Posts Categorized: In The News

Posted by & filed under In The News.

Dear CIGAs,

I have received advice from Computershare advising that the Direct Registration System (DRS) is now available to all registered shareholders Computershare manages. This includes Canadian residents.

Jim Sinclair’s Commentary

These guys will never stop writing these garbage credit default derivatives. They even have an index as if the underlying paper was functional.

Tracking big increases in counterparty credit risk
Previous peak came after September collapse of Lehman and AIG, CDR says
By Alistair Barr, MarketWatch
Last update: 2:00 p.m. EDT March 9, 2009

SAN FRANCISCO (MarketWatch) — Counterparty credit risk in the derivatives market surged to a new record Monday, reflecting concern that the U.S. financial system remains fragile in the midst of a long recession.

The CDR Counterparty Risk Index, which tracks credit default swaps on leading banks and brokerage firms, jumped more than 13 basis points to a record 300.9 during midday action.

The index, compiled by New York-based Credit Derivatives Research, has risen more than 53 basis points since last week. A basis point is one-hundredth of a percentage point.

Credit default swaps are a common type of derivative contract that, as the name implies, pay out in the event of default. When prices for credit default swaps rise, that suggests investors are willing to pay more to protect against defaults.



Jim Sinclair’s Commentary

Statements from positioned people in China are not like the East, made off hand and without truthful purpose.

You know we have discussed this point on more than one occasion.

Above USDX .8900 there is no basis to the argument that increasing the supply of dollars by back hand means is self destructive to the Chinese Central Bank.

China can buy more gold, oil with forex -official
2009-03-09 05:52 (UTC)

BEIJING, March 9 (Reuters) – China should use part of its nearly $2 trillion in foreign exchange reserves to buy more gold, oil, uranium and other strategic commodities, the head of China’s energy bureau said in comments published on Monday.

The comments made by Zhang Guobao, head of the National Energy Administration, marked the latest call out of Beijing that the government should diversify the world’s largest stockpile of forex reserves.

Zhang’s proposals were published by the Beijing-based China Reform Daily, a newspaper run by China’s powerful economic planning agency, the National Development and Reform Commission.

Zhang said the State Administration of Foreign Exchange could directly buy more gold and other strategic materials.

He added that agencies such as China’s National Oil Reserves Centre should be allowed to issue foreign exchange bonds to obtain money from China’s forex reserves for overseas purchases.


Jim Sinclair’s Commentary

Pakistan according to its neighbour.

Ex-Indian general: Pakistan nuclear weapons prevent India from retaliatory attacks twice 2009-03-09 17:45:49

NEW DELHI, March 9 (Xinhua) — Pakistan’s possession of nuclear weapons prevented India from attacking it twice, one after the Mumbai attacks last November and the 2001 terrorist attack on Indian Parliament, the semi-official Press Trust of India quoted a former Indian Army general as saying on Monday.

Former Indian Army chief Gen. Shankar Roychowdhury told a seminar in New Delhi that Pakistan’s nuclear weapons deterred India from attacking that country after the Mumbai strikes, according to the report.

He also told the seminar, entitled "Nuclear Risk Reduction and Conflict Resolve" that it was due to Pakistan’s possession of nuclear weapons that India stopped short of a military retaliation following the attack on Parliament in 2001, said the report.

The 2001 Indian Parliament attack was a high-profile attack by militants belonging to the Lashkar-e-Taiba and Jaish-e-Mohammed groups against the building housing the Parliament of India in New Delhi.

The attack led to the death of a dozen people, including five terrorists, six Indian policemen and one civilian. It also led to tensions between India and Pakistan and the 2001-2002 India-Pakistan standoff.


Jim Sinclair’s Commentary

I am not sure Santelli made any mistakes when he went Ballistic on CNBC, but overlooking that small part of the video the rest is totally worth the few minutes it will take you to watch. Strange, none of my Bloomberg interviews were shown.



Jim Sinclair’s Commentary

Here comes another $500 billion! Remember the Lady head of the FDIC only requested $100 billion. What does she know?

FDIC Bill Dodges a New TARP Fight

WASHINGTON — A three-page bill designed to bolster the Federal Deposit Insurance Corp. could let the Obama administration sidestep a huge political problem: securing more financial firepower without opening a debate over the Troubled Asset Relief Program.

The legislation, introduced late Thursday by Senate Banking Committee Chairman Christopher Dodd, would temporarily allow the FDIC to borrow $500 billion to replenish the fund it uses to guarantee bank deposits, if the Federal Reserve and Treasury Department concur. Those funds would be distinct from the contentious $700 billion financial-sector bailout, which lawmakers are loathe to expand.

The FDIC can presently only borrow $30 billion from Treasury. The bill would permanently raise that level to $100 billion, which the FDIC could tap without prior approval from the Fed and Treasury.

Mr. Dodd, a Connecticut Democrat, already has four Republican co-sponsors for the bill and it could quickly gain momentum, in part because of strong backing by community bankers.



Jim Sinclair’s Commentary

You know the maniacs in Wall Street are still writing this crap.

Scholes Advises ‘Blow Up’ Over-the-Counter Contracts
By Christine Harper

March 6 (Bloomberg) — Myron Scholes, the Nobel prize- winning economist who helped invent a model for pricing options, said regulators need to “blow up or burn” over-the-counter derivative trading markets to help solve the financial crisis.

The markets have stopped functioning and are failing to provide pricing signals, Scholes, 67, said today at a panel discussion at New York University’s Stern School of Business. Participants need a way to exit transactions and get a “fresh start,” he said.

The “solution is really to blow up or burn the OTC market, the CDSs and swaps and structured products, and let us start over,” he said, referring to credit-default swaps and other complex securities that are traded off exchanges. “One way to do that, through the auspices of regulators or the banking commissioners, is to try to close all contracts at mid-market prices.”

Scholes also recommended moving the trading of credit- default swaps, asset-backed securities and mortgage-backed securities to exchanges to allow for “a correct repricing” of the assets. The securities are currently traded between banks and investors, without any price disclosure on exchanges.


Jim Sinclair’s Commentary

Here comes a major confidence shaker.

Pension system is cracking
New York needs to establish a more affordable benefits tier for its new public employees
March 8, 2009

In these days of imploding institutions, public pensions may well be next. They are outstripping private benefits at such a pace that governments cannot sustain them. New York should act now to create a slimmed-down category of benefits for new hires.

