Posts Categorized: In The News

Posted by & filed under In The News.

Jim Sinclair’s Commentary

Now compare President Obama’s presentation in light of Mr. Armstrong’s article!

Obama: This isn’t your ‘run-of-the-mill recession’

(CNN) — President Obama appeared before a national audience Monday night to make the case for his economic stimulus plan, saying this is not your "run-of-the-mill recession."

The president stressed the urgency of passing the roughly $838 billion measure, which his administration and Democratic leaders say will help pull the U.S. economy out of its current skid.

"My bottom line is to make sure that we are saving or creating 4 million jobs, we are making sure that the financial system is working again, that homeowners are getting some relief," he said in his first prime time news conference.

Obama’s remarks came the day before the Senate votes on its version of the stimulus bill. The House passed its version of the stimulus bill nearly two weeks ago — without a single Republican vote. If the measure passes the Senate, the two chambers will have to reconcile the differences between the two bills.

Obama urged Congress "to act without delay," saying that only the federal government can break the "vicious cycle" gripping the U.S. economy.

"It is absolutely true that we cannot depend on government alone to create jobs or economic growth. That is and must be the role of the private sector," he said.

More…

Posted by & filed under In The News.

Dear Friends,

Gold is going to $1650 and that is for starters.

The US dollar is going to .6200 and then .5100.

The Safe Haven Dollar is as stupid now as the Goldilocks Economy and rear view mirror economic events were.

I am getting calls from people who either don’t read or should only be in US dollar treasury bills.

My leash is getting tight so please read JSMineset first. Email me if you do not understand something and if it was ill presented, it will be corrected. Do not call me and ask me if I have changed my mind since I posted something this morning. Remaining polite is becoming hard.

The following amount of money can:

1. Pay off every mortgage in the USA.
2. Send a check for $1400 to ever person on this planet.

Hyperinflation cannot be avoided.

Respectfully yours,
Jim

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
By Mark Pittman and Bob Ivry

Feb. 9 (Bloomberg) — The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

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Jim Sinclair’s Commentary

And finally for this evening a word from Bloomberg for the all the Pollyanna’s out there.

Bank Failures May Reach 1,000 on Bad Loans, RBC Says (Update2)
By David Mildenberg and Margaret Chadbourn

Feb. 9 (Bloomberg) — As many as 1,000 U.S. banks may fail in the next three to five years, almost double the one-year tally at the height of the saving-and-loan collapse, as losses mount on commercial real-estate loans, RBC Capital Markets analysts said.

Most of the failures will probably occur at banks with less than $2 billion in assets as their commercial customers default, said Gerard Cassidy, an analyst at RBC, in an interview today.

“There are billions of dollars of losses embedded in the system, and the system has to flush them out,” Cassidy said. “The people that are going to take the losses are the taxpayers and bank stockholders, and if regulators say there won’t be much loss to taxpayers, they will be lying.”

Regulators are taking steps to help lenders avoid losses as President Barack Obama’s administration readies a rescue package that may include guarantees for toxic assets, according to people familiar with the plan. The Federal Deposit Insurance Corp. closed nine banks so far this year after shutting 25 in 2008 and identified 171 “problem” institutions as of the third quarter.

The FDIC has already raised the estimate for the cost of U.S. bank failures through 2013 after fourth-quarter financial reports from banks signaled possible additional losses to the deposit insurance fund. The agency said failures through 2013 may cost more than the $40 billion estimated in October.

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Jim Sinclair’s Commentary

What, me worry? If I’m not why would you?

IMG_5797

Jim Sinclair’s Commentary

Here is a neat approach. The Fed buys its own paper in amounts in excess of what it issues thereby financing itself and no longer requiring China’s help.

The catch is that the value of the US government would head for the floor as rates went through the roof because there are too many treasuries already out there.

How damn stupid can a central bank be? To the degree they buy their own paper they depreciate the paper already out there. Have you ever seen a stock buyback stop a bear market in the buyback company? All a stock buyback ever does is to allow the insider a firm bid to sell into.

If the Fed does what amounts to a buyback is China the seller?

Fed Lacks Consensus on Treasuries as Yields Rise
By Scott Lanman and Craig Torres

Feb. 9 (Bloomberg) — Federal Reserve officials have failed to resolve an internal debate over whether to purchase long-term Treasuries, even as rising yields on the securities threaten to undermine the central bank’s objective of cutting borrowing costs for consumers and businesses

Policy makers are instead focusing on a program to purchase $200 billion in consumer and small-business loans and on a plan to buy $600 billion in home-finance debt, according to people familiar with the deliberations.

Forgoing purchases of Treasuries may exacerbate a jump in borrowing costs for the government as federal debt managers seek to finance an unprecedented budget deficit. Benchmark 10-year note yields this week exceeded their level of Dec. 1, when Fed Chairman Ben S. Bernanke first talked about the option. That’s raised other borrowing costs, potentially delaying a recovery.

“The Fed will get a lot more bang for its buck by buying mortgages than buying Treasuries,” said John Ryding, founder and chief economist of RDQ Economics LLC in New York and a former Fed economist. “We were kind of a little surprised when the Fed wanted to go down this route” in comments starting in December, Ryding said.

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Jim Sinclair’s Commentary

Hello, I am from the Federal Government here to help you.

GM, Chrysler May Face Bankruptcy to Protect U.S. Debt (Update3)
By Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) — General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

“They are negotiating to see if they can reach an agreement,” said Workman, a bankruptcy lawyer based in Washington. “If not, they are saying ‘We are pretty darn sure that a bankruptcy judge will allow us’” to be first in line for repayment.

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Jim Sinclair’s Commentary

Here is an FYI from CIGA Jesse. Maybe GM deserves to go broke?

General Motors to Invest $1 Billion in Brazil Operations — Money to Come from U.S. Rescue Program
By Russ Dallen
SAO PAULO — General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn’t be logical to withdraw the investment from where we’re growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company’s revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil’s automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.

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Jim Sinclair’s Commentary

Let the truth be known!

You know all these car company got the major axe, not from bad business, but first from the use of OTC derivatives by their credit arm which in turn killed business.

If you cannot borrow money to buy a car, no cars are bought!

Nissan to Cut 20,000 Jobs as Carmaker Forecasts Loss (Update3)
By Makiko Kitamura

Feb. 9 (Bloomberg) — Nissan Motor Co., Japan’s third- largest automaker, said it will slash 20,000 jobs and post its first loss in nine years as the global recession cripples car demand and a stronger yen ravages the value of overseas earnings.

The company expects a net loss of 265 billion yen ($2.91 billion) for the year ending March 31, compared with its October estimate of 160 billion yen in net income. It also scrapped its second-half dividend.

Nissan’s sales in the U.S., its biggest market, plunged 31 percent in January as demand for Altima sedans and Xterra sport- utility vehicles dried up. Chief Executive Officer Carlos Ghosn’s elimination of 9 percent of the workforce caps a month in which all of Japan’s carmakers slashed forecasts and Panasonic Corp. and NEC Corp. cut workers.

“The economic storm is wreaking havoc on everyone,” said Yuuki Sakurai general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets. “Things could get even worse.”

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Jim Sinclair’s Commentary

It is so stupid as not to be stupid.

Money given to Pakistan for any reason goes to them for one reason and into very few pockets.

Damn, country leadership can be a great private enterprise.

Police injured in Pakistan attack
BBC News – UK
A suicide bomber has driven a car loaded with explosives into a police check post in north-western Pakistan, injuring at least 15 policemen.
See all stories on this topic

Video Is Said to Be Polish Hostage’s Beheading in Pakistan
New York Times – United States
By AP DERA ISMAIL KHAN, Pakistan (AP) — A graphic video delivered to reporters on Sunday appeared to show the execution of a Polish engineer by Pakistani
See all stories on this topic

Tougher on Pakistan
News & Observer – Raleigh,NC,USA
27 news article "Taliban clamp down in Swat" suggested the need for new US foreign policy toward Pakistan. US policy undermined India’s democracy and
See all stories on this topic

Losing Hearts and Minds in Pakistan
Washington Post – United States
President Asif Ali Zardari gave a frank assessment of the challenges that Pakistanfaces, as well as outlining the need for US support in improving
See all stories on this topic

Pakistan to Present Mumbai Probe Report to Committee, Geo Says
Bloomberg – USA
9 (Bloomberg) — Pakistan has completed its investigation into the Mumbai attacks and will submit its report to a defense committee today, GEO television
See all stories on this topic

US Skeptical About Pakistan’s Restrictions on Nuclear Scientist
Washington Post – United States
Pakistan has "given us some initial commitments but we’re going to be following [the situation] very closely. The important thing is that they know we are
See all stories on this topic

Pakistan Vows to Monitor Scientist
New York Times – United States
Mr. Khan is a hero in Pakistan for developing the country’s nuclear program, and many claimed the Zardari government was detaining him at the behest of
See all stories on this topic

Nuclear Scientist Khan Isn’t Threat, Pakistani Minister Says
Bloomberg – USA
8 (Bloomberg) — Pakistan will ensure that nuclear scientist Abdul Qadeer Khan doesn’t resume selling atomic technology to other countries after his release
See all stories on this topic

Pakistan enjoys world support against Indian ‘designs’: Gilani
Daily Times – Lahore,Pakistan
Gilani described reported Indian plans to get Pakistan declared a ‘terrorist state’ as wishful thinking, and said Pakistan’s diplomacy and foreign policy
See all stories on this topic

US envoy Holbrooke to reach in Pakistan today
Times of India – India
MUNICH: US special envoy Richard Holbrooke will arrive in Pakistan on a two-day visit on Monday, Geo TV reported. He will hold separate meetings with
See all stories on this topic

Posted by & filed under In The News.

