In The News Today

Posted at 4:13 PM (CST) by & filed under In The News.

Dear CIGAs,

Click the following link to hear my August 5th interview on Goldseek Radio:

http://www.radio.goldseek.com/players/sinclairnuggetaug5.php

DailyCartoon

Jim Sinclair’s Commentary

This is a conservative estimate. We have heard from authoritative sources numbers as high as 1000.

US Sen Bunning: FDIC’s Bair Said Up To 500 More Banks Could Fail
By Jessica Holzer, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Federal Deposit Insurance Corp. Chairman Sheila Bair believes up to 500 more banks could fail, a U.S. senator said Bair told him in a recent meeting.

“She told us that unless something dramatic happens, we could lose up to 500 more banks,” Sen. Jim Bunning, R-Ky., said Thursday at a hearing of the Senate Banking Committee on the foreclosure crisis.

Bunning said Bair made the remarks in a recent meeting.

“That means that people who make mortgages in local places …. people that could really help in a foreclosure will not be there,” Bunning said.

More…

Jim Sinclair’s Commentary

“This is cheating, this is stealing your money, this is the reason you should be holding your assets away from all 3rd parties. At least until they get “truth” as a religion…”—CIGA JB Slear

Traders Profit With Computers Set at High Speed
July 24, 2009, 4:10 am

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices. It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets, writes Charles Duhigg in The New York Times.

Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.

These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk.

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.

And when a former Goldman Sachs programmer was accused this month of stealing secret computer codes — software that a federal prosecutor said could “manipulate markets in unfair ways” — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage.

More…

Jim Sinclair’s Commentary

MOPE for the war between politically directed monetary policy and FOMC direct monetary policy accelerates.

This is fact!

Surprise shrinkage in service sector quells notion of rapid recovery
By David M. Dickson THE WASHINGTON TIMES | Thursday, August 6, 2009

The service sector, which makes up nearly 90 percent of the U.S. economy, unexpectedly contracted at a faster rate in July than in June, indicating that economic activity continued to decline last month despite a raft of revised forecasts that now project a stronger recovery will begin during the third quarter.

The Institute for Supply Management (ISM) reported Wednesday that its non-manufacturing index declined to 46.4 last month from 47 in June. It was the first decrease since March. Readings below 50 indicate contraction, while readings above 50 represent expansion.

The report revealed that business activity, employment, order backlogs and new orders, including those for export, all shrank more in July than the previous month.

“The majority of respondents’ comments reflect a sense of uncertainty and cautiousness about business conditions,” said Anthony Nieves, the chairman of the ISM committee that produces the non-manufacturing index.

“The bottom line here is that the path from recession to recovery should not be expected to be smooth, and occasional setbacks should not be a surprise,” said Brian Bethune, chief U.S. financial economist for IHS Global Insight. Describing the “pull back” in the services industry as “somewhat disturbing,” Mr. Bethune said,

More…

Jim Sinclair’s Commentary

I have the deepest respect for Dean Harry, but would normally not believe the potential for what dear Harry proposes.

However, with the present war between politically directed monetary policy and FOMC directed monetary policy I have to suggest serious consideration of the following.

There certainly is no harm to be done by doing what Dean Harry suggests.

Harry Schultz newsletter

Conclusion: Stand by for a possible bank run & bank holiday on Aug 26th, after the news breaks on the 25th. (FDIC 2nd Qtr. Report)

This is in line with the HSL prediction of a US bank holiday in Aug/Sept.

If you live in the US, get 3 to 6 months household expense money out of banks now.

Jim Sinclair’s Commentary

I would say that this group would see the comparison as a compliment.

Goldman’s damaged reputation leaves it with the ‘Gekko’ look
By Greg Farrell in New York
Published: August 3 2009 03:00 | Last updated: August 3 2009 03:00

Goldman Sachs’ reputation among both the general public and financially sophisticated Americans has been damaged by the events of the past year, according to research conducted for the Financial Times.

In a survey of 17,000 Americans, Brand Asset Consulting found that Goldman’s stature – as measured by several gauges of brand strength – had suffered in 2008 and 2009.

“Goldman Sachs still has that Gordon Gekko look to it among the general public,” said Anne Rivers, who oversaw the survey, referring to the villain of the 1987 film Wall Street .

Goldman’s long-time rival, Morgan Stanley, also suffered a decline in stature in the survey. But respondents liked and respected Morgan Stanley more than Goldman, a reversal of respondents’ sentiment in 2006.

