the real risks credit derivatives pose and how they can be limited to prevent further lossesunraveling.

“I would like to have, by the end of this year, concrete proposals as to how the risks from credit derivatives can be mitigated,” he said in astatement.

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Jim Sinclair’s Commentary

Maybe the FBI should just arrest all the OTC derivative manufacturers.

Lehman Is Focus of Three U.S. Grand Jury Probes; 12 Subpoenas
By Linda Sandler and Christopher Scinta

Oct. 17 (Bloomberg) — Lehman Brothers Holdings Inc., which last month filed the largest bankruptcy in history, is the subject of three federal criminal probes and at least 12 subpoenas, according to a lawyer for the failed bank.

“We are facing three grand jury investigations,” said lead Lehman bankruptcy lawyer Harvey Miller yesterday in Manhattan federal court. The probes, launched by the New York U.S. attorneys in Brooklyn and Manhattan as well as in Newark, New Jersey, are focusing in part on Lehman’s role in the $330 billion auction rate securities market and possible crimes associated with the New York-based bank’s $6 billion June stock issue, according to a person familiar with the case.

The New York Post reported today that Lehman Chief Executive Officer Richard Fuld is among the 12 subpoenaed, without saying where it got the information. Miller declined to immediately comment on whether Fuld was among those subpoenaed.

Investigators have subpoenaed Ernst & Young LLP, Lehman’s auditor; U.K.-based bank Barclays Plc, which bought Lehman’s North American brokerage; and the New Jersey Division of Investments, which runs a pension fund that lost $115.6 million on a $180 million investment in the June stock sale, according to people familiar with the case. It’s not clear whether these subpoenas are part of the 12 noted by Miller.

Yusill Scribner, a spokeswoman for U.S. Attorney Michael Garcia in Manhattan, declined to comment. Fuld’s lawyer, Patricia Hynes of London-based Allen & Overy, didn’t immediately return a call or e-mail seeking comment.

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