In The News Today

Posted at 12:39 PM (CST) by & filed under In The News.

Dear Friends,

In hard times remember the things that are most important to you. The following pictures are from my last trip to Africa.

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Jim Sinclair’s Commentary

You think the OTC derivative salesman would get a special welcome in some of these Italian towns? Maybe we should pay for their tickets and let the mayors know they are coming.

‘Impossible to Understand’ Swap Burns 290-Person Italian Hamlet
By Alan Katz, Lorenzo Totaro and Elisa Martinuzzi

June 19 (Bloomberg) — Ortenzio Matteucci points to towns down the wooded Nerina valley in Italy’s Umbria region and blames peer pressure for his decision to let Polino, population 290, buy a U.S.-inspired financial swap he didn’t understand.

A retired steelworker with wavy gray hair, Polino’s Mayor Matteucci says he agreed to the interest-rate swap because Milan, with more than 1 million residents, and local towns Arrone and Stroncone all bought derivatives to try to save money. Polino’s contract has cost the village 6,579.66 euros ($9,200) more than it has earned since the town made the deal in 2005.

“At the time I thought: Can the Province of Terni, the City of Terni and all the other municipalities bigger than us, such as Milan, be all wrong?” said Matteucci, 59, dressed in a blue polo shirt and jeans. “You can make a mistake if you don’t have an appropriate and deep knowledge of this and just follow what other local governments do.”

Derivatives have burned towns from Polino to Milan to Erie, Pennsylvania. Jefferson County, Alabama, said it might need to declare bankruptcy because of costs associated with the contracts. Responsibility for the expenses in Italy’s second- biggest city and in Umbria’s smallest village sits with elected officials who agreed to financial instruments they didn’t fully grasp, said Stefano Taurini, a lawyer who specializes in corporate law in Milan.


Jim Sinclair’s Commentary

JB Slear comments "Just another Friday night, no big thing."

United Community Banks, Inc. Announces Acquisition of Southern Community Bank
June 19, 2009 6:20 PM EDT

BLAIRSVILLE, GA — (MARKET WIRE) — 06/19/09 — United Community Banks, Inc. (NASDAQ: UCBI) announced today that its wholly-owned subsidiary, United Community Bank, has entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase the assets and assume the deposit liabilities and secured wholesale borrowings of Southern Community Bank. The Georgia Department of Banking and Finance declared Southern Community Bank closed today and appointed the FDIC as receiver. The FDIC then assigned the assets, deposit liabilities and secured wholesale borrowings of Southern Community Bank to United Community Bank under a loss sharing agreement.

"We are delighted to welcome the customers of Southern Community Bank to the family of valued customers of United Community Bank," says Jimmy Tallent, President and Chief Executive Officer of United Community Banks, Inc. "It is our number one objective to make this transition as transparent and easy as possible for both Southern Community customers and employees. Because United Community Bank elected to assume both insured AND non-insured deposits, no customers of Southern Community Bank will lose any of their deposits.

"Under the loss sharing agreement," Tallent continued, "the FDIC will reimburse United Community Bank for losses on Southern Community Bank’s loans and foreclosed properties. Also, as part of the loss sharing agreement, the acquired assets receive a 20 percent risk weighting for regulatory capital purposes, therefore the impact on our regulatory capital ratios will not be significant."

As of March 31, 2009, Southern Community Bank reported total assets of $372 million, loans of $224 million, customer deposits of $197 million and other deposits and borrowings of $155 million. Under the terms of the agreement, United Community Bank has the option to purchase, or to assume the leases on, all five Southern Community bank locations, most of which are contiguous to existing United Community Bank locations.



Jim Sinclair’s Commentary

This is a major development in a geopolitical flashpoint. I assume that since the top guy has spoken out violence is not out of the question.

Stratfor has dropped their subscription price sharply. Their website is

Iran: The Supreme Leader Draws the Line


Iranian Supreme Leader Ayatollah Ali Khamenei spoke to the Iranian people during Friday prayers June 19, siding with Iranian President Mahmoud Ahmadinejad and ordering protesters to end their demonstrations. Khamenei has decided that using force to suppress the uprising is worth the risk, even if it leads to greater infighting among the power brokers of the system. It remains unclear if Ahmadinejad’s opponents will stage a showdown, but the protests have grown enough in size and energy to take on a life of their own.


Iranian Supreme Leader Ayatollah Ali Khamenei delivered a rare but critical Friday sermon prayer June 19 in which he addressed the continuing public unrest in the wake of President Mahmoud Ahmadinejad’s victory in the June 12 presidential election, as well as the schism among the country’s political leadership. As expected, he took a clear position in favor of the president, rejecting accusations of electoral fraud and framing the conflict in terms of foreign powers exploiting the Islamic republic’s internal troubles. More importantly, he warned both the protesters and their leaders to halt the demonstrations and that they would be responsible for any bloodshed.

