In The News Today

Posted at 7:10 PM (CST) by & filed under In The News.

Dear CIGAs,

"Buy em Bull Bond Trader Ben." He better be there in Europe and Asia tonight or all hell will have broken loose before the US wakes up to find another Blacker Friday

Today’s obliterated long bond futures market is a challenge to the US Fed to "put up" or "shut up."

The US Fed has publicly threatened to buy one trillion US dollars worth of bonds.

Well, they better start cranking the electronic quantitative printing press and throw a few hundred billion at it here and now.

Markets have a nasty way of diving for zero if they conclude the Fed is bluffing. It sure looked like it today.

Jim Sinclair’s Commentary

Payback is a b***h.

He’s back. Eliot Spitzer and his article are hard hitting. Click the following links to view Part 1 and Part 2 of the video.

The New York Fed is the most powerful financial institution you’ve never heard of. Look who’s running it.
By Eliot Spitzer
Posted Wednesday, May 6, 2009, at 12:29 PM ET

The kerfuffle about current New York Federal Reserve Bank Chairman Stephen Friedman’s purchase of some Goldman stock while the Fed was involved in reviewing major decisions about Goldman’s future-well-covered by the Wall Street Journal here and here-raises a fundamental question about Wall Street’s corruption. Just as the millions in AIG bonuses obscured the much more significant issue of the $70 billion-plus in conduit payments authorized by the N.Y. Fed to AIG’s counterparties, the small issue of Friedman’s stock purchase raises very serious issues about the competence and composition of the Federal Reserve of New York, which is the most powerful financial institution most Americans know nothing about.

A quasi-independent, public-private body, the New York Fed is the first among equals of the 12 regional Fed branches. Unlike the Washington Federal Reserve Board of Governors, or the other regional fed branches, the N.Y. Fed is active in the markets virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks. And, like the other regional branches, it has boundless power to examine, at will, the books of virtually any banking institution and require that wide-ranging actions be taken-from raising capital to stopping lending-to ensure the stability and soundness of the bank. Over the past year, the New York Fed has been responsible for committing trillions of dollars of taxpayer money to resuscitate the coffers of the banks it oversees.

Given the power of the N.Y. Fed, it is time to ask some very hard questions about its recent performance. The first question to ask is: Who is the New York Fed? Who exactly has been running the show? Yes, we all know that Tim Geithner was the president and CEO of the N.Y. Fed from 2003 until his ascension as treasury secretary. But who chose him for that position, and to whom did he report? The N.Y. Fed president reports to, and is chosen by, the Fed board of directors.

So who selected Geithner back in 2003? Well, the Fed board created a select committee to pick the CEO. This committee included none other than Hank Greenberg, then the chairman of AIG; John Whitehead, a former chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, a former chairman of Lehman Bros. It was not a group of typical depositors worried about the security of their savings accounts but rather one whose interest was in preserving a capital structure and way of doing business that cried out for-but did not receive-harsh examination from the N.Y. Fed.

The composition of the New York Fed’s board, which supervises the organization and current Chairman Friedman, is equally troubling. The board consists of nine individuals, three chosen by the N.Y. Fed member banks as their own representatives, three chosen by the member banks to represent the public, and three chosen by the national Fed Board of Governors to represent the public. In theory this sounds great: Six board members are "public" representatives.

So whom have the banks chosen to be the public representatives on the board during the past decade, as the crisis developed and unfolded? Dick Fuld, the former chairman of Lehman; Jeff Immelt, the chairman of GE; Gene McGrath, the chairman of Con Edison; Ronay Menschel, the chairwoman of Phipps Houses and also, not insignificantly, the wife of Richard Menschel, a former senior partner at Goldman. Whom did the Board of Governors choose as its public representatives? Steve Friedman, the former chairman of Goldman; Pete Peterson; Jerry Speyer, CEO of real estate giant Tishman Speyer; and Jerry Levin, the former chairman of Time Warner. These were the people who were supposedly representing our interests!

Of course, there have been the occasional nonfinance representatives from academia and labor. But they have been so outnumbered that their presence has done little to alter the direction of the board.


NY Fed chair resigns amid stock purchase questions
By Kristina Cooke Kristina Cooke – Thu May 7, 8:30 pm ET

NEW YORK (Reuters) – Stephen Friedman, chairman of the New York Federal Reserve Bank’s board of directors, resigned on Thursday amid questions about his purchases of stock in his former firm, Goldman Sachs.

