In The News Today

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Dear CIGAs,

To properly understand what this means, there are various items for you to consider:

The prime implications of the Trade Balance deals with a comparison to the Treasury International Capital Flows as both are measures of capital inflow or outflow. That balance deals with the willingness of non US entities to finance the demands of the USA. The Trade Balance deals with the mechanics of international trade as a positive inflow of capital in terms of export earnings or out flow as a product of import dependency.

The Trade Balance is heavily dependent on the level of economic activity of the country it represents.

Therefore presentation of the Trade Balance without comparison to the Treasury International Capital Flows renders the statistic immaterial. Both are immaterial when expressed independently of each other.

The bottom line of the comparison is that the trend is now forcing the US Treasury in on the internal US credit markets to finance the present needs for the 12.7 trillion bailouts as well as the shortfall on the US budget deficit.

The above is a lesson in "how to" that you might consider noting for future reference or bookmarking on the compendium.

U.S. Trade Deficit Plunges to Nine-Year Low as Imports Slump
By Timothy R. Homan

April 9 (Bloomberg) — The U.S. trade deficit tumbled in February to the lowest level in nine years as collapsing demand from consumers and companies reverberated around the globe.

The gap shrank to $26 billion, less than anticipated, from a revised $36.2 billion in January, the Commerce Department said today in Washington. Imports plunged for a seventh consecutive month, leading to declines in the deficits with Japan and China, while exports climbed from a two-year low.

The report showed some U.S. trading partners may not bypass the recession unscathed as American demand for Asian cars, toys and electronics plunged. The improvement in exports, the first since July, is likely to be short-lived as economies shrink worldwide.

“It’s an indication of the extent to which we’ve been passing on some of our demand decline to the rest of the world,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “That is why we’ve seen such disastrous declines in growth numbers in Asia. They have been relying on U.S. spending, and U.S. spending just isn’t there any more.”

Separate figures from the Labor Department today showed the cost of goods imported into the U.S. in March rose less than forecast as companies in China and Japan cut prices to stem the slump in overseas sales. Other figures from Labor showed the number of Americans filing first-time claims for unemployment insurance exceeded 600,000 for a 10th consecutive week.



Jim Sinclair’s Commentary

From Stratfor. Pakistan is a bloody mess. It is the most critical and dangerous area in the world right now.

Pakistan: Islamabad Denies ISI Chief Snub
April 7, 2009 | 2154 GMT

U.S. special envoy for Afghanistan and Pakistan Richard Holbrooke (L) and Pakistani Foreign Minister Shah Mehmood Qureshi in Islamabad on April 7 Pakistani military spokesman Maj. Gen. Athar Abbas on April 7 denied reports that Lt. Gen. Ahmed Shuja Pasha, head of Pakistan’s Inter-Services Intelligence (ISI) spy agency, declined to meet U.S. special envoy to Afghanistan and Pakistan Richard Holbrooke and Joint Chiefs of Staff Chairman Adm. Mike Mullen, who were visiting Islamabad. Abbas, who is director-general of the Inter-Services Public Relations directorate, said the ISI chief was in fact present in the meetings Mullen and Holbrooke had with Pakistani military chief Gen. Ashfaq Kayani. The denial came about half an hour after Pakistani news channels broadcast reports that the ISI chief had snubbed the two senior U.S. officials.

The two reports may appear contradictory, but STRATFOR has learned that the top U.S. military commander and Washington’s point man on the Afghanistan/Pakistan region had requested a separate meeting with the ISI chief, which was not granted. The ISI likely released this story to the media in such a way that it created the impression (and sensation) that the ISI chief refused to meet with senior U.S. officials. Since the rise of a democratically elected government in Islamabad in March 2008, U.S. officials representing the State Department and the Pentagon frequently travel to Pakistan and meet with a wide range of civilian and military officials, including the ISI chief, as authority is now divided between the government and the security establishment. Thus, Holbrooke and Mullen’s request was not out of the ordinary.

Pakistan, which faces a raging jihadist insurgency, is upset over growing U.S. criticism of its army-intelligence complex and increasing unilateral American airstrikes in the country’s northwest. Islamabad is trying to craft a unified national security and foreign policy that takes into account all the stakeholders (legislature, executive, judiciary and military/intelligence establishment) as a means of enhancing its bargaining power with Washington. As a result, it is trying to limit one-on-one contact between Washington and the various Pakistani institutions, especially the ISI — which in this case meant having a group meeting with both the army and intelligence chiefs instead of separate meetings. That said, Islamabad did want to relay its anger to Washington over U.S. criticism of the ISI. This would explain why Kayani demanded April 7 that negative propaganda against his country’s foreign intelligence service end, and it is a reason for preventing a separate meeting between Pasha and the Mullen-Holbrooke team.


