In The News Today

Posted at 4:44 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

What a disaster has befallen on the financial industry thanks to OTC Derivatives manufacturers, 158 year old Lehman and 95 year old Merrill. We are yet to witness the final chapter of this horror story which is the death of the US dollar with America’s permanent fall from grace.

Thank you to the army of geeks who still do not know what all the fuss is about, to management that counted their bonuses but knew nothing about derivatives and regulators that were not at home.

Merrill 95-Year Run Ends as Bank of America Buys Firm
By Zachary R. Mider

Jan. 1 (Bloomberg) — Merrill Lynch & Co.’s 95-year run as an independent company is coming to an end as Bank of America Corp. completed its acquisition of the broker for about $33 billion in stock.

Bank of America, the biggest U.S. home lender, closed the purchase today, the Charlotte, North Carolina-based company said in a PRNewswire statement. Scana Corp., South Carolina’s biggest utility owner, will replace New York-based Merrill Lynch in the Standard & Poor’s 500 Index.

Merrill Lynch was founded by Charles E. Merrill in January 1914 and evolved into the world’s biggest brokerage, with an army of 17,000 financial advisers. After more than $50 billion of losses and writedowns tied to the collapse of the U.S. subprime mortgage market, Merrill agreed in September to a sale, escaping the fate of bankrupt Lehman Brothers Holdings Inc.

Bank of America, led by Chief Executive Officer Kenneth Lewis, 61, plans to cut 30,000 to 35,000 positions from the combined companies in the next three years because of the merger and a weak U.S. economy. Merrill CEO John Thain, 53, will remain as president of investment banking, trading and brokerage.

Bank of America rose 84 cents, or 6.3 percent, to $14.08 yesterday in New York Stock Exchange composite trading, valuing Merrill shares at $12.10 in the stock-for-stock exchange. That’s 88 percent less than their high of $97.53 in January 2007.

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Jim Sinclair’s Commentary

There is something so obviously wrong with all this, yet the public remains quiet.

Government aid could save U.S. newspapers, spark debate
Wed Dec 31, 2008 6:50pm EST
By Robert MacMillan – Analysis

NEW YORK (Reuters) – Connecticut lawmaker Frank Nicastro sees saving the local newspaper as his duty. But others think he and his colleagues are setting a worrisome precedent for government involvement in the U.S. press.

Nicastro represents Connecticut’s 79th assembly district, which includes Bristol, a city of about 61,000 people outside Hartford, the state capital. Its paper, The Bristol Press, may fold within days, along with The Herald in nearby New Britain.

That is because publisher Journal Register, in danger of being crushed under hundreds of millions of dollars of debt, says it cannot afford to keep them open anymore.

Nicastro and fellow legislators want the papers to survive, and petitioned the state government to do something about it. "The media is a vitally important part of America," he said, particularly local papers that cover news ignored by big papers and television and radio stations.

To some experts, that sounds like a bailout, a word that resurfaced this year after the U.S. government agreed to give hundreds of billions of dollars to the automobile and financial sectors.

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Jim Sinclair’s Commentary

Who dun it?

Pakistani Militants Admit Role in Siege, Official Says
By RICHARD A. OPPEL JR. and SALMAN MASOOD
Published: December 31, 2008

ISLAMABAD, Pakistan — Pakistani authorities have obtained confessions from members of the Pakistani militant group Lashkar-e-Taiba that they were involved in the terrorist attacks in Mumbai in November that killed more than 160 people, a Pakistani official said.

The confessions are sure to put pressure on Pakistan’s leaders; senior Pakistani officials have repeatedly complained in recent weeks that India had not provided them evidence of Pakistani complicity.

American and British officials — and Indian investigators — have said for weeks that their intelligence clearly points to the involvement of Lashkar in the Mumbai attacks. That evidence has been deeply uncomfortable for Pakistan, whose premier spy agency, the Directorate for Inter-Services Intelligence, helped create, finance and train Lashkar in the 1980s to fight a proxy war against Indian forces in the Indian-controlled portion of Kashmir.

But now, after weeks of stonewalling, it also seems clear that Pakistan may use its investigation to make the case that the Mumbai attackers were not part of a conspiracy carried out with the spy agency, known as the ISI, but that the militants were operating on their own and outside the control of government agents.

The most talkative of the senior Lashkar leaders being interrogated is said to be Zarrar Shah, the Pakistani official said. American intelligence officials say they believe that Mr. Shah, the group’s communications chief, has served as a conduit between Lashkar and the ISI. His close ties to the agency and his admission of involvement in the attacks are sure to be unsettling for the government and its spy agency.

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Jim Sinclair’s Commentary

Happy New Year Pakistan. Obama plans a massive troop increase?

Afghanistan and Pakistan take center stage in 2009
Under Obama, the US may send 20,000 more troops and encourage talks with the Taliban in an effort to reclaim the upper hand in Afghanistan.
By Anand Gopal | Correspondent of The Christian Science Monitor
from the January 2, 2009 edition

Kabul, Afghanistan – At times in 2008 Afghanistan eclipsed Iraq in levels of violence, and international attention is returning to the country for the first time since 2001. With the Obama administration planning a massive troop increase, Afghanistan and Pakistan look to be at the center of the administration’s foreign policy for 2009.

What is at stake?

In 2008, violence reached record levels across the country – there were 50 percent more insurgent attacks in the first seven months of 2008 than in the same period in 2007, according to Agency Coordinating Body for Afghan Relief (ACBAR), a Kabul-based aid organization. Insurgents are "conservatively estimated to be active in over 35 percent of the country," says Nic Lee of the Afghan NGO Safety Office, a Kabul-based nongovernmental organization. The Taliban and its allied movements effectively control large parts to the Pashtun-dominated south and east, including many districts close to Kabul. Nearly as many international troops have been killed in Afghanistan this year as in Iraq, despite the fact that almost twice as many soldiers are deployed in Iraq.

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Jim Sinclair’s Commentary

There is no moral will to face the problem and revamp the system therefore there is no possible chance of avoiding hyper-dollar-inflation. Simply NO chance!

Treasury Opens Door to Aid for Broad Array of Firms, Industries
By Rebecca Christie

Jan. 1 (Bloomberg) — The U.S. Treasury threw the door open to taxpayer financing for a widening array of companies and industries by drafting broad guidelines on aid to the auto industry.

The Treasury’s guidelines, published yesterday, would let officials provide funds to any company they deem important to making or financing cars. That leaves room for the government to provide money from the Troubled Asset Relief Program beyond loans already committed to General Motors Corp., GMAC LLC and Chrysler LLC.

“There are going to be other industries that are going to have just as good a case,” as the auto companies, former St. Louis Federal Reserve Bank President William Poole said in an interview on Bloomberg Television. “We don’t know what those other industries are going to be. Where does this process stop?”

Shares of auto suppliers including American Axle & Manufacturing Holdings Inc. and Lear Corp. jumped yesterday after Treasury announced the guidelines. The Motor & Equipment Manufacturers Association has been lobbying for the use of federal funds as a backstop in case parts makers can’t collect money the auto manufacturers owe them.

Analysts have speculated that companies such as GM’s bankrupt former parts unit Delphi Corp., might be eligible for assistance. The Treasury guidelines may encourage more guessing on what companies and industries are next, said Vincent Reinhart, resident scholar at the American Enterprise Institute in Washington.

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