In The News Today

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Jim Sinclair’s Commentary

Our leaders could march us into a crisis of international confidence in economic leadership.



Jim Sinclair’s Commentary

This is not a problem that ends with a rise in the debt ceiling.

The problem is the debt itself, and this is but a yearly spotlight on the greatest weakness the USA has.

A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall
By Yalman Onaran – Oct 7, 2013 11:27 AM ET

Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.

Failure by the world’s largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.

The $12 trillion of outstanding government debt is 23 times the $517 billion Lehman owed when it filed for bankruptcy on Sept. 15, 2008. As politicians butt heads over raising the debt ceiling, executives from Berkshire Hathaway Inc.’s Warren Buffett to Goldman Sachs Group Inc.’s Lloyd C. Blankfein have warned that going over the edge would be catastrophic.

Lehman Aftermath

“If it were to occur — and it’s a big if — one would expect a series of legal triggers, potentially transmitting the default to many other markets,” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s largest fixed-income manager. “All this would add to the headwinds facing economic growth. It would also undermine the role of the U.S. in the world economy.”


Jim Sinclair’s Commentary

This is a problem that might just not be solved by a rise in the symbolic only debt limit.

It is the size of the debt that is the problem.jes

White House openly threatens US default as debt fight escalates
US Treasury Secretary Jacob Lew has issued a categorical warning that the United States will default on its $16.7 trillion debt and throw the world into turmoil unless Congress agrees to raise the legal debt ceiling by October 17.
By Ambrose Evans-Pritchard
8:32PM BST 06 Oct 2013

“Congress is playing with fire. If the US government, for the first time in its history, chooses not to pay its bills on time, we will be in default,” said Mr Lew.

“Anyone who thinks that the United States government not paying its bills is anything less than default hasn’t thought about it very clearly,” he told NBC’s Meet the Press.

Mr Lew said the treasury had already exhausted its normal funds in May and has been “creating room” by resorting to one-off tricks, but these, too, have run dry. The government will have just $30bn by October 17, half what is needed to cover immediate needs over subsequent days.

“That is a dangerously low level of cash, and we’re on the verge of going into a place we’ve never been. Even getting close to the line is dangerous,” he said.

Mr Lew’s dramatic comments mark a further escalation in the game of chicken on Capitol Hill. They suggest that the White House has for now ruled out a drastic fiscal squeeze to balance the books if there is no deal, and is unwilling to contemplate exotic loopholes – such as a $2 trillion platinum coin – to circumvent the will of Congress.


Jim Sinclair’s Commentary

Is this an example of a change in the acceptance of illegality and the prosecution of people, not fine taking? Yes, small but important.

Greek ex-minister gets 20 years in jail

A court in Greece has sentenced former defense minister, Akis Tsochatzopoulos, to 20 years in prison for money laundering.

The court found Tsochatzopoulos and 16 of his co-defendants guilty in a six-million money laundering case that has become emblematic of political corruption in the European country.

Akis Tsochatzopoulos, 73, a founding member of the socialist Pasok party and a leading figure on the Greek political stage for the past 30 years, served as defense minister from 1996 to 2001.

The ex-minister and his accomplices have been found guilty of money laundering from bribes in the purchase of military hardware, including Russian anti-aircraft missiles when he was in office.

“There were so many bribes he could not even calculate the total amount,” Prosecutor Georgia Adilini said, citing sums of money transferred in “bags, suitcases, cheques, bank accounts, businesses”.


Jim Sinclair’s Commentary

Any step forward for the euro is a step backwards for the US dollar.

Confidence is the key to a currency. In the Information Age this is bad PR for the US dollar.

BERLIN | Thu Oct 18, 2012 2:19am EDT

(Reuters) – Panama would like to introduce the euro as legal tender alongside the U.S. dollar, President Ricardo Martinelli told German Chancellor Angela Merkel on Monday during a visit to Europe.