A few New York leaders who get the problem – Gov. David A. Paterson, Mayor Michael Bloomberg – are raising the need for reform. So far, the unions aren’t persuaded. But public pressure is building, from overwhelmed taxpayers who’ve witnessed their own pensions diminish or disappear, and from hard-pressed local governments and schools, which will be required to make dramatically higher payments into the funds.

Nassau County, which is struggling with a $130 million deficit, will see its $97 million annual contribution for county workers grow $40 million by 2011, predicts County Comptroller Howard Weitzman. Extrapolate that to Suffolk County and the rest of the schools, villages and towns on Long Island, and it’s a $320-million budget-buster.

At one time, pensions were considered essential to attract people into government service. But studies today show that, with benefits, public employees now make 42 percent more than private-sector workers in comparable jobs.



Jim Sinclair’s Commentary

In the 70s it was not the gold gang that made the big dollars. It will not be this time either.

They, as a community, seek reasons why they are wrong and rarely why they are right.

Believe me, I know.

Hedge funds turn to gold
By Henny Sender in New York and Javier Blas in London
Published: March 8 2009 18:13 | Last updated: March 8 2009 18:13

Hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks.

The gold bulls include David Einhorn, founder of hedge fund Greenlight Capital, who last year came under the spotlight for his short selling of shares in Lehman Brothers, after arguing that the bank did not have enough capital to offset its exposure to falling property prices. Other funds looking at gold include Eton Park and TPG-Axon, investors said.

Their belief in bullion is being expressed even as gold prices have retreated from last month’s break above the $1,000 an ounce level. Spot gold in London closed last Friday at $939.10, after falling last week to $900.95 an ounce.

Investors such as Mr Einhorn are turning to gold because they are worried about the response of the US Federal Reserve and other central banks to the global economic crisis. A bet on gold is essentially a bet against all paper currencies.

“The size of the Fed’s balance sheet is exploding and the currency is being debased. Our guess is that if the chairman of the Fed is determined to debase the currency, he will succeed,” Mr Einhorn wrote in a recent letter to his investors. “Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself.”



Jim Sinclair’s Commentary

Are we not all asking the same question?

Minnesota Bank Asks Why It Pays for Wall Street Greed
By Linda Shen

March 6 (Bloomberg) — TCF Financial Corp., the Wayzata, Minnesota-based bank that never made a subprime loan and hasn’t lost money since 1995, is asking why it should help clean up the mess made by Wall Street.

“I’m kind of bitter,” said William Cooper, chief executive officer of the 448-branch bank, adding that over the years TCF has invested about $1 billion in the Federal Deposit Insurance Corp.’s fund that guarantees bank deposits. “We pay for the excesses of our competitor over and over again.”

TCF is among more than 8,300 banks and lenders insured by the FDIC facing increased fees and a one-time “emergency” charge designed to raise $27 billion this year for the agency’s depleted coffers. Community banks may take a 10 percent to 20 percent hit to 2009 earnings even if the FDIC halves that charge, said Camden Fine, president of the Independent Community Bankers of America.

The ICBA and its 5,000 mostly locally owned member banks are rebelling against the costs, as well as curbs on pay and business practices imposed on recipients of U.S. capital after public outrage over bonuses and perks. Community banks rely more on deposit funding, so they suffer a “much heavier burden” as a result of deposit insurance proportionate to size than peers such as New York-based Citigroup Inc. and Wells Fargo & Co., with its headquarters in San Francisco, Fine said.


Jim Sinclair’s Commentary

Hyperinflation will not and cannot be avoided. Protect yourself or suffer the loss of everything you have worked for!

Let sleeping shadow banking systems lie
By: James Saft

Rather than vainly trying to refloat the shadow banking system, the U.S. would be better off grappling with the inevitable ultimate solution — debt destruction and inflation.

The common denominator of policies like the Term Asset-Backed Loan Facility (TALF) that was detailed on Tuesday, is that they try to solve fundamental problems with indebtedness by attempting to float asset prices high enough that they are back in proportion with the debt.

Even more, they use the same structures that worked out so poorly — highly levered hedge fund like vehicles and securitisation — but this time substitute government funding and leaves the taxpayer as main bag-holder if the deals go bad.


Jim Sinclair’s Commentary

I told you for a long time that for every loser there is a winner.

Therefore it is now reasonable to assume the absolute majority of the $9.5 trillion dollar bailout has been paid out to the winners.

Therefore tax and debt dollars have funded the yet unnamed winners.

Top U.S., European Banks Got $50 Billion in AIG Aid

The beneficiaries of the government’s bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany’s Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Societe Generale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.



Jim Sinclair’s Commentary

Credit default derivatives and the Credit Default Index quoted daily on Financial TV are as described in this Guardian article, "Acts of Satan." They are. Then who are the agents of Satan?

"AIG had a sought-after selling point: a triple-A credit rating. For a fee, it would stand behind lesser institutions’ credit obligations. By lending its gilt-edged rating, it could give clients’ investments a higher value and make them easier to trade. Headquartered in Connecticut but largely run from London, the division transacted billions in credit default swaps (CDS) – instruments trading financial risk – which have been dubbed "acts of Satan" by a leading US credit analyst, Christopher Whalen.

Hedge fund hotel yields up secrets
Wheeler-dealing in UK led to US insurer’s record loss
‘Acts of Satan’ ripped black hole in financial system
Andrew Clark
Saturday March 7 2009
The Guardian

It is Mayfair’s house of financial horrors. Owned by the Abu Dhabi royal family, One Curzon Street is among London’s flashiest office blocks. But behind the elegant curves, polished white stone, sweeping windows and panoramic atrium lie billions of dollars in losses that have threatened the global financial system.

Popular with financial enterprises, the building is known as a hedge fund hotel. Its tenants include GLG Partners, one of the City’s star funds, which has fallen on hard times, and the struggling Swiss bank UBS, but on the fifth floor can be found the most notorious of the property’s troubled tenants – a formerly obscure financial products division of the sprawling American International Group (AIG).

It was in this London office of AIG that big-brained financial whiz-kids created a casino offshoot of the once-mighty insurer that spectacularly wrecked the company, racking up billions of dollars in losses on arcane derivatives, swaps and contracts. Fatally undermined by the unit’s wheeler-dealing culture, AIG crashed to the US’s biggest corporate loss of $61.7bn (£43bn) for the final quarter of 2008 and is limping along the brink of oblivion, saved from bankruptcy by an eye-watering $150bn of emergency aid from US taxpayers.

