In The News Today

Posted at 2:05 PM (CST) by & filed under In The News.

Dear CIGAs,

The main characteristic of a sociopathic corporate culture is a total disregard for the rights of others. Sociopaths are also unable to conform to what society defines as a normal personality. Antisocial tendencies are a big part of the sociopath’s personality. Sociopaths feels most comfortable when the circumstances surrounding them and their associates share the same attitudes. They are distrustful and disdain those who do not agree with their reality and will turn on each other at the slightest provocation.

We Don’t Care. We Don’t Have To Care. We’re Goldman Sachs.

Goldman Sachs has openly, blatantly gone back to business as usual, knowing they will be bailed out by taxpayers if their high rolling gambles don’t work, and they don’t care who knows about it.

The reason they can be so breathtakingly arrogant, so stunningly cavalier about not giving a damn about things that any other company’s PR and government relations department would advise them against, is that they know they have the power to do anything they want to do. The Obama White House needs to take Goldman Sachs to the woodshed rhetorically, and they should have the Justice Department investigating them for anti-trust violations and all manner of stock manipulation. It is time to start squeezing the management at Goldman, and making them nervous about being broken up into pieces that are not too big to fail.

Here’s (with brief intro) Matt Taibbi, Rob Johnson, and myself taking about Goldman Sachs on what is rapidly becoming my favorite media program for discussing economic issues, GRITtv:


Jim Sinclair’s Commentary

The war between the present Administration and the Federal Reserve has to do with the level of QE or simply how many bonds the Fed will purchase from the US Treasury.

Bernanke either vigorously steps up buying of US Treasuries or the next and new Chairman will.

Bernanke either ratchets up buying of US Treasury paper by the Fed "to all and every" not otherwise subscribed to at present interest levels or the Fed will be made a toothless regulator by act of Congress.

Remember, Bush gave birth to Bernanke so therefore Bernanke becomes a present Administration team player or he is not a player at all.

Forget this independent Fed crap. It does not float in a MOPE world.

Will Bernanke make case for more asset purchases?
Fed chief may offer an expansion plan rather than an exit strategy
Jul 17, 2009, 6:10 p.m. EST
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — One key question ahead of Federal Reserve chairman Ben Bernanke’s testimony to Congress next week is whether he has the guts to makes the case for more, not fewer, purchases.

Although there has been much talk recently has been about an exit strategy, some economists think an expansion plan may be the order of the day.

Private and public economic forecasts are converging on the view that unemployment will remain at high levels for years.

In the words of Nouriel Roubini, chairman of RGE Monitor and professor at New York University’s Stern School of Business, the U.S. appears headed for a "shallow, below-par and below-trend recovery where growth will average about 1% in the next couple of years when potential is probably closer to 2.75%."

The Fed’s central forecast now sees the unemployment rate rising as high as 10.1% in 2009. It projects it will remain above 9.5% in 2010 and only falling to 8.6% in 2011.


Jim Sinclair’s Commentary

You have no idea how critical this is.

This writer understates it badly. Does the central planning committee want to launch the Lehman Brother syndrome into the real economy?

If CIT goes MOPE concerning the fat cat’s purchasing of some of CIT’s divisions this will not stop the avalanche of unemployment inherent is this poor decision.

Looking back from a 43% approval rating for the present administration will show the walk away from CIT as the catalyst. Nothing will repair this error for the present administration. This is the present Administration’s Battle at Waterloo and Obama is not Wellington.

Saving the fat cats and dumping the average guy (CIT failure) will be remembered for a millennium.

Armstrong is dead right that this is a one term Administration with the rise of a third party to victory.

Change the title below taking the word "could" out and put "WILL" in its place.

CIT failure could unleash slew of bankruptcies
Andrew S. Ross
Friday, July 17, 2009

Move along. Nothing to see here. That appears to be the view of the Obama administration as it allows CIT Group Inc. to desperately look for other financing, or slide quietly into bankruptcy, possibly as early as today.