"In Panama the currency in free circulation is the American dollar and I told the chancellor we are looking for ways for the euro to become another currency of legal circulation and to be accepted in the Panamanian market," President Ricardo Martinelli told a joint news conference with Merkel in Berlin.

Martinelli provided no details about the switch but he expressed "full confidence" in the German and European economies and said he expected the euro zone debt crisis would soon pass.

Seventeen of the European Union’s 27 member states are in the euro zone but euros are also in circulation in a number of non-EU countries, including Kosovo and Montenegro in the Balkans as well as tiny Monaco and Andorra, and in overseas territories.

Panama’s dollarized economy – almost 10,000 kilometers from mainland Europe – is one of the fastest growing in Latin America, expanding 10.6 percent last year with help from heavy infrastructure spending including the expansion of the Panama Canal.



Jim Sinclair’s Commentary

The age of blatantly manipulated markets has come to an end. Gold will reflect that soon.


Jim Sinclair’s Commentary

The 2nd amendment goes international.

Obama Administration Signs United Nations Arms Trade Treaty
Submitted by cbaus on September 25, 2013 – 4:00pm.

Today, Secretary of State John Kerry signed the United Nations Arms Trade Treaty on behalf of the Obama administration. The National Rifle Association strongly opposes this treaty, which is a clear violation of the Second Amendment to the U.S. Constitution.

"The Obama administration is once again demonstrating its contempt for our fundamental, individual Right to Keep and Bear Arms," said Chris W. Cox, executive director of the NRA’s Institute for Legislative Action. "This treaty threatens individual firearm ownership with an invasive registration scheme. The NRA will continue working with the United States Senate to oppose ratification of the ATT."

A bipartisan majority of the U.S. Senate is already on record in opposition to ratification of the ATT. On March 23, the Senate adopted an amendment to its FY 2014 Budget Resolution, offered by Sen. James Inhofe (R-OK), that establishes a deficit-neutral fund for "the purpose of preventing the United States from entering into the United Nations Arms Trade Treaty." This amendment is in addition to the previous efforts of Sen. Jerry Moran (R-KS) and Rep. Mike Kelly (R-PA) to pass concurrent resolutions opposing the treaty in their respective chambers.

Notably, the ATT includes "small arms and light weapons" within its scope, which covers firearms owned by law-abiding citizens. Further, the treaty urges recordkeeping of end users, directing importing countries to provide information to an exporting country regarding arms transfers, including "end use or end user documentation" for a "minimum of ten years." Each country is to "take measures, pursuant to its national laws, to regulate brokering taking place under its jurisdiction for conventional arms." Data kept on the end users of imported firearms is a de-facto registry of law-abiding firearms owners, which is a violation of federal law. Even worse, the ATT could be construed to require such a registry to be made available to foreign governments.

"These are blatant attacks on the constitutional rights and liberties of every law-abiding American. The NRA will continue to fight this assault on our fundamental freedom," concluded Cox.



Jim Sinclair’s Commentary

QE to infinity at increasing levels of activity or this?

This cannot be allowed therefore QE to infinity is the only choice of politicians.

SocGen: End Of QE3 Will Lead To 15% Market Drop, Surge In VIX, Followed By "The Big Sleep"
Submitted by Tyler Durden on 10/07/2013 09:19 -0400

Curious why recently the US stock market has dislocated from its most trusty correlation counterparty: the size of the Fed’s balance sheet (which increased another $13.4 billion last week and up $939 billion Y/Y to a record $3.75 trillion)? Simple: the market is now starting to factor in the end of QE, because while tapering may have been delayed it has not been cancelled. And while the Fed has done everything in its power to destroy the market’s discounting function, when it comes to frontrunning the Fed the market can still think ahead. Especially when frontrunning is no longer on the table.