The Federal Reserve chairman, Ben Bernanke, wasted few words in condemning the division’s antics, telling Congress this week: "This was a hedge fund, basically, that was attached to a large and stable insurance company."


Jim Sinclair’s Commentary

It is about time, wouldn’t you say?

Militant threat from Pakistan alarms U.S.
Officials see indication of presence within United States
By Josh Meyer | Washington Bureau
March 8, 2009

WASHINGTON — The Mumbai terrorist siege and other recent plots and attacks have stoked alarm among U.S. officials that the next strike on U.S. soil is less likely to come from traditional Al Qaeda operatives than from virtually unidentifiable Pakistani militants who enjoy easy access to the United States and already have a significant presence here.

But U.S. efforts to identify and thwart the growing threat posed by the Pakistani extremists—both inside the United States and against American interests overseas—are being undermined by the government of Pakistan, which has a long history of close ties to the militant organizations such as Lashkar-e-Taiba that are radicalizing, training and funding extremists, according to current and former U.S. and Western counterterrorism officials.

Even before the gunfire in Mumbai stopped last November, the FBI and other U.S. agencies went on red alert, searching for any evidence of plotters in the United States.

Although they did not find any direct connections, authorities did find troubling evidence of the group’s continued presence on U.S. soil, including fundraising and support cells that are well-hidden within the large numbers of the Pakistani diaspora.



Jim Sinclair’s Commentary

Somebody Will.

Will US attack Pakistan to secure nuclear weapons? 
Speculation is rife that United States of America, increasingly worried by the expansion of fundamentalist and Jehadi forces in Pakistan, could attack that country to secure its nuclear arsenal. Such a move could suck many nations into the quagmire..
CJ: Akbar Majid ,

WILL THE attack on the Sri Lankan cricket team in the heart of Pakistan prove to be the last straw on the camel’s back? Has the belligerence shown by the Taliban and Lashkar-e-Taiba convinced the world that no business is possible with the Jehadis?

The answer to these questions cannot be a straight yes or no. However, if the grapevine is to be believed then the next few months could see a paradigm shift in the War Against Terror in so much so that there could be a possibility of a war staring South Asia.

Speculation is rife that United States of America, increasingly worried by the expansion of fundamentalist and Jehadi forces in Pakistan, could attack that country to secure its nuclear arsenal. US fears that terror groups, either forcibly or with the connivance of security official can manage to obtain a nuclear weapon, a situation which could be nothing less than catastrophe.

India, which is holding the elections next month could also be seriously affected, if the US seriously pursues the aggressive agenda and decides to divest Pakistan of nuclear weapons. Most probably the elections scheduled in April will have to be postponed in case of such an attack and an emergency like situation could be imposed here.



Jim Sinclair’s Commentary

Libor has been green on the screens for the past three weeks!

New Fears as Credit Markets Tighten Up

The credit markets are seizing up again amid new anxieties about the global financial system.

The fear and uncertainty that sent stocks to 12-year lows is now roiling the market for corporate bonds and loans, which have given back much of the gains they chalked up earlier in the year.

Short-term credit markets are still performing better than they did last year thanks to government programs to buy commercial paper and guarantee short-term debt. But some risk premiums are widening. The spread on junk bonds, for example, has climbed to 19 percentage points over that of comparable Treasury bonds, up from 16 percentage points in February. And Libor, the London interbank offered r ate, a common benchmark interest rate, has crept up over the past weeks, from 1.1% in mid-January to 1.3% on Friday, reflecting banks’ concerns about being paid back for even short-term loans. It is still well below its peak of 4.8% last October.


Jim Sinclair’s Commentary

Be careful of how you protect yourself. Distance yourself from financial agents in everything, including gold.

More gold fraud likely as economy swoons: Agents
3/8/2009 8:0:2
Source ::: REUTERS

NEW YORK: Investigators expect to uncover more fraud involving gold in a recession that has already exposed several Ponzi schemes and other crimes, law enforcement officials with the US Postal Inspection Service said on Thursday. Agents with the federal agency have been working with the FBI, US prosecutors and other investigators on a series of scams from Ponzi schemes in financial investments and oil futures to gold coins all over the United States. “It’s the same scam but they are just selling different products,” Ronald Verrochio, Postal Inspector in Charge of the New York division of the U.S. Postal Inspection Service (USPIS), said in an interview. He spoke to Reuters at a seminar marking national consumer protection week to warn the public about being bilked by seemingly attractive investments.

“A lot of these scammers develop their scams following current economic trends and we’re bracing to see gold being used as a carrot,” USPIS spokesman Al Weissmann told the seminar, which was attended by government agents, prosecutors, attorneys and victims of fraud.

The price of gold hit an 11-month high above $1,000 an ounce on February 20, just below a record of $1,030.80 reached a year ago as investors sought a safe haven from financial market turmoil. Spot gold was trading at $927.90 on Thursday. New York division agents have helped uncover various scams involving selling unwitting investors gold coins, which turn out to be a fraction of their purported worth. Postal inspectors investigate mail fraud, enforcing more than 200 US federal laws that pertain to the mail. They investigate corporate and securities fraud cases when mail is suspected of being used to commit a crime. “It’s a very old adage but if it sounds too good to be true, it probably is,” said Verrochio, whose agency has been known as the “silent service” for its relatively low profile.


Posted by & filed under In The News.

Dear CIGAs,

$9.5 trillion of bailout money is enough to pay off every mortgage in the USA or write a check to every person on the planet for $1400.

Where did it go? The Fed keeps it secret. The Fed therefore has bigger secret accounts than Switzerland ever dreamed of.

One in 8 U.S. homeowners late paying or in foreclosure
Thu Mar 5, 2009 5:18pm EST
By Lynn Adler

NEW YORK (Reuters) – About one in eight U.S. homeowners with mortgages, a record share, ended 2008 behind on their loan payments or in the foreclosure process as job losses intensified a housing crisis spawned by lax lending practices, the Mortgage Bankers Association said on Thursday.

With unemployment at a 16-1/2-year high and expected to continue rising until mid- to late 2010, more borrowers will pay late or fall into foreclosure this year, said the group’s chief economist.

"While California, Florida, Nevada, Arizona and Michigan continue to dominate the delinquency numbers, some of the sharpest increases we saw last quarter in loans 90 days or more delinquent were in Louisiana, New York, Georgia, Texas and Mississippi, signs of the spreading impact of the recession," said Jay Brinkmann.

Duress is no longer isolated to borrowers with lower credit quality. As joblessness grew, so did late payments on prime fixed-rate loans that represent two-thirds of mortgages.

