In The News Today

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Jim Sinclair’s Commentary

John Williams’ excellent subscription service, available at says:

– GAAP-Based 2011 Federal Deficit Likely Within Five- to Seven-Trillion Dollar Range
– Effects of High Oil Prices Still Spreading in Broad Economy
– October‚s Annual Inflation: 3.5% (CPI-U), 3.9% (CPI-W), 11.1% (SGS)
– Real Retail Sales and Industrial Production Gained in October But the Series Share Inflation-Adjustment Issues


Jim Sinclair’s Commentary

97% of all the credit default OTC derivatives have been written by the 5 largest US bank dealers.

JPMorgan Joins Goldman Keeping Investors in Dark on Italy Derivatives Risk
By Christine Harper and Michael J. Moore – Nov 15, 2011 4:01 PM PT

JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), among the world’s biggest traders of credit derivatives, disclosed to shareholders that they have sold protection on more than $5 trillion of debt globally.

Just don’t ask them how much of that was issued by Greece, Italy, Ireland, Portugal and Spain, known as the GIIPS.

As concerns mount that those countries may not be creditworthy, investors are being kept in the dark about how much risk U.S. banks face from a default. Firms including Goldman Sachs and JPMorgan don’t provide a full picture of potential losses and gains in such a scenario, giving only net numbers or excluding some derivatives altogether.

“If you don’t have to, generally people don’t see the advantage to doing it,” said Richard Lindsey, a former director of market regulation at the U.S. Securities and Exchange Commission who worked at Bear Stearns Cos. from 1999 through 2006. “On the other hand, if there were a run on Goldman Sachs tomorrow because the rumor was that they had exposure to Greece, you’d see them produce those numbers.”

A case in point: Jefferies Group Inc. (JEF), the New York-based securities firm, disclosed every long and short position it held on European debt earlier this month after its shares plunged more than 20 percent. Jefferies also said it wasn’t relying on credit-default swaps, contracts that promise to pay the buyer if the underlying debt defaults, as a hedge on European holdings.



Jim Sinclair’s Commentary

QE to infinity as there is no other tool to stop a run.

Gold is getting ready for a trip into the $2000s.

Fed Now Largest Owner of U.S. Gov’t Debt—Surpassing China
By Terence P. Jeffrey
November 16, 2011

( – At the close of business on Tuesday, the debt of the federal government exceeded $15 trillion for the first time–with the largest single owner of the publicly held portion of that debt being the Federal Reserve.

Over the past year, as the Federal Reserve massively increased its holdings of U.S. Treasury securities and entities in China marginally decreased theirs, the Fed surpassed the Chinese as the top owner of publicly held U.S. government debt.

In its latest monthly report, the Federal Reserve said that as of Sept. 28, it owned $1.665 trillion in U.S. Treasury securities. That was more than double the $812 billion in U.S. Treasury securities the Fed said it owned as of Sept. 29, 2010.

Meanwhile, as of the end of this September, entities in mainland China owned $1.1483 trillion in U.S. Treasury securities, according to data published today by the U.S. Treasury Department. That was down slightly from the $1.1519 trillion in U.S. Treasury securities the Chinese owned as of the end of September 2010, according to the same Treasury Department report.

Thus, at the end of September 2010, the Chinese owned about $339.9 billion more in U.S. Treasury securities than the Fed owned at that time. By the end of September 2011, the Fed owned about $516.7 billion more in U.S. Treasury securities than the Chinese owned.