Posts Categorized: In The News

Posted by & filed under In The News.

"During times of universal deceit, telling the truth becomes a revolutionary act"
— Orwell

Dear CIGAs,

I am Outraged. This is simply too much. This is too far over the top and too much to bear. These sub humans should be throttled and locked up, not coddled.

You or I go bust and the attitude is the same as if we were Motors. Go belly up you jerks. Let them eat cake!

In fact in today’s market the US Fed and US treasury seem to almost enjoy watching the hedge funds break the law, resulting in the killing pensioners trying to protect themselves against the result of all this.

In today’s world the first rule of success is to donate $1,000,000 to both parties

The damned killer hedge funds blow up and look at who seeks them out to bail them out!

This is madness, preferential treatment and downright rotten to the core. I am outraged.

Why are you not?

Hedge funds gain access to $200bn Fed aid
Krishna Guha in Washington
Published: December 20 2008 05:01

Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn programme intended to support consumer credit.

The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.

The asset-backed securities to be funded under the programme are pools of credit card receivables, automobile loans and student loans.

The idea is to increase the supply of these loans and reduce borrowing rates by ensuring that the companies that make the loans can sell them on to investors who have guaranteed access to low-cost funding from the Fed.

The TALF is a key plank of the unorthodox strategy set out by the Fed last week as it cut interest rates virtually to zero. Washington insiders expect the programme will be dramatically expanded next year with further capital support from Treasury once the Obama administration takes office.

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Jim Sinclair’s Commentary

US Intelligence Advisor James Rickards is a person who demands our respect.

Because of the enormous nature of this financial event, being ignored by most, I have to agree with him.

Four really, really bad scenarios
By EAMON JAVERS | 12/17/08 4:39 AM EST

What’s the worst that could happen?

That’s a question that James Rickards spends a lot of time pondering these days, as he sifts through the national security implications of the financial crisis facing the United States.

Rickards will lay out his worst case scenarios in a lecture sponsored by the Navy and the Office of the Secretary of Defense for Policy tonight. And his forecasts aren’t for the faint of heart.

Rickards calls it the “A to Z” problem: What are the threats that could make the U.S. economy look less like America and more like Zimbabwe? He sees them everywhere – in the Chinese ownership of vast amounts of American debt, in Russia’s increased centralization of its economy, in Al Qaeda’s long-established fascination with damaging the U.S. economy.

In many ways, Rickards is the ultimate bear. He’s not just thinking about whether the stock market will decline, but whether or not the stock market will survive.

All that puts Rickards decidedly outside mainstream economic and political thinking in America. But he does have an influential audience: the United States intelligence and defense communities.

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Jim Sinclair’s Commentary

Why not? Everybody else has them.

The highest probability is that Pakistan lights up the whole area. We must not prevent our dear friends, the Saudis from playing the boom game.

The safest place on the planet is sub-Kenya Africa (not Rhodesia). How is that for a turn of events?

Report: Saudis seek nuclear weapons
Mon, 22 Dec 2008 11:07:05 GMT

Saudi Arabia has sought Pakistan’s help as part of its long-term plan to attain nuclear weapons for regional dominance, says a report.

"Reports have circulated for years that the Saudis have pursued a secret nuclear program with help from Pakistan, though the Saudis deny this," said a Wall Street Journal article titled ‘A Middle East Arms Race’.

For years now, media outlets have alleged that Saudi officials are interested in nuclear proliferation, citing comments by former Saudi diplomat Mohammed Khilewi — who defected to the US in 1994.

Khilewi reportedly handed over documents to US officials, which revealed that the Saudi government was interested in nuclear proliferation.

According to the diplomat, who now lives undercover in the New York City area, Saudi officials have had a covert nuclear weapons research effort since 1975.

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Jim Sinclair’s Commentary

This article speaks for itself.

A monster out of control: Pakistan secret agents tell of militant links
Jeremy Page in Muridke
December 22, 2008

The Islamic fundamentalists who run the Markaz-e-Taiba complex near Lahore like to boast that it was inspired by Aitchison College, Pakistan’s poshest private school. It is, as they describe it, the Eton of Wahhabi Islam, complete with polo ponies and a swimming pool.

Yet when it comes to their links to Pakistan’s intelligence service and Lashkar-e-Taiba (LeT), the militant group blamed for last month’s attacks in Mumbai, they seem to suffer from collective amnesia. “We’ve never had any connection to either,” Mohammed Abbas, the administrator of the complex, told The Times.