Which is precisely the basis for the just released forecast by SocGen’s Alain Bokozba, which extrapolates what will happen when the Fed’s balance sheet stops rising, and applies the same drop to stocks as was seen at the end of QE1 (-16%) and QE2 (-17%) and concludes that the "end of QE3 would cost the S&P500 15%" and that following that, absent even more QE of course, "the US equity index should remain relatively flat, burdened by higher yields (rate hikes in mid-2015), a higher US dollar and limited earnings growth (Return on Equity is already high), but supported by better economic prospects and a new shareholder value cycle, staving off a bear market." Or, as SocGen calls it, "the Big Sleep."


Jim Sinclair’s Commentary

I believe GEAB as a fundamental source is excellent. Hold gold, and GOTS.

Excerpt GEAB 60 (December 2011) – The future of the USA – 2012-2016: An insolvent and ungovernable United States
– Excerpt GEAB N°60 (December 16, 2011) –

In this issue, our team gives its anticipations regarding the future of the United States for the 2012-2016 period. We recall that since 2006 and the first GEAB issues, LEAP/E2020 described the global systemic crisis as a phenomenon characterizing the end of the world as we know it since 1945, marking the collapse of the American pillar on which this world order has rested for nearly seven decades. Since 2006, we had identified the period 2011-2013 as that during which the “Dollar Wall” on which the power of the United States sits would fall apart. Summer 2011, with the cut in the United States’ credit rating by S & P, marked an historic turning point and confirmed that the “impossible” (1) was indeed in the process of coming true. Therefore today, it seems essential to provide our subscribers with a clear anticipatory vision of what awaits the “pillar” of the world before the crisis at the point when the crisis moved into “top gear” in summer 2011 (2).

Thus, according to LEAP/E2020, the 2012 election year, which opens against the backdrop of economic and social depression, complete paralysis of the federal system (3), strong rejection of the traditional two-party system and a growing questioning of the relevance of the Constitution, inaugurates a crucial period in the history of the United States. Over the next four years, the country will be subjected to political, economic, financial and social upheaval such as it has not known since the end of the Civil War which, by an accident of history, started exactly 150 years ago in 1861. During this period, the US will be simultaneously insolvent and ungovernable, turning that which was the “flagship” of the world in recent decades into a “drunken boat”.

To make the complexity of the current process understandable, our team has chosen to organize its anticipations around three key areas:

1. US institutional deadlock and the break-up of the traditional two-party system

2. The unstoppable spiral of recession/depression/inflation

3. The breakdown of the US socio-political fabric

This public announcement contains sections 1


Jim Sinclair’s Commentary

Hold gold and GOTS.

Shutdown Spectacle: ‘America Is Already Politically Bankrupt’

As the United States government shutdown enters its second day, Washington is the target of both ridicule and concern overseas. German commentators describe the situation as a "specifically American problem" with far-reaching consequences.

The illustration on the cover of German business daily Handelsblatt on Wednesday morning fairly well encapsulates the way the US federal government shutdown is being perceived across the Atlantic. The Statue of Liberty stands bound in chains, her torch hand hanging listlessly by her side. Across it reads the headline: "The Blocked World Power."

Many Germans have found it hard to understand American lawmakers’ inability to resolve their budget disagreements in time to prevent a shutdown of all nonessential government services, which went into effect at midnight on Monday night. "What Washington currently offers up is a spectacle, but one in which the spectators feel more like crying," writes the conservative dailyFrankfurter Allgemeine Zeitung.

"Because Republicans and Democrats, House and Senate, Congress and president could not agree on a stop-gap budget, hundreds of thousands of federal employees were sent on involuntary leave and many agencies were forced to shut down," continues the editorial. "The main actors in this dispute, which brings together many factors, both ideological and political, took a huge risk and, unhindered, proceeded to validate everyone who ever accused the political establishment in Washington of being rotten to the core — by driving the world power into a budgetary state of emergency. The public is left wondering how things could have been allowed to get to this point and why there is so much poison in the system."