U.S. President Barack Obama’s $275 billion housing stimulus program will standardize modifications for distressed loans and pave the way for more refinancing.


Jim Sinclair’s Commentary

Economic changes are processes, not singular events. The following is part of the hyperinflation process.

Because nothing done has targeted OTC derivatives as the villain in all this, there is nothing that can stop the ongoing process towards it final end. That end is not an event but a condition – hyperinflation.

American banking system insolvent, says US economist

6 Mar 2009, 2124 hrs IST, PTI

NEW DELHI: The American banking system has become insolvent following the global financial crisis which is likely to be deep and prolonged hitting the economies of the developing and developed world, said a US-based economist.

"In our assessment, the US banking system is insolvent… they are below the water level", said Nouriel Roubini, professor of the US-based Stern School of Business, while addressing a session on the global meltdown at the India Today Conclave 2009 here on Friday.

According to research, he said, the losses of the US banking system are a mammoth $ 3.6 trillion, with banks accounting for $ 1.8 trillion and pension funds, hedge funds and other shadow banking institutions, the remaining portion.

Pitching for nationalisation of crisis-ridden banks by the American government, the US-based economist said, "they (banks) could be handed over to the private sector after cleaning up".

Suggesting ways for tackling the global crisis, Roubini said it was time for the governments of developed and developing countries to act in concert to prevent further deepening of the global recession.


Jim Sinclair’s Commentary

The Seven Story Mountain seeking the Real Story.

1. All of this, without exception, was an OTC derivative failure, even motors.
2. To a financial institution, every failure was an OTC derivative process.
3. There is not a sound bank in America.
4. There is no major financial institution that can be accurately described as sound.
5. For every loss there is a gain in transaction.
6. The gain can be in cash, position, fees or a mix of all three.
7. Now if everybody lost in the USA and on the planet, who won?

Corporate America’s Icons Crumbling Under Global Recession
By Steven Mufson
Washington Post Staff Writer
Friday, March 6, 2009; Page A01

The truisms have been familiar to generations of Americans: As General Motors goes, so goes the nation; Citigroup is too big to fail; General Electric, one of the 12 original companies in the Dow Jones industrial average in 1896, brings good things to life.

But the giants that only recently seemed like the unshakable foundations of the economy are faltering one after another. The girth that once seemed a source of strength now appears to be undermining them.

A share of Citigroup, worth $55.12 less than two years ago, yesterday cost about half of an ATM fee, finishing the day at $1.02 after briefly breaking below the buck-a-share level. The once-mighty financial conglomerate, valued at more than $300 billion in March 2007, was worth just $5.6 billion yesterday.

General Electric, whose mix of financial services, consumer products and industrial goods was once considered a sturdy pillar of the U.S. economy, closed yesterday at its lowest level since 1992, barely a 10th of its peak level. The price of a GE share, $6.66, was less than the cost of single compact fluorescent flood light bulb.

And battered GM shares slid yesterday yet another 15 percent to $1.86, not quite enough to buy a gallon of gasoline, after news that GM auditors warned the company might not remain a going concern without massive additional assistance from the U.S. government. While GM’s fate might indeed mirror the nation’s for now, the company could perish before an economic recovery arrives.


Jim Sinclair’s Commentary

This type of talk, if it persists and gets heard in public, would begin the process of legislative weakening of the Federal Reserve.

AIG Update: Senators Doubt Fed Could Regulate Systemic Risk
By Emily Flitter, American BankerMarch 6, 2009

As the House Financial Services Committee met Thursday to discuss the creation of a systemic risk regulator, Senate Banking Committee members were questioning the mettle of the main candidate for the job, the Federal Reserve Board.

Senators openly doubted whether American International Group Inc., which has received four government bailouts so far, ever poised a systemic risk to the economy, and they asked if the central bank made a mistake in providing the company with assistance.

It seems as if the Fed led the government to make a "large blunder — the largest in modern history," according to Sen. Bob Corker, R-Tenn.

"I have a hard time understanding the systemic risk issue," Corker said at a hearing on the AIG bailouts.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., said regulators would have to do a better job explaining how and why they rescued AIG.

"Public confidence in what we’re doing is at stake," he said.


Jim Sinclair’s Commentary

Mullah Omar makes for today’s Pakistan:

Mullah Omar Calls for a Taliban Surge

March 6, 2009, 8:26 AM

The Pakistani newspaper Dawn reports that on Thursday, “the mausoleum of renowned Pashto mystic poet Abdur Rehman Baba was bombed by unidentified miscreants,” outside Peshawar, in Pakistan’s North West Frontier Province. Dawn calls the bombing of the shrine to “a 17th century poet, revered for his message of love and peace” part of an “attack on Sufism.”

As the BBC notes, suspicion has turned to the Taliban, “who represent a more purist form of Islam and are opposed to Sufism, preventing people from visiting shrines of Sufi saints in areas they control.” The BBC also says that “No casualties are reported but the poet Rahman Baba’s grave has been destroyed and the shrine building badly damaged.”

According to Dawn:

The shrine’s watchman had received a threat from suspected militants on his cell phone three days ago. He told police that the attack took place to crack down on the tradition of women making pilgrimages to the site.

In spirit, the attack on the Pashtun poet’s shrine in Pakistan seems to echo one of the Afghan Taliban’s most infamous acts of cultural cleansing: the destruction of the Great Buddhas of Bamiyan in 2001. But, surprisingly, the Taliban leader who ordered the attack on the “idols” at Bamiyan, Mullah Muhammad Omar, might not approve of this bombing in Pakistan, or, for that matter, the attack on the Sri Lankan cricket team and its Pakistani police escort in Lahore.


Jim Sinclair’s Commentary

"Eric the Gold" speaks about what might well be another difficult situation; a situation that many of your retirement plans are involved in.

As Safe As Gold
Sprott Asset Management
February 2009
Eric Sprott 
Sasha Solunac

What are phrases that connote safety? Two that come to mind are: “Like money in the bank” or “As safe as houses”. Given events of the past year, these two phrases no longer seem to hit the mark, do they? These days, the one word that signifies safety is “gold”, being far safer than both cash and houses. It therefore stands to reason that a more accurate phraseology would be “Like gold in the safe!” or “As safe as gold!” Yes, the barbarous relic is back… and with a vengeance.