But it was here, in April 2001, that Hafiz Mohammed Saeed, LeT’s leader at the time, called a meeting of his supporters in the 75-acre complex of red-brick buildings and neat lawns. Most of the visitors wore the obligatory long beards, but among them was an elderly man with no beard, only a thin, military-style moustache.

He was Hamid Gul, the former head of Pakistan’s Inter-Services Intelligence (ISI) agency. “Yes, I visited there,” General Gul told The Times. “Retired army officers used to go, too. They used to hold annual fixtures to raise funds and motivate people.”

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Jim Sinclair’s Commentary

Today on Pakistan

Deaths in Pakistan ‘US strikes’

A suspected US missile strike has killed at least seven people in Pakistan’s northwestern tribal region.

One missile hit a vehicle in the village of Wana killing four people, while another strike killed three in a nearby village, both in South Waziristan on Monday, Pakistani intelligence officials said.

"Tribesmen opened fire on the drones after the attacks," a resident of Wana told Reuters news agency.

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India Will Take All Steps Needed to Combat Terrorism (Update2)
By Kartik Goyal and Khalid Qayum

Dec. 22 (Bloomberg) — India will take all steps needed to combat terrorism emanating from Pakistan, Foreign Minister Pranab Mukherjee said, adding that the government in Islamabad must also act against terrorists on its territory.

The government in New Delhi has blamed “elements” in Pakistan for being behind the Nov. 26-29 attack on Mumbai that killed 164 people. Pakistan, which has pledged to cooperate with the investigation, said it has been given no evidence the attacks were carried out by Pakistanis.

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Pakistan militants ‘world threat’

Militant groups in Pakistan are "the greatest danger to peace and security in the entire world", India’s foreign minister has said.

Pranab Mukherjee accused Islamabad of "denial" and "shifting the blame" for last month’s deadly Mumbai attacks.

He said the international community had not done enough to exert pressure on Pakistan, which denies any involvement.

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Posted by & filed under In The News.

ATT8 - 20081221_065347

Dear Friends,

Don’t lose focus on the enormity of what has taken place. It is that unimaginable size of the socialization of the losses while privatizing by monetization the ill gotten gains from pawning off fraudulent OTC derivatives. The massive size of this disaster caused entirely by OTC derivative implosions and fraudulent valuations will function to make my gold price target of $1650 that I have held for over eight years pitifully low. Alf Fields’ next leg from the recent low to $6000 has moved to probable from simply possible.

– Consider what the junior golds holding real properties will be worth.
– Consider what RGLD will be worth.
– Consider how difficult it is now for anyone to find any investment in currencies or governments.
– Consider that gold is the only true currency because there is no liability attached to it.
– Consider that the dollar represents the largest debtor entity while the euro is not.
– Consider that all government statistics are tools of spin, therefore know the truth as below

Truth in Statistics exist only at http://www.shadowstats.com

– Growth Surges/Accelerates in Broad Money Components
– Monetary Base Up 97.5% Year/Year
– Fed Actions Begin to Kick In — For Better and Worse
– U.S. Dollar Remains Key to Markets

 

Jim Sinclair’s Commentary

Fiscal Stimulation like bailouts is open ended. The number coming from the back channel now is $2 trillion. The combination of fiscal stimulation, bailout-itise, and quantitative easing is all the tools there are. they will have a major impact, but not in the manner desired.

As Outlook Dims, Obama Expands Recovery Plans
By JACKIE CALMES
Published: December 20, 2008

WASHINGTON — Faced with worsening forecasts for the economy, President-elect Barack Obama is expanding his economic recovery plan and will seek to create or save 3 million jobs in the next two years, up from a goal of 2.5 million jobs set just last month, several advisers to Mr. Obama said Saturday.

Even Mr. Obama’s more ambitious goal would not fully offset as many as 4 million jobs that some economists are projecting might be lost in the coming year, according to the information he received from advisers in the past week. That job loss would be double the total this year and could push the nation’s unemployment rate past 9 percent if nothing is done.

The new job target was set after a meeting last Tuesday in which Christina D. Romer, who is Mr. Obama’s choice to lead his Council of Economic Advisers, presented information about previous recessions to establish that the current downturn was likely to be “more severe than anything we’ve experienced in the past half-century,” according to an Obama official familiar with the meeting. Officials said they were working on a plan big enough to stimulate the economy but not so big to provoke major opposition in Congress.