Men acquire a particular quality by constantly acting a particular way… you become just by performing just actions, temperate by performing temperate actions, brave by performing brave actions.
–Aristotle

 

Dear Friends,

Of all the charts concerning the Weimar Experience, one needs your clear understanding as it may seem to be a great contradiction. That chart is of the Weimar Equity Market during a period that could be similar in many ways to that which is coming in the future of the US dollar.

Should the uptick rule be reinstated internationally and forcefully applied in Canada (the front door of naked short sellers to the world) as the US dollar meets its fundamental destiny, then equities could put on and out do the 1930 rally before a total collapse (as occurred in the Weimar Equity Market experience).

Respectfully yours,
Jim

Click chart for more…

weimar_stocks

 

Jim Sinclair’s Commentary

The US dollar and US dollar proxies all top in the form of up-trending neckline head and shoulders.

$USD - SharpCharts from StockCharts_Page_1

 

Jim Sinclair’s Commentary

All that I have warned you about in the timeframe of reference (2000 to 2011) will come to the forefront. Here is the reason that no politician on this amoral planet has the stomach for.

The selection between many Kent State executions or hyperinflation will end up with hyperinflation. That is fact.

WTO chief warns of looming political unrest

BERLIN (AFP) – The global economic crisis could trigger political unrest equal to that seen during the 1930s, the head of the World Trade Organization (WTO) said in a German newspaper interview Saturday.

"The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time," Pascal Lamy told the Die Welt newspaper.

Questioned about the risks of political instability, Lamy — who wraps up his four-year term as WTO director-general in September — responded that that was "the main danger".

"This crisis weighs heavily on politics and puts peace in danger," he said.

"Some democracies are old and sufficiently stable to overcome such problems, (but) others are going to be confronted by unrest and inter-religious and inter-ethnic conflicts."

He went on to warn against protectionism, saying it would be "wrongly easy" for nations to throw up trade barriers in response to the economic and financial downturn.

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Jim Sinclair’s Commentary

Damned if you do and double damned if you do not!

Stimulus will lead to ‘disaster,’ Republican warns

 

WASHINGTON (CNN) — Leading Republicans warned Sunday that the Obama administration’s $800 billion-plus economic stimulus effort will lead to what one called a "financial disaster."

"Everybody on the street in America understands that," said Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. "This is not the right road to go. We’ll pay dearly."

Shelby, of Alabama, told CNN’s "State of the Union" that the package and efforts to shore up the struggling banking system will put the United States on "a road to financial disaster."

But Lawrence Summers, the head of the administration’s National Economic Council, said Republicans have lost their credibility on the issue.

"Those who presided over the last eight years — the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that’s collapsing more rapidly than at any time in the last 50 years — don’t seem to me in a strong position to lecture about the lessons of history," Summers told ABC’s "This Week."

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Jim Sinclair’s Commentary

The future of the dollar is poor to none.

Recent dollar strength is no different from any of the manias we have experienced in the past eight years. 30 year bonds at 147 is the most recent moment of market madness.

The Fed balance sheet qualifies it as the USA’s own "Bad Bank." That condemns the US dollar to monetary hell once the foolishness of the dollar as a "Safe Haven" is spent.

Dan Norcini’s Commentary

The following article goes to emphasize what Jim has stated repeatedly since the bailouts began in earnest, namely that the Fed has become the largest hedge fund of them all.

Also, when that former Fed governor let slip a while back in that video clip that played widely on YouTube that the Fed could always upwardly revalue the official gold holdings from its current value down near $42. Only the gold community caught the significance of that Freudian “slip” of the tongue.

They have no way out of this man-made disaster except to upwardly revalue gold which is simply another way of saying devalue the dollar. Unless that occurs, the monetary system in its current form will not survive and a Bretton Woods II will be needed. I see no way to ever make good on the sheer size of indebtedness that has been created without a currency devaluation – if one could ever call such an occurrence, “making good”. Good for the issuer of the debt but certainly not for the owner.

The Insolvency of the Fed
Daily Article by Philipp Bagus and Markus H. Schiml | Posted on 2/5/2009 12:00:00 AM

Since August 15, 1971 the US dollar has been an irredeemable paper currency. Every irredeemable paper currency in history has failed. Yet, the experiment of the US dollar and the rest of the fiat paper world continues.

During the current crisis, however, financial systems all over the world are increasingly struggling, and the end of the experiment seems closer. In fact, the Federal Reserve System has used up much of its "ammunition" for monetary interventions in an attempt to keep the experiment going, lowering its target interest rate almost to zero. Other central banks are also quickly approaching the "zero limit" for interest rates.

Figure1

During these inflationary decades, economic structures have developed that can only survive with falling interest rates. As the world approaches a zero interest rate, it appears that finally there might be a full adaptation of the structure of production to the demands of consumers, and the experiment might come to an end.

Yet, has the Fed really "run out of ammunition"? First of all: what is the Fed shooting at? It is trying to artificially stimulate the economy with its monetary policy, thereby it is also unwittingly shooting at the value of the currency. Through its monetary policy, the Fed is trying to bail out an insolvent and illiquid banking system to maintain an unsustainable structure of production. As long as the currency is not totally destroyed, the Fed will never run out of ammunition. In order to assess the ammunition left, one should have a look at the balance sheet of the Federal Reserve — especially at the assets the Fed can still obtain. The Fed’s balance sheet also gives insights on the condition or quality of the dollar.

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Jim Sinclair’s Commentary

This was the great US Balance of Trade "plus" tool that now is heading in the deficit way.

Boeing jet orders: Minus 13
More ’09 cancellations may cut production
By JAMES WALLACE
P-I AEROSPACE REPORTER

With the cancellation of another 16 orders for its 787 Dreamliner, which is two years late, The Boeing Co. has started out 2009 losing more orders than it has won.

Number of canceled orders in 2009

Boeing has won 18 orders and lost 31 through cancellations. A Russian airline backed away from its order for 15 Dreamliners a week ago. The latest 787 order cancellation came from a Dubai leasing company.

Underscoring just how difficult the current industry downturn will be, Boeing Chief Financial Officer James Bell told an industry conference Thursday that Boeing might have to lower production rates in 2010. Bell did not say so, but if fewer planes are built the company could trim or reassign some of the people who assemble its jets in Renton and in Everett.

Boeing recently announced it will reduce its work force by about 10,000 jobs this year — about half of those jobs in the Puget Sound area. The cuts are a result of the global recession and economic crisis. Airlines are cutting capacity as traffic falls. But so far, Boeing has said that most of the job losses will not be related to production because it wants to keep building jets at current rates, given a record backlog of planes.

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Jim Sinclair’s Commentary

A safe haven? Only a moron attaches that to the US dollar.

U.S. Debt Default, Dollar Collapse Altogether Likely
February 03, 2009

The prospect of the United States defaulting on its debt is not just likely. It’s inevitable, and imminent.

The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end – the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index.

Is 2009 the year that the United States formally defaults? And with that, will the dollar collapse be rolled back ten for one or more?

There are a lot of reasons to support that theory. To Wall Street economists, such an event is heresy and therefore unthinkable. Yet Wall Street is the very La-la-land that bred the idea of a perpetually indebted nation in the first place.

Number one among the indicators favoring this scenario is what is happening in the U.S. Treasuries auction market.

Last Thursday, an $30 billion auction in five-year notes failed to stir the interest of traditional primary dealers. The auction itself was saved by an anonymous “indirect” bid.

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Jim Sinclair’s Commentary

Are you looking for the money you have lost in your IRA’s at the hand of the predatory beings of the hedgie’s world? I can tell you where a lot of it has been spent.