Jim Sinclair’s Commentary

This place can blow any day, any time. No one other than our gang has any idea of what this means and the start of the most disruptive market event ever when consider over time.

Pakistan: Possible Militant Strikes on Karachi
April 8, 2009 | 2156 GMT

Militants of Tehreek-e-Taliban Pakistan in the Pakistani tribal district of Mohmand Agency on July 21, 2008 TARIQ MAHMOOD/AFP/Getty Images Militants of Tehrik-i-Taliban Pakistan in Mohmand Agency in July 2008 Summary

Karachi police chief Waseem Ahmed said April 8 that police had arrested 5 militants belonging to Lashkar-e-Jhangvi (LJ) who reportedly were planning attacks on seven government buildings in Karachi, British newspaper the Telegraph reported. The targets included the home of the interior minister, police headquarters, Shiite religious centers and suppliers cooperating with NATO forces. LJ is a jihadist group based in Punjab province allied with Tehrik-i-Taliban Pakistan. Jihadists have struck in Karachi before, but a campaign against Karachi by the Tehrik-i-Taliban Pakistan (TTP) would create a serious confrontation for the city’s ruling party, the Muttahida Qaumi Movement, a group that is itself known to engage in significant violence.


On April 8, Karachi police chief Waseem Ahmed said police had arrested five militants who were part of militant group Lashkar-e-Jhangvi (LJ) and were planning to attack government offices (including the police station), intelligence agencies, mosques, suppliers who ship goods to Western forces in Afghanistan and counterterrorism personnel. These arrests are only the latest sign that Karachi’s ruling party, the Muttahida Qaumi Movement (MQM), is nervous about the jihadist threat to its city. LJ is a jihadist group based in Punjab province and allied with Tehrik-i-Taliban Pakistan (TTP), which is led by Baitullah Mehsud.

The TTP has shown an ability to strike beyond its traditional territory in the North-West Frontier Province (NWFP) and Federally Administered Tribal Area (FATA) by expanding to virtually all of Pakistan’s major metropolitan areas with attacks in Islamabad, Lahore, Rawalpindi and Peshawar in recent months. Most recently, a group of 10 militants under Mehsud raided a police training facility just east of Lahore in Manawan in Punjab province. The TTP also has shown an interest in attacking Karachi, such as when Mehsud threatened in August 2008 to launch attack on MQM offices and other targets in Karachi if the party leader, Altaf Hussain, did not forfeit his rule there. Mehsud’s spokesman added that the time “was ripe for the Taliban to gain control of the city.”


Riots in Pakistan After Dissidents Found Dead
Thursday, April 09, 2009

QUETTA, Pakistan —  Rioting has broken out in southwestern Pakistan after police said they found the bodies of three missing political dissidents.

Police say one officer has been shot dead in southwestern Pakistan during the rioting.

Ghulam Ali Lashari, a senior police official, said the officer was fatally wounded when protesters opened fire in Khuzdar, a town in Pakistan’s restive Baluchistan province.

Television footage showed police swinging batons to disperse protesters who set fire to a bus in the city of Quetta, the capital of Baluchistan province.

Police official Khalid Masood says the mutilated bodies of three ethnic Baluch nationalist leaders were found before dawn on Thursday in another part of the province.


Jim Sinclair’s Commentary

You see why slowly but surely some of the maverick strongholds are becoming establishment types.

Moody’s Downgrades Berkshire
April 9, 2009

In these economic times, even Warren E. Buffett can’t qualify for the best credit rating.

Moody’s Investors Service on Wednesday stripped away the triple-A rating of Berkshire Hathaway, the conglomerate and investment vehicle run by Mr. Buffett, citing the economic pressures on the firm.

The news is yet another sign that, despite all of Mr. Buffett’s investing prowess and business savvy, even the man that investors regard as the Oracle of Omaha cannot avoid the tremors coursing through the markets.

The ratings downgrades affect Berkshire as a whole as well as a wide swath of its insurance subsidiaries, including its flagship National Indemnity, as well as other units like the auto insurer Geico and the municipal bond insurer Berkshire Hathaway Assurance.

“Today’s rating actions reflect the impact on Berkshire’s key businesses of the severe decline in equity markets over the past year as well as the protracted economic recession,” Bruce Ballentine, Moody’s lead analyst for Berkshire, said in a statement.