In The News Today

Posted at 9:36 AM (CST) by & filed under In The News.

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.
— Joseph Goebbels, Minister of Nazi Propaganda

All over the world people are chanting, ‘Death to America.’ Except in China, where they’re chanting, ‘Not until we get our money back’.
–Jay Leno

 

Jim Sinclair’s Commentary

Economics and markets must yield this weekend to making applesauce

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Jim Sinclair’s Commentary

Of course. What else do you expect when it is clear that Wall Street owns Washington?

This lack of ethical procedures guarantees nothing changes and gold goes to and beyond $3500

Wall Street Rolling Back Another Key Piece of Financial Reform
POSTED: September 20, 9:33 AM ET

Wall Street lobbyists are awesome. I’m beginning to develop a begrudging respect not just for their body of work as a whole, but also for their sense of humor. They always go right to the edge of outrageous, and then wittily take one baby-step beyond it. And they did so again last night, with the passage of a new House bill (HR 2827), which rolls back a portion of Dodd-Frank designed to protect cities and towns from the next Jefferson County disaster.

Jefferson County, Alabama was the most famous case – the city of Birmingham went bankrupt after being bribed and goaded into taking on billions of dollars of toxic swap deals – but in fact it was just one of hundreds ofsimilar examples of localities being duped into suicidal financial deals by rapacious banks and financial companies. The Denver school system, for instance, got clobbered when it opted for an exotic swap deal pushed by J.P. Morgan Chase (the same villain in Jefferson County, incidentally) and then-school superintendent/future U.S. Senator Michael Bennet, that ended up costing the school system tens of millions of dollars. As was the case in Jefferson County, the only way out of the deal involved a massive termination fee that might have been even more destructive than the deal itself.

To deal with this problem, the Dodd-Frank Act among other things included a simple reform. It required the financial advisors of municipalities to do two things: register with the SEC, and accept a fiduciary duty to respect the best interests of the taxpayers they are advising.

Sounds simple, right? But Wall Street couldn’t have that. After all, if companies are required to have a fiduciary responsibility to cities and towns, how in the world can they screw cities and towns? The idea was a veritable axe-blow to the banks’ municipal advisory businesses.

So what did Wall Street lobbyists and trade groups like SIFMA (the Securities Industry and Financial Markets Association) do? Well, they did what they’ve been doing to Dodd-Frank generally: they Swiss-cheesed the law with a string of exemptions. The industry proposal that ended up being HR 2827 created several new loopholes for purveyors of swaps and other such financial products to cities and towns. Here’s how the pro-reform group Americans for Financial Reform described the loopholes (emphasis mine):

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Jim Sinclair’s Commentary

Our Banksters have a team of attorneys and accountants for the singular purpose of hiding risk.

This is a dilly. Nothing changes therefore gold is on its way to $3500.

How to Lose Weight Fast the Deutsche Bank Way
By Jonathan Weil Sep 20, 2012 6:30 PM ET

Imagine if I told you I could reduce my own body weight by 80 percent or more, on paper, through a series of calculations utilizing my own proprietary mathematical models, the details of which are so complex and highly prized that I couldn’t divulge them.

You would be right not to believe me, and might think I’m nuts. Yet this, in essence, is what regulators let banks do all the time with their balance sheets. Huge swaths of assets are allowed to vanish, making too-big-to-fail financial institutions seem leaner and safer than they are.

Under the system known as risk weighting, banks get away with this because they are allowed to stipulate that some assets carry little, if any, risk. Many government bonds, for instance, fall into the riskless category for purposes of determining regulatory-capital ratios. So a bank can assume it won’t incur losses on them, which allows it to keep a lower capital cushion. The flaw here is that rulemakers aren’t good at predicting what kinds of assets might blow up. Some governments, especially in Europe, are in awful shape and pose a real risk of defaulting.

