In The News Today

Posted at 4:29 PM (CST) by & filed under General Editorial.

Room for rent – 60 “one ounce Silver Eagle coins” a month (san jose north)
Reply to: hous-889292171@craigslist.org [?]
Date: 2008-10-22, 11:42AM PDT

Furnished room for rent for 60 one ounce Silver Eagle coins a month.
Sorry, I do not accept cash nor checks. I only accept 60 of the “one ounce Silver Eagle” coins” or 6 of the “one ounce Canadian gold maple leaf” coins.

Deposit: Ten of the “one ounce Silver Eagle” coins.

DSL internet access, microwave, washer and dryer, close to shopping malls, San Jose airport, major freeways.

Looking for a non-smoker, non-alcoholic drinker, no pets, no drugs, working professional who is clean, neat and tidy.

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Jim Sinclair’s Commentary

It puts the CME group at outrageous risk. Valuation and margin maintenance is impossible on mark to any model. I recall a man by the name of Von Peterffy that was the in house rocket scientist at Mocatta Metals when there were none. It was in 1979 to be exact. I wonder if this is him.

He is right. If the CME group wants to lose all they have gained this is the formula.

Peterffy Says CME Group Credit Swap Plan Puts Billions at Risk
By Matthew Leising

Oct. 22 (Bloomberg) — Electronic trading pioneer Thomas Peterffy says a plan by CME Group Inc. to guarantee credit- default swaps could put his entire $4 billion company at risk.

CME Group’s proposal to use its existing clearinghouse to clear swaps would require exchange members such as Peterffy’s Interactive Brokers Group Inc. to bail out a failed trader. Those companies have put up $101 billion to guarantee the futures and options now cleared by CME.

“It would be a great mistake,” said Peterffy, 64, a Hungarian immigrant whose company executes 14 percent of the world’s equity options. “Mixing the two types of funds will jeopardize the entire financial system” set up to guarantee futures trades, he said.

Peterffy, whose concern is shared by CME Group members including Penson GHCO Chief Executive Officer Chris Hehmeyer, is balking at a plan that CME developed amid pressure from the Federal Reserve to create a safety net for risky credit-default trades, now traded on an over-the-counter basis. Failed investment bank Lehman Brothers Holdings Inc. was among the top 10 dealers in the $55 trillion CDS market.

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Jim Sinclair’s Commentary

I will keep my shares and bullion insurance thank you very much.

The majority of emails and messages today are throwing out their insurance and going long in that good old buck.

The following is a comment on the later strategy.

Very well done Karl!

Fiscal Cat 5 Hurricane Warning
The Market Ticker
Wednesday, October 22. 2008
Posted by Karl D at 07:11

You only think the Stock Market has been smashed.

Just wait until you see what will come next.

If you’re playing “Buffett”, following his claim (note: there is no penalty for lying on national television about what you’re doing in your personal account) that he’s buying here, there is a little ugly fact you need to be aware of.

That fact is treasury issuance.

See, to fund all this crap that Congress, Paulson and Bernanke have in the pipe (you know, the TARP, the newly-minted SIV that Ben announced this morning to buy commercial paper, etc) the treasury issue requirements will be north of three trillion dollars in this fiscal year.

Oh, and that’s before Obama wins (and he will) and promises another $1 trillion worth of new spending without a nickel’s worth of ability to fund it.

To put this in perspective the total amount of treasury securities owned by all foreigners at present is about $2.7 trillion.

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Jim Sinclair’s Commentary

First OTC derivative recognition of real value will kill the balance sheet.

Then comes lousy business to kill earnings.

After that comes the attorneys to feed on what is left, if anything.

After that nothing is left but somehow this “nothing” will be bailed out by creating ever more dollars.

Bank of America Credit-Card Unit Loses $373 Million (Update1)
By David Mildenberg

Oct. 21 (Bloomberg) — Bank of America Corp., the largest U.S. consumer bank, lost money in its credit-card unit for the first time since its January 2006 purchase of MBNA Corp. as more borrowers missed payments amid the slowing economy.

Card services, which includes unsecured loans, lost $373 million in the third quarter, compared with a profit of $1.04 billion in the same period last year, the Charlotte, North Carolina-based company said today in a regulatory filing. Defaults on cards, consumer loans and home mortgages contributed to a 47 percent decline in operating profit at the consumer and small-business division.

Bank of America provided more details on its third-quarter results today, two weeks after reporting a 68 percent decline in profit. Those earnings, released early as the bank announced plans to raise $10 billion by selling common shares, were worse than analysts expected. The world’s biggest financial companies have disclosed $661 billion in losses and raised $634 billion in fresh capital.

“Credit cards have typically been among the most profitable parts of Bank of America’s business,” said Jim Campen, executive director of Americans for Fairness in Lending, a Boston-based nonprofit that studies the credit card industry. “As we enter the biggest financial crisis since the Great Depression, more people aren’t going to be able to pay their credit cards.”

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Jim Sinclair’s Commentary

You know this thing is hopeless. It will be in Taliban hands within 18 months, if not a lot sooner. Oil will trade $100 higher from wherever it is trading within 60 days following the implosion. The world will never be the same when this place goes.

Pakistan seeks IMF help to avoid debt default

ISLAMABAD, Pakistan (AP) – Pakistan sought help from the International Monetary Fund on Wednesday to avoid defaulting on billions of dollars in debt racked up as the country struggled with fuel prices, dwindling foreign investment and soaring militant violence.

In a statement, the fund said Pakistan had requested IMF help “to meet the balance of payments difficulties the country is experiencing.”

Pakistani officials had previously said turning to the IMF would be a last resort.

Aid from the agency often comes with conditions such as cutting public spending that can affect programs for the poor, making it a politically tough choice for governments.

The IMF statement said the amount of money to be given had yet to be determined. Pakistani economists say up to $5 billion is needed to avoid defaulting on sovereign debt due for repayment next year.

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