This is not Lehman Bros. Part 2, and besides, another bailout is a political nonstarter, go the assumptions. The damage, even to those businesses that rely on CIT for regular infusions of cash, will manage, according to much of the financial punditocracy. And isn’t the administration planning to pump billions more dollars into small-business loans anyway?

Lloyd Chapman, president of the Petaluma-basedAmerican Small Business League, is not so cheery. "I fear an avalanche of bankruptcies," which may hit California hard because of the concentration of retail and import clothing businesses in the state tied to CIT, Chapman said. As to the supposed ease of replacement, many of the loans are long-term credit lines given to business owners "that had been turned down repeatedly by other lenders." The Obama administration, he added, is going to have come up with a "much bigger pot of money" than is currently on offer to replace what businesses will lose with CIT’s disappearance.

Noting that Goldman Sachs Group Inc., which reported boffo quarterly profits this week, benefited from a Federal Deposit Insurance Corp. program guaranteeing newly issued debt that was denied to CIT, Chapman added, "I’m not predicting it, but I wouldn’t be surprised if Goldman Sachs somehow benefits from this."


Jim Sinclair’s Commentary

Nothing has been solved. Nothing has been changed. This is what scares the absolute hell out of me. The major problem hasn’t even been touched. Outside of gold is there any future?

The Top 5 International Banks Are Keeping The Derivatives Beast Alive
JULY 17, 2009…3:27 PM

Time to revisit the Derivatives Beast.  It hasn’t been growing rapidly for the last year but is poised to balloon even bigger.  This is due to the near total lack of any regulation on the part of governments.  The central bankers conspiring with the top 5 banking houses are keeping this business going.  They do NOT want the derivatives market controlled.  This is a source if immense income flows for them.  They want all the risks of the derivatives markets to move effortlessly to government ledgers so the public eats any losses.  The lastest OCC derivatives report is an eye-opener.

.AIG Swaps May Take Decades to Expire Leaving a ‘Toxic Pool’ –

European banks including Societe Generale SA and BNP Paribas SA hold almost $200 billion in guarantees sold by New York-based AIG allowing the lenders to reduce the capital required for loss reserves. The firms may keep the contracts to hedge against declining assets rather than canceling them as AIG said it expects the banks to do, according to David Havens, managing director at investment bank Hexagon Securities LLC.


Jim Sinclair’s Commentary

Let’s raise this week’s bank failures to five.
Information for Temecula Valley Bank, Temecula, CA

Information for Vineyard Bank, National Association, Rancho Cucamonga, CA

Information for BANKFIRST, Sioux Falls, SD

Information for First Piedmont Bank, Winder, GA

Information for Bank of Wyoming, Thermopolis, WY

Jim Sinclair’s Commentary

The "Government Rescue" has been initiated, but for the Fat Cats who spit upon the public serfs. As the real economy rolls over and unemployment sets records, the legislative, fearful of their own tenure, will push through aid to all kinds of popular problems. This will serve to increase the Federal Budget deficit putting terminal downward pressure on the US dollar.

It is starting.

Senators Outraged About Foreclosures
Jul 17 2009, 10:25 am by Daniel Indiviglio

Yesterday, the Senate Banking Committee held a hearing to address the ongoing foreclosure problem. Both sides of the aisle tore into representatives from banks, servicers and the Obama administration. Leading the charge, Chairman Dodd (D-CT) asked:

So I’m hoping that, with stakes this high, somebody can explain to me why nothing has changed over the last two years.

Let me give it a shot.

First, I would point the Senator to yesterday’s post about servicers and re-defaults. There, he’ll find two reasons:

1. Servicers have an incredible amount of volume to deal with, as many distressed homeowners want modifications. They either haven’t had time to ramp up their staffs to process all applications, or don’t want to.

2. Many of those who have gotten modifications will re-default, because no reasonable new mortgage terms will actually result in their being able to cope with the principal balance of the mortgage.

Then, there are a few other reasons:

3. Many don’t (or shouldn’t) qualify for modifications, for the same reason as #2. They’re better off foreclosing, as they just can’t afford their mortgage under any terms a bank would accept.