Mr. Obama’s advisers have projected that the multifaceted economic plan would cost $675 billion to $775 billion. It would be the largest stimulus package in memory and would most likely grow as it made its way through Congress, although Mr. Obama has secured Democratic leaders’ agreement to ban spending on pork-barrel projects.

The message from Mr. Obama was that “there was not going to be any spending money for the sake of spending money,” said Lawrence H. Summers, who will be the senior economic adviser in the White House.

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Jim Sinclair’s Commentary

It is coming and is extremely dangerous. If two highly excitable nuclear capable nations go at each other, it will not end until the end. When it hits the fan in either of these countries, the national lights are on, but mentally nobody is home.

Report: India may attack Pakistan
Sat, 20 Dec 2008 15:27:30 GMT

Indian military has prepared operations against targets in Pakistan and awaits the signal to go forward, a US intelligence report says.

"These most likely would take the form of unilateral precision strikes inside Pakistan-administered Kashmir, along with special forces action on the ground in Pakistan proper," Global Intelligence Service, Stratfor said in its latest report.

"Sources have indicated to Stratfor that New Delhi is going through the diplomatic motions in order to give Pakistan the opportunity to take care of the militant problem itself – but the Indians know that Islamabad has neither the will nor the capability to address their concerns," the agency said.

It explained that India knew strikes in Pakistan would not eliminate the terrorist threat, "but that would not be the aim of any such operation". It added, "Instead, India has to communicate firmly that it will no longer tolerate attacks from Pakistan-based militants – whether they are rogue or approved by the state. Failure to do so risks emboldening the militants and their enablers, as well as a domestic political backlash. The Indian government could not live with either of those outcomes."

Earlier on Friday, Indian Foreign Minister Pranab Mukherjee said that the government was keeping all options open in dealing with the situation. "If a country cannot keep the assurances that it has given, then it obliges us to consider the entire range of options that exist to protect our interests and people from this menace."

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Posted by & filed under In The News.

RebuildEconomy

Jim Sinclair’s Commentary

When you read articles like this keep in mind who is the most powerful man on the planet. The answer is the captain of a nuclear launch submarine. He has the power to incinerate nations.

Now think about how India has two Akula type 2 nuclear missile launching (28 per ship) submarines, and Pakistan has mobile nuclear launch vehicles with very long legged missiles.

I would say that is as serious as it gets.

After having a home in India and having lived there for a total of three years in short stays I can assure when it hits the fan the police with the guns and uniforms and the lights turned off are the most dangerous people there in any situation.

India may still strike at Pakistan: US report
19 Dec 2008, 2207 hrs IST, TNN

NEW DELHI: India may have ruled out the military option against Pakistan in the aftermath of Mumbai terror attacks but the international intelligence community continues to believe that strikes in PoK and elsewhere could still happen.

Global intelligence service Stratfor, in its latest report, said, "Indian military operations against targets in Pakistan have in fact been prepared and await the signal to go forward."

It added, "These most likely would take the form of unilateral precision strikes inside Pakistan-administered Kashmir, along with special forces action on the ground in Pakistan proper."

The private sector intelligence service said that unlike the massive movements of 2002 during Operation Parakram, India’s preparations this time were more under the radar and not visible to the world at large. Its only indication was the fact that the Border Security Force (BSF) has been put on high alert on the western sector as well as the eastern sector — this paramilitary force’s main mandate would be to prevent infiltration.

"Sources have indicated to Stratfor that New Delhi is going through the diplomatic motions in order to give Pakistan the opportunity to take care of the militant problem itself — but the Indians know that Islamabad has neither the will nor the capability to address their concerns," Stratfor said.

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Jim Sinclair’s Commentary

Quantitative easing combined with fiscal stimulation leads to the advent of the increased velocity of money. This equals lower values for the currency of the largest liquidity producer – the dollar. Confidence sunders when business activity statistics are less ebullient than the real rate of inflation. Confidence is the key as hyperinflation is a currency event, not a business event.

In Zimbabwe the price of food is doubling daily just as it did in all examples of hyper inflation.

$1 trillion is only the beginning for Obama’s fiscal stimulation.

Do you recall the low bailout estimates made when Bear blew up?

Monty Guild’s Commentary

Good call Jim. In my opinion, everything you say is exactly correct. From an economics point of view, the long term effect of these actions will be inflation.

I talk to a lot of economists. Although my Keynesian friends disagree with the inflation from money supply growth thesis, largely because it is a Monetarist viewpoint, they do admit that the current large increase in the supply of bonds could send the dollar lower. Like you and Dan, I strongly believe that the huge issuance of US bonds, and the actual printing of money to which Mr.Bernanke alluded, can only send the dollar lower. In my opinion, this will send gold and foreign currencies much higher.

