In The News Today

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Dear CIGAs,

A major congratulations goes to Bill and Chris

GATA Urges SEC, CFTC to Investigate Goldman Sachs’ Trading Program
July 08, 2009 09:30 AM Eastern Daylight Time

MANCHESTER, Conn.–(BUSINESS WIRE)–The Gold Anti-Trust Action Committee has urged the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission to investigate the computer trading program of Goldman Sachs Group Inc. that, according to a federal prosecutor, the bank acknowledges can be used to manipulate markets.

GATA’s complaint to the two commissions refers to a July 6 Bloomberg News story — http://www.bloomberg.com/apps/news?pid=20601087&sid=a_6d.tyNe1KQ — reporting the arraignment in U.S. District Court in New York of a former Goldman Sachs employee accused of stealing the program. The prosecutor, Assistant U.S. Attorney Joseph Facciponti, was quoted as telling the court: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

In its letters to the SEC and CFTC, GATA wrote: "The assistant U.S. attorney’s comment can be construed to suggest Goldman Sachs considers its own manipulation of markets to be fair, while such manipulation by others would be unfair. The court proceeding described in the Bloomberg News story would seem to impugn all markets in which Goldman Sachs trades."

GATA asked each commission "to investigate Goldman Sachs’ trading program urgently and report its findings publicly."

GATA is an educational and civil rights organization that seeks to restore free markets to the precious metals.

The text of GATA’s letters is appended.

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Jim Sinclair’s Commentary

Who said money is the root of all evil? We all know it is oil.

Now Baghdad will have to fight the Kurds, which is nothing really new. The problem is with the US troops withdrawn from the cities, the Kurd problem puts a great strain on the Iraq National Boy Scout troop pretending to be an army.

Baghdad with the majority of Iraq oil is nothing very much. This thing will persist as a bag of worms for the next 100 years, just like the Crusades did.

Kurds Defy Baghdad, Laying Claim to Land and Oil
By SAM DAGHER
Published: July 9, 2009

BAGHDAD — With little notice and almost no public debate, Iraq’s Kurdish leaders are pushing ahead with a new constitution for their semiautonomous region, a step that has alarmed Iraqi and American officials who fear that the move poses a new threat to the country’s unity.

The new constitution, approved by Kurdistan’s parliament two weeks ago and scheduled for a referendum this year, underscores the level of mistrust and bad faith between the region and the central government in Baghdad. And it raises the question of whether a peaceful resolution of disputes between the two is possible, despite intensive cajoling by the United States.

The proposed constitution enshrines Kurdish claims to territories and the oil and gas beneath them. But these claims are disputed by both the federal government in Baghdad and ethnic groups on the ground, and were supposed to be resolved in talks begun quietly last month between the Iraqi and Kurdish governments, sponsored by the United Nations and backed by the United States. Instead, the Kurdish parliament pushed ahead and passed the constitution, partly as a message that it would resist pressure from the American and Iraqi governments to make concessions.

The disputed areas, in northern Iraq, are already volatile: There have been several tense confrontations between Kurdish and federal security forces, as well as frequent attacks aimed at inflaming sectarian and ethnic passions there.

The Obama administration, which is gradually withdrawing American troops from Iraq, was surprised and troubled by the Kurdish move. Vice President Joseph R. Biden Jr., sent to Iraq on July 2 for three days, criticized it in diplomatic and indirect, though unmistakably strong, language as “not helpful” to the administration’s goal of reconciling Iraq’s Arabs and Kurds, in an interview with ABC News.

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Jim Sinclair’s Commentary

Father forgive them for they know not what they do!

U.S. companies lobby Congress on derivatives-WSJ
Fri Jul 10, 2009 2:35am EDT

July 10 (Reuters) – At least 42 nonfinancial companies and trade associations are lobbying the U.S. Congress to push back on proposals that regulate the over-the-counter derivatives market, the Wall Street Journal said on Friday.

