In The News Today

Posted at 9:43 PM (CST) by & filed under In The News.

Men acquire a particular quality by constantly acting a particular way… you become just by performing just actions, temperate by performing temperate actions, brave by performing brave actions.
–Aristotle

 

Dear Friends,

Of all the charts concerning the Weimar Experience, one needs your clear understanding as it may seem to be a great contradiction. That chart is of the Weimar Equity Market during a period that could be similar in many ways to that which is coming in the future of the US dollar.

Should the uptick rule be reinstated internationally and forcefully applied in Canada (the front door of naked short sellers to the world) as the US dollar meets its fundamental destiny, then equities could put on and out do the 1930 rally before a total collapse (as occurred in the Weimar Equity Market experience).

Respectfully yours,
Jim

Click chart for more…

weimar_stocks

 

Jim Sinclair’s Commentary

The US dollar and US dollar proxies all top in the form of up-trending neckline head and shoulders.

$USD - SharpCharts from StockCharts_Page_1

 

Jim Sinclair’s Commentary

All that I have warned you about in the timeframe of reference (2000 to 2011) will come to the forefront. Here is the reason that no politician on this amoral planet has the stomach for.

The selection between many Kent State executions or hyperinflation will end up with hyperinflation. That is fact.

WTO chief warns of looming political unrest

BERLIN (AFP) – The global economic crisis could trigger political unrest equal to that seen during the 1930s, the head of the World Trade Organization (WTO) said in a German newspaper interview Saturday.

"The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time," Pascal Lamy told the Die Welt newspaper.

Questioned about the risks of political instability, Lamy — who wraps up his four-year term as WTO director-general in September — responded that that was "the main danger".

"This crisis weighs heavily on politics and puts peace in danger," he said.

"Some democracies are old and sufficiently stable to overcome such problems, (but) others are going to be confronted by unrest and inter-religious and inter-ethnic conflicts."

He went on to warn against protectionism, saying it would be "wrongly easy" for nations to throw up trade barriers in response to the economic and financial downturn.

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Jim Sinclair’s Commentary

Damned if you do and double damned if you do not!

Stimulus will lead to ‘disaster,’ Republican warns

 

WASHINGTON (CNN) — Leading Republicans warned Sunday that the Obama administration’s $800 billion-plus economic stimulus effort will lead to what one called a "financial disaster."

"Everybody on the street in America understands that," said Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. "This is not the right road to go. We’ll pay dearly."

Shelby, of Alabama, told CNN’s "State of the Union" that the package and efforts to shore up the struggling banking system will put the United States on "a road to financial disaster."

But Lawrence Summers, the head of the administration’s National Economic Council, said Republicans have lost their credibility on the issue.

"Those who presided over the last eight years — the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that’s collapsing more rapidly than at any time in the last 50 years — don’t seem to me in a strong position to lecture about the lessons of history," Summers told ABC’s "This Week."

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Jim Sinclair’s Commentary

The future of the dollar is poor to none.

Recent dollar strength is no different from any of the manias we have experienced in the past eight years. 30 year bonds at 147 is the most recent moment of market madness.

The Fed balance sheet qualifies it as the USA’s own "Bad Bank." That condemns the US dollar to monetary hell once the foolishness of the dollar as a "Safe Haven" is spent.

Dan Norcini’s Commentary

The following article goes to emphasize what Jim has stated repeatedly since the bailouts began in earnest, namely that the Fed has become the largest hedge fund of them all.

Also, when that former Fed governor let slip a while back in that video clip that played widely on YouTube that the Fed could always upwardly revalue the official gold holdings from its current value down near $42. Only the gold community caught the significance of that Freudian “slip” of the tongue.

They have no way out of this man-made disaster except to upwardly revalue gold which is simply another way of saying devalue the dollar. Unless that occurs, the monetary system in its current form will not survive and a Bretton Woods II will be needed. I see no way to ever make good on the sheer size of indebtedness that has been created without a currency devaluation – if one could ever call such an occurrence, “making good”. Good for the issuer of the debt but certainly not for the owner.

The Insolvency of the Fed
Daily Article by Philipp Bagus and Markus H. Schiml | Posted on 2/5/2009 12:00:00 AM

Since August 15, 1971 the US dollar has been an irredeemable paper currency. Every irredeemable paper currency in history has failed. Yet, the experiment of the US dollar and the rest of the fiat paper world continues.