Obama Team Is Seeking Stimulus Bill by New Year
By JACKIE CALMES

WASHINGTON — President-elect Barack Obama’s advisers hope to finish an economic recovery blueprint by Dec. 25 so that Democratic Congressional staff members can draft legislation by the new year, as the two branches of government try to converge on a two-year plan by late January that could total just under $1 trillion.

“The goal for completing action on this important legislation should be as close to Jan. 20 as possible,” said an e-mail message from Senate Majority Leader Harry Reid’s office to senior Senate Democratic staff members.

Some Obama advisers have sought to tamp down expectations that Mr. Obama could sign a package immediately after he is inaugurated. The opposition of some Senate Republicans and House and Senate negotiations on a final compromise could force delays into February.

Democrats familiar with the early deliberations say the preliminary price tag has grown to about $800 billion from the roughly $600 billion that House Speaker Nancy Pelosi had estimated in recent days.

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Jim Sinclair’s Commentary

These reports, like the reports on WMDs in Iraq, presages a move into Pakistan "to help" the government of Pakistan kill all the bad guys as a recent article in the Washington Post suggested.

‘ISI killing US troops in Afghanistan’
Fri, 19 Dec 2008 06:01:29 GMT

Pakistan’s powerful spy agency is working with groups that support the Taliban and are killing American troops in Afghanistan, a US report says.

“All of this suggests that the Inter-Services Intelligence (ISI) is no longer certain the coalition forces will prevail in Afghanistan and that it is using militants groups in an attempt to expand its own influence,” the report said.

The report by the bipartisan Pakistan Policy Working Group also cites the Afghan government’s allegations that ISI-supported elements that orchestrated an assassination attempt on Afghan President Hamid Karzai, and that the ISI had a role in the July 7 car bombing of Indian embassy in Kabul.

The 43-page report notes Pakistan may be the greatest challenge for US President-elect Barrack Obama.

The report came as Pakistani major media outlets said that the ISI had been cleared of any involvement in the Mumbai terrorist attacks by the US’ Federal Bureau of Investigation (FBI). According to Karachi-based Dawn, FBI agents interrogated Ajmal Kasab, the lone surviving terrorist for nine hours in Mumbai. They concluded that he was a Pakistani national but ISI was not involved.

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Jim Sinclair’s Commentary

Note how the markets took this both when announced as coming, and on its advent. I feel Obama’s fiscal stimulation will produce a general lift of the equity gang’s spirits, and a good lift to gold as the dollar is weighed down by the cost of fiscal stimulation.

Bush Approves $17.4 Billion Auto Bailout
By DAVID M. HERSZENHORN and DAVID E. SANGER
Published: December 19, 2008

WASHINGTON — President Bush announced $13.4 billion in emergency loans on Friday to prevent the collapse of General Motors and Chrysler, and another $4 billion available for the hobbled automakers in February with the entire bailout conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.

The loans, as G.M. and Chrysler teeter on the brink of insolvency, essentially throw the companies a lifeline from the taxpayers that will keep them afloat until March 31. At that point, the Obama administration will determine if the automakers are meeting the conditions of the loans and will continue to receive government aid or must repay the loans and face bankruptcy.

The money to aid the automakers will come from the Treasury’s $700 billion financial stabilization fund and shortly after Mr. Bush’s announcement, the Treasury secretary, Henry M. Paulson Jr., who will oversee the aid to the auto industry, said Congress would need to release the second $350 billion for that program in short order.

By law, once Mr. Paulson makes a formal request, Congress has 15 days to reject it and deny the additional money. It was unclear when that request would be sent or if lawmakers who have left Washington for the holidays, would return to debate it. The administration’s handling of the program has come under sharp criticism and several lawmakers in both parties have suggested they would oppose the release of more money.

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Jim Sinclair’s Commentary

It amazes me how the obvious is always ignored as it approaches the full light of day.

Pakistan remains the world’s most serious problem.

NATO Materiel Threatened in Pakistan
Taliban Attacks on Goods for Afghanistan Mission Viewed With Growing Concern
By Candace Rondeaux and Walter Pincus
Washington Post Foreign Service
Friday, December 19, 2008; Page A23

PESHAWAR, Pakistan — A recent increase in Taliban attacks on a crucial NATO transportation route from Pakistan to Afghanistan could imperil efforts to bolster the flagging, seven-year U.S.-led military campaign in Afghanistan, U.S. and Pakistani officials say.