Jim Sinclair’s Commentary

The proper title here is "Goldman Squabbles With Itself."

Goldman Sachs bites Uncle Sam’s hand
The investment bank is fat and happy again, but you wouldn’t know it from it squabbling with the Treasury over the warrants in the TARP deal.
By Allan Sloan, senior editor at large
July 17, 2009: 10:39 AM ET

NEW YORK (Fortune) — I’ve always thought that the guys running Goldman Sachs were really smart, not only about making money, but also about projecting a classy image to the world outside of Wall Street. Clearly, I overestimated them.

If there was ever a firm with the motivation — and the money — to be gracious to the U.S. taxpayers who kept it alive when the financial markets were imploding, it’s Goldman. It had a chance to look good and do good for taxpayers and itself and Wall Street for a relative pittance — and has blown it. Horribly.

As you have probably noticed, Goldman is getting attacked for posting record profits and setting aside a record amount for employee compensation about three seconds after it repaid its $10 billion of loans from the Troubled Asset Relief Program. Repaying those loans freed Goldman from pay restrictions on its top honchos, who seem headed for record or near-record bonuses unless things go badly for the firm in the second half of the year.

What you probably don’t know is that Goldman, flush with cash and profits, is squabbling with the Treasury about how much it should pay taxpayers to buy back the stock purchase warrants it gave the government as part of the TARP deal. Talk about tacky.

Had Goldman retained something it was once reputed to have — a sense of short-term sacrifice in return for long-term profit — it would have agreed to pay the government generously for the warrants. It could have announced that on Tuesday, along with its profits, and looked like a decent, concerned corporate citizen instead of Greedhead Central.


Jim Sinclair’s Commentary

You think they give a flying you know what?

Goldman saga not so rosy
Diane Francis, Financial Post Published: Saturday, July 18, 2009

This week the headline should have read: "Goldman Sacks America’s Taxpayers" instead of Goldman Sachs posts a US$3.88-billion quarterly profit. The Wall Street firm’s workers are licking their lips at the thought that the firm has set aside enough money to pay out billions in bonuses this year, equivalent to US$770,000 per worker.

This is pretty shocking, even by Wall Street standards, given the firm’s profits derive from direct and indirect taxpayer bailouts forked out by Mr. and Mrs. Average American Taxpayer.

Goldman this week defended itself by reiterating that it received US$10-billion in TARP bailout money last year to avert bankruptcy but has repaid that amount in full.

That is true, but that’s only a fraction of the bailout.

Goldman received an estimated three times more, or US$30-billion, in an indirect bailout funnelled through bankrupt insurer AIG International.

Washington bailed out AIG’s counterparties, to whom it owed hundreds of billions, because AIG had sold to them unbacked credit-default swaps (a form of insurance on bond values). Goldman was not only ahead of the queue in collecting its IOU but is reported to have gotten 100¢ on the dollar to boot.


Jim Sinclair’s Commentary

Simultaneous is a sign of al Qaida;

Indonesia Bombings Signal Militants’ Resilience
Published: July 17, 2009

JAKARTA, Indonesia — The nearly simultaneous suicide bomb attacks at two American hotels on Friday suggested that Islamic terrorist groups, though significantly weakened in Indonesia in recent years, still had the means to mount deadly assaults in one of the most heavily secured areas here in Indonesia’s capital.

Indonesian officials said it was too early to identify those behind the attacks at the hotels, the JW Marriott and the Ritz-Carlton, which killed eight people and wounded at least 50. But they appeared to be focusing on domestic militants, possibly individuals or splinter groups loosely tied to Jemaah Islamiyah, the Southeast Asian terrorist network linked to Al Qaeda.

The attacks were a blow to the Indonesian government, which had been credited with cracking down on Jemaah Islamiyah and for keeping Indonesia free of terrorist attacks since late 2005. The explosions took place nine days after President Susilo Bambang Yudhoyono was overwhelmingly re-elected to a second term, riding a wave of popularity for fighting corruption and restoring a measure of stability.