As our readers may have already surmised, we like gold around here, and evidence suggests the world is beginning to like it more and more too. We therefore hope our readers can forgive us for harping on the same theme over and over. For the past seven articles including this one, the subject of gold has been a dominant theme, if not the prevailing theme in four of these articles; namely, “The Phony Express” (August 2008), “Cash or Gold” (October 2008), “Surviving the Depression” (December 2008), and now “As Safe as Gold”. Although we may seem obsessed, there is a method to our madness.

Not coincidentally, the past seven months have also coincided with the worst financial crisis the vast majority of us have ever seen in our lifetimes, as well as the worst global economic contraction the world has seen since the Great Depression. As we wrote in our previous article, “So You Think 2008 Was Bad? Welcome to 2009”, the world is currently in an environment where weakness only begets more weakness, and furthermore, the olden days of economic prosperity through endless credit creation are likely never coming back. That’s right; we believe there has been, and will continue to be, a paradigm shift in the way financial markets function going forward. We believe this last point is a very important distinction to make – one that fundamentally distinguishes the current environment from a run-of-the-mill recession. The implication is that current government policies, which are all focusing on bringing the olden days back (this time through endless government credit/debt creation) are in fact ruinous strategies that will have dire implications for financial stability and investment portfolios going forward.

If one believes the above (indeed, it seems increasingly difficult not to), then it should go without saying that, from an investment perspective, these are extremely challenging times. It has become very difficult to preserve wealth, let alone create it. Just like a rising tide lifts all ships, a receding tide tends to ground them one and all. You could have bought almost anything in 2003-2007 and made money (provided, of course, you got out by the beginning of 2008!) Likewise, right now you can buy almost anything and lose money. Those who have been “bargain hunting” on the way down have been taken to the cleaners. There was a time not that long ago when big bank stocks were considered conservative and ‘safe’ investments. Today this notion seems laughable. Bank stocks are now the biggest dogs on the planet – the common equity of which, in its current form, will be shown to be completely worthless in our opinion. Thus, buying bank stocks remains a sucker’s game – at any price. But there isn’t much solace to be found elsewhere. The direction for almost everything, in any industry, remains down. You show us an investment and we’ll tell you why it’ll lose money.


Jim Sinclair’s Commentary

Some subjects seem to evade CNN.

BUDGET BACKLASH: Thousands Rally At City Hall
Taxpayers Furious With Budget Cuts Take Frustration To Streets Of NYC
Organizers Say 50,000 On Hand For ‘Rally For New York’

NEW YORK (CBS) ― A massive budget backlash came to lower Manhattan on Thursday. Tens of thousands of New Yorkers marched on City Hall, rallying to stop proposed funding cuts.

The rally cries of labor unions, community groups and families outside City Hall could be heard throughout lower Manhattan. Desperation for an economic lifeline brought out more than 50,000 people along several blocks of Broadway in a self-described "Rally For New York."

Their message for Gov. David Paterson came in the form of booming chants:

"No more cuts! No more cuts!"

Everyday New Yorkers had their own personal messages for the governor as well.

"Governor Paterson, I wish you could have an open heart that we are going to suffer if this budget cut goes through," said China Lankford of Jamaica.


Posted by & filed under In The News.

Dear President Obama,

You think you have problems now?

Present challenges, economic or political, are nothing compared to when this one lands on your desk; the implications of which are generational in nature.

Respectfully yours,

Pakistan ‘bigger problem’ than Afghanistan: US diplomat

LONDON (AFP) — The top US diplomat in Kabul warned that Pakistan posed a bigger security problem for the rest of the world than Afghanistan, in a newspaper interview published Thursday.

Christopher Dell spoke after Tuesday’s attack on Sri Lanka’s cricket team as they travelled to a Test match in Lahore which left eight people dead, and has raised doubts about the government’s ability to tackle Islamic militancy.

"From where I sit (Pakistan) sure looks like it’s going to be a bigger problem," Dell told the Guardian newspaper.

"It is certainly one of those nuclear armed countries the instability of which is a bigger problem for the globe.

"Pakistan is a bigger place, has a larger population, it’s nuclear-armed.

"It has certainly made radical Islam a part of its political life, and it now seems to be a deeply ingrained element of its political culture. It makes things there very hard," he told the British daily.

Pakistan, a key US power in the "war on terror", is battling Taliban and Al-Qaeda militants along its rugged and lawless border with Afghanistan in the northwest.

More than 1,600 people have died in attacks in Pakistan in the last 22 months and analysts say its security agencies are failing to provide adequate security against militants, who could challenge the rule of President Asif Ali Zardari.


Fundamentalist Islamic law expands in Pakistan
Pakistani officials agree to 17 steps as part of a peace deal with extremists, alarming human-rights groups and others. Also, a bomb exploded at a Peshawar mausoleum where women came to pray.
By Mark Magnier 
8:06 AM PST, March 5, 2009

Reporting from Lahore, Pakistan — In an apparent expansion of Islamic fundamentalists’ authority in the picturesque Swat Valley, local Pakistani officials have agreed to close shops at prayer times and crack down on prostitution and drug dealing as part of a proposed peace deal, according to media reports today.

The steps were among 17 points that emerged following a Wednesday meeting involving provincial government officials and supporters of a pro-Taliban cleric mediating the talks, according to the Associated Press.

Although Sharia, or Islamic law, has been in practice in many parts of Pakistan’s North-West Frontier Province and its tribal areas, its official expansion into a region less than 100 miles from Islamabad, the capital, last month has unnerved secular groups, human-rights activists and Western officials.

In a separate development underscoring the debate in Pakistan over religious extremism, a bomb exploded today at the mausoleum of a 17th century Sufi poet in the northwestern city of Peshawar after its management received a letter complaining that women were coming to pray there.

The predawn blast damaged a corner of the monument commemorating Sufi poet Rehman Baba, but no one was injured. The bomb appeared aimed at practitioners of the mystical Sufi form of Islam opposed by more hard-line Muslims



Jim Sinclair’s Commentary

Here is another statement on the condition of government affairs.

Scandal at Treasury: Official Quits Amidst Fraud Scandal
Darrel Dochow Allowed IndyMac Bank to Cook Its Books, Investigators Say
March 5, 2009

The man at the center of a fraud scandal at the Treasury Department has been allowed to quietly quit and retire from his job as a government regulator, despite allegations that he allowed a bank to falsify financial records and amidst outcries from investigators who say the case shows how cozy government regulators have become with the banks and savings and loans they are supposed to be checking on.

