In The News Today

Posted at 9:09 PM (CST) by & filed under In The News.

Dear CIGAs,

The media can play all the games they wish. Just keep firmly in mind that:

1. Towns are broke.
2. Cities are broke.
3. States are broke.
4. Main Street is in dire pain.
5. The apparent improvement in the financial industry is accounting smoke and mirrors.
6. Most corporate improvements are not sales driven but cost cutting based. You can also call that "firing the help."

Greece or any state of the United States that goes under must be supported by QE to infinity as a country bankruptcy of the Iceland type will sweep across the Western World faster than Lehman Brothers locked up the credit markets.

This is no time to be swept up in the short term noise. Keep your eye on the ball.

All Fiat money is in a race to worth-less-ness. Only gold will protect your financial position.

Dear Friends,

The following links, courtesy of CIGA Craig, serve to reinforce the folly of the term, “jobless recovery”. Pay close attention to the number of “problem” banks on the FDIC’s list. It is evident where the FDIC is going to obtain the funding necessary to come in and deal with these banks in the future.

On the payroll front, the article also reinforces why the Confidence numbers are so poor.

Trader Dan

Mass Layoffs Surge In January, Highest Since July 2009
Submitted by Tyler Durden on 02/23/2010 10:45 -0500

The BLS has reported Mass Layoff Statistics for January 2010 – the result is plain ugly, and kills any hope for sustained improvement in unemployment data. Not seasonally adjusted Mass Layoff Events (defined as at least 50 persons being laid off from a single employer) surged in January to 2,860, from 2,310 in January, from a 12 month low of 1,371 in September 2009. This is the biggest monthly surge since July when the Mass Layoff Events hit a 12 month high of 3,054. In terms of actual workers, January saw 278,679 initially laid off people. The deterioration was mirrored in the much less credible seasonally adjusted data. Obviously companies were waiting for the end of the year to dump as many people as they could.

The BLS data is charted below:

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FDIC Hits Record "Default" Level As Deposit Insurance Fund Plunges By $12.7 Billion To NEGATIVE 20.9 Billion
Submitted by Tyler Durden on 02/23/2010 10:13 -0500

From Dow Jones:

The U.S. banking industry continued to struggle in the fourth quarter, as the number of banks on the brink of failure continued
to rise and the government’s fund to protect deposits fell sharply into the red.

The Federal Deposit Insurance Corp. said Tuesday that its deposit-insurance fund fell to $20.9 billion at the end of 2009, a $12.6 billion drop in the final three months of the year, as bank failures continued at a pace not seen since the savings and loan crisis. The fund’s reserve ratio was -0.39% at the end of the quarter, the lowest on record for the combined bank and thrift fund.

The deposit insurance fund is unlikely to soon see a respite from a decline in the number of failing banks: The FDIC said the number of banks on its "problem" list climbed to 702 at the end of 2009 from 552 at the end of September and 252 at the end of 2008. The number of banks on the list, which have combined assets of $402.8 billion, is the highest since June 1993.

"The continued rise in loan losses and troubled assets points to further pressure on earnings," FDIC Chairman Sheila Bair said in a statement. "The growth in the numbers and assets of institutions on our ‘Problem List’ points to a likely rise in the number of failures."

Industry indicators deteriorated nearly across the board. The FDIC said loan losses for U.S. banks climbed for the 12th straight quarter, while the total loan balances for U.S. banks continued to fall. The agency said the quarterly net charge-off rate and the total number of loans at least three months past due both were at the highest level ever recorded in the 26 years the data have been collected.

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Jim Sinclair’s Commentary

A picture says a thousand words.

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Jim Sinclair’s Commentary

Most US states are broke. In fact, most governments are or will be broke.

No currency will sustain buying power. The entire Western world is compromised.

This leaves gold as the only viable vehicle to function as a storehouse of buying power.

Consumer Confidence in U.S. Falls More Than Forecast (Update2)
By Bob Willis

Feb. 23 (Bloomberg) — Confidence among U.S. consumers fell more than anticipated in February to the lowest level since April 2009 as the outlook for jobs diminished, a sign spending may be slow to gain traction as the economy recovers.

The Conference Board?s confidence index declined to 46, below the lowest forecast in a Bloomberg News survey of economists, from a revised 56.5 in January, a report from the New York-based private research group showed today. Concerns about the economy and the labor market pushed an index of current conditions to its lowest in 27 years.

Stocks extended losses and Treasuries gained after the report indicated a lack of job growth and impaired household finances threaten to restrain consumer spending. Without sustained growth in the biggest part of the economy, the expansion may be slow to gain momentum.

The economy ?may not be out of the woods,? said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York. Most of the deterioration ?is labor market related. Consumer spending is going to disappoint throughout most of the year,? he said.

The Standard & Poor?s 500 Index dropped 0.9 percent to 1,098.26 at 10:47 a.m. in New York. The 10-year Treasury note rose, pushing down the yield seven basis points to 3.73 percent.

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Jim Sinclair’s Commentary

No one will say it but here is your answer. The OTC derivative manufacturers have destroyed more of the world than most wars have

Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs
By Richard Teitelbaum

Feb. 23 (Bloomberg) — When a congressional panel convened a hearing on the government rescue of American International Group Inc. in January, the public scolding of Treasury Secretary Timothy F. Geithner got the most attention.

Lawmakers said the former head of the New York Federal Reserve Bank had presided over a backdoor bailout of Wall Street firms and a coverup. Geithner countered that he had acted properly to avert the collapse of the financial system.

A potentially more important development slipped by with less notice, Bloomberg Markets reports in its April issue. Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG.

These were the deals that pushed the insurer to the brink of insolvency — and were eventually paid in full at taxpayer expense. The New York Fed, which secretly engineered the bailout, prevented the full publication of the document for more than a year, even when AIG wanted it released.

That lack of disclosure shows how the government has obstructed a proper accounting of what went wrong in the financial crisis, author and former investment banker William Cohan says. “This secrecy is one more example of how the whole bailout has been done in such a slithering manner,” says Cohan, who wrote “House of Cards” (Doubleday, 2009), about the unraveling of Bear Stearns Cos. “There’s been no accountability.”

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