In The News Today

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Jim Sinclair’s Commentary

John Williams’ latest:

– Renewed Battle Over U.S. Sovereign Solvency
– President’s Working Group on Financial Markets Likely in Play
– Government Economic-Reporting Shutdown Excludes Data from Privately-Owned Federal Reserve

"No. 562: Shutdown of the Federal Government"

Jim Sinclair’s Commentary

Here is the Real Problem


David Stockman Fears Intense Resentment Over "Disaster" That Is Obamacare
Submitted by Tyler Durden on 10/01/2013 14:34 -0400

"Obamacare is a disaster," is the jumping-off point for David Stockman’s latest tirade against the "greatest expansion to the welfare state in the last 80 years," that was rammed through congress on a totally partisan vote. In this brief Bloomberg TV clip, Stockman "understands why the Republicans are willing to hold up government if they have to," as there is growing intensity of partisanship and resentment that can only bode ill for debt ceiling discussions… "The Republicans have to take a stand."


Jim Sinclair’s Commentary

The value of gold will be determined by the size of debt, not like it is today by the Securities Plunge Protection Team.


Dutch pension fund defeats central bank, wins right to invest in gold
Submitted by cpowell on Tue, 2013-10-01 03:49. Section: Daily Dispatches

By Den Haag
De Rechtspraak
The Hauge, Netherlands
Tuesday, September 10, 2013—aanwijzing-…

Tuesday, September 10, saw the final ruling of the Board of Industry Appeals (College van Beroep voor het Bedrijfsleven) on the gold case brought by the Dutch pension fund Vereenigde Glasfabrieken against De Nederlandse Bank (DNB, the Dutch central bank) in 2011. The pension fund objected to an earlier directive of DNB.

This ruling is in favor of the pension fund, because the judges of this college, following an earlier decision in March 2012, not only ruled that a fund may decide how to implement its investment policy, but also ruled that DNB failed to underpin its concerns as expressed in the directive imposed [onto the pension fund].

By contrast, the underpinning of the pension fund was so clear that the judges fully agreed. They agreed with the pension fund that there may be circumstances that justify deviation from ordinary investment policies. Such circumstances included the financial crisis that began in 2008 and the euro crisis that was an extension of this financial crisis.

These crises were indeed at the root of the defensive investment of the pension fund. DNB turned a blind eye to these circumstances and considered only an ALM study (Assets & Liability Management), a study that ignored any negative factors in an economy. Furthermore, DNB did not present relevant examples on gold investment other than a blurred report by JP Morgan, which stated that one should invest only 1 percent in a commodity. That study — rather dubious and lacking detail — turned out to be their sole defense.

It is also noticeable that the supervisors at DNB have not the slightest idea of gold’s function in finance and economy. They are in good company, because most economists in the Netherlands don’t know either. Gold is the de-facto foundation of our economic system and it is therefore essential for any pension fund (or any other investment fund) to have gold in the portfolio as a hedge against unforeseen system risks. In the world of financial investment, gold is insurance and the return on that investment is not in interest or dividends but protection against inflationary measures of the government. The return on that investment is the safety of the portfolio.

Risks such as high monetary inflation, collapse of the system, war, and other major events are fully hedged in this way. Especially in high-risk times like today, gold is a buffer and a safe haven for many investors.

Unfortunately, this knowledge is not yet widespread, as DNB and large investment companies still blindly trust completely outdated studies like ALM. It is a tragedy that many funds have already incurred considerable losses due to this one-sided approach.

The great advantage of this final ruling (no further appeal is possible) is that pension funds again are free in their investment policy without the need to anticipate improper intervention by DNB. The ruling clearly indicates that DNB needs to substantiate its decisions carefully and that lax directives without valid arguments will no longer be tolerated.

This is truly a revolution: DNB is a supervisor, not an investment adviser. A supervisor should limit its directives to cases of clear malpractice or destructive financial policy. In other words, as the judges also indicated, supervision needs to keep its distance.


Thanks to Louis Boer for the translation from Dutch to English.


100 Unintended Consequences of Obamacare 
Companies, workers, retirees, students, and spouses all suffer from the law’s inflexible mandates. 
By Andrew Johnson
OCTOBER 1, 2013 4:00 AM

In a few days, Obamacare’s October 1 launch date finally will have arrived. Ever since its passage, supporters of the law have made countless attempts to convince the American people of its viability, dismissing predictions of lost jobs, decreased hours, and rising costs, among others.

Yet from major corporations to local mom-and-pop shops, from entire states to tiny school districts, a wide range of companies and institutions have seen Obamacare’s negative impact on their workers, budgets, and production. Here are 100 examples of how Obamacare is falling short of what was promised.


1. IBM
Earlier this month, the computer giant, once famed for its paternalism, announced it would remove 110,000 of its Medicare-eligible retirees from the company’s health insurance and give them subsidies to purchase coverage through the Obamacare exchanges. Retirees fear that they will not get the level of coverage they are used to, and that the options will be bewildering.

2. Delta Air Lines
In a letter to employees, Delta Air Lines revealed that the Affordable Care Act will cost the company about $100 million next year alone. The airline said that in addition to several other changes, it would have to drop its specially crafted insurance plans for pilots because the “Cadillac tax” on luxurious health plans has made them too expensive.




Jim Sinclair’s Commentary

The Securities Plunge Protection Team got up earlier and are hard at work.

Gold was trading between $1330 and $1340 before their guy got out of bed and flushed the first COMEX session.

US wakes up to government shutdown
1 October 2013 Last updated at 08:06 ET

The US government has begun a partial shutdown after the two houses of Congress failed to agree a new budget.

The Republican-led House of Representatives insisted on delaying President Barack Obama’s healthcare reform – dubbed Obamacare – as a condition for passing a bill.

More than 800,000 federal employees face unpaid leave with no guarantee of back pay once the deadlock is over.

It is the first shutdown in 17 years and the dollar fell early on Tuesday.

Goldman Sachs estimates a three-week shutdown could shave as much as 0.9% from US GDP this quarter.

The White House’s budget office began notifying federal agencies to begin an "orderly shutdown" as the midnight deadline approached.

Shortly after midnight, President Obama tweeted: "They actually did it. A group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget."


10 ways govt shutdown will hurt America
Published time: September 30, 2013 19:10 
Edited time: October 01, 2013 07:18

With the threat of a federal government shutdown hanging over the US economy, here is a handy list of the possible effects American citizens and the rest of the world could face if no deal is reached to continue funding.

In the most recent developments in a budget battle, the US Senate Democrats have rejected a proposal by the Republican-led House of Representatives to put off Obamacare for a year in return for temporary funding of the federal government beyond Monday.

Though adopting spending bills by Oct. 1, the start of the new fiscal year in the US, may seem a purely political issue, if Congress fails to approve funding for the federal government this would seriously affect the daily routine of ordinary US citizens, let alone up to 800,000 federal employees who would be sent home Tuesday without pay if the shutdown takes place.

The last government shutdown lasted 21 days, from December 1996 to January 1997, and cost the administration of US President Bill Clinton cost an estimated $2 billion, according to the White House’s Office of Management and Budget.

In remarks made by Obama Monday evening the President struck a defiant note on the healthcare law.

"An important part of the Affordable Care Act takes effect tomorrow, no matter what Congress decides to do today. The Affordable Care Act is moving forward. That funding is already in place. You can’t shut it down."

In another pointed remark aimed at Republicans tying Obamacare to the government shutdown the President essentially accused lawmakers of political blackmail.

"You don’t get to extract a ransom for doing your job, for doing what you’re supposed to be doing anyway, or just because there’s a law there that you don’t like."