Friedman, a retired chairman of Goldman Sachs who has led the New York Fed’s board since January 2008, said he quit to prevent criticism about his stock buying from becoming a distraction as the Fed battles a severe U.S. recession.

"Although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper," he said in a letter of resignation to New York Fed President William Dudley.

"The Federal Reserve System has important work to do and does not need this distraction," Friedman said.

The U.S. central bank is comprised of a seven-member Board of Governors in Washington, and 12 regional Fed banks.

Some of the regional directors are appointed by the Washington-based board. Those directors are not allowed to own shares of bank holding companies, a status that Goldman Sachs won in September to secure access to Fed lending facilities.


Jim Sinclair’s Commentary

There will come a time when the disposed seek those who have caused their pain and suffering. CIGAs are now losing their jobs and it is heartbreaking to know they are suffering. They worked hard for companies that have been broken by the OTC derivative market. It is so wrong.


Jim Sinclair’s Commentary

Just a drop in the phony money paper bucket. It is hardly worth writing about if you judge it by today’s standards.

All inside financial institutions will be provided with as much money as is required and when required.

To infinity it will be.

Remember that hyperinflation is a currency event and not an economic event. The barn will be burned to save all insider institutions. The Barn is the US dollar.

Gold is going to Alf’s price objectives on Armstrong’s schedule.

U.S. Says Ailing Banks Need $75 Billion
Published: May 7, 2009

Federal regulators told the country’s 19 largest banks that they must raise $75 billion in extra capital by November, a more upbeat verdict on the health of the financial system than the industry had feared just two months ago.

Ten of the 19 bank holding companies deemed “too big to fail” by the Obama administration will be required to raise additional capital, according to the results of the government’s stress tests, released late Thursday afternoon. But the 10 banks will have to raise much less capital than some analysts had expected as recently as a few days ago.

“With the clarity today’s announcement will bring, we hope banks are going to get back to the business of banking,” Treasury Secretary Timothy F. Geithner said during a news briefing on Thursday afternoon.

Mr. Geithner noted that banks had a long way to go to restore the nation’s confidence in the financial industry, and that they could get a start in generating good will by lending more.


Jim Sinclair’s Commentary

Gerald Celente of the Trend Research Institute, a by subscription service, said today:

"’Green shoots’ may sprout," said Celente, "but they will not flower.  The economy cannot be coerced back into growth with tons of money manure."  As the ancient parable puts it:

"A sower went out to sow his seed: and as he sowed, some fell by the way side; and it was trodden down, and the fowls of the air devoured it. And some fell upon a rock; and as soon as it was sprung up, it withered away, because it lacked moisture. And some fell among thorns; and the thorns sprang up with it, and choked it. And other fell on good ground, and sprang up, and bare fruit an hundredfold. And when he had said these things, he cried, He that hath ears to hear, let him hear." — Luke 8:4-8

Jim Sinclair’s Commentary

Remember when public bank company management worked for their Board, which in turn was legally bound to protect the stockholders?

It would seem that the bank Boards are now window dressing and the boss of the boss is the Treasury Secretary.

When Washington give $1 it takes $1000.

Now please name the new system.

Regulators put bank CEOs on notice
Banks that need capital after stress tests will have a month to give regulators a plan and to review management to make sure they have "sufficient expertise."
By Colin Barr, senior writer
Last Updated: May 7, 2009: 3:55 AM ET

NEW YORK (Fortune) — Banks that need more capital under the stress tests will have a month to present regulators with a fundraising plan, federal officials said Wednesday.

The banks will have six months to raise the funds, according to a statement from the Treasury Department, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

The banks will also have to review their management and board within a month, "to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment," the bank regulators said in a statement Wednesday afternoon.

The announcement comes just a day before the results of regulators’ Supervisory Capital Assessment Program, which covers the 19 biggest bank holding companies in the U.S., are due to be released to the public.

Wall Street has been eagerly awaiting the results since the government unveiled the stress test plan in February. The results of the tests were initially scheduled for release earlier this week, but the announcement was rescheduled for Thursday afternoon to allow banks a chance to review the findings.


Jim Sinclair’s Commentary

The various predictions made by Alphaville FT assuming the worst case scenario has elucidated comments of being "too negative."

Read what is below and understand that if we return to a psychology of contraction what is outlined below will expand. Those 9 points are the story of an Empire that down spirals into a Banana Republic.

If this occurs, all of that essay will unfortunately be CORRECT.

Please protect yourselves!