Ex-Madam says clients paid with corporate credit cards
07 February 2009 00:54 AM

NEW YORK (Reuters) – A former madam of a high-priced New York prostitution ring alleges in a U.S. television interview to be aired on Friday that investment bankers, Wall Street lawyers, CEOs and media executives often paid for her services using corporate credit cards.

The former madam, Kristin Davis, said her clients included investment bankers from JPMorgan, Goldman Sachs, Merrill Lynch, Lehman Brothers and Deutsche Bank, according to an article about the interview posted on ABCNews.com.

The banks either declined comment or did not immediately respond to a request for comment from Reuters.

ABC news said that Davis’ client list also included a vice president of a major media company, the part owner of a Major League Baseball team, the CEO of one of the country’s largest private equity firms and a major New York real estate developer.

"Some of these guys I was invoicing on corporate credit cards," Davis told ABC’s "20/20" news magazine, according to the station’s website.

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Jim Sinclair’s Commentary

1. Israel makes a major error in judgement.
2. Pakistan goes nuclear into the wrong hands.
3. Turkey is a victim.
4. January 14th 2011

Obama’s biggest foreign policy challenge? It’s Pakistan
By JONATHAN S. LANDAY AND SAEED SHAH
McClatchy Newspapers

A nearly completed U.S. military study is expected to say that nuclear-armed Pakistan, not Iraq, Afghanistan or Iran, is the most urgent foreign policy challenge facing President Barack Obama.

Pakistan – convulsed by a growing al-Qaida-backed insurgency, hamstrung by a ruinous economy and run by an unpopular government that’s paralyzed by infighting and indecision – is critical to U.S. efforts to stabilize Afghanistan, thwart the spread of nuclear weapons and prevent tensions with neighboring India from escalating into a nuclear showdown.

The U.S. Central Command review is assessing the situation in the Middle East and South Asia as the Obama administration plans to draw down U.S. forces in Iraq and double the 30,000-strong American military presence in Afghanistan, several people involved in the study told McClatchy Newspapers. They spoke on condition of anonymity because the study is still underway and they weren’t authorized to discuss it publicly.

The assessment, they said, is expected to recommend major changes in the U.S. approach to the volatile region, including major increases in U.S. aid to Pakistan in areas such as public education, health care and good governance, in a bid to stem the poverty and illiteracy that help fuel the country’s Islamic insurgency.

Stepped up non-military aid also could ease popular anger at the government and its chief ally, the United States, which many Pakistanis accuse of stoking the insurgency by relying primarily on military offensives and missile strikes that have claimed numerous civilian lives, the officials said.

More…

Pakistan heads toward crisis as coalition flounders
U.S. looks on with alarm as key Western ally’s inability to deal with jihadist menace threatens to destabilize region
SAEED SHAH
Special to The Globe and Mail
February 7, 2009

ISLAMABAD — Almost a year after elections were held in Pakistan, which restored democracy after more than eight years of military rule, growing Islamist violence, a crisis of governance and an economy in a tailspin threatens this key Western ally with collapse.

The new U.S. administration of President Barack Obama has made Pakistan one of its foreign policy priorities. Aides say that the U.S. President is "scared" by what he sees in Pakistan, a country that is crucial to meeting his goals of stabilizing Afghanistan and routing al-Qaeda. Next week, Richard Holbrooke, the special envoy just appointed to handle Afghanistan and Pakistan, arrives in Islamabad on a fact-finding mission, which is expected to be followed by swift action by Washington.

Critics say the Pakistani government is gripped with paralysis, as patronage, not policy, occupies Islamabad under President Asif Zardari. Some see echoes of the last period of civilian rule in Pakistan, between 1988 and 1999, when a series of floundering governments were repeatedly toppled by the army amid allegations of massive corruption and misrule.

Already the military and civilians are privately blaming each other for inaction as jihadists push ever deeper into the country from the northwest, with a de facto extremist mini-state now existing in Swat, a valley just 160 kilometres from the capital, Islamabad. Along the border with Afghanistan, Taliban and al-Qaeda enjoy a safe haven, undermining the international coalition’s fight against insurgents in Afghanistan.

More…

What kind of ally is Pakistan?
Saturday, February 7, 2009

It could be an episode of "24." A rogue bombmaker peddles nuclear weapon technology to Iran, North Korea and Libya. He’s caught but then set free in the seething, violent politics of his home country.

This isn’t a Hollywood script. It’s the real-life story of A.Q. Khan, the father of Pakistan’s nuclear program. On Friday he was freed from house arrest in the country’s capital in a move that drew sharp criticism from Washington.

Pakistani leaders served up the awkward news as a hands-off legal matter and the end of a lengthy court case that began when Khan was arrested in 2004. But it carries another meaning – a very troubling one – for Pakistan’s neighbors and allies.

Quite simply, the nation isn’t a reliable force for peace or stability in a central front of the terrorism fight. Khan was accorded the status of a populist hero, a scientist who gave his country a mighty weapon to hold far-bigger India at bay. When he set up a black market network to sell nuclear supplies to three of the worst countries imaginable, he was given wrist-slap treatment and protected from international investigators.

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Posted by & filed under In The News.

Dear Friends,

1. The position of Volcker as Chairman of the Economic Advisory Board is a window dressing presently to placate conservatives.
2. Chairman Volcker is there, but on his own agenda, no one else’s.
3. Chairman Volcker, assuming he is blessed with eight more years of life, will once again perform as Master of the Financial Universe, saving whatever then is left of the USD.
4. All you need to do is review Chairman Volcker’s previous and present words to understand that agenda.
5. Yesterday, Chairman Volcker said it would cost trillions more, not billions, to paste together the tattered economy.
6. Chairman Volcker historically has defined the economic condition we are in as the Mother of Financial Crises. MOTHER OF ALL.
7. Chairman Volcker historically has said that the US dollar will decline as long as no policies are put in place with the proven capacity to change deficits towards surpluses.
8. Chairman Volcker had the total backing of the then sitting Administration when he bankrupted the USSR in the early 1980s.
9. Chairman Volcker will act when conditions get so terrible that the sitting Administration applies to him for his help. There will be a price for that help.
10. The Federal Reserve Gold Certificate Ratio, modernized and revitalized, will be adopted as I have outlined to you multiple times.
11. The Chairman will require that policies be put in place that have historical precedent to cause deficits to move towards surpluses, untenable now.
12. That mark to the low is a pummelled dollar below .5100 USDX.
13. This will mark the time for long term investment in companies leading the technology and biomedical fields of that time.
14. As a result of the "FRGCR" the price of gold will go up and remain up. This will effectively defeat 99.9% of the present gold writer’s outlooks for the metal.
15. I believe the most successful owners of gold will be the Carlyle corporation.
16. I believe the consolidator of the gold industry, assuming they rise to Russian and Chinese competition, will be Barrick. This has also been outlined to you multiple times.

Respectfully yours,
Jim

Obama names outside economic advisory panel

Published: Friday February 6, 2009

President Barack Obama on Friday charged a new Economic Recovery Advisory Board to provide him with independent advice on pulling the United States out of recession.

The president signed an executive order formally creating the board which will hold regular briefings for Obama and Vice President Joe Biden and will be under the chairmanship of former Federal Reserve chief Paul Volcker.

The board will be modelled on the Foreign Intelligence Advisory Board that offers the president an independent viewpoint on intelligence issues, the White House said.

Volcker, 81, played a prominent role during Obama’s election campaign, providing him with economic advice and gravitas as the US meltdown developed.

The announcement came on a day when new government data showed unemployment surging to 7.6 percent — the highest since 1992, as 598,000 jobs were cut.

Among other business figures on the new board were Obama supporter Penny Pritzker, chairman of the Pritzker Realty Group and former Obama campaign finance chair, Charles Phillips, President of the Oracle Corporation and Laura D’Andrea Tyson, a former Clinton administration economic official.

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Jim Sinclair’s Commentary

Every bank has its own Patsy.

You know those trillion dollar deals don’t really stand out too well. Quadrillion dollar deals must be totally invisible.

Ever heard the words Compliance, Ethics and Oversight?

More major BS in a spin it all world.

Deutsche Bank Fallen Trader Left Behind $1.8 Billion Hole
By SCOTT PATTERSON and SERENA NG

The fall of Boaz Weinstein, once one of Wall Street’s hottest traders, speaks volumes about why financial firms still are reeling from the shattered global markets.

As a chess master, poker and blackjack devotee and top trader at Deutsche Bank AG, Mr. Weinstein made big bets using complex financial instruments, generating large returns for the bank and about $40 million in annual pay for himself. But in 2008 the group he ran saddled the bank with $1.8 billion in losses, erasing more than two years of trading gains.