Mr. Yudhoyono said at a news conference that the “bombings were perpetrated by terrorist groups,” but that he could not say whether “these groups are the same ones” behind previous attacks. He said the attacks may have been linked to the electoral campaign, during which threats were made against him.

Jemaah Islamiyah led several attacks against Western-linked sites in Indonesia this decade, including one in 2003against the Marriott that was struck Friday. A bombing at anightclub in Bali killed 202 people in 2002; two years later, a car bomb at the Australian Embassy here killed 9.


Jim Sinclair’s Commentary

We are entering into stage 2 of the OTC derivative disaster as the cancerous tentacles of wrongdoing tear at the real economy.

Job losses mount among California government workers
Most Los Angeles County Superior Court operations, including those at the courthouse in Long Beach, above, were shut down Wednesday as a once-a-month unpaid furlough program took effect.
Unemployment in the state holds steady at 11.6% in June, but the outlook worsens in the public sector. The state loses 6,700 government jobs in June and continues to furlough workers and cut services.
By Marc Lifsher and Alana Semuels
July 18, 2009

California shed 66,500 jobs in June, and more losses loom as double-digit unemployment spreads to state and local governments, once reliable bastions of employment security.

June’s 11.6% unemployment rate is a post-World War II record. Professional services, construction and trade continue to top the state’s jobless categories.

But in a troubling sign, governments — a stable part of the state’s economy for a decade — have been laying off thousands of workers in recent months. And far more losses are ahead.

California lost 6,700 government jobs in June after dropping 14,200 in May. Facing huge deficits, the state continues to furlough employees, eliminate jobs and cut services. Most offices were closed Friday.

Layoff notices are piling up at thousands of public schools, where an estimated 17,500 teachers statewide have been told not to return to classrooms in the fall, when they will officially join the ranks of the unemployed.


Jim Sinclair’s Commentary

When no action is taken to confront the problem what makes you think any of the problem has gone away? I love the way Jill gets back to the real number well above a quadrillion.

Too Little, Too Late For Derivatives Oversight

As the Obama administration sets out to reform the over-the-counter (OTC) derivatives market, Wall Street is scrambling to protect its own profits and put a preemptive kibosh on any regulation that could reduce the lucrative transaction fees or expose criminal wrong-doing.

But no matter how many regulators gain oversight in the derivative markets, how successful the government is at putting in place rules to cage the beast, derivatives are a problem of breathtaking scale that cannot be cleaned up with a quick government fix.

It is currently estimated that there are $684 trillion in outstanding derivatives and another $800 trillion in "shadow" or off-balance-sheet derivatives (which are impossible to calculate because they are not reported), totaling well over $1.4 quadrillion.

This is roughly 27 times the global GDP at $55T, and 7 times aggregate global asset values (of stocks, real estate and private business) at $200T. Obviously, this total amount is not at risk, but the derivatives are based ultimately on underlying asset values or assumptions that if off by even 5%, could create a loss that well exceeds global GDP, and if off by 18% would wipe out global asset values.


Jim Sinclair’s Commentary

This Administration’s approval ratings are the glue that hold things together.

Polls: Obama approval rating falls below 60 percent
updated 3:27 p.m. EDT, Fri July 17, 2009

WASHINGTON (CNN) — An average of five national polls conducted in July indicates that President Obama’s approval rating has slipped to under 60 percent.

Fifty-seven percent of Americans surveyed approve of the job Obama’s doing as president, according to a CNN Poll of Polls compiled and released Friday, with 36 percent disapproving.

In early June, Obama’s average approval rating was 62 percent. It dropped a point to 61 percent in mid-June and stayed at that level through the rest of the month.

"Recent polls indicate that Obama’s lowest ratings — and biggest losses — come on the public’s perception of how he is handling the economy," said Keating Holland, CNN polling director.

Holland adds: "And the latest CNN/Opinion Research Corp. poll shows a double-digit drop in the number of Americans who think that the president has a clear plan for solving the country’s problems. The public may not be as willing to give Obama the benefit of the doubt after six months on the job as they did when he first took office."

So how does Obama compare to his most recent predecessors six months into a first term?