Khamenei has clearly opted for the forcible suppression of the uprising. STRATFOR had pointed out in a previous report that the country’s elite ideological military force, the Islamic Revolution Guards Corps (IRGC) has taken command of domestic law enforcement in Tehran. Consequently, from today forward, we can expect to see security forces crush protests. That the two main defeated challengers of Ahamdinejad, former prime minister Mir Hossein Mousavi and former speaker of parliament Mehdi Karroubi did not attend the prayer session shows that they are not about to accept the verdict.

At the same time, Mousavi and Karroubi cannot be perceived as openly defying the supreme leader and they have an interest in the preservation of the cleric-led political system. Furthermore, their supporters on the streets are far more radical than they are because Mousavi and Karroubi are part and parcel of the system (something which Khamenei pointed out when he said that that all four candidates in the recent presidential election belonged to Iran’s Islamic establishment). Therefore, they will have a hard time balancing between the need to sustain their opposition to the results of the election and controlling the protesters on the streets, especially during a major security crackdown. Regardless of whether the opposition leaders choose to take charge of the demonstrations, the protests have swelled enough in size and energy to take on a life of their own.


Jim Sinclair’s Commentary

This is an extremely sad situation akin to the show now being run on the History Channel titled "Life After People."

The Packard plant, which might be considered as the start of the death of Detroit, also downed by debt, questionable management and design, is literally becoming a jungle of growth inside with a cadaver for an outside.

Michigan jobless rate is highest in decades
Auto, construction layoffs drive increase
June 18, 2009

Michigan’s unemployment rate in May shot up to 14.1%, the highest level in more than a quarter-century, according to state figures released Wednesday.

As has been the case for many years, the increase was driven by layoffs in auto manufacturing and, to a lesser extent, construction. The jobless rate was the worst since the July 1983 level of 14.2% and significantly exceeds the May U.S. unemployment rate of 9.4%. The state’s unemployment rate will likely remain the nation’s highest.

"A lot of this was expected, considering where our auto companies are," said Rick Waclawek, director of the state’s Bureau of Labor Market Information and Strategic Initiatives.

After years of steadily inching upward, Michigan’s jobless rate has been accelerating higher in recent months as layoffs have mounted. Just a year ago, in May 2008, the unemployment rate stood at 8.2%.

The auto industry’s woes continue to cost Michigan dearly. Its manufacturing industry has shed 37,000 jobs during the last two months, including 16,000 in May.


Jim Sinclair’s Commentary

In the arena of Green Shoots, the newest Bankster’s cliché, you need to ask yourself where economic recovery will come from as unemployment reaches into double digits on the understated skewed present indices. This is another reason why Shadow Statistics is so important to your trend thinking.

NY state unemployed soars to 33-year high
Thu Jun 18, 2009 3:15pm EDT
By Joan Gralla

NEW YORK (Reuters) – More than 800,000 New York state residents were unemployed in May, the highest level in 33 years, and another sign the state is still mired in recession, the state labor department said on Thursday.

The New York state unemployment rate rose to 8.2 percent in May from 7.7 percent in April, the highest level since February 1993, the agency said in a statement.

The jobless rate in New York City, which powers the state’s economy, climbed to 9 percent in May, its highest since October 1997, from 8 percent in April.

Wall Street’s securities industry helped boost city and state tax surpluses in the last boom, but James Brown, state labor market analyst, said the sector cut 900 jobs in May, and has lost 21,800 over the year.

The entire financial sector, including banking, real estate and insurance, sliced 1,900 workers, for a year-over-year loss of 28,000 jobs, Brown said.


Jim Sinclair’s Commentary

For your information.

‘Something different" happening with new flu – CDC
Thu Jun 18, 2009 5:41pm EDT
By Maggie Fox, Health and Science Editor

WASHINGTON, June 18 (Reuters) – The new strain of H1N1 flu is causing "something different" to happen in the United States this year — perhaps an extended year-round flu season that disproportionately hits young people, health officials said on Thursday.

An unusually cool late spring may be helping keep the infection going in the U.S. Northeast, especially densely populated areas in New York and Massachusetts, the officials at the U.S. Centers for Disease Control and Prevention said.

And infections among healthcare workers suggest that people are showing up at work sick — meaning that workplace policies may be contributing to its spread, the CDC officials said.

The new strain of swine flu is officially a pandemic now, according to the World Health Organization.

So far the virus is causing mild to moderate disease, but it has killed at least 167 people and been confirmed in nearly 40,000 globally.


Jim Sinclair’s Commentary

Honest Abe’s Used Auto Emporium has now been taken over by the entire US public. I wonder if the present Administration can fund a guy in a plaid suit, white socks and black shoes to be the Clunker Czar.