On Thursday, the German banking giant reported a 2008 loss of $5 billion (€3.9 billion), its first one-year loss in over five decades and a reminder that financial firms are not out of the woods. In an earnings conference call, Chairman Josef Ackermann described the market environment as a "series of earthquakes with constantly changing epicenters."

The losses are the latest reminder of the challenges faced in the new financial order. Wall Street firms long relied for much of their profit on massive risk-taking by aggressive traders deploying the firms’ own money; with that game over, firms are struggling to find fresh sources of revenue.

But first they must stabilize their institutions after the holes dug by former Masters of the Universe. Last month, Deutsche Bank shut down Mr. Weinstein’s operation and wound down many of his positions. He left the bank this week, with plans to start a hedge fund.

More…

 

Jim Sinclair’s Commentary

Today in Pakistan.

India: Official Accuses Pakistan in Mumbai Attacks
By REUTERS
Published: February 6, 2009

India has for the first time directly accused Pakistan’s Inter-Services Intelligence spy agency of links to the planners of the terrorist attacks in Mumbai in November. “The perpetrators planned, trained and launched their attacks from Pakistan, and the organizers were and remain clients and creations of the ISI,” Shivshankar Menon, India’s foreign minister, said in a speech in Paris. Mr. Menon accused Pakistan of “prevarication” in investigating the attacks, which killed more than 160 people. The speech, delivered Wednesday, was released to the news media on Thursday. Pakistan said Indian officials should avoid making such statements at a time when Islamabad was in the process of investigating the matter.

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Pakistan nuclear scientist ‘free’

A court in Pakistan has freed disgraced nuclear scientist Abdul Qadeer Khan from house arrest.

Dr Khan, who has been under tight restrictions since 2004, can now leave home and receive visitors.

Dr Khan welcomed the ruling and said he was not bothered what the international community thought of his release.

Dr Khan admitted transferring nuclear secrets to other countries in 2004 but was later pardoned by former Pakistani President Pervez Musharraf.

The US has repeatedly said it wants to question Dr Khan but Pakistan has always refused access.

More…

Reflecting upon Pakistan and Its Nuclear Weapons
February 6, 2009 – 12:00am
By Luis de Lencquesaing

The centrality of Pakistan was first revealed to me two summers ago. I was visiting Cornell friends in Islamabad and Lahore. During a dinner conversation I had with the Turkish ambassador — a diplomat who impressed me by his particularly refined vision of the global dynamics — the topic of Pakistan’s role in the world came up. The ambassador emphasized the strategic role of Pakistan, which sits at the juncture of the broader Middle-East and South Asia.

Is Pakistan not parted in two by the Indus River, on the banks of which Alexander the Great died, and which academics often define as the border between these two universes? This duality is not only geographic, but also cultural. Whether walking down the streets of Lahore, or crossing through villages in the Kashmiri mountains, I was struck by the contrast between the joyful women in their blue or pink Punjabi Shalwar Kamiz with a veil negligently passed over their heads, and the women in black Burkas, with only their mysterious eyes visible. The relaxed Islam of South Asia coexists with Saudi Wahhabism. Pakistan belongs to both worlds. Although Vice President Biden probably was not thinking about the Pakistani women when he visited the country a few weeks ago — I guess you have to be French and 20 for that — he certainly was signaling that in the crucial regions of the Middle East and South Asia, Pakistan is the key actor. For that reason alone, it is the center of the world.

Dryden Road. Jan. 28, 2009. 7:30 a.m. I peek out the window from under my covers, see a snow storm, and wonder why I am not studying in California.

I get to the Statler for a working breakfast organized by the Cornell International Affairs Review on nuclear weapons in Pakistan. Gaurav Kampani, a graduate student in the government department who works on the politics of nuclear proliferation gave us a pessimistic presentation. In the midst of such a “wave of hope,” this talk reminded us that President Obama’s magic may not be enough to solve all the problems of the world between now and Slope Day.

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Jim Sinclair’s Commentary

Hedge funds at the dock.

Market Rap – Bernard Madoff, the Mafia, and the Friends of Michael …
In 2005, Patrick Byrne, the CEO of Overstock.com (OSTK) and future Deep Capture investigative reporter, began a public crusade against illegal naked short selling (hedge funds and brokers creating phantom stock to manipulate stock … It is a common misperception that Boesky’s testimony led to the 98-count indictment of Michael Milken. Considering the scope of business the two criminals did together, Boesky actually provided very little information to the government. …
Recent Articles – http://www.marketrap.com/article/selected_articles

Judge Orders Accused NY Lawyer Freed on Bail – Funds and ETFs * US…
A U.S. grand jury indicted Dreier on Jan. 30, accusing him of securities fraud, conspiracy and wire fraud for lying to hedge funds and investment funds that he was selling notes on behalf of a New York developer and a pension fund in …
CNBC Top News and Analysis – http://www.cnbc.com/

New York investment fraud lawyer Marc Dreier bailed out! | Press …
By heather 
As reported by Reuters, Dreier, a high profile New York attorney for 30 years, wasindicted by a US federal grand jury for securities fraud, conspiracy, wire fraud, misrepresenting hedge funds and investment funds in New York and …
JusticeNewsFlash.com | Legal… – http://www.justicenewsflash.com/

[Updates] Riveting Testimony by a Great American, Harry Markopolos …
By Larry Doyle 
When Mr. Markopolos remarks that FINRA is in bed with the industry, is he referencing that they are invested in hedge funds, fund of funds, and private equity? Our new SEC chair, former FINRA chair Mary Schapiro, ….. Many of these people shouldn’t be appointed, they should be indicted. I guess honest and decent people like Harry Markopoulos don’t have a place in today’s governments. Obama promised change, but he has filled his administration with corrupt and incompetent …
NO QUARTER – http://www.noquarterusa.net/blog/

The Divagator: Considerations of Huntington
By The Divagator 
2008 Was Lean Year for New Hedge Funds – Raising money to start any new venture was tough last year, but especially so if you were a hedge fund. Assets for new hedge-fund launches declined 35 perc… 23 minutes ago. Volokh Conspiracy …Germans Probe Report Of Nazi Doctor’s Death – German TV network says concentration-camp doctor Aribert Heim died in Cairo in 1992. He was indicted in Germany in absentia in 1979 on hundreds of counts o… 2 hours ago …
The Divagator – http://divagator.blogspot.com/

 

Jim Sinclair’s Commentary

Pension funds are broke and those anticipating retirement are going to get a royal screwing. This is another problem akin the 1950’s Japanese SciFi wherein the unstoppable green blob ate the earth. Recognition that practically all major retirement fund are broke is the one that fires social unrest and hyper inflation. The green blob is the present economic rescue plan and the seven to follow.

Ford May Add $4 Billion to Pensions, Spurring Aid Bid (Update2)
By Keith Naughton

Feb. 6 (Bloomberg) — Ford Motor Co. may have to contribute $4 billion to its pension plan after a 2008 shortfall, a cash drain that risks dragging the second-largest U.S. automaker closer to a federal bailout.

The collapsing stock market left the fund with a $4.1 billion deficit for its projected obligations, after 2007’s $3 billion surplus, Ford said in its fourth-quarter financial results. That may force an infusion of money starting next year, according to the viability plan filed with Congress in December.

Such spending would add to the strain on the only Detroit automaker not relying on government aid. With U.S. auto sales at their lowest since the early 1980s, Ford said Jan. 29 it lost a record $14.6 billion last year and tapped its entire $10.1 billion credit line while the money was still available.

“The pension is another demand on cash at a time when Ford cannot really afford it,” said Pete Hastings, a fixed-income analyst with Morgan Keegan Inc. in Memphis, Tennessee.

Ford is working to pare costs through steps such as closing plants and is trying to raise money by selling its Volvo unit. The Dearborn, Michigan-based automaker is in early talks with China’s Geely Automobile Holdings Ltd., people familiar with the matter have said.

More…

Jim Sinclair’s Commentary

8th in 2009 and counting.

California’s Alliance Bank marks eighth failure of the year
By John Letzing
Last update: 7:42 p.m. EST Feb. 6, 2009

SAN FRANCISCO (MarketWatch) — Culver City, Calif.-based Alliance Bank was closed by regulators Friday, marking the eighth bank failure of the year amid the ongoing credit crisis, the Federal Deposit Insurance Corporation said. San Diego-based California Bank & Trust has agreed to assume the failed bank’s deposits, the FDIC said. Alliance Bank had $1.14 billion in assets and $951 million in total deposits as of Dec. 31, the FDIC said.

More…

 

Jim Sinclair’s Commentary

This is not capable of correcting the economic malaise as it does not even address the real problem.