During the current crisis, however, financial systems all over the world are increasingly struggling, and the end of the experiment seems closer. In fact, the Federal Reserve System has used up much of its "ammunition" for monetary interventions in an attempt to keep the experiment going, lowering its target interest rate almost to zero. Other central banks are also quickly approaching the "zero limit" for interest rates.

Figure1

During these inflationary decades, economic structures have developed that can only survive with falling interest rates. As the world approaches a zero interest rate, it appears that finally there might be a full adaptation of the structure of production to the demands of consumers, and the experiment might come to an end.

Yet, has the Fed really "run out of ammunition"? First of all: what is the Fed shooting at? It is trying to artificially stimulate the economy with its monetary policy, thereby it is also unwittingly shooting at the value of the currency. Through its monetary policy, the Fed is trying to bail out an insolvent and illiquid banking system to maintain an unsustainable structure of production. As long as the currency is not totally destroyed, the Fed will never run out of ammunition. In order to assess the ammunition left, one should have a look at the balance sheet of the Federal Reserve — especially at the assets the Fed can still obtain. The Fed’s balance sheet also gives insights on the condition or quality of the dollar.

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Jim Sinclair’s Commentary

This was the great US Balance of Trade "plus" tool that now is heading in the deficit way.

Boeing jet orders: Minus 13
More ’09 cancellations may cut production
By JAMES WALLACE
P-I AEROSPACE REPORTER

With the cancellation of another 16 orders for its 787 Dreamliner, which is two years late, The Boeing Co. has started out 2009 losing more orders than it has won.

Number of canceled orders in 2009

Boeing has won 18 orders and lost 31 through cancellations. A Russian airline backed away from its order for 15 Dreamliners a week ago. The latest 787 order cancellation came from a Dubai leasing company.

Underscoring just how difficult the current industry downturn will be, Boeing Chief Financial Officer James Bell told an industry conference Thursday that Boeing might have to lower production rates in 2010. Bell did not say so, but if fewer planes are built the company could trim or reassign some of the people who assemble its jets in Renton and in Everett.

Boeing recently announced it will reduce its work force by about 10,000 jobs this year — about half of those jobs in the Puget Sound area. The cuts are a result of the global recession and economic crisis. Airlines are cutting capacity as traffic falls. But so far, Boeing has said that most of the job losses will not be related to production because it wants to keep building jets at current rates, given a record backlog of planes.

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Jim Sinclair’s Commentary

A safe haven? Only a moron attaches that to the US dollar.

U.S. Debt Default, Dollar Collapse Altogether Likely
February 03, 2009

The prospect of the United States defaulting on its debt is not just likely. It’s inevitable, and imminent.

The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end – the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index.

Is 2009 the year that the United States formally defaults? And with that, will the dollar collapse be rolled back ten for one or more?

There are a lot of reasons to support that theory. To Wall Street economists, such an event is heresy and therefore unthinkable. Yet Wall Street is the very La-la-land that bred the idea of a perpetually indebted nation in the first place.

Number one among the indicators favoring this scenario is what is happening in the U.S. Treasuries auction market.

Last Thursday, an $30 billion auction in five-year notes failed to stir the interest of traditional primary dealers. The auction itself was saved by an anonymous “indirect” bid.

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Jim Sinclair’s Commentary

Are you looking for the money you have lost in your IRA’s at the hand of the predatory beings of the hedgie’s world? I can tell you where a lot of it has been spent.

Ex-Madam says clients paid with corporate credit cards
07 February 2009 00:54 AM

NEW YORK (Reuters) – A former madam of a high-priced New York prostitution ring alleges in a U.S. television interview to be aired on Friday that investment bankers, Wall Street lawyers, CEOs and media executives often paid for her services using corporate credit cards.

The former madam, Kristin Davis, said her clients included investment bankers from JPMorgan, Goldman Sachs, Merrill Lynch, Lehman Brothers and Deutsche Bank, according to an article about the interview posted on ABCNews.com.

The banks either declined comment or did not immediately respond to a request for comment from Reuters.

ABC news said that Davis’ client list also included a vice president of a major media company, the part owner of a Major League Baseball team, the CEO of one of the country’s largest private equity firms and a major New York real estate developer.