Attacks on NATO supply lines have become a regular occurrence in parts of northwestern Pakistan, including the country’s inhospitable tribal areas near the Afghan border. In the past two weeks, Taliban fighters have mounted at least six assaults on NATO supply depots near the Pakistani city of Peshawar, setting fire to more than 300 armored Humvees, military vehicles and other supply containers.

The attacks come as Pakistanis are increasingly calling for Western forces to stop using their territory for transport: Thousands of people rallied here Thursday to demand that the government cut off U.S. and NATO access to the main transit route.

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Fears grow over Pakistan terror resolve
By James Lamont in New Delhi
Published: December 19 2008 02:00 | Last updated: December 19 2008 02:00

Fears grew last night that Pakistan’s resolve to bring the perpetrators of the Mumbai terror attacks to justice was faltering.

The government said it had lost track of one of India’s most wanted militants following his supposed arrest only a few days ago.

Shah Mahmood Qureshi, Pakistan’s foreign minister, said Masood Azhar, the leader of Jaish-e-Mohammad, a militant group, was not under arrest, contradicting his government’s previous claim that he was in custody.

"Other people have been detained but Mr Masood Azhar is at large. We have no knowledge of his whereabouts," Mr Qureshi told reporters in Islamabad. The Pakistani defence ministry said a week ago that security forces had arrested Mr Azhar, who is suspected of launching an attack on the Indian parliament in 2001 that brought India and Pakistan to the brink of war.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

After a significant reduction of US presence, you can count on this.

Up to 25 Iraq government officials accused in plot
By QASSIM ABDUL-ZAHRA and SINAN SALAHEDDIN, Associated Press Writers Qassim Abdul-zahra And Sinan Salaheddin, Associated Press Writers

BAGHDAD – More than 20 employees of Iraq’s Ministry of the Interior have been arrested on allegations that they were plotting to revive Saddam Hussein’s outlawed Baath party, government officials said Thursday.

Interior Ministry spokesman Maj. Gen. Abdul-Karim Khalaf told reporters that 23 people, most employees of the ministry’s traffic department, have been arrested over the past five days but he dismissed suggestions they were plotting a coup.

A security official put the figure at 25 and said a brigadier general in the traffic police was the highest-ranking figure. Most of the others are low-level ministry employees, he said.

The official, who has access to the investigative file, spoke on condition of anonymity because he was not authorized to speak about the matter to the media.

Another security official said those in custody were believed to have links to al-Awda, or "Return," a Sunni underground organization founded in 2003 to try to restore Saddam and the Baath party to power.

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Posted by & filed under In The News.

Dear CIGAs,

If you feel gold is free of Madoffs you are dreaming.

Jim Sinclair’s Commentary

Gold will go to $1200 and then $1650 on its way to Alf’s lofty levels.

Quantitative Easing and Fiscal Stimulation guarantee that.

After rate cuts: The Fed’s new ball game
With rate cuts doing little to help boost the economy, the Fed has begun to print money to finance its liquidity programs. But that could spell disaster down the road.
By David Goldman, CNNMoney.com staff writer
Last Updated: December 15, 2008: 5:08 PM ET

NEW YORK (CNNMoney.com) — After what is likely to be the last in a long series of interest rate cuts Tuesday, the Federal Reserve is expected to continue its new, perhaps more effective monetary strategy: printing lots of money.

The Fed traditionally uses its rate-cutting tool to encourage lending and boost the economy. But despite a staggering 4.25 percentage points of cuts since September 2007, the economy has not improved – in fact, it has gotten worse, drifting in to a recession last December.

Economists expect the Fed to produce one more cut to its benchmark funds rate at the conclusion of its Federal Open Market Committee meeting Tuesday, trimming the rate to 0.5%, the lowest level on record. Whether one last rate cut will help stimulate economic growth remains to be seen.

At any rate, the Fed will likely continue to use its new favorite tool, quantitative easing, "Fed-speak" for pouring new money into the economy.

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Jim Sinclair’s Commentary

Stop the Comex and I promise you $1250 in gold immediately!

RPT-FEATURE-Nervy investors spur rush at Swiss gold refiners
Wed Dec 17, 2008 8:04am EST
By Arnd Wiegmann and Lisa Jucca

MENDRISIO/ZURICH, Switzerland, Dec 17 (Reuters) – Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.

This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.