It is quite capable of initiating the inflationary potential of monetary stimulation without any historical precedent.

The adventure begins now, which will culminate in an inflation of such dimension that it also lacks historical precedent.

Reinstate the uptick rule guys if you want a hand from an equity rally of some duration.

Senators Reach Accord on Stimulus Plan as Jobs Vanish
By CARL HULSE and DAVID M. HERSZENHORN

Published: February 6, 2009

WASHINGTON — Spurred by a dismal unemployment report for January and prodded by President Obama, senators reached an accord on Friday evening on an economic stimulus program of some $780 billion.

Democrats succeeded, after a long day of private negotiations and intense public debate, in winning the support of enough Republicans to move the package toward a final Senate vote, where Democrats are confident of passage, given the support announced by several Republicans. Exact outlines of the accord, which is somewhat smaller than the amount originally sought by President Obama, were not immediately available, but the senators agreed to cut some spending and strip out some business tax cuts to gain enough Republican support.

Senator Harry Reid of Nevada, the Democratic majority leader, hailed the agreement. “This is a very critical juncture for our great country,” he said on the Senate floor.

The timing of the Senate vote was not clear, but Mr. Reid signaled that action could take place over the weekend. Once it the package is approved, differences between the Senate legislation and a considerably different version passed recently by the House will have to be reconciled. President Obama has said he hopes all that can be accomplished in time for him to sign the measure within 10 days.

Three centrist Republicans, Arlen Specter of Pennsylvania and Olympia J. Snowe and Susan Collins, both of Maine, were among the senators wooed by Democrats, whose efforts were bolstered by Rahm Emanuel, the president’s chief of staff, who is a former Congressman from Illinois.

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Posted by & filed under In The News.

Dear Friends,

A society that promotes lies (make believe computer based asset valuation by fiduciaries) as truth (real value) for the profit of the few is NOT a society, but rather a group of animals destined for their own immediate destruction.

Most unfortunately these Wall Street Fat Cat few destroy the many common men in their manic pursuit of personal wealth and egocentric power.

A move like this certainly puts the second coming of our new leadership in question. It screams that the new administration is simply business as usual – fraud.

Millions of attendees at the inauguration prayed otherwise. What a sham if this rumor has any basis.

What a slap in the face for those millions attending the recent inauguration.

Accounting rule change hopes spur Wall St. rally (Reuters)

NEW YORK (Reuters) – Stocks rallied on Thursday on investor hopes that the government’s plan to shore up the financial system will include a change in accounting rules that would stem bank write-downs and spur lending.

Bank stocks reversed losses in late morning to lift the Dow off its lowest level since the bear market low of November 21.

Bank of America (BAC.N) finished up 3 percent, while JPMorgan (JPM.N) rose 2.1 percent and the S&P financial index (.GSPF) rose 1.4 percent. A solid January sales report from Wal-Mart (WMT.N), coupled with better-than-expected reports from a few other retailers added to the positive tone.

"Anything that helps the banks is helpful for the economy if they can start lending," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in Lisle, Illinois. "Wal-Mart news was good, so that also helped."

The Dow Jones industrial average (.DJI) rose 106.41 points, or 1.34 percent, to 8,063.07. The Standard & Poor’s 500 Index (.SPX) gained 13.62 points, or 1.64 percent, to 845.85. The Nasdaq Composite Index (.IXIC) climbed 31.19 points, or 2.06 percent, to 1,546.24.

The S&P 500 is now off 6.4 percent since the start of 2009, but has risen 12.4 percent since the bear market low hit in November.

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Jim Sinclair’s Commentary

Oh my god, where is the rage?

Bush SEC Holdovers Cite Executive Privilege, Refuse to Answer Questions at Madoff Hearing
By Susie Madrak Thursday Feb 05, 2009 3:01pm

David Sirota on yesterday’s hearing about Bernie Madoff:

At a contentious Financial Services Committee hearing today about the failure of the Securities and Exchange Commission to prevent the Bernie Madoff scandal, the SEC’s General Counsel cited executive privilege as reason that he and the SEC’s enforcement branch were refusing to answer congressional inquiries. You can watch the video here – the executive privilege issue comes at about 5 minutes and 15 seconds into the clip.

As you’ll see, SEC officials refuse to answer the committee’s basic questions about the Madoff scandal, and the agency’s acting general counsel, Andy Vollmer (a Bush holdover and maxed-out donor to John McCain’s presidential campaign) explicitly cites executive privilege as his legal rationale for refusing to provide basic information to federal lawmakers.

Congress has a constitutional obligation to engage in basic fact finding, both in order to legislate reforms at the SEC and to publicly expose how our economy was destroyed by sharks like Madoff. Now, Bush holdovers at the SEC are using executive powers – powers that are now President Obama’s – to prevent Democratic lawmakers from doing their job.

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Jim Sinclair’s Commentary

Today in Pakistan. Another challenge for President Obama.

Seven dead in Pakistan blast: hospital

MULTAN, Pakistan (AFP) — A bomb exploded near a Shiite mosque in the town of Dera Ghazi Khan in central Pakistan on Thursday, killing at least seven people, a hospital doctor said.

Police said the bomb was planted outside the mosque and exploded shortly before a religious gathering got under way.

"I have seen seven bodies," Doctor Pervez Haider, the head of the local hospital, told AFP by telephone.

"We have shifted 25 people to the local hospital, eight of them were in critical condition," local police chief Maqsoodul Hassan said.

The blast shattered windows in nearby buildings, local residents said.

The location of the explosion — close to a Shiite mosque — raised fears that the bombing could be the latest episode in a wave of sectarian violence to rock Pakistan, an overwhelmingly majority Sunni Muslim country.

More…

Indian Official Links Pakistan’s Spy Agency to Mumbai Attacks
By VOA News
05 February 2009

India’s foreign secretary says Pakistan’s spy agency is linked to planners of the Mumbai terrorist attacks that killed more than 170 people in November.

Shivshankar Menon says the organizers planned, trained and launched the attacks from Pakistan, and that they were and remain clients of the Inter-Services Intelligence, Pakistan’s spy agency.

Indian leaders have repeatedly said that Pakistan’s intelligence agencies have had some role in the Mumbai attacks.

Recently, Indian Prime Minister Manmohan Singh said the terrorists who carried out the Mumbai attacks "must have had the support of some official agencies in Pakistan."

Pakistan’s government rejected Mr. Singh’s remarks as little more than a "propaganda offensive."

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Jim Sinclair’s Commentary

Did you suspect anything different?

Regulator Says Bailout Fund Overpaid Banks
By JACK HEALY
February 6, 2009

Add this to the list of complaints about the government’s Wall Street bailout: When Washington was buying pieces of banks last year, it may have overpaid, by as much as 30 percent.

A regulator overseeing the government’s $700 billion bailout testified Thursday that the Treasury Department paid $254 billion for $176 billion of assets — a shortfall of $76 billion.

“Treasury paid substantially more for the assets it purchased under the TARP than their then-current market value,” said Elizabeth Warren, chairwoman of the Congressional Oversight Panel examining the Troubled Asset Relief Program, or TARP. She cited a valuation study as evidence of the overpayment.

The figures were calculated by studying 10 transactions and then extrapolating their results to all of the TARP purchases in 2008, Ms. Warren said.

“There may be good policy reasons for overpaying,” Ms. Warren said. “But without a clearly delineated reason, we can’t know.”

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Jim Sinclair’s Commentary

Food for thought – is your local bank safe? Probably not.

Banks Sitting On An Inventory Time Bomb
Posted By: Diana Olick
Wednesday, 28 Jan 2009

An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.

Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I’m wondering why? Why are the banks sitting on all these properties instead of listing them for sale?

Okay, a couple of posibilities:

* The inventory of foreclosed properties has just exploded so rapidly and in such high volumes that the banks can’t process it all as fast as they would like to.

* In a lot of cases it’s taking longer to process the foreclosures themselves and the homes are getting trashed. Before the bank puts the house up for sale it has to do all the repair work, and now more repair work is needed.

Now here’s a possibility that is a bit more disturbing. Rick Sharga of RealtyTrac says he can’t get anyone to confirm it but he can’t get anyone to deny it either:

"The lenders are simply trying to defer the losses to a later date, because having to recognize the losses short term might pose severe risks to the banks in question."

More…

 

CIGA Christopher’s Commentary

It seems the honeymoon between Volcker and Summer is over.

That was predictable.

Volcker Chafes at Obama Panel Delay, Strains With Summers Rise
By Robert Schmidt and Julianna Goldman

Feb. 5 (Bloomberg) — Paul Volcker has grown increasingly frustrated over delays in setting up the economic advisory group President Barack Obama picked the former Federal Reserve chairman to lead, people familiar with the matter said.