In other words, the notion of risk weighting is a farce, at least the way it is practiced now. Yet it carries the imprimatur of the Basel Committee on Banking Supervision, the Swiss body that writes capital standards for most of the developed world. Thankfully, a U.S. regulator has stepped up to say the world should scrap the Basel committee’s standards.

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Jim Sinclair’s Commentary

I have told you for years that the singular greatest opportunity for the mega farmer lies in Tanzania.

S Korea ‘in Tanzania land deal’

South Korea says it has agreed to develop farmland in Tanzania – the latest in a series of such deals between rich and poor nations.

Korean officials say 1,000 sq km (386 sq miles) will be developed – half for local farmers, half to produce processed goods for South Korea.

But Tanzanian officials have denied that any deal has been finalised.

Seoul also signed a deal last year to lease a vast area of Madagascar.

Rich countries have increasingly sought farmland in poorer nations to help shore up food supplies.

Countries such as China, Saudi Arabia, South Korea and Kuwait are short of arable land and have been seeking agricultural investments in Africa.

But South Korea’s deal in Madagascar – which would have seen it lease an area the size of Belgium from the island nation – has been thrown into uncertainty.

Madagascar’s government was overthrown in a coup earlier this year and the new leaders said they would scrap the deal, which was cited as one reason for the unrest.

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Jim Sinclair’s Commentary

Since Wall Street management are a group of sociopaths who hire younger sociopaths and have no ability as a group to grow a conscience and politicians will never change, gold at and above $3500 is guaranteed by this understanding.

This is also the message of the illustration of the Skier given you years ago.

DEUTSCHE BANK: Western Economies Are Screwed, And Investors Face A ‘Disturbing Paradox’
Matthew Boesler | Sep. 20, 2012, 12:54 PM

In a new report entitled Gold: Adjusting For Zero, Deutsche Bank analysts Daniel Brebner and Xiao Fu paint an incredibly dark picture of the bind the global economy is in right now.

Brebner and Xiao are pretty frank about how levered up the financial system is at the moment, and they warn that the next shock will be totally involuntary and unexpected.

Here is what the analysts have to say about how upside down the world is right now and the risks looming on the horizon:

We believe the balance of 2012 could remain challenging for investors, given the many negative indicators and warning signs. Certainly extremes in leverage in the Western economies and questions regarding growth in China present investors with a worrying post-2012 future. However, in our view there are nearly zero real choices available to global policy makers. The world needs growth and it is willing to go to extraordinary lengths to get it. This is creating distortions where old rules don’t seem to apply and where investors face a disturbing paradox:

Those who are right are likely to be wrong

Those who lose, often win

Those who are imprudent can be rewarded

Dumb money can win

In the first instance, we believe investors are right to worry; the imbalances in the global economy are extreme and need to be urgently addressed, proactively. This is unlikely however, making a necessary future adjustment likely to be involuntary and therefore unexpected. Those who are right are likely to be wrong for a considerable period of time.

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Jim Sinclair’s Commentary

What is required money wise will be provided for Spain regardless of the endless verbiage common to Europe.

EU in talks over Spanish rescue plan
By Peter Spiegel in Brussels and Miles Johnson in Madrid

EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme that will be unveiled next week.

According to officials involved in the discussions, talks between the Spanish government and the European Commission are focusing on measures that would be demanded by international lenders as part of a new rescue programme, ensuring they are in place before a bailout is formally requested.

News of the talks helped boost the euro on Friday, with the currency rising briefly above $1.30 before settling at $1.29.62. Analysts at Morgan Stanley said there was likely to be renewed support for EU asset markets.

One senior European official said negotiations have been conducted directly with Luis de Guindos, the Spanish finance minister. The plan, due to be unveiled next Thursday, will focus on structural reforms to the Spanish economy long requested by Brussels, rather than new taxes and spending cuts.

“It is a kind of ‘proto-programme,’ if such were needed,” the official said. The commission could, however, still request more austerity measures next month to meet existing EU budget targets, which Madrid is expected to miss.

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