Yet among those familiar with the two businesses, Goldman still led Morgan Stanley in a category known as “energised differentiation”, a measure that translates into pricing power, Ms Rivers said.

More…

Jim Sinclair’s Commentary

We have made all the winners of the OTC derivatives whole but not the banks or institutions that manufacture them.

Banks still getting sicker
The economy may have turned, but banks will be cleaning up after their lending mistakes for years. Several big banks may already be doomed to fail.
By Colin Barr, senior writer
August 5, 2009: 2:17 PM ET

NEW YORK (Fortune) — The economy may have pulled out of its plunge, but you’d never know by a look at many big banks.

Even after a rousing market rally that spurred new capital into giant institutions such as Wells Fargo (WFC, Fortune 500) and Bank of America (BAC, Fortune 500), numerous large banks around the country are still struggling with deteriorating finances.

Two dozen banks with at least $5 billion in assets get the lowest one-star rating on Bankrate.com’s safety and soundness test, which is based on an assessment of regulatory filings for the quarter ended March 31.

More than half of those banks are ranked “troubled” or worse by research firm Bauer Financial, using the same data. Three of these banks, with a total of $45 billion in assets, have made public statements indicating they could soon collapse.

“There are some big ones in fairly dire straits,” said Karen Dorway, director of research at Coral Gables, Fla.-based Bauer. “If you see some of these fail, it could add to the stress on local economies.”

More…

Jim Sinclair’s Commentary

Here is the war between politically managed monetary policy and FOMC managed monetary policy that has been going on now at a serious level for four months. This is the formula for the end of the Fed as primary manager of monetary policy and Chairman Bernanke with it.

We will read the resolution in the long bond market by early November 2009.

Fed Set to End Purchases, Two Former Governors Say (Update1)
By Steve Matthews and Scott Lanman

Aug. 5 (Bloomberg) — The Federal Reserve is set to halt its purchases of up to $300 billion in U.S. Treasuries in mid- September as scheduled, and will probably announce the decision next week, two former central bank governors said.

“They’re clearly not going to extend that program given the improvement in financial markets that’s going on,” said Lyle Gramley, senior economic adviser with New York-based Soleil Securities Corp. and a former governor.

Plans to buy as much as $1.25 trillion of mortgage-backed securities and $200 billion of federal agency debt expire at the end of the year, so the decision on whether to extend them may be delayed, former Fed Governor Laurence Meyer said in a report.

The Fed lowered its main interest rate almost to zero in December, switching to asset purchases and credit programs as the main policy tools. The Federal Open Market Committee kept the asset purchase plan unchanged in June, and will consider the program at an Aug. 11-12 meeting in Washington.

The FOMC “is unlikely to extend the life of these programs, unless, of course, either the economy or the financial markets take a significant turn for the worse,” Meyer, vice chairman of St. Louis-based Macroeconomic Advisers LLC, wrote in a report released yesterday. “We therefore expect the FOMC to announce at its upcoming meeting that it will allow the Treasury purchase program to expire in mid-September.”

More…

Jim Sinclair’s Commentary

OTC derivatives have proven themselves to be real weapons of mass destruction. These paper crimes are far from victimless.

I as a voice in gold, as a businessman and as a CEO have grave responsibility to those people who have placed their trust in me. I carry this responsibility with me every moment of every day.

No matter how highly placed a sociopath is they simply do not give a flying you know what.

Unclaimed dead stack up in Wayne County morgue
Charlie LeDuff / The Detroit News

Detroit — Poor Grandpa.

His corpse lies at the bottom of a pile of other bodies unclaimed at the Wayne County morgue. But Grandpa — whose name has been withheld to avoid embarrassing his family — is a special case. He has been in the cooler for the past two years as his kinfolk — too broke to bury him — wait for a ship to come in.

“There is destitution,” says Dr. Carl J. Schmidt, the chief medical examiner of this, the nation’s poorest big city. “But when you’re so destitute that nobody has claimed you, that’s a whole different level of being destitute.”

Peering into the small glass window of the cooler door, Schmidt counts 52 unclaimed bodies stacked like cordwood — in some cases four to a shelf; always two to a gurney.

Generally, the economic well-being of a municipality is measured by unemployment rates and quarterly earnings reports. But Schmidt’s cooler may say as much about metropolitan Detroit’s financial health as any statistics released by the Federal Reserve.

“It really is a sign of how bad things have gotten,” says Schmidt, 52, a 16-year veteran of the Detroit death scene. “Some people really have to make a choice of putting food on the table or burying their loved ones. It is very sad really. In all of my years here, I have never seen it this bad.”