Volcker, 81, blames Obama’s National Economic Council Director Lawrence Summers for slowing down the effort to organize the panel of outside advisers, the people said. Summers isn’t regularly inviting Volcker to White House meetings and hasn’t shown interest in collaborating on policy or sharing potential solutions to the economic crisis, they said.

While Summers, a former Treasury secretary, oversees the official White House economic policy apparatus, Obama tapped Volcker for a new Economic Recovery Advisory Board charged with injecting fresh, outside ideas into policy debates.

“When you have two strong, highly accomplished, driven people, it’s not unusual that there is going to be a battle over turf,” said James Cox, a professor at Duke University Law School in Durham, North Carolina. “I would hope that Obama doesn’t lose Volcker’s counsel. They need someone to help them think outside the box.”

The contretemps shows the difficulties Volcker, perhaps the world’s most respected economist, may encounter as an outside adviser charged with providing policy alternatives to the president, said William Silber, a finance professor at New York University’s business school.

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Posted by & filed under In The News.

Dear CIGAs,

The following is CIGA Lyn’s volunteer crew practicing for the Hedgie hunt and subsequent feasting.

airborne

Because of the gigantic machine that is government, there cannot be a great deal of difference because of one man. President Obama has gathered so many "old School" thinkers about him that there is little, if any, room for imaginative thinkers that could possibly come up with innovative solutions.

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Jim Sinclair’s Commentary

Now this is king of the bears. Note Bloomberg’s disavowal at the end of the article.

U.S. Housing Slump Has ‘Just Begun,’ Says Forecaster Talbott

Feb. 5 (Bloomberg) — Let’s say you own a $1 million home in Santa Barbara, California.

The house seemed like a steal when you bought it with that adjustable-rate mortgage in 2005. You still love the white beaches and those yachts bobbing up and down in the harbor.

Then you awaken early one morning, troubled that your monthly payments will soon double. You go out to pick up your newspaper and see for-sale signs on five houses on the street. One identical to yours just sold for $500,000.

Are you going to pay the bank $1 million plus interest for your place? John R. Talbott, a former investment banker for Goldman Sachs, poses that hypothetical question in his latest book of financial prophesy, “Contagion.”

His answer: “I don’t think so,” he says. “If I’m right, then this housing decline has only just begun.”

More…

 

Jim Sinclair’s Commentary

Recall who called Crude at $100 plus when it was laughed at.

Goldman Sachs lifts gold price forecast to $1,000/oz
Thu Feb 5, 2009 12:55am GMT

SINGAPORE (Reuters) – Investment bank Goldman Sachs raised its forecast for the price of gold to reach $1,000 an ounce in the next three months from its previous forecast of $700 due to rising investor demand for safe haven assets.

"The gold price rally has been driven by surging demand for gold in all forms: physical gold, exchange-traded funds (ETFs), and futures contracts as investors seek ‘a safe store of value’ amid the financial distress and inflation risks," it said in a report.

It also noted that a strong relationship betwween the price of gold in U.S. dollars and the exchange rate of the dollar against other currencies has begun to break down. Gold was trading at $903.15 an ounce by 0038 GMT, down $1.70 from New York’s notional close.

More…

Justin Oliver

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Not the Justin Oliver you were looking for?

 

Jim Sinclair’s Commentary

Seen any hedgies lately?

DSC_1948_edited-1

 

Dear CIGAs,

The general equity markets are trying to stage a rally. If the SEC would reinstate the uptick rule, maybe a 1930s rally in a bear market could occur. Let’s see if Mrs. Shapiro is a light in a very dark tunnel or if it is business as usual.

Jim Sinclair’s Commentary

Come on you guys out there with the money, get out of paper gold and get into the real fight.

Today Trader Dan said:

"A side note – deliveries in February have so far been disappointing when compared to December 2008. Only a bit more than 200,000 ounces of gold have been stopped compared to 1.17 million after the first 4 delivery days back with the December contract. That is not going to help dislodge the strangle hold that the bullion banks have on the Comex."

Nobody can complain about the Comex guys picking your pocket every day as long as gold is not taken delivery of from the Comex and moved out of their warehouse. The Comex cannot stop gold from going to $1650 and then on to Alf’s number as a product of the choice between public unrest and hyperinflation, a currency event.

All the Comex manipulators can accomplish is a move of the gold price backwards six feet after it has gone forward ten. This will happen on a constant basis until one day it blasts up and out by hundreds of dollars.

Jim Sinclair’s Commentary

The connected can do no PUNISHABLE wrong!

The best investment of a million dollars has not been in any business, stock, or commodity, but in past political donations.

That speaks tomes about where the dollar and all fiat currency is really headed and were gold is finally destined to be.

Madoff Outrage: Whistleblower Testimony Rips SEC
Rich Edson
Tuesday, February 03, 2009

The Madoff whistleblower, Harry Markopolos, has finally and publicly detailed his nearly eight-year investigation into Bernard Madoff — a period in which Markopolos said he feared for his life.

“If Mr. Madoff was already facing life in prison, there was little to no downside for him to remove any such threat,” said Markopolos’ testimony. “We did know, however, that he was one of the most powerful men on Wall Street and in a position to easily end our careers or worse.”

Markopolos provided detail evidence to the Securities and Exchange Commission from 2000 to 2008 and said there was an abject failure by the regulatory agencies, said his testimony.

More…

Jim Sinclair’s Commentary

The connected can do no PUNISHABLE wrong!

The best investment of a million dollars has not been in any business, stock, or commodity, but in past political donations.

That speaks tomes about where the dollar and all fiat currency is really headed and were gold is finally destined to be.

Madoff Outrage: Whistleblower Testimony Rips SEC
Rich Edson
Tuesday, February 03, 2009

The Madoff whistleblower, Harry Markopolos, has finally and publicly detailed his nearly eight-year investigation into Bernard Madoff — a period in which Markopolos said he feared for his life.

“If Mr. Madoff was already facing life in prison, there was little to no downside for him to remove any such threat,” said Markopolos’ testimony. “We did know, however, that he was one of the most powerful men on Wall Street and in a position to easily end our careers or worse.”

Markopolos provided detail evidence to the Securities and Exchange Commission from 2000 to 2008 and said there was an abject failure by the regulatory agencies, said his testimony.

More…

Jim Sinclair’s Commentary

Regardless of "Safe Haven," and whatever the fancy flavor of the month is, the US dollar will be ruled by the size of the US Federal Deficit, the condition of the US TIC report and US Trade Balance.

Algorithms distort everything. The new to-be TA gang get their pockets picked regularly.

In the end economic law rules. Economic law says that the US dollar will break the neckline of the huge Head and Shoulders being created in the US Trade Weighted Dollar and tank the US dollar all to hell.

This is no different than the flavor of the month that had the US dollar 30 year bond at 147.

There is no other possibility.

Big Deficits and a Weaker Dollar
by Michael S. Rozeff

Hyperinflation in the U.S. hasn’t happened for quite some time. The last two instances that come to mind are confederate money in the 1860s and the continentals in the 1770s. In both these cases, governments used inflation to finance wars because their tax systems were weak.

A strong tax system (from the government’s perspective) has several aspects. It has a large productive capacity that it can tax without causing production to decline by a great deal. It can enforce tax collections. The required taxes are low compared to the overall government spending.

The U.S. tax system is not weak, but it is weakening. The productive capacity is difficult to evaluate, but it too has probably weakened. The U.S. economy has a large government sector (at least 40 percent) that is relatively inefficient. It also interferes with and distorts the private economy. The federal government has not been able to finance its spending by current taxes in a long time. Instead it has resorted to borrowing (deficit spending) and inflation. The results are a large national debt and a depreciating currency.

U.S. government financing has weakened further in the past year. The government is borrowing very heavily to pay for such actions as the absorption of Fannie Mae and Freddie Mac, bailouts of AIG and large banks, and the rest of the Troubled Assets Relief Program. A short while ago, the government sent out $160 billions of dollars of tax rebates. Meanwhile the Fed has, on its own and with government cooperation, vastly increased credits to the private economy. This has dramatically inflated the monetary base.

The prospects for further tax cuts and higher government spending are bright. In particular, the federal and state governments have made large promises in Social Security and Medicare that, if carried out, mean much higher future government expenditures. These cannot be financed by higher taxes, as they would be too high and crimp production. This spells greater deficit spending, which in turn raises the prospect of higher inflation. In fact, the Fed has already begun to buy more securities in the open market. This "monetizes" debt or creates base money that allows banks to increase lending if they so choose.

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Jim Sinclair’s Commentary

The choice will come in the form of a political decision to redo the Kent State incident OR hyperinflation, a currency event. Count on hyperinflation, a currency event under the present administration and legislative. What decision do you think Barney will make?