Citing its own analysis of lobbying disclosure forms filed through April, the paper said the companies include Caterpillar Inc (CAT.N), Boeing Co (BA.N) and 3M Co (MMM.N), according to the paper.

Caterpillar believes new regulations may drive U.S. companies to seek financing overseas, the paper said.

The paper also quoted Janet Yeomans, treasurer of 3M, as writing in a letter to U.S Senator Mike Crapo: "Not all derivatives have put the financial system at risk and they should not all be treated the same."

Caterpillar, Boeing and 3M could not be immediately reached for comment by Reuters.

President Barack Obama last month laid out his vision for recrafting U.S. financial regulation, vowing to halt "a cascade of mistakes … over the course of decades" that eroded bank and market oversight. [ID:nN17330766]

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Jim Sinclair’s Commentary

Sounds just right to me!

Catching The Gold Bug
By LARRY LIGHT

Worried about a harrowing, inflation-ridden future, Scott Van Steyn has found the answer in a batch of glittering one-ounce gold coins. In fact, they make up a large chunk of the physician’s assets.

“There’s 2,000 years of history to show that gold is the best thing to own during bad inflation,” says Dr. Van Steyn, a 45-year-old orthopedic surgeon in Columbus, Ohio. “People used to laugh at me for buying gold. They don’t anymore.”

More and more investors are acquiring physical gold, or bullion, in the form of small bars the size of iPhones or coins like American Eagles and South African Krugerrands. Individuals’ bullion purchases almost doubled last year, amid apocalyptic panic over the financial system, to 862 metric tons.

Lately, that panic-driven demand has given way to a more subdued, yet still potent, fear that stocks will suffer as the recession grinds on for a long time, so gold makes sense. At the same time, there’s a rising anxiety about inflation among people like Dr. Van Steyn, resulting from the Obama administration’s massive stimulus spending.

“When you’re in uncharted economic waters, people buy gold,” says Shawn Price, manager of the Touchstone Large Cap Growth fund, which holds several hundred ounces of the stuff.

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Jim Sinclair’s Commentary

The money goes in the front door and out the back to the winners of the OTC derivatives. Of course it is worthless.

AIG May Have Zero Value After Rescue, Citigroup Says (Update4)
By Erik Holm and Hugh Son

July 9 (Bloomberg) — American International Group Inc., the insurer bailed out four times by the government, fell the most in nine months after Citigroup Inc. said the firm may have no value left for shareholders after repaying the U.S.

AIG plunged $3.62, or 28 percent, to $9.48 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest drop since September 2008. The insurer has lost more than half its value after implementing a 1-for-20 reverse stock split when trading closed June 30.

“Our valuation includes a 70 percent chance that the equity at AIG is zero,” said Joshua Shanker, an analyst at Citigroup, in a note to investors late yesterday cutting his price target on the New York-based insurer by more than half.

Departing Chief Executive Officer Edward Liddy is under pressure from lawmakers to sell assets to help repay the $182.5 billion rescue package that was required to prop up the insurer after losses on credit-default swaps tied to U.S. home loans. The company said last week that other derivatives, backing about $193 billion in assets for European banks, could have a “material adverse effect” on AIG’s results.

“The company has not been forthcoming about the sequence of events that would result in a loss” on the European contracts, Shanker said. “Even a proportionally small loss could be significant.”

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Jim Sinclair’s Commentary

Here is the hidden but gigantic problem, both in numbers as well as in the ability to disturb the social order.

As CIGA Green Hornet said to me, it is happening everywhere in the USA.

Solving Pittsburgh’s pension problem
City officials debate options while senators plan legislation
Pittsburgh Business Times – by Kris B. Mamula

Legislation that would ease municipal pension headaches statewide will be introduced within a few weeks to coincide with adoption of a new state budget, according to state Sen. Jim Ferlo, a co-sponsor.

The bill is especially important to Pittsburgh, where Mayor Luke Ravenstahl is considering a range of tough choices in solving the city’s pension crisis, including a payroll tax on nonprofits. Hospitals and other medical institutions would pay $11 million of the $16.5 million the tax is expected to generate at a time when government reimbursement for hospitals has been declining and charity care is up sharply.

