In The News Today

Posted at 12:24 PM (CST) by & filed under In The News.

Dear Friends,

As the dollar intraday reached for the .80 plus level yesterday it ran directly into what I will call cash selling or dollar diversification.

That .80 to .82 level is a fundamental level the dollar is unlikely to penetrate. Don’t get too bearish on the euro as selling into a Chinese basket can be bad for your financial health. Selling into the China basket in copper from $1 up has not been too wise.



Jim Sinclair’s Commentary

Today’s update from John Williams’

– Annual “Core” Inflation Rose for 15th Straight Month
– Year-to-Year January Consumer Inflation: 2.9% (CPI-U), 3.1% (CPI-W), 10.5% (SGS)
– Headline CPI and PPI Inflation Rates Understated Due to Unstable Seasonal Factors

"No. 419: January CPI, PPI, Real Retail Sales and Housing Starts "


Jim Sinclair’s Commentary

It is time to reconsider the impact of Greece on the Euro.

May I suggest you listen to the Ellis Martin interview as we are nearing some action on Greek debt where it is discussed.

Germany Sees Greek Deal Within Days
By Tony Czuczka and James G. Neuger – Feb 17, 2012 10:42 AM ET

Angela Merkel at the chancellory building in Berlin on Feb. 17, 2012. Photographer: Michele Tantussi/Bloomberg


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Feb. 17 (Bloomberg) — Riccardo Barbieri, an economist at Mizuho International Plc, discusses the possible consequences of restructuring Greece’s debt. He speaks with Owen Thomas and Linzie Janis on Bloomberg Television’s "Countdown." (Source: Bloomberg)


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Feb. 17 (Bloomberg) — Germany wants euro-area finance chiefs to avoid splitting consideration of a 130 billion-euro ($171 billion) Greek rescue and a bond swap to cut the nation’s debt load at a meeting next week, coalition lawmakers were told by German government officials in a briefing. David Tweed reports on Bloomberg Television’s "First Look" with Caroline Hyde. (Source: Bloomberg)


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Jim Sinclair’s Commentary

Somebody will go to Hell for this!

Vatican told to pay taxes as Italy tackles budget crisis

End of controversial property tax breaks leaves the Pope facing €600m-a-year bill
Michael Day
Friday 17 February 2012

After several years of scandal in which the Catholic Church has faced allegations of financial impropriety, paedophile priests and rumours of plots to kill the Pope, the Vatican is now facing a new €600m-a-year tax bill as Rome seeks to head off European Commission censure over controversial property tax breaks enjoyed by the Church.

As the EC heads closer to officially condemning the fiscal perks enjoyed by the Catholic Church and introduced by the Berlusconi administration, Prime Minister Mario Monti has written to the Competition Commissioner, Joaquin Almunia, saying that the Vatican will resume property tax, or Ici, payments.

Mr Almunia said in 2010 that the exemption amounted to state aid that might breach EU competition law. A parliamentary proposal by the Italian Radicals party last August to repeal the exemption, with a successful petition on Facebook, upped the pressure. A spokesman for Mr Almunia appeared to give the thumbs-up yesterday: "It is a proposal that constitutes a significant progress on the issue and I hope will be implemented," he said.

"This is a victory for public pressure," said Mario Staderini, the leader of the Italian Radicals party. "We’ve managed to break down – a little bit – the wall protecting the Church."

The Vatican avoids Ici tax on about 100,000 properties, classed as non-commercial, including 8,779 schools, 26,300 ecclesiastical structures and 4,714 hospitals and clinics.

Estimates of its annual saving from avoiding the levy range widely from €600m to €2.2bn. The Church, however, says the tax exemption is worth only €100m a year. Neither is it clear from Mr Monti’s comments how much Ici tax the Church will now have to pay.



Congress Acts to Extend Aid to Jobless and Payroll Tax Cut
Published: February 17, 2012

WASHINGTON — With members of both parties expressing distaste at some of the particulars, Congress on Friday voted to extend payroll tax cuts and unemployment benefits and sent the legislation to President Obama, ending a contentious political and policy fight.

The vote in the House was 293 to 132 with Democrats, who are in the minority, carrying the proposal over the top with the acquiescence of almost as many Republicans. The Senate followed within minutes and approved the measure on a vote of 60 to 36.

“One hundred sixty million Americans,” said Senator Max Baucus, the Montana Democrat who, as chairman of the Finance Committee, led negotiations over the measure with the House. “That’s the number of Americans who are helped by this bill.”

President Obama has said he will sign the bill as soon as Congress passed it, with lawmakers seeking to wrap up the legislation before leaving on the President’s Day break.


Jim Sinclair’s Commentary

Here is news that will not have legs in Main Street media.

