In The News Today

Posted at 12:15 PM (CST) by & filed under In The News.

Dear CIGAs,

Tore up $38.6 TRILLION in overlapping contracts?

That sound like an interesting financial transaction.

I think we need a tad more explanation of this massive disappearing act.

Credit Swaps Market Cut to $38 Trillion, ISDA Says
2009-04-22 07:59:13.968 GMT
By Katrina Nicholas and Abigail Moses

April 22 (Bloomberg) — Credit-default swap dealers cut the volume of outstanding trades to $38.6 trillion last year as they tore up overlapping contracts amid pressure from regulators to scale down the privately negotiated market and reduce risk.

Outstanding contracts fell 38 percent in 2008, the New York-based International Swaps and Derivatives Association said in a survey released in Beijing today. It’s the first annual decline, after the market increased 100-fold over the previous seven years as investors used the derivatives to protect against bond losses and speculate on creditworthiness.

Traders have been rushing to cancel redundant trades as federal authorities seek to impose regulations on the market for the first time since it was created a decade ago. After the collapse of Bear Stearns Cos. last year, 17 banks that handled about 90 percent of trading in default swaps agreed to initiatives including trade compression to help reduce day-to- day payments, bank staff paperwork and potential for error.

“In the current environment, firms are intensely focused on shrinking their balance sheets and allocating capital most productively,” said ISDA Chief Executive Robert Pickel, whose group represents dealers that control trading.

More than 2,000 banks, hedge funds and asset managers trading credit-default swaps agreed to a “Big Bang Protocol” this month that aims to improve transparency and confidence in credit-default swaps. It changes the way the swaps are traded so that it’s easier to eliminate offsetting trades and move them through a clearinghouse.


Jim Sinclair’s Commentary

Prestidigitation increases home values in the last reporting month.

Stock rallies are breaking out of short term down trends.

Wall Street expresses surprise and glee.

Bottoms seen by AOs.

Housing bubble smackdown: Huge “shadow inventory” portends a bigger crash ahead

Mike Whitney
Wednesday, April 22, 2009

In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before–nearly perpendicular. Housing prices are not falling, they’re crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It’s a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?


Here’s a excerpt from the SF Gate explaining the mystery:

“Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.


Jim Sinclair’s Commentary

Keep an eye on this development.

If you catch one mouse in your house, how many do you have inside the walls?

Turkey: Police arrest Al-Qaeda suspects in raids

Istanbul, 21 April (AKI) – Turkish police on Tuesday arrested at least a dozen suspected members of Al-Qaeda in simultaneous raids across four provinces, Turkish media reported.

While the exact number of suspects was still to be confirmed, at least 12 suspects were arrested in raids in the southeastern provinces of Gaziantep and Sanliurfa, the central province of Konya and southern city of Adana, said Turkish daily Hurriyet.

Earlier this month, seven people were arrested on charges of links to the extremist network following simultaneous operations in the western province of Eskisehir.

A Turkish newspaper reported in March that Ankara had received US intelligence that Al-Qaeda militants could be plotting attacks on foreign targets in Turkey.

A Turkish Al-Qaeda cell was held responsible for truck bomb attacks against two synagogues, the British consulate and a British bank in Istanbul in 2003.


Jim Sinclair’s Commentary

Whatever needs bailouts will be bailed out. Eventually the dollar will, by severe depreciation, bailout the bailout debt. REALLY!

‘Deeper’ recession ahead says IMF
By Steve Schifferes
Economics reporter, BBC News

The global economy is set to decline by 1.3% in 2009, in the first global recession since World War II, the International Monetary Fund (IMF) says.

In January, the IMF had predicted world output would increase by 0.5% in 2009.

It now projects that the UK will see its economy shrink by 4.1% in 2009, and by a further 0.4% in 2010.

But other major economies are predicted to shrink even more, with Germany declining by 5.6%, Japan by 6.2%, and Italy by 4.4% in 2009.

The prospects for the advanced economies are not much brighter in 2010, with an overall forecast of zero growth.

The IMF says this represents “by far the deepest post-World War II recession” with an actual decline in output in countries making up 75% of the world economy.

Currently, output is falling by an “unprecedented” 7.5% annual rate in the rich countries in the last quarter of 2008, and the IMF expects the same rate of decline in the first quarter of this year.

Only a recovery in developing and emerging market countries will propel the world economy back into positive growth in 2010, albeit at a relatively weak level of 1.9%.

The prospects for world trade are even gloomier, with the IMF now forecasting world trade volumes to decline by 11% in 2009, and barely grow at all in 2010.

After 60 years as the engine of world growth, the sharp fall in trade is now hitting many of the leading exporting nations, particularly in Asia.