The city needs to find an additional $10 million to $15 million to right its three pensions, Ravenstahl said. Among the options being considered is the tax on hospitals and other nonprofits — “ugly stuff, things we don’t really want to have to do,” he said.

Ferlo, D-Lawrenceville, said he and Sen. Patrick Browne, R-Allentown and finance committee chairman, will co-sponsor the bill, which would allow the state’s Pennsylvania Municipal Retirement System to take control of plans that are less than 50 percent funded. PMRS runs 900 municipal pension plans statewide, including 50 for police, firefighters and other government agencies in Allegheny County.

At the end of last year, Pittsburgh’s police, fire and nonuniform employee pension plans had a combined liability of $899 million, or about 29 cents on hand for every $1 of obligation to retirees, according to Cathy Qureshi, the city’s assistant director of finance, which experts say is the lowest among any city in the state.

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Jim Sinclair’s Commentary

This is a growing trend as Asia takes economic leadership. America’s xenophobic nature and provincial ways prevent recognition of this reality.

This is what is happening to the US dollar with the US in total denial. You need to be in China or Africa looking back to see what is real.

Suzuki, Mitsubishi Urged to ‘Forget America’ as Sales Slump
By Kiyori Ueno and Alan Ohnsman

July 10 (Bloomberg) — Suzuki Motor Corp. and Mitsubishi Motors Corp., suffering from plunging U.S. sales and excess North American plant capacity, may have to quit the market after a quarter century.

Suzuki, Japan’s fourth-largest carmaker, reported a 78 percent drop in unit sales in June, pushing its first-half decline to 60 percent, the market’s worst. Mitsubishi is down 51 percent this year, and is stuck in a slump that began in 2003.

Both carmakers “should withdraw from the U.S.,” said Yuuki Sakurai, chief executive of Tokyo-based Fukoku Capital Management Inc., which oversees about $10 billion in Tokyo. “It’s time for them to decide whether they pay a high price to continue business there or stop the bleeding.”

Recession, joblessness and weak consumer confidence pushed U.S. auto sales to the lowest since 1976, bringing bankruptcies for General Motors Corp. and Chrysler LLC and a record loss at Toyota Motor Corp. Truckmaker Isuzu Motors Ltd., which halted U.S. consumer sales in January, is the only Japanese brand less familiar to carbuyers than Suzuki or Mitsubishi, according to industry analyst Alexander Edwards.

“Both are struggling with getting customers to initially even consider them,” said Edwards, head of auto research for San Diego-based Strategic Vision Inc.

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Jim Sinclair’s Commentary

Every day and in every way China expands outward in a strong Yuan as the dollar contracts inward on increasing balance sheet weakness.

HK urges China to relax rules on yuan business
07.10.09, 05:09 AM EDT
By Susan Fenton

HONG KONG, July 10 (Reuters) – Hong Kong on Friday urged China to further ease restrictions on Chinese currency business in the territory, including allowing non-financial companies to issue bonds, following the start of cross-border yuan trade settlement this week.

The cross-border yuan trade settlement scheme that began on Monday had so far attracted a modest 30 transactions between Hong Kong and mainland China worth 30 million yuan (US4.4 million), the Hong Kong government said.

It projected trade volumes in yuan, also known as the renminbi, to increase as the number of mainland China companies authorised to participate in the scheme was expected to soon increase to several hundred.

‘It’s too early to assess how much trade it will generate,’ Julia Leung, undersecretary for financial services and the treasury, told a press briefing. ‘It also depends on whether trading companies prefer to settle in renminbi.’

Yuan trade settlement is the latest in a series of measures introduced by China in recent years to allow yuan business in Hong Kong, including the issue of yuan bonds and the opening of yuan bank accounts in the city.

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Jim Sinclair’s Commentary

When you hear all this MOPE keep firmly in mind that the problem is not going forward, but the immense mountain of garbage paper out there with no standards and therefore NO way on earth they can be listed because they simply CANNOT be clearinghouse guaranteed.