"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world’s three largest.

"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.

Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.

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Jim Sinclair’s Commentary

For the real numbers subscribe to www.shawdowstats.com. The real numbers push events after the spin has spun itself out as it has now.

Treasury Reports 2008 Federal Deficit of $1.009 Trillion (GAAP-Based), 
$5.1 Trillion Including Social Security/Medicare
Total U.S. Government Obligations at $66 Trillion
Against what had been the recently publicized, cash-based "official" fiscal 2008 (year-ended September 30th) federal deficit of $454.8 billion, and similar $161.8 billion deficit in 2007, the U.S. Treasury reported this afternoon (December 15th) that the 2008 deficit [change in net position] was $1,009.1 billion, versus $275.5 billion in 2007, using generally-accepted accounting principles (GAAP). Since 2002, the Treasury has been reporting the government’s finances using annual statements prepared using accounting standards similar to those used in corporate America, but the statements typically have minimal, if any, following in the popular financial media.

The new numbers, however, still do not account for the annual change in the net present value of unfunded Social Security and Medicare liabilities. Counting those changes, as a corporation would for its pension and healthcare liabilities for retirees, the 2008 annual deficit was $5.1 trillion, versus $1.2 trillion in 2007. Such showed total U.S. obligations – gross federal debt outstanding plus the net present value of unfunded liabilities – at $66 trillion, roughly 4.6 times the level of reported U.S. GDP, and greater than total estimated global GDP.

These numbers remain unsustainable, already are deteriorating severely for fiscal 2009, and eventually will doom the U.S. dollar to hyperinflation, as discussed in the Hyperinflation Special Report at www.shadowstats.com.

I have not had a chance to review the statements in careful detail, yet, and there apparently have been some minor accounting changes that do not alter the picture meaningfully. A more complete analysis will follow in the upcoming newsletter. The full financial statements, including the GAO’s auditing comments, are available at: http://www.fms.treas.gov/fr/08frusg/08frusg.pdf

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

With a feeding frenzy to point out how the biggest of the big can be major turkeys, no one has asked the inviting question, what did he do with the money? It is hard to spend billions on oneself.

Top banks admit huge losses in Wall Street ‘pyramid’ fraud
Dec 15 09:11 AM US/Eastern

Top world financial groups on Monday revealed massive potential losses from an alleged scam run by Wall Street trader Bernard Madoff, admitting they were fooled by a classic pyramid investment fraud.

British, French, Japanese and Spanish banks and funds said investments totalling billions of dollars (euros) could be wiped off their balance sheets by a scandal that is set to affect some of the richest people in the world.

Royal Bank of Scotland said it could lose about 400 million pounds (598 million dollars, 444 million euros), joining a growing list of banks and investors in Europe, Asia and the United States struck by the scandal.

Shares in Santander, the biggest bank in Spain and the second largest in Europe after HSBC , plunged after the lender said it had an exposure of more than three billion dollars to Madoff Investment Securities in New York.

France’s Natixis investment bank, already brought low by subprime losses, put its maxiumum exposure at 450 million euros (606 million dollars). Retail banking giant BNP-Paribas revealed potential losses of 350 million euros.

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Jim Sinclair’s Commentary

Where is the money?

Wall Street ‘fraud’ victims continue to rise
December 15, 2008

The list of institutions and individuals set to lose billions of pounds after investing in a fund run by Bernard Madoff, the Wall Street broker and former Nasdaq chairman, is growing by the hour.

The list of institutions and individuals set to lose billions of pounds after investing in a fund run by Bernard Madoff, the Wall Street broker and former Nasdaq chairman, is growing by the hour.

Royal Bank of Scotland (RBS), the bank majority-owned by the Government, today admitted that it had an exposure of £400 million to the $50 billion alleged fraud.

It joins Man Group, the world’s largest listed hedge fund manager, HSBC and Santander, the Spanish group that owns Britain’s Abbey, Alliance & Leicester and Bradford & Bingley, which are exposed to Mr Madoff’s business.

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Jim Sinclair’s Commentary

The moment these non US entities dumped Fanny and Freddie and jumped into practically no interest US Treasuries for safety, the US dollar rally crumbles and kicks those geniuses in the rear.

Foreign investors fled agencies, bought T-bills
Monthly inflows hit record as investors sought safety from U.S. troubles in U.S. assets
By Laura Mandaro, MarketWatch
Last update: 1:47 p.m. EST Dec. 15, 2008

SAN FRANCISCO (MarketWatch) — Foreign investors shed their holdings of Fannie Mae and Freddie Mac debt after the U.S. government’s takeover of the floundering mortgage institutions, and instead piled into short-term Treasury bills, October data released Monday show.