More…

Jim Sinclair’s Commentary

The damage Wall Street has done is planetary and unforgivable.

US food stamp list tops 34 million for first time
08.06.09, 11:26 AM EDT

WASHINGTON (Reuters) – For the first time, more than 34 million Americans received food stamps, which help poor people buy groceries, government figures said on Thursday, a sign of the longest and one of the deepest recessions since the Great Depression

Enrollment surged by 2 percent to reach a record 34.4 million people, or one in nine Americans, in May, the latest month for which figures are available.

It was the sixth month in a row that enrollment set a record. Every state recorded a gain in participation from April. Florida had the largest increase at 4.2 percent.

Food stamp enrollment is highest during times of economic stress. The U.S. unemployment rate of 9.5 percent is the highest in 26 years.

Average benefit was $133.65 in May per person. The economic stimulus package enacted earlier this year included a temporary increase in food stamp benefits of $80 a month for a family of four.

More…

Jim Sinclair’s Commentary

GM is going to produce the new Smart Electric Lambo car?

The Smamborghini!

Smam

Jim Sinclair’s Commentary

What is with these guys? They are using our money to for bonuses.

They were recently broke, had to be rescued, and took government money. That is fact. Just follow the money.

Outrage: Merrill’s record 3.8 billions bonuses and $27.6 billion loss in 2008!!!
BY DANIEL AT 6 AUGUST, 2009, 2:40 AM

“…The judge also said the agreement “in no way specifies the basis for the $33 million figure or whether any of this money is derived directly or indirectly” from public funds advanced to Bank of America as part of its bail out.

An SEC spokesman declined immediate comment.

Bank of America, along with Citicorp Inc. and insurance giant American International Group, is among the largest recipients of government aid. It has received $45 billion from the federal $700 billion bank rescue program.

Merrill ended up paying $3.6 billion in bonuses in 2008, the SEC said, even though it lost $27.6 billion that year, a record for the firm. The bonuses amount to nearly 12 percent of the $50 billion that Bank of America paid for Merrill.”

Soon we will have a bonuses crisis! Bonus system in wall street is definitely corrupted.

More…

Jim Sinclair’s Commentary

I will give you three guesses to figure out who is long.

Commodity Shortage Likely in 2010, Goldman Sachs Says
By Chanyaporn Chanjaroen

Aug. 6 (Bloomberg) — A commodity shortage is likely next year as output of metals and agricultural products potentially rises too slowly to match revived demand, Goldman Sachs Group Inc. said.

Supply of cotton, soybeans, copper and zinc will be dictated by China, New York-based analysts Anthony Carpet, Laura Conigliaro and Robert Boroujerdi said in a report dated yesterday. The country consumes about a quarter to a third of world production of those raw materials and relies on supplies from abroad, they said.

“We expect a redux of 2008, when severe supply constraints forced the rationing of demand through sharply higher prices to keep markets balanced,” the analysts said.

The Reuters/Jefferies CRB Index of 19 commodities has added 17 percent this year, driven by energy and metals prices. Limits on production growth and swelling demand in developing nations will keep driving prices higher and probably curb usage in industrialized countries like the U.S., Goldman Sachs said.

Stronger demand from China, the world’s most populous nation, helped to lift copper and soybeans to records last year before commodity prices collapsed in the second half. Larger Chinese imports have helped copper to almost double in 2009 in London trading.

More…

Jim Sinclair’s Commentary

Short squeezes can occur on technicalities.

Can you image what a short cover will look like in some of the junior gold shares when a major event occurs, not just a technicality?

Analyst says short squeeze likely driving AIG gain
Aug 5, 2009, 2:15 p.m. EST
By Greg Morcroft

NEW YORK (MarketWatch) — Investors who were short shares of American International Group   (AIG  22.77, +0.24, +1.07%) before a recent 20-for-1 reverse stock split are scrambling Wednesday to buy scarce shares to cover, driving the stock up more than 50%, according to Miller Tabak analyst Peter Bookvar. Bookvar said he’s seeing a similar situation with shares of Georgia Gulf Corp (GGC  28.36, -0.94, -3.21%) , which also recently did a large reverse split. “GGC is another stock that had this big reverse stock split, and its stock went from $7 to $36 in five trading days. It’s another example of where the float has dramatically shrunk, and now there’s a massive short squeeze going on,” Bookvar said. “There is certainly no news to account for it (AIG’s stock move), he added.

More…