Click here to review the 12 points Worst Case Scenario article from

Ex-Owners Turning Aggressive in Efforts to Resist Leaving
By Derek Kravitz
Sunday, May 3, 2009

One former homeowner rigged his front door with coffeepots filled with boiling water. Another left piles of ferret feces. Hidden compartments have been used as living spaces, with people hiding in attics, tool sheds and garages to elude police.

In the D.C. suburbs, a new class of squatter has emerged, as people illegally remain in homes after they have lost them to the bank. Some have become aggressive in their efforts to stay, setting booby traps to ward off police.

"People got in over their heads, and they don’t want to leave," said Loudoun County sheriff’s Capt. Chuck Wyant, who oversees the department’s five-person eviction unit.

The problem seems especially acute outside the Capital Beltway. Initially viewed as an unusual symptom of the economic downturn, squatting has grown into something closer to an epidemic in Loudoun. Court-ordered evictions in the county have more than doubled over the past three years, and a six-month backlog of cases at the Loudoun courthouse is a dire reminder that things might only get worse, Wyant said. A docket at the courthouse has been created for the approximately 2,300 in the county facing evictions.

"It’s hit us hard, worse than other counties, because we grew so quickly," he said.


Jim Sinclair’s Commentary

The Crimex makes a phony paper gold price while the physical market is tight.

A shift from the physical market by mints and other consumers of physical gold to making their purchases on the COMEX will transmute the COMEX to a cash exchange. This will extinguish the gold bank’s ability to make the gold price.

It is so easy to see that the Commercial Dealers are not yet prepared to run gold higher as their short position still needs more balancing between options, physical and reduction.

When that occurs gold will be off to a penetration of the $1000 level and a visit at $1224.

It is only time, and the time is short.

U.K.’s Royal Mint Uses 75% More Gold as Investor Demand Expands
By Thomas Biesheuvel and Nicholas Larkin

May 7 (Bloomberg) — The Royal Mint, established in the 13th century, used 75 percent more gold in the first quarter amid a surge in demand for bullion to diversify investments.

The U.K. mint made 28,496 ounces of gold coins in the quarter, compared with 16,317 ounces a year earlier, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production last year rose 30 percent to 53,089 ounces, the data show.

Demand for gold and exchange-traded funds linked to the metal accelerated as equities collapsed and governments spent trillions of dollars to combat recessions. The Austrian mint, Muenze Oesterreich AG, sold a record 1.5 million ounces of gold last year, while the U.S. Mint’s sales of 1-ounce American Eagle gold coins more than quadrupled in January to 92,000.

“People are worried about their savings and banks, and a lot of people realize it’s a safe-haven asset,” said Mark O’Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. “Very few people are selling.”

Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, has expanded to 1,104.45 metric tons, overtaking Switzerland as the world’s sixth-largest gold holding. Gold has advanced for eight consecutive years, the longest winning streak since at least 1948, according to data compiled by Bloomberg.

The Royal Mint is now based in Llantrisant, Wales. Its 2009 Gold Proof Sovereign coin, made from 22-carat gold and weighing 7.99 grams (0.26 ounce) sells for 299 pounds ($450), according to the government agency’s Web site. Gold for immediate delivery averaged $904.18 an ounce this year, compared with $872.25 an ounce last year.


Jim Sinclair’s Commentary

Expectations of a Fortress Europe are not farfetched as blame for the financial disaster sticks to Washington and the US Banksters. This has negative implications for the US dollar.

Sarkozy plans a fortress Europe à la française

Nicolas Sarkozy has just done a favour to British Conservatives and other sceptics who like to see the European Union as a plot for putting a French face on Europe.

Super Sarko used his second anniversary in office to sketch a vision for the Union which fell somewhere between that of the late Charles de Gaulle and the pro-European French leaders of the 1970s and 80s. If Europe follows his recipe, it will be able to pull out of the "deep intellectual and moral crisis" from which it is suffering, he said.

Sarkozy wants a Union with a new "economic government" — run by the member states not the supranational Brussels Commission. He wants a centralised industrial policy, new tight financial regulations, a closed door to "predators from the world at large". He wants a curb on the free market laws that are policed by Brussels.  He also reaffirmed his pledge to stop Turkey ever joining the Union.

Sarko was speaking in Nîmes to kick off the campaign for next month’s European Parliament elections but the assembly — the other supranational pillar of the Union — got barely a mention in his manifesto for a continent run by the Council of member governments.  He shares ground with the British sceptics on that front, but not on much else.