The rush to safety lifted monthly inflows of net foreign investments in U.S. securities to a record high of $286.3 billion, said the U.S. Treasury in its monthly Treasury International Capital, or TIC, report.

The upshot was that foreigners increased their holdings of U.S. dollar assets even after the U.S. financial system delivered a list of historic failures and near-misses, including the September bankruptcy of Lehman Brothers, and then had its worst October for stock trading since 1987. See article on October trading records.

"For now, the U.S. dollar has reassumed its reserve-currency primacy," said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Foreign private investors, central banks and other overseas institutions sold a net $50.2 billion in Fannie Mae and other government agency bonds in October, a reversal from the $6.2 billion in net purchases made in September, the U.S. Treasury said.

The rush for the exits followed the U.S. government’s decision to seize formal control of Fannie Mae and Freddie Mac after the government-sponsored enterprises – which had operated as independent, publicly traded mortgage financers with the implicit backing of the U.S. government – skirted near bankruptcy.

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Jim Sinclair’s Commentary

Oh what beautiful morning. Those that flamed the planet with their OTC derivatives and gold bearishness are becoming a bad chapter in world history.

Citadel joins rush to lock up funds
By Henny Sender in New York
Published: December 14 2008 19:00 | Last updated: December 14 2008 19:00

Citadel Investment Group has joined the rush of hedge funds suspending redemptions to investors, a development that is in effect locking up hundreds of billions of dollars in cash during a volatile period in global markets.

Ken Griffin, Citadel’s founder, sent a letter on Friday to investors in the group’s flagship Kensington and Wellington funds telling them that the group had decided to hold on to their money at least until March.

Citadel has about $15bn under management after suffering big recent losses.

Citadel trades in many of the markets hardest hit by recent volatility – including convertible bonds, corporate bonds, credit derivatives and so-called “pipes”, or private investments in public equities.

Citadel did not respond when called for comment.

Citadel joins a growing list of hedge fund groups – including Tudor, Farallon and DE Shaw – that have imposed restrictions on the ability of investors to withdraw money.

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Jim Sinclair’s Commentary

Kerry forgot to add to his statement the Pakistani Intelligence, the Pakistani Military Leaders, Pakistani Military Grunts and a significant amount of Pakistani civilians.

I imagine the Washington Post meant a great deal of the Pakistan population makes up the bad guys this article suggests be killed forthwith.

The more of this rhetoric, the closer we come to some entity with support from the US, Great Britain and others sending in troops. This will come after a major PR campaign to color the place all bad, making them all fair targets.

U.S.’s Kerry urges Pakistan to control spy agency

Mon Dec 15, 2008 8:05am EST

NEW DELHI, Dec 15 (Reuters) – The Pakistan military’s powerful spy agency must be tightly controlled and not allowed to act independently, U.S. Senator John Kerry said on Monday after meeting Indian leaders to discuss the deadly Mumbai attacks.

India has blamed last month’s attacks that killed 179 people on the banned Islamist militant group Lashkar-e-Taiba, which analysts say has long had ties with the Pakistan military’s Inter-Services Intelligence (ISI) spy agency.

New Delhi has also demanded Islamabad do more to stop such militant groups from using Pakistani soil to launch attacks on Indian cities.

The Mumbai attacks have renewed suspicion in India and elsewhere about ties between Lashkar and the ISI, ratcheting up tensions between the nuclear-armed neighbours.

"In the United States, our intelligence agency is obviously held accountable, not just to the administration that runs it but also to the United States Congress and, through the Congress, to the people," Kerry told reporters in New Delhi after meeting Indian Prime Minister Manmohan Singh.

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Jim Sinclair’s Commentary

Pakistan, a rolling disaster becoming visible.

The Washington Post recently said that if Pakistan won’t or can’t uproot its home grown terrorists groups, said Robert Kagan, the world would have to step in. The international community should declare parts of Pakistan, "ungovernable" and send troops to help the Pakistan government round up and kill the bad guys.

The article goes on to ask itself "would this violate sovereignty? Of course it will answers the author. He went on to declare that nations should not be able to declare sovereign rights when they cannot control territory from which terrorist attacks are launched.

