In The News Today

Posted at 5:19 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Ok, who did it? That was supposed to be our Easter Weekend!

clip_image001[1]

Jim Sinclair’s Commentary

This has to give the geriatric frat boys a big laugh at the NYC suburbia country clubs.

GM bonds: Big trouble for small investors
Nearly $6 billion of GM’s unsecured debt is held by individual investors like Harley VanDeloo. A GM bankruptcy could mean a ‘significant’ loss to his income.
By Chris Isidore, CNNMoney.com senior writerApril 15, 2009: 3:38 AM ET

NEW YORK (CNNMoney.com) — Harley VanDeloo, a 69-year old retiree in Thousand Oaks, Calif., has resigned himself to losing an important piece of his retirement income: interest payments from $25,000 worth of General Motors bonds.

The bonds were due to pay VanDeloo about $1,000 twice a year, an important supplement to his social security benefits that he said are his main source of income.

"It’s not going to kill us, but it’s significant," he said about the loss of income.

VanDeloo, a self-described car enthusiast who says his GM van is the best car he’s ever owned, bought the bonds at a 20% discount just over a year ago. He believed GM (GM,Fortune 500) was on the verge of a turnaround and that the bonds were relatively safe despite having already been downgraded to junk bond status by the rating agencies.

He said he didn’t care about the bonds’ prices. He was attracted instead to the better than 8% yield the bonds paid. "They were due to be paying off well after I’m gone," he said about the debt, which matures in 2033.

More…

Jim Sinclair’s Commentary

Jim’s 2006 Formula functions:

Select a city.
It is omnipresent.
It cannot be reversed by Tarp, or any acronym.
Your town and city are experiencing just this, no matter where you live.

Prepared text of Villaraigosa’s State of the City speech
Tuesday, 14 April 2009
Fellow Angelenos:

These are no ordinary times in the City of Los Angeles, or for that matter, any place where people depend on the global economy.

Here in L.A., the recession is taking a terrible toll.  230,000 Angelenos now standing on unemployment lines.  The jobless rate simmering at 12% and rising. The mortgage crisis has now forced 21,000 of our families to box up their belongings and vacate their homes, many experiencing for the first time in their lives the humiliating pain — the frustration — that comes in having to put your hand out and rely on the help of strangers to survive.

We have thousands of business owners struggling to make payroll.  Trade flows and ship traffic are idling at the port.  And the recession has done lasting damage to one of our most vital civic institutions: our great newspapers.

Needless to say, the recession has hit government particularly hard.

The need for our services is up.  Revenue to pay for them is down. Here in L.A., we face a $530-million  deficit this year alone.

The situation at the state level — where the system seems hardwired for failure — is even more extreme.  That’s why it is absolutely critical that we lock arms and approve the bipartisan budget stabilization package on May 19 to prevent us from destroying the very services that Californians depend on.

More…

Jim Sinclair’s Commentary

Consider what Pakistan means to markets as a major domino about to fall.

Pakistan grants bail to detained hard-line cleric
By ZARAR KHAN – 8 hours ago

ISLAMABAD (AP) — Pakistan’s Supreme Court ordered the release on bail Monday of a hard-line cleric who had been detained since shortly before soldiers stormed his mosque in 2007, killing scores of people and energizing the country’s Islamist insurgency.

Maulana Abdul Aziz was granted bail while the court considers the charges against him in relation to the siege of the Red Mosque in the capital, Islamabad, his lawyer Shaukat Siddiqui told reporters outside the court. Prosecutors were not available for comment.

Aziz was arrested as he tried to sneak out of the mosque dressed in an all-covering burqa worn by some Muslim women.

Several days later, security forces stormed the mosque and adjoining buildings after scores of heavily armed militants inside refused to surrender. The government says 102 people, including 11 security personnel, were killed in the standoff.

Aziz is facing a raft of charges ranging from abetting terrorists to illegally occupying a building.

Pakistan has a history of failing to successfully prosecute militants, many of whom are believed to have once had links with the country’s armed forces.

More…

Jim Sinclair’s Commentary

Note how concerned the youngsters are. Even if this is a professional act it is a great act and deserves a reward.

It is definitely getting very bad…

clip_image001

(Female cats are drama queens)

Jim Sinclair’s Commentary

It is absolutely amazing that Nassim Taleb did not get the hook on financial TV this morning.

He ripped into every plan and every person of note from the Treasury, Federal Reserve and right up to the Fat Cats.

The look on the interviewer’s face was a marvel to behold. He says nothing has changed. Nothing is strengthening. The weaknesses are still there and there is no effective plan or people to change that.

I understand he is a professor of Risk Engineering so I wonder what he teaches when you listen to his views.

Professor Taleb, I am open to invitation to a lecture and promise to sit quietly and attentively. I will gladly pay for a ticket if it is public.

Please listen to this man if you have not heard him interviewed.

Black Swan Author Nassim Taleb Joins Arianna on CNBC’s Squawk Box

 

Nassim Nicholas Taleb, author of The Black Swan, joined Arianna on Squawk Box to discuss the financial meltdown, mark-to-market accounting and ways to build a more robust economic system.

More…

Ten principles for a Black Swan-proof world
By Nassim Nicholas Taleb
Published: April 7 2009 20:02 | Last updated: April 7 2009 20:02

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess.

Instead, find the smart people whose hands are clean.

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without

disincentives: capitalism is about rewards and punishments, not just rewards.

5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.

6. Do not give children sticks of dynamite, even if they come with a warning . Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging”

products, and from gullible regulators who listen to economic theorists.

More…