  Darrel Dochow, the West Coast regional director at the Office of Thrift Supervision who investigators say allowed IndyMac to backdate its deposits to hide its ill health, quit last Friday. Prior to his leaving, Dochow was removed from his position but remained on the government payroll while the Inspector General’s Office investigates the allegations against him.


Jim Sinclair’s Commentary

Not very long if you are a legislator whose pension fund is run by a subsidiary of AIG.

Pension Plans: How Long Can We Sweep the Problems Under the Rug?
March 05, 2009

Despite the influx of fiscal stimulus money, the governor of Arizona is appearing Thursday afternoon before a joint session of the legislature to lay out the sobering facts about the fiscal condition of the state. The stimulus money only plugged the current hole. It does nothing to address the systemic hole that Arizona has dug for itself.

According to the Goldwater Institute, the state faces a $4 billion funding shortfall for its proposed $10.5 billion fiscal year 2010 budget. To put that another way, in fiscal year 2004 the state’s spending was $6.5 billion and the budget was largely in balance. Arizona is now generating revenues at 2004 levels thus the challenge is to get expenditures right-sized.

Not an easy task and one that most likely is not going to be accomplished by cutting programs exclusively. A tax increase is sure to be on the table. A dire situation but there is probably one item that won’t be discussed this evening even though it may represent the biggest time bomb of all. The state’s pension funds.

The dirtiest little secret in government finance has to be the sorry state of the state and municipal pension plans. Leaving aside the promises of rich retirement benefits that were from inception mathematically impossible to deliver the schemes and deception that the various governments are employing to delay the day of reckoning are stunning.

An article in Bloomberg a couple of days ago shined a much needed light on them.



Jim Sinclair’s Commentary

As long as you do not see the reinstitution of the uptick rule in the USA and the USA and Canada do not enforce the up tick rule, there is no criminal fraud indictment of naked short sellers. The inviting conclusion is that the equity disaster is wanted, desired and engineered. Citi as a penny stock is a disgrace to the USA, its Administration and regulators.

This disaster now exceeds 1929.

Japan to extend curbs on short-selling – Nikkei
Thu Mar 5, 2009 1:54pm EST

NEW YORK, March 5 (Reuters) – Japan’s Financial Services Agency plans will retain restrictions on selling stocks short because the market remains unsettled, financial daily Nikkei said in its Friday edition.

The curbs include a ban on naked short-selling, or shorting a stock without first borrowing the shares, and call for reporting requirements for large short positions, the paper said. Short-sellers with positions of 0.25 percent of a company’s outstanding shares or more must file reports.

The regulations had gone into effect in October, as the global financial crisis deepened, and have been due to expire at the end of March. U.S. measures similar to Japan’s are scheduled to last through July, and Europe also has short- selling restrictions in place.

Short-selling, or betting that stocks will go down, has been blamed for deepening drops in stock prices.
(Reporting by Gerald E. McCormick; Editing by Andre Grenon)

Jim Sinclair’s Commentary

"As Goes Motors So Goes the USA"
–Bert Seligman (1958)

‘Going-concern warning’ raises spectre of GM bankruptcy filing
Kevin Krolicki, Reuters Published: Thursday, March 05, 2009

General Motors Corp on Thursday said its auditors had raised "substantial doubt" about its ability to survive outside bankruptcy if it fails to stem its losses and stop burning cash.

The "going concern" warning from the struggling U.S. automaker had been expected, but underscored the stakes for GM as it seeks up to $30 billion in U.S. government aid to restructure outside a court-supervised bankruptcy process.

GM had warned late last month that it expected its auditors would question its viability at the same time that it reported a loss of nearly $31 billion for 2008.

The automaker faces an end of March deadline to complete concession talks with the United Auto Workers and bondholders to reduce its debt load as part of a bid to convince the autos task force assembled by U.S. President Barack Obama that it can be made viable with a new round of government help.


Jim Sinclair’s Commentary

We shall suffer from the sins of our Financial Fathers.

This is so bad!

Fed Refuses to Release Bank Lending Data, Insists on Secrecy
By Mark Pittman

March 5 (Bloomberg) — The Federal Reserve Board of Governors receives daily reports on loans to banks and securities firms, the institution said in response to a Freedom of Information Act lawsuit filed by Bloomberg News.

The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.

The bank provides “select members and staff of the Board of Governors with daily and weekly reports” on Primary Dealer Credit Facility borrowing, said Susan E. McLaughlin, a senior vice president in the markets group of the Federal Reserve Bank of New York in a deposition for the Fed. The documents “include the names of the primary dealers that have borrowed from the PDCF, individual loan amounts, composition of securities pledged and rates for specific loans.”

The Board of Governors contends that it’s separate from its member banks, including the Federal Reserve Bank of New York which runs the lending programs. Most documents relevant to the Bloomberg suit are at the Federal Reserve Bank of New York, which the Fed contends isn’t subject to FOIA law. The Board of Governors has 231 pages of documents, which it is denying access to under an exemption under trade secrets.

“I would assume that information would be shared by the Fed and the New York Fed,” said U.S. Representative Scott Garrett, a New Jersey Republican. “At some point, the demand for transparency is paramount to any demand that they have for secrecy.”


Jim Sinclair’s Commentary

For Your Information, VALIC are subsidiaries of American International Group (AIG).

AIG VALIC Expands Independent Advice Platform to Serve Participants in Retirement.

HOUSTON — AIG VALIC, a national leading provider of retirement plan services to for-profit and not-for-profit education, healthcare and government organizations, today announced that Guided Portfolio Services(SM) (GPS), its independent advice and managed-account platform offered through VALIC VALIC Variable Annuity Life Insurance Company  Financial Advisors, Inc., has been expanded to offer comprehensive capabilities to clients entering the income distribution phase of retirement.

Launched in January 2003, GPS delivers comprehensive investment advice and discretionary managed accounts services to individual participants in employer-sponsored defined contribution retirement plans – principally in the accumulation and transition phases of retirement planning. Entering 2007, GPS has been expanded to service clients entering the distribution phase of retirement by providing personal wealth forecasts, comprehensive portfolio construction and ongoing portfolio optimization.

AIG VALIC is one of the leading retirement plan services providers in the United States. For more than half a century, it has specialized in providing retirement programs and related investment, recordkeeping and administrative services to a variety of employer types, including for-profit and not-for-profit elementary and secondary education institutions, hospitals and healthcare organizations, higher education institutions and governmental entities. VALIC serves 28,000 client groups and more than two million participants. AIG VALIC is the marketing name for the group of companies comprising VALIC Financial Advisors, Inc.; VALIC Retirement Services Company; and The Variable AnnuityVariable Annuity

An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio.