Revolt Spreads Across the Globe as "Crisis" Continues to Unfold
Unrest rocks the streets of China, France, Russia, Mexico, and elsewhere. And it is spreading…
By Nathan Coe, GNN
Published: Wednesday February 4th, 2009

“They say that the fires of revolt will spread everywhere, and we see acts like damage to bank branches or state buildings and claims of solidarity with the Greek rioters.”

After numerous European governments expressed fear that the unrest in Greece would spread to neighboring countries and perhaps around the world, the spreading global revolt has taken on another tone: that of confronting the elite for their manipulation of the economic “crisis” (which is really a systemic collapse) in order to consolidate yet even more wealth as the masses of the world suffer the brunt of the former’s greed. The spirit of the Greek revolt has not been forgotten, however, for it is clear whose interests the police serve and protect (as America was recently reminded in Oakland).

As Iceland became the first country to fall due to popular revolt against the economic elite, and then proceeded to elect their first female PM, who is also openly gay, things are heating up around the globe. Recently, over 1,000 protesters assembled illegally to protest the World Economic Forum in Geneva, Switzerland, and while the protests were overwhelmingly peaceful, fear of unrest prompted the police to systematically target and arrest known and identified militants and revolutionaries.

As GNN’s Grady reports, in China “2,000 workers and farmers held wage protests for twelve days outside of Shanghai” in December 2008, “striking workers and security guards clash in a textile factory in Dongguan” on January 15th, and on January 16th, “100 police officers stage a rally in Shenzhen after being sacked from their jobs.” The Times Online also reports that in the southern province of Guangdong, “three jobless men detonated a bomb in a business travellers’ hotel in the commercial city of Foshan to extort money from the management.” In the 12 days of mass demonstrations last December, the Times reports:

…angry workers besieged labour offices and government buildings after dozens of factories closed their doors without paying wages and their owners went back to Hong Kong, Taiwan or South Korea. In southern China, hundreds of workers blocked a highway to protest against pay cuts imposed by managers. At several factories, there were scenes of chaos as police were called to stop creditors breaking in to seize equipment in lieu of debts.

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Jim Sinclair’s Commentary

Today in the stinking criminal under-world of hedge fund lowlifes:

Judge asks whether guards can use deadly force should Marc Dreier …
New York Daily News – New York,NY,USA
Dreier, 58, is accused of duping hedge fund investors out of nearly $400 million through a scheme to sell fake promissory notes. Shargel estimates that the …

Shredded letter haunts accused hedge fund swindler in court
New York Daily News – New York,NY,USA
BY THOMAS ZAMBITO Prosecutors cited more than just a shred of evidence Tuesday against a hedge fund manager accused of ripping off clients – they …

LuxAlpha Liquidation Sought by Regulator Over Madoff
Bloomberg – USA
3 (Bloomberg) — Luxembourg’s financial regulator will ask a court to liquidate Access International Advisors LLC’s LuxAlpha Sicav-American Selection fund …

Mass. fund fires firm that put money with Madoff
Reuters – USA
By Svea Herbst-Bayliss BOSTON, Feb 3 (Reuters) – Massachusetts’ state pensionfund fired a hedge fund firm on Tuesday that lost millions by putting money …

The Criminal Report Daily : Investigation Discovery: Missing …
By David Lohr 
Arthur G. Nadel, the missing 76-year-old hedge fund manager from Sarasota, Fla., was arrested last week after turning himself in to federal authorities. According to the US Attorney’s Office, Nadel, accompanied by two …

Jailed Hedge Fund Manager to Face Charges in New York — Attorney …
By timgrenda 
Nadel, 76, managed six New York-based hedge funds, but disappeared in January 2009 after investors learned their accounts had been drained. He remained missing for several weeks until federal investigators tracked him down in Tampa, Fla. and placed him under arrest. … The investigation into Nadel’s handling of customer investments began in the wake of the arrest of another New York money manager accused of defrauding investors. That man, Bernard Madoff, …

Hedge Fund Zone » Luxembourg to shut down Madoff-linked hedge fund
By Yahoo! News – Search Results for "hedge fund" 
Find the best information on hedge funds! … Hedge Fund Zone. "It’s Time to Discover the BEST Information About Hedge Funds!" February 3, 2009. Luxembourg to shut down Madoff-linked hedge fund. Luxembourg financial supervisors said …

Reporter Arrested At Madoff’s Front Door | FINalternatives
By Jon Shazar 
There were more losers than winners in the hedge fund universe last year as fundsgrappled with a deteriorating credit market and a global equity sell-off. One firm that bucked the trend with its strong performance was …

Arrest in suspicious powder mailings to be aired – Texas News …
By Examiner Texas Headlines 
Arrest in suspicious powder mailings to be aired – Texas News, 2009-02-03 14:57:33 on ArticleBlip.com, all news no fluff.

Jim Sinclair’s Commentary

Between an ally denying the US a key airbase and this push out of Pakistan, President Obama is being challenged in a pincer move in Afghanistan.

Taliban Destroys a Key Bridge in Pakistan

Main Supply Route For U.S. Is Cut Off
By Candace Rondeaux
Washington Post Foreign Service
Wednesday, February 4, 2009; Page A12

ISLAMABAD, Hundreds of trucks bearing NATO supplies idled at terminals near the city of Peshawar in northwestern Pakistan on Tuesday after Taliban fighters blew up an iron bridge about 15 miles away. The explosion, the latest in a spate of attacks, cut off the main supply route for U.S.-led forces in Afghanistan, complicating plans to substantially increase the Western military presence there and roll back recent gains by Taliban forces.

For a quick look at the state of the war on terrorism in Pakistan and Afghanistan, one need travel only as far as Peshawar’s Karkhano Market. Set at the edge of the sprawling city of 3 million in a dusty warren of ramshackle kiosks, the 24-year-old market has long been known as a key smuggling hub for the hundreds of traders who regularly cross the mountainous no man’s land that lies between Pakistan and Afghanistan.

Business has been especially brisk in recent months, in the wake of more than a dozen major Taliban attacks on NATO supply routes and the creeping encroachment of insurgents in northwest Pakistan, according to Karkhano shopkeepers. Goods pilfered from raids on NATO supply trucks have become a mainstay for shopkeepers like Noor Mohammed.

Customers at Mohammed’s small kiosk can easily purchase a set of American-made tools or an American flag or a durable American-made pistol holder. A U.S. military-issue ammunition vest and staff sergeant’s sun cap together cost a mere $20. "It’s not a problem to get anything here as long as you have the money," Mohammed said. And, with AK-47 assault rifles selling for about $1,000 apiece, profits have never been better.

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Militants killed, NATO trucks targeted in NW Pakistan

From Zein Basravi
CNN

ISLAMABAD, Pakistan (CNN) — Conflict raged Wednesday in volatile northwestern Pakistan, with nine militants killed in a gun battle, the Taliban’s abduction and release of about 30 police officers, and strikes on stranded NATO trucks.

It’s the latest fighting between Pakistani security forces and the Taliban militants in the northwestern region near Afghanistan.

The country’s central government has little control in the area, and U.S. intelligence officials say the area is a haven for militants.

Nine militants were killed when police and local residents foiled an attempted kidnapping of the mayor in a village on the outskirts of Peshawar, police told CNN. Taliban fighters attempted to abduct Fahim Ur Rehman, but police and residents resisted and a gun battle ensued.

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‘Taliban seize’ Pakistan policemen

Thirty Pakistani policemen are reported to have been captured by Taliban fighters in the northwest Swat Valley after they laid siege to a police station.

"Taliban kidnapped 30 policemen and blew up the police office after a day-long fight," Dilawar Khan, a regional police commander, said on Wednesday.

Army troops were sent to the Shamozai area in an effort to rescue the police officers but the operation was suspended after dusk fell, security officials said.

Four paramilitary and police officers were wounded in the clashes around the police station, a Pakistani intelligence official said.

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Posted by & filed under In The News.

Dear CIGAs,

These are our financial leaders bequeath to our, not their, grandchildren and the grandchildren of them, all thanks to looking the other way as OTC manufacturers and distributors plied their evil fraudulent trade.

Leaders

Jim Sinclair’s Commentary

What the OTC derivatives and terrible business does not do to financial entities, attorneys will. When it is all said and done, Wall Street is history killed stone cold dead by the OTC derivative manufacturers and distributors.

RBS Faces 2nd Round Of US Investor Disclosure Suits
By Liz McKenzie

Law360, New York (February 02, 2009) — The Royal Bank of Scotland Group PLC faces another securities class action from U.S. investors alleging that the U.K. clearing bank failed to disclose its exposure to the subprime mortgage market before reporting one of the biggest losses in British banking history.