That seems to me like a slippery slope into financial and geopolitical Armageddon when the nation under discussion is nuclear capable with delivery systems. Keep in mind the military and intelligence is pro-Taliban. It seems to me the first to battle is not the government but rather the military with plans predicated on intel.

This is not Iran, Iraq or Afghanistan that truthfully lacks world class teeth. They do not vaporize their invaders, they just practice the age old strategy of bury your weapons, all fall down, now when the invading nation ensconce themselves, get up, get your weapons and bleed the enemy slowly using ancient technology until the war drains the invading nation to death.

This bunch can throw nukes if they deem themselves to be facing a force beyond their ability to repulse by traditional means, considering it not help but rather invasion. The government that the Washington Post has deemed a non nation’s present government has said, "do not do that." We will consider your offer of help if executed as an invasion of our sovereign territory.

There will be an invasion of Pakistan soon, by someone supported by the USA, GB and Israel. That you can be sure of.

Pakistan ‘linked to 75% of all UK terror plots’, warns Gordon Brown
December 14, 2008

Sam Coates, Chief Political Correspondent, and Jeremy Page, South Asia Correspondent, in Islamabad

Gordon Brown demanded "action, not words" from Pakistan today, blaming Pakistani militants for last month’s attack on Mumbai and revealing that three quarters of the gravest terror plots under investigation in the UK had links to Pakistan.

Winding up a two-day tour of Afghanistan, India and Pakistan, the Prime Minister urged Asif Ali Zardari, Pakistan’s President, to "break the chain of terror" linking Islamist militants in Afghanistan and Pakistan to attempted terrorist attacks in Britain.

British military officials believe there are a "handful" of British militants fighting alongside the Taleban in Afghanistan, often entering the country through northern Pakistan, where al Qaeda and Taleban leaders are thought to be sheltering.

Officials also believe that there are currently around 30 major terrorist plots in the United Kingdom with 2,000 suspects being watched by police and the intelligence services.

"Three quarters of the most serious plots investigated by the British authorities have links to al-Qaeda in Pakistan," said Mr Brown in a press conference alongside Mr Zardari in the presidential palace in Islamabad. "The time has come for action, not words."

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Jim Sinclair’s Commentary

The financial problems are behind us? Not a chance. What OTC derivatives did not do, imploding earning and litigation will.

Wall Street shock as Goldman Sachs is expected to post losses of £1.35billion
By DAILY MAIL REPORTER
Last updated at 8:09 PM on 14th December 2008

As the shock waves of former Nasdaq chairman Bernard Madoff’s arrest over an alleged £33.5billion fraud continues to reverberate around Wall Street, dealers in New York are braced for yet more grief from the battered banking sector.

For the first time in a decade as a publicly listed company, Goldman Sachs is expected to report a loss for the fourth quarter tomorrow.

Analysts believe chief executive Lloyd Blankfein could post a loss of £1.35billion caused by further huge write-downs on the value of its investments and a fall in revenues as investment banking, sales and trading activity all take a further downturn.

The firm’s revenue for the first three quarters fell by almost 33 per cent from a year earlier, as investment banking fees dropped 26 per cent and trading and principle investment revenue slid 45 per cent.

Goldman, which converted into a bank-holding company in September to help it survive the global credit crisis, last month slashed about 3,200 jobs or one tenth of its staff.

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Jim Comments on President Elect Obama’s appointments:

There are two similarities pervading Obama’s appointees.

1. Harvard University
2. Intellectuals.

Therefore decisions made will be from the overeducated and lead to impractical programs and solutions following closely to a liberal manifesto.

There is a tendency when you are surrounded by what boils down to same university fraternity house to have formed a team of YES people.

 

Jim Sinclair’s Commentary

The good guys at GATA bring this to our attention

Trace Mayer: A problem with GLD and SLV ETFs
Submitted by cpowell on 08:25AM ET Sunday, December 14, 2008. Section: Daily Dispatches
11:20a ET Sunday, December 14, 2008

Dear Friend of GATA and Gold:

In an essay published yesterday, Trace Mayer, an accountant, lawyer, journalist, and proprietor of the Internet site RunToGold.com, has done a wonderful job exposing the weaknesses of gold and silver exchange-traded funds, as those weaknesses are acknowledged in their own prospectuses. Mayer observes, "There is no assurance that the ‘gold’ held in the ETFs is actually the same gold as defined under the periodic table."

Mayer’s essay is headlined "A Problem with GLD and SLV ETFs" and you can find it at Run To Gold here:

http://www.runtogold.com/2008/12/a-problem-with-gld-and-slv-etfs/