Fed’s Kohn Says Risks of Not Rescuing AIG ‘Unacceptably Large’
By Scott Lanman and Hugh Son

March 5 (Bloomberg) — Federal Reserve Board Vice Chairman Donald Kohn said that while the decisions to rescue American International Group Inc. have been “difficult,” the costs of withholding aid to the insurer would be “unacceptably large.”

“The disorderly failure of systemically important financial institutions during this period of severe economic stress would only deepen the current economic recession,” Kohn said today in remarks prepared for a hearing of the Senate Banking Committee. “We have been and will continue to work alongside the Treasury and other government agencies to avoid this outcome.”

Kohn’s comments, building on remarks this week from Fed Chairman Ben S. Bernanke, indicate the government may commit more funds to avoid an AIG failure. Bernanke told another Senate panel on March 3 that AIG’s collapse “would be devastating to the stability of the world financial system” and jeopardize taxpayer investment in the firm, now totaling $163 billion.

The government provided a revised rescue this week, adding a $30 billion line of capital, as the New York-based company reported a $61.7 billion fourth-quarter loss. The Fed warned that AIG may need more aid if markets don’t recover.

“Extreme financial and economic conditions have greatly complicated the plans for divestiture of significant parts of the company in order to repay the U.S. government for its previous support,” Kohn said. The new plan will “provide longer-term stability to AIG” while “maximizing likelihood of repayment to the U.S. government,” Kohn said.


Jim Sinclair’s Commentary

Destruction (negative basis crime) is the moving principle of the dollar demons in today’s markets.

Someday they will hurt the wrong people.

They cannot remain immune to their damages of life and fortune.

Darth Wall Street Thwarting Debtors With Credit Swaps
By Caroline Salas and Shannon D. Harrington

March 5 (Bloomberg) — Amusement-park operator Six Flags Inc. and automaker Ford Motor Co. may be pushed toward bankruptcy by bondholders trying to profit from credit-default swaps that protect against losses on their high-yield debt.

By employing a so-called negative-basis trade, investors could buy Six Flags bonds at 20.5 cents on the dollar and credit- default swaps at 71 cents. If the New York-based chain defaults, the creditors would receive the face value of the debt, minus costs. In a Feb. 27 note, Citigroup Inc.’s high-yield strategists put that profit at 6 percentage points, or $600,000 on a $10 million purchase.

Investors who bet on the collapse of a company are pitting themselves against traditional debt holders at a time when Moody’s Investors Service projects defaults will more than triple this year and exceed the level during the Great Depression. The clash may stall restructuring efforts to prevent bankruptcies, as basis traders may be less inclined to participate in distressed debt exchanges, said Matthew Eagan, an investment manager at Boston-based Loomis Sayles & Co., with $7 billion in high-yield assets.

“Before, you really had to worry mostly about where you were in the” company’s capital structure, he said. “Now, you have to consider the possibility that you might have this large holder of CDS incentivized to see it go into bankruptcy. It’s something that’s going to come up more and more.”

Six Flags Debt

Six Flags debt is rated Caa3 by Moody’s and CCC+ by Standard & Poor’s, three and five levels above default. Both rankings were put on “negative outlook” last year. Sandra Daniels, a spokeswoman for the New York-based company, didn’t return a phone call seeking comment.


Jim Sinclair’s Commentary

This could give some naked shorts a new rear end. You have to beat them to death by spectacular successes.

China’s spending spree likely to include Canadian companies
Duncan Mavin, Financial Post Published: Wednesday, March 04, 2009

HONG KONG – Asia’s dealmakers say a Chinese resource spending spree will accelerate throughout the next 12 months, with Canadian mining and energy companies likely on the shopping list.

Chinese buyers have already scooped up US$70-billion worth of global resource assets so far this year, as Beijing looks to secure its energy and resource future by spending some of its US$2-trillion in foreign exchange reserves.

The overseas buying trend will pick up steam in the months ahead, according to China and Hong Kong-based corporate dealmakers, investment bankers and private equity players surveyed by Royal Bank of Scotland and Mergermarket.

The report comes as expectations soar Beijing will deliver another stimulus package on Wednesday to add to the 4-trilion yuan (US$586-billion) in spending announced late last year. Further stimulus measures will be announced at the National People’s Congress – the climax of the country’s political calendar that features 3,000 delegates from across the country – according to government officials quoted in Chinese state media. Reuters reported, citing an unidentified official at the country’s top economic planning agency, that China will spend more on infrastructure and to boost manufacturing in addition to the stimulus package announced in November.

Details of Beijing’s previously announced spending plans are still sketchy although much of it is directed toward resource-intensive infrastructure projects in the transport and energy sectors.


Jim Sinclair’s Commentary

Pakistan is over. It is a process, not a specific event. The Taliban are in control of this process.

Pak facing six critical threats to its survival

Islamabad/London, Mar.4 (ANI): The militant assault on cricket tourists in Lahore puts sharp focus on a fragile democracy that is at risk of disintegration and international isolation in Pakistan.

Whole provinces run beyond the writ of the state.

According to The Guardian, security is not the only problem of a country that the United States now considers a greater threat than neighboring Afghanistan.

With the economy teetering, political tumult building and social conditions ripe for extremists, nuclear-armed Pakistan faces six critical threats to the rule of law and governance of the state.

The current violence started in summer 2007, when security forces routed armed militants at the Red Mosque in Islamabad.

That event turned militant groups that were focused on India or Afghanistan inwards, to Pakistan itself.


Posted by & filed under In The News.

Advice to the EFTs:

Real versus counterfeit Gold test:

Different companies melt down the gold to analyze if it is real or not.

Many jewellers use an acid test to identify it. You can also check its purity by using face powder. First you need to put a small amount of powder on your hand and rub the gold in that powder. If it leaves a black mark then it is real and if it not then it is fake. It will happen because pure gold forms a chemical reaction with many makeup products. Molecules of pure gold are packed tightly together and make it heavy.

There is one more way to check the purity of gold and that is by seeing if it will sink into water speedily. Fake gold will sink more slowly. This is a bit harder for the untrained eye.

If it is paper gold then that should be apparent. Light a match and apply.

Jim Sinclair’s Commentary

This can put a Big Prick in the Dollar Bubble.