Filed on Thursday in the U.S. District Court for the Southern District of New York by investor Ferdinand Levy, the lawsuit claims the bank downplayed its risk exposure and issued misleading information to investors about its financial security.

The complaint accuses Edinburgh, Scotland-based RBS and several of its executives of breaching U.S. securities law by failing to properly record losses for impaired assets, failing to acknowledge the extent of impairment of its debt securities portfolio, failing to maintain adequate internal controls and concealing the fact that its capital base was insufficient to withstand the deterioration in the U.S. subprime mortgage market.

Despite assuring investors that its economic outlook was still promising, investors allege that “the dislocation in the financial markets was then having an increasingly severe impact on RBS’ business, which significantly increased the risk level of Series S ADSs [American depositary shares].”

In December 2007 the bank was forced to write down £1.5 billion ($2.18 billion), in great part because of its exposure to the U.S. subprime mortgage market, the suit claims.

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Jim Sinclair’s Commentary

Not only is it a bad idea, but we already have a "Bad Bank." That bank is the Federal Reserve with all the crap they hold, having been stuffed by the bailouts.

A bad bank is a very bad idea
By Rolfe Winkler
Updated Monday, February 2nd 2009, 9:48 AM

When rumors surfaced on Wednesday that the Obama administration may create a "bad bank" to buy toxic assets, financial stocks soared. Of course bank shareholders were happy; the plan is likely to be a titanic taxpayer hand-out. It has to be to achieve the administration’s goal of keeping banks in private hands.

To understand the banking crisis, and Obama’s emerging solution, all you need to know is one equation: Assets = Liabilities + Equity. This equation explains why banks are dropping like flies.

A bank’s assets are the loans it makes to borrowers. Its liabilities are the dollars it borrows from lenders and depositors to fund those loans. Shareholder equity is what’s left over.

During the bubble, banks made loans for houses at vastly inflated prices. Say, for instance, a bank lent $1 million to a borrower buying a Miami condo in 2006. The borrower promised to repay $1 million over the life of the loan, so the bank valued this asset at $1 million.

Flash forward to 2009, and the condo is now worth $500,000. The borrower defaults because he’d rather lose the condo than pay a million-dollar mortgage on a property now worth half that.

The bank forecloses on the condo and sells it for what it can get, the current market value of $500,000. The bank’s asset, the loan, has fallen from $1 million, which the borrower owed, to $500,000, the amount recovered. A 50% loss.

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Monty Guild’s Commentary

Between Variable Annuities and Derivatives the insurance companies may be more broke than the banks. Their capital may be more impaired, and it may take them longer to get solvent.

If something like an annuity sounds too good to be true… it probably is. How are insurance companies going to be able to meet their commitments to guarantee a 5% return on stocks and bonds for annuity holders, when world markets are down an average of 43% in 2008 and 8% in the first month of 2009? A global depression hitting stock values possibly for one or two more years? The high fees insurance companies took for annuities exacerbates the problem.

This is another big scandal waiting to hit the news.

Jim Sinclair’s Commentary

You think when you call the "Good Hands" you are in a check is forthcoming. All our insurance companies are broke. Thank you one more time to the OTC derivative manufacturers and distributors.

Allstate’s Catastrophe Bonds Face ‘Imminent’ Default (Update3)
By Neil Unmack and Oliver Suess

Feb. 2 (Bloomberg) — A catastrophe bond sold by Allstate Corp. faces “imminent” default following the collapse of Lehman Brothers Holdings Inc., Standard & Poor’s said. It would be only the second such security to fail in a decade.

New York-based S&P downgraded $250 million of debt sold by Allstate’s Willow Re Ltd. to D, the lowest grade, from CC, according to a Jan. 30 statement. Northbrook, Illinois-based Allstate sold the bonds in 2007 to protect against losses caused by U.S. hurricanes.

“The issuer has notified Standard & Poor’s that it will not have sufficient funds to make the scheduled interest payment,” S&P analyst Gary Martucci in New York wrote in the statement.

Insurers started using so-called cat bonds in the 1990s to transfer the risk of claims that could threaten their solvency. Bond investors in Zurich Financial Services AG’s Kamp Re 2005 Ltd. lost money when property damages caused by Hurricane Katrina in 2005 exceeded the threshold that entitled Zurich to keep investor funds to pay insurance claims.

“The market was already pricing Willow Re in the area of 50 cents,” said Christophe Fritsch, head of insurance-linked securities at Axa SA in Paris. “New deals will improve dramatically. Investors will make sure that they will only be exposed to insurance risk and won’t take credit risk.”

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Jim Sinclair’s Commentary

Repeated presence of many auditors means only one thing. The last one refused to sign off on the audit. That is fact, jack.

Lehman Brothers saga – 4th auditor appointed
By Francis Chan
Feb 2, 2009

A FOURTH independent auditor in Singapore has been appointed to help deal with investor complaints linked to Lehman Brothers.

The complaints come after investment products from the bankrupt United States investment bank failed late last year.

On Monday, Hong Leong Finance appointed National University of Singapore law professor Hans Tjio to review complaints from its customers who invested in Morgan Stanley’s Pinnacle Notes Series 9 and 10.

The Monetary Authority of Singapore (MAS) said Professor Tjio’s role would be similar to those of three other industry leaders appointed last year to review complaints over the failed structured products.

One of the three, Mr Hwang Soo Jin, who was previously overseeing the complaints-handling process of brokerages that sold the products, will also review cases received at brokerages in relation to Pinnacle 9 and 10, said MAS.

Besides Hong Leong Finance, brokerage firms like DMG & Partners Securities, Kim Eng Securities, OCBC Securities and UOB Kay Hian also sold the notes to retail investors here.

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Jim Sinclair’s Commentary

The specs can spec and the Comex manipulators can jiggle, but it is all in vain. Gold is going to

$1064, $1250 and then on to Alf’s price predictions, all of which will be the product of inescapable hyperinflation, a currency event certain to occur.

Chinese Cautious on Treasury Notes
Published: January 31, 2009

LONDON (Reuters) — China’s willingness to continue buying United States Treasury securities in large numbers will depend on its need to protect the value of its foreign investments, the Chinese premier, Wen Jiabao, said Saturday. He also said that a stable yuan is in everyone’s interests.

“Whether we will buy more U.S. Treasury bonds, and if so by how much — we should take that decision in accordance with China’s own need and also our aim to keep the security of our foreign reserves and the value of them,” Mr. Wen said.

His enigmatic remarks, made near the end of a visit to Europe, could raise new concerns about China’s commitment to continue purchasing United States government debt.

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Jim Sinclair’s Commentary

Out of the news, but not out of core geopolitical tinder box perma-status.

American Kidnapped in Pakistan
Solecki Is the First Single-National American Kidnapped in Pakistan Since Daniel Pearl in 2002
By HABIBULLAH KHAN and NICK SCHIFRIN

ISLAMABAD, Pakistan, Feb. 2, 2009 – The head of a U.N. aid office in Pakistan was kidnapped today, the first single-national American kidnapped in Pakistan since Daniel Pearl was abducted and killed in 2002.

John Solecki’s sport utility vehicle was attacked in Chaman Housing, a posh residential area in Quetta, while he was on his way to work at the local U.N High Commissioner for Refugees office, according to officials.

At least one gunman, working with a driver and at least one accomplice, fired into the car, which was not bulletproof, killing Solecki’s driver Syed Hashim, the officials added.

The car then hit a wall and Solecki was hustled out of his vehicle into the kidnappers’ car.

"It’s difficult to establish now whether he was targeted because he was an American, but he was definitely targeted for being a foreigner," a senior intelligence official in Quetta told ABC News.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

This is what $1650 gold is made of.

“When the Fed gets finished here they will have an inflation nightmare on their hands,” said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisor Services Ltd. in Austin, Texas. “There is a lot of downside in conservative government bonds.”

Treasury Real Yields at 16-Month High as Deflation Bets Die
By Dakin Campbell

Feb. 2 (Bloomberg) — For the first time since 2007, Treasury investors are betting that inflation will accelerate.

The yield on 10-year notes exceeds the consumer price index by 2.74 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.

Deflation was the growing concern for investors in 2008 as government bond yields fell to historic lows in December, the Reuters/Jefferies CRB Index of commodities tumbled 53 percent since July and home prices plunged 18 percent amid a deepening recession. Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.

“When the Fed gets finished here they will have an inflation nightmare on their hands,” said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisor Services Ltd. in Austin, Texas. “There is a lot of downside in conservative government bonds.”

MacQueen is selling 30-year Treasuries, which are more sensitive to inflation expectations than shorter-maturity debt.

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