This does not rein in one penny of what is out there.

Geithner Seeks ‘Difficult-to-Evade’ Derivatives Laws (Update2)
By Dawn Kopecki and Robert Schmidt

July 10 (Bloomberg) — Treasury Secretary Timothy Geithner is urging Congress to rein in the $592 trillion derivatives market with new U.S. laws that are “difficult to evade.”

The complexity of over-the-counter derivatives contracts and industry growth let corporations take on excessive risk and caused a “very damaging wave of deleveraging” that exacerbated the global credit crisis, Geithner said in prepared testimony to be delivered today at a joint hearing of the House Agriculture and Financial Services committees in Washington.

Geithner repeated President Barack Obama’s call to force “standardized” contracts onto exchanges or regulated trading platforms, and regulate all dealers. Contracts would be subject to new disclosure rules, and “conservative” capital and margin requirements, as well as business-conduct standards, would be imposed on market participants, Geithner said.

The market, which grew almost seven-times since 2000, complicated government efforts throughout the credit crisis to assess potential losses at U.S. banks and corporations because regulators lacked adequate data to measure their risk, he said.

“The status quo has to change,” Keith Styrcula, the chairman and founder of the Structured Products Association, said in an interview today with Bloomberg Television. “It’s been a privately negotiated market, and with the credit default crisis we’ve had, that’s no longer acceptable.”

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Jim Sinclair’s Commentary

Face the facts. The USA’s domination of currencies, markets, economics and soon politics is yesterday’s news.

Denial has 120 days to go.

G-8’s Dominance Faces Challenge From China, India (Update2)
By James G. Neuger

July 10 (Bloomberg) — Leaders of developing countries confronted advanced nations with a demand for a greater role in the management of the global economy, signaling the drift in power away from the financially distressed West.

Five countries with almost half the world’s population — China, India, Brazil, Mexico and South Africa — challenged the hegemony of the U.S. dollar, balked at the industrial world’s strategy for fighting climate change and sought more clout in global markets and institutions.

The encounter in L’Aquila, Italy at the annual Group of Eight summit dramatized the ascendance of emerging nations, led by China, as the worst economic calamity since World War II batters the U.S. and its European allies.

“We have to update and refresh and renew the international institutions that were set up in a different time and place,” President Barack Obama said after the meeting of world leaders ended today. “For us to think we can somehow deal with some of these global challenges in the absence of major powers like China, India and Brazil seems to me wrongheaded.”

Leaders of the G-5, which represents 3 billion people with gross domestic product of $7 trillion, appeared as a united front for a fifth time at the summit of the G-8, the advanced world’s forum founded in 1975.

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Jim Sinclair’s Commentary

As hyperinflation takes hold as the result of the US dollar dropping below .7200 USDX, which it will, the US Trade balance will move out of sight.

Trade Deficit in the U.S. Probably Widened on Higher Oil Prices
By Bob Willis

July 10 (Bloomberg) — The U.S. trade deficit probably widened in May for a third month as higher oil prices boosted the bill for imports, while exports declined amid a global recession, economists said before reports today.

The gap increased to $30 billion from $29.2 billion in April, according to the median forecast of 71 economists surveyed by Bloomberg News before the Commerce Department report. Another report from the Labor Department may show import prices continued to rise in June, pushed up by oil costs.

Shrinking economies from Europe to Mexico are curbing demand for U.S. goods, prolonging the worst recession in at least five decades. While imported oil has become more expensive, weak U.S. consumer demand is holding down other imports and helping keep the deficit near a decade-low level.

“Rising oil prices will contribute to the deterioration in the deficit, but it’s still low compared to where it’s been,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “We’re actually picking up a little bit of production simply because people are consuming less imports.”

Dwindling exports are also adding to the deficit. Caterpillar Inc., the world’s largest maker of bulldozers and excavators, suffered a first-quarter decline in machinery sales of 46 percent in the region that includes Europe. Sales for the Peoria, Illinois-based company were down 2 percent in Asia- Pacific and 16 percent in Latin America.