"Some of these guys I was invoicing on corporate credit cards," Davis told ABC’s "20/20" news magazine, according to the station’s website.

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Jim Sinclair’s Commentary

1. Israel makes a major error in judgement.
2. Pakistan goes nuclear into the wrong hands.
3. Turkey is a victim.
4. January 14th 2011

Obama’s biggest foreign policy challenge? It’s Pakistan
By JONATHAN S. LANDAY AND SAEED SHAH
McClatchy Newspapers

A nearly completed U.S. military study is expected to say that nuclear-armed Pakistan, not Iraq, Afghanistan or Iran, is the most urgent foreign policy challenge facing President Barack Obama.

Pakistan – convulsed by a growing al-Qaida-backed insurgency, hamstrung by a ruinous economy and run by an unpopular government that’s paralyzed by infighting and indecision – is critical to U.S. efforts to stabilize Afghanistan, thwart the spread of nuclear weapons and prevent tensions with neighboring India from escalating into a nuclear showdown.

The U.S. Central Command review is assessing the situation in the Middle East and South Asia as the Obama administration plans to draw down U.S. forces in Iraq and double the 30,000-strong American military presence in Afghanistan, several people involved in the study told McClatchy Newspapers. They spoke on condition of anonymity because the study is still underway and they weren’t authorized to discuss it publicly.

The assessment, they said, is expected to recommend major changes in the U.S. approach to the volatile region, including major increases in U.S. aid to Pakistan in areas such as public education, health care and good governance, in a bid to stem the poverty and illiteracy that help fuel the country’s Islamic insurgency.

Stepped up non-military aid also could ease popular anger at the government and its chief ally, the United States, which many Pakistanis accuse of stoking the insurgency by relying primarily on military offensives and missile strikes that have claimed numerous civilian lives, the officials said.

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Pakistan heads toward crisis as coalition flounders
U.S. looks on with alarm as key Western ally’s inability to deal with jihadist menace threatens to destabilize region
SAEED SHAH
Special to The Globe and Mail
February 7, 2009

ISLAMABAD — Almost a year after elections were held in Pakistan, which restored democracy after more than eight years of military rule, growing Islamist violence, a crisis of governance and an economy in a tailspin threatens this key Western ally with collapse.

The new U.S. administration of President Barack Obama has made Pakistan one of its foreign policy priorities. Aides say that the U.S. President is "scared" by what he sees in Pakistan, a country that is crucial to meeting his goals of stabilizing Afghanistan and routing al-Qaeda. Next week, Richard Holbrooke, the special envoy just appointed to handle Afghanistan and Pakistan, arrives in Islamabad on a fact-finding mission, which is expected to be followed by swift action by Washington.

Critics say the Pakistani government is gripped with paralysis, as patronage, not policy, occupies Islamabad under President Asif Zardari. Some see echoes of the last period of civilian rule in Pakistan, between 1988 and 1999, when a series of floundering governments were repeatedly toppled by the army amid allegations of massive corruption and misrule.

Already the military and civilians are privately blaming each other for inaction as jihadists push ever deeper into the country from the northwest, with a de facto extremist mini-state now existing in Swat, a valley just 160 kilometres from the capital, Islamabad. Along the border with Afghanistan, Taliban and al-Qaeda enjoy a safe haven, undermining the international coalition’s fight against insurgents in Afghanistan.

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What kind of ally is Pakistan?
Saturday, February 7, 2009

It could be an episode of "24." A rogue bombmaker peddles nuclear weapon technology to Iran, North Korea and Libya. He’s caught but then set free in the seething, violent politics of his home country.

This isn’t a Hollywood script. It’s the real-life story of A.Q. Khan, the father of Pakistan’s nuclear program. On Friday he was freed from house arrest in the country’s capital in a move that drew sharp criticism from Washington.

Pakistani leaders served up the awkward news as a hands-off legal matter and the end of a lengthy court case that began when Khan was arrested in 2004. But it carries another meaning – a very troubling one – for Pakistan’s neighbors and allies.

Quite simply, the nation isn’t a reliable force for peace or stability in a central front of the terrorism fight. Khan was accorded the status of a populist hero, a scientist who gave his country a mighty weapon to hold far-bigger India at bay. When he set up a black market network to sell nuclear supplies to three of the worst countries imaginable, he was given wrist-slap treatment and protected from international investigators.

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