CBO: Longest Period of High Unemployment Since Great Depression
CBO: U.S. enduring the longest period of high unemployment since the Great Depression
By Alex M. Parker
February 16, 2012

After three years with unemployment topping 8 percent, the U.S. has seen the longest period of high unemployment since the Great Depression, the Congressional Budget Office noted in a report issued today.

And, despite some recent good news on the economic front, the CBO is still predicting that unemployment will remain above 8 percent until 2014. The report also notes that, including those who haven’t sought work in the past four weeks and those who are working part-time but seeking full-time employment, the unemployment rate would be 15 percent.

The CBO made its comments in a report examining the long-term effects of joblessness, and possible policy options to boost employment, including unemployment insurance reforms and job training programs. The report came at the request of Democratic Michigan Rep. Sander Levin, but Republicans quickly jumped on the chance to bash President Obama’s stimulus program, which is also reaching its three-year anniversary today.


Jim Sinclair’s Commentary

Looks like Wall Street has influenced the Mob to think big when it comes to liquidity.

Record $6 Trillion of Fake U.S. Bonds Seized
By Elisa Martinuzzi – Feb 17, 2012 7:18 AM ET

Italian anti-mafia prosecutors said they seized a record $6 trillion of allegedly fake U.S. Treasury bonds, an amount that’s almost half of theU.S.’s public debt.

The bonds were found hidden in makeshift compartments of three safety deposit boxes in Zurich, the prosecutors from the southern city of Potenza said in an e-mailed statement. The Italian authorities arrested eight people in connection with the probe, dubbed “Operation Vulcanica,” the prosecutors said.

The U.S. embassy in Rome has examined the securities dated 1934, which had a nominal value of $1 billion apiece, they said in the statement. Officials for the embassy didn’t have an immediate comment.

The financial fraud uncovered by the Italian prosecutors in Potenza includes two checks issued through HSBC Holdings Plc (HSBA) in London for 205,000 pounds ($325,000), checks that weren’t backed by available funds, the prosecutors said. As part of the probe, fake bonds for $2 billion were also seized in Rome. The individuals involved were planning to buy plutonium from Nigerian sources, according to phone conversations monitored by the police.

The fraud posed “severe threats” to international financial stability, the prosecutors said in the statement.


Jim Sinclair’s Commentary

When since 2001 have they not been buyers?

Our long time readers will recall our comments on Chung Phat.

China central bank in gold-buying push
By Jack Farchy in London
February 16, 2012 8:37 pm

The World Gold Council believes China’s central bank made significant gold purchases in the final months of 2011, contributing to a surge in the country’s imports.

Marcus Grubb, managing director for investment at the WGC, a lobby group for the gold mining industry, told the Financial Times that buying by the People’s Bank of China could explain a large discrepancy between Chinese imports and the WGC’s estimates of consumer demand in the country

“There is absolutely a discrepancy in the import figures,” said Marcus Grubb. “The obvious inference is that the central bank is buying.”

His comments mark the first public statement from a senior gold industry executive pointing to purchases by the Chinese central bank, a trend that many others have highlighted privately. The PBOC did not respond to questions on Thursday.

China’s imports from Hong Kong, which account for the majority of its overseas buying, soared to 227 tonnes in the last three months of 2011, according to data published by Hong Kong. Mine production in the country, the largest gold producer, stood at about 100 tonnes in the quarter, implying total supply of at least 330 tonnes.


Jim Sinclair’s Commentary

When Lehman was flushed the OTC derivative problem lost any chance of a solution.

There was a solution before the flush.

Should a default occur in Greece, confirmed by the ISDA, (International Swaps and Derivatives Association) the CDS (credit default swaps) pile of crap is finished.

Lehman Crisis Veterans Warn Europe Leaders Against Provoking Greek Default
By Sandrine Rastello and Simon Kennedy – Feb 17, 2012 7:23 AM ET

Neel Kashkari, who was on the policy frontlines when Lehman Brothers Holdings Inc. crumpled in 2008, warns European governments against pushing Greece too far as they impose conditions for aid.

“It can be very politically satisfying to be tough, but if an uncontrolled default were to lead to contagion around the euro zone, that could be very damaging for all of Europe and for the global economy,” said Kashkari, who four years ago was an aide to then-U.S. Treasury Secretary Henry Paulson and now is head of global equities at Pacific Investment Management Co.

Kashkari is not alone among the Treasury veterans who fought the worst financial turmoil since the Great Depression and now say the euro area should be careful of taking too hard a line with Greece. Their battle-seasoned advice: Avoid encouraging a default unless first acting to ensure foreign economies and banks are protected from the aftershocks.

“This seems like brinkmanship on the part of the European leaders,” said Phillip Swagel, the Treasury’s former chief economist, who now teaches at the University of Maryland in College Park. “The better approach is to prepare for a future failure so they have a more credible threat to allow Greece to default and possibly leave the euro zone.”