Von Mises and Ricardo are revolving in the graves at a Japanese auto’s 14,000 RPM. The Chicago School has decided to shut down and enter the used car business.

The used car market auctions are presently a disaster but now will give some enterprising crooks a stop loss at $4500. No one needs to steal from Medicare if they can turn in an old junker and get $4500 in a fake new car sale with the assistance of a crooked car dealer.

Last updated: 2:07 am
June 19, 2009

Your old clunker can bring as much as a $4,500 check from Uncle Sam if you dump it to buy a new car — so long as it’s not another gas guzzler.

The government’s "cash for clunkers" incentive program designed to boost sales of fuel-efficient vehicles got the green light of Senate approval yesterday, and is on its way to be signed into law by President Barack Obama.

Ford Motor and General Motors have pressured Congress all year for the novel trade-in incentive to help break Detroit’s long and punishing sales slump.

A similar rebate program in Germany to clear clunkers off its roads caused new-car sales there to jump as much as 40 percent. Similar plans in China and France lifted sales by 15 percent and 8 percent, respectively.

Proponents are hoping for a busy autumn in vehicle sales. The first checks could start arriving by Sept. 1, with the program’s end set for Sept. 30.


June 19th, 2009 by Egon von Greyerz

No green shoots

There are no green shoots. Every single piece of economic and market news we observe confirms our view that the current optimism in the world economy is purely based on sentiment and not on facts.

The current corrective rallies in world stock markets were forecast by us in our January Newsletter. Corrective rallies create false optimism and hope. This is what we are seeing currently.

So, what indicators are telling us that things are going to get a lot worse:

· Unemployment is increasing rapidly in all countries

· Government deficits are rising at an accelerating pace

· Many local governments, counties and cities are virtually bankrupt

· Household finances are worsening rapidly

· Bank balance sheets are as leveraged and as unsound today as when the crisis started

· Banks are not recognizing that a major part of consumer loans will never be repaid

· Company failures are rising fast

· Housing market is continuing to deteriorate in most countries and especially in the  USA, UK and Spain

· Commercial real estate is in a precarious state. Banks are not writing down their loan books to market values

· US 30 year treasury bond rates are in a strong uptrend indicating the world is becoming increasingly unwilling to finance the excesses of a bankrupt US government

So what are the golden shoots?

Gold has been consolidating for the last four months and is now ready for the next major move up.

We have some very strong technical indicators which tell us that the consolidation in gold will finish at the latest next week and thereafter we will see gold going up strongly in July and for the next few months until the next consolidation in late autumn.


Jim Sinclair’s Commentary

In all fairness we do have one Green Shoot that should be recognized.

Friday, June 19, 2009

It is hard not to sneer, but apparently more than 2,200 people every day are applying for a job at McDonald’s.

The lure of the burger empire is proving too much for jobseekers from diverse employment backgrounds and the global junk food giant is finding university graduates, bank workers and teachers among their applicants. I’ll declare now that my vested interest here is that I was refused a job by McDonalds when I was just 16 years old.

Why I was knocked back still remains a mystery, as my brother, to his eternal embarrassment, was the branch’s star employee at the time and I knew the manager, who interviewed me, very well. He obviously didn’t see my future and that of the Golden Arches in karmic synchronicity.

Anyhow, with unemployment at a record level of 2.2 million, I guess it’s all stops out as people look for that first rung on the career ladder or cling to it with a vice-like grip to keep a wage, any wage, coming in. And McDonald’s are doing their best, with the company hiring 140 people a day to flip burgers, cook fries and ask customers "Would you like a large meal" at every order.

But let’s face it, even the Oxford English Dictionary looks down its nose at the McJob, describing it as ‘an unstimulating, low-paid job with few prospects’. And though McDonald’s keep fighting to have that perception changed, it’s an uphill battle.


Israel’s military planning for a multi-front war

Israel’s military has intensified coordination between the army and air force to conduct simultaneous operations in the Gaza Strip and Lebanon.

Officials said the effort reflects an assessment that Israel’s next war would include such adversaries as Hamas, Hizbullah and Syria.

"The Israeli military’s future operations will be broader and more demanding in terms of their scope and pace, with more risks than Operation Cast Lead," Israeli Defense Minister Ehud Barak said.

Operation Cast Lead marked the Israeli military attack on the Hamas regime in the Gaza Strip. The 22-day war spanned December 2008 and January 2009.

In an address to Israeli military officers on June 9, Barak envisioned a war with far greater Israeli casualties than that against Hamas. The minister said the next war would take place under more difficult conditions than the Israeli air, naval and ground campaign in the Gaza Strip, a flat area of 360 square kilometers.