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Jim Sinclair’s Commentary

When a currency event can and will cause hyperinflation gold is your only safe haven.

This is what markets are telling you in the face of furious anti-gold market manipulation and MOPE.

Gold perceived as a safe haven during the recession
Jul 10 2009 by John Cranage, Birmingham Post

Gold has worked down from Alexander’s time. When something holds good for 2,000 years I do not believe it can be so because of prejudice or mistaken theory.”

So wrote Bernard M Baruch, the famous American financier, who lived and worked through a few crises including the Great Depression of the 1930s.

It seems that many investors are rushing to the perceived safe haven of gold during the current recession. Uncertainty over the state of the economy, plummeting share prices, pitiful interest rates and fears over the vulnerability of even the biggest banks have all lead investors to return to the old ways of physically holding gold to protect themselves.

This is reflected in the fact that sales of gold to retail investors has increased by 33 per cent in the first three months of this year. Since the start of 2007 the price of gold has risen from $600 an ounce to nearly $1,000 in February this year. It is currently trading around the $940 an ounce mark.

One of the paradoxes of investing in gold is that it is seen as a hedge against both inflation and deflation. It also seems to have an inverse relationship with the value of the dollar, particularly in times of economic stress.

All these make theoretical sense. In times of inflation the value of money reduces, but there is a finite supply of gold so its value will not reduce in the long term, in fact it should increase.

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Jim Sinclair’s Commentary

The sociopath derivative traders, now with their trillions, do not give a crap that they have killed the world and brought such terrible suffering to so many. It is so very wrong.

Homeless numbers include more families
By KEVIN FREKING, Associated Press Writer Kevin Freking, Associated Press Writer – Thu Jul 9, 3:09 am ET

WASHINGTON – The face of homelessness in the United States is changing to include more families and more people who live in the suburbs and rural communities.

The number of homeless has remained steady since 2007, but within the overall count are trends that can tell officials where federal resources would do the most good, the Housing and Urban Development Department says in its annual report to Congress being released Thursday.

About 1.6 million people used a homeless shelter or lived in transitional housing between Oct. 1, 2007, and Sept. 30, 2008 — about the same as the year before. But within that group, the number of families grew 9 percent, from about 473,000 to 517,000.

Officials said they also saw more demand for transitional housing in the suburbs and in rural areas of the country. Residents of suburban and rural communities made up about a third of those in need of housing, up from about 24 percent the year before.

HUD also attempts to count the number of homeless at a single point in time. In January 2008, about 664,000 people were in homeless shelters or in the streets on a single night. That’s a drop of about 7,500 from the year before, but officials point out that the count occurred just as the nation’s economic woes were beginning and did not account for soaring unemployment and other economic problems that have kicked in during the subsequent months.

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Jim Sinclair’s Commentary

Thank God, Big Brother has made us all safe!

U.S. Senate approves $42.9 billion homeland security bill
By Jeremy Pelofsky Jeremy Pelofsky – Thu Jul 9, 10:40 pm ET

WASHINGTON (Reuters) – The Senate on Thursday approved a wide-ranging $42.9 billion measure to pay for improving U.S. border security, clamp down on illegal immigration and beef up cyber security in fiscal 2010.

The Senate voted 84-6 for the annual spending bill funding the Department of Homeland Security for the year starting October 1, and now lawmakers must work out differences with a $42.6 billion version of the bill that passed the U.S. House of Representatives last month.

Debate over the bills offered insight into deep divisions over how to address illegal immigration into the United States, beef up security on the U.S. borders, and what to do with the estimated 12 million people in the country illegally.

The Senate measure provides $10.1 billion for customs and border protection, including $800 million for bolstering security along the U.S. border with Mexico, where drug and weapons trafficking has spiked and sparked growing concerns.

The legislation also includes almost $400 million for cyber security, a 27 percent increase over fiscal 2009, and comes as several U.S. government websites were attacked in the past few days by hackers.

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