China’s Torpedo Play: Yuan Set to Replace Dollar in Asia
Posted by slowsmile February 10, 2009

The Yuan will soon replace the dollar as the new Asian regional reserve currency. This also confirms that China now will probably dump a large amount of her trillions of reserve dollars and Treasury Bills – a horrific prospect for America with dangerous economic and dollar impacts.

Whilst stumbling over the internet in search of some news I came across a detailed article on the Asia News website headed "Chinese Yuan Set to Replace Dollar". I was somewhat stunned at this headline. This article describes that Beijing is introducing a serious currency experiment – because of the dollar’s volatility and unreliability – to aid in the stability of the Asian economy. But in the Asian News article, it is fairly clear what China’s intentions are – which is to completely decouple both China and Asia from the American dollar and introduce the yuan as the regional reserve currency. My guess is that other Asian governments will fall over themselves to join with this new reserve currency. This will be horrific news for America and all Americans, since it is now apparent that China(and eventually all Asia) will have little further use for the sick US dollar in this heavyweight economic region. This implementation of the yuan as the regional currency of Asia is also entirely legal – ever since Nixon trashed Breton Woods by decoupling gold from the dollar in 1971(And this is what initiated the US government’s Treasury Bill/Debt exchange standard for the world). So, soon Asian members of this new reserve currency will be able to buy raw materials and commodities like Food and Oil for yuan in Asia. Ouch!! That’s really going to hurt the greenback…

With the likelihood of China, Russia, Korea, Taiwan and Japan all eventually joining and also dumping large quantities of their reserve dollars in favour of the yuan currency, which will severely weaken dollar demand and therefore weaken its value, the outlook seems pretty grim for the future of the American economy. And with all those trillions of dollars coming home to roost in America, there is now nothing that the US government will be able to do to avoid inflation, or – much more likely – hyperinflation.



Jim Sinclair’s Commentary

Now the right questions are being asked. Who now has the $9.5 trillion?

Making good on OTC derivative trades gone bad. Making good to whom?

Solvent Insurer / Insolvent Insurer
By Barry Ritholtz – March 4th, 2009, 7:30AM

Forget the good bank/bad bank, I have an even bigger beef with this INSANE absurdity: Why are the taxpayers making good on hedge fund trades gone bad?

I cannot figure that one out.

When AIG first faltered, there were two companies jammed under one roof. One was a highly regulated, state supervised, life insurance company. In fact, the biggest such firm in the world.

The other firm was an unregulated structured finance firm, specializing in credit default swaps and other derivatives.

The first firm was Triple AAA rated. They had a long history of steady growth, profitability, excellent management. They made money (as the commercial goes) the old fashioned way: They earned it.

This half of the company held the most important insurance in many families’ financial lives: Their life insurance.  When an AIG policy holder passed away, the company paid off the policy, providing monies that get used to pay off mortgages, kids’ colleges, and surviving spouse’s life time living expenses. Given the importance of this payment, one can see why it is crucial to make sure there are sufficient reserves to make good on the promise of the life insurance policies. The actuarial tables used are conservative, the accounting transparent. The policy payoffs rock solid, utterly reliable.

AIG, this insurance company, was well run. It made a steady income, provided a valuable service to its clients.

It was also very solvent.


Jim Sinclair’s Commentary

The major and internationally respected publication "The Hindu" in India published the following.

My answer is "Fat Chance."

When Jinnah initiated the march of Muslin fundamentalists to form Pakistan, destroying Ghandi’s plan for India, this end was set in cement.

Pakistan has already gone Taliban. Whomever runs the intelligence service of a country, runs the country, that is an axiom.

The world is yet to realize the obvious. The question is who will Dr. Doom and his team work for. The inviting answer is whomever will pay and is Pakistani. Sounds like whomever runs the country to me.

Wake up, stop supporting jehadis: British media to Pakistan

London (IANS): British newspapers Wednesday described Pakistan as a "failing state" and said it was time its politicians and generals stopped supporting jehadis, a day after a terror attack in Lahore killed eight people and wounded six Sri Lankan cricketers.

The Times described as "absurd" the initial claim by a Pakistani minister that the terrorists involved in Tuesday’s attack were Indians.

"President (Asif Ali) Zardari’s principal enemy is within and, until he and his ministers understand this, there is little chance that they will find the will and means to deal with the terrorist threat. India’s assertion that Pakistan has done next to nothing to pursue the masterminds of the Mumbai attacks has proven all too true.

"No real effort has been made to disband Lashker-e-Taiba, the extremist organisation implicated in Islamist terrorism. Pakistan’s initial denials of knowledge or responsibility have been grudgingly followed by a few token arrests – and, on past form, those held will be quietly released in a few months.

"The truth is that the army, the compromised Inter-Services Intelligence (ISI) agency and the political establishment have shown no serious interest in confronting the Islamists. They have too many sympathisers in their own ranks to risk a crackdown and too many fifth columnists ready to tip off the terrorists."




Jim Sinclair’s Commentary

The most intriguing story on AIG is a strong rumor that AIG manages a high placed politicos Federal Retirement Program. I am looking for confirmation but do not yet have it. Have you?

Two thing are for sure:

1. This entire disaster never needed to happen if it were not for the sociopaths who made their living through OTC derivative manufacturing and distribution.

2. Bailout money goes in the front door or the OTC derivative loser and out the back door to the OTC winner. Who are they?

Is it any wonder now why $9.5 trillion has not done one thing for unemployment and housing?

Other interesting items:

U.S. to Take Over AIG in $85 Billion Bailout; Central Banks Inject Cash as Credit Dries Up
SEPTEMBER 16, 2008

…Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake

…It puts the government in control of a private insurer — a historic development, particularly considering that AIG isn’t directly regulated by the federal government.


Pressure to reveal major AIG counterparties grows
Some suggest fees for firms that got billions of dollars from insurer’s bailout
By Alistair Barr & Greg Robb, MarketWatch
Last update: 6:35 p.m. EST March 3, 2009

….The insurer’s portfolio of credit default swaps was still notionally worth $302.2 billion at the end of 2008, despite government-supported efforts to aggressively unwind it during the fourth quarter.


AIG reports $5.29 billion quarterly net loss
Insurance giant takes $11.12 billion charge from credit derivatives
By Alistair Barr, MarketWatch
Last update: 7:08 p.m. EST Feb. 28, 2008

…. The unit’s portfolio of credit derivatives had a net notional exposure of $505 billion at the end of September.



Jim Sinclair’s Commentary

This bailout will come as we also bailout the pensions funds.

Hyperinflation is guaranteed.

Alf predictions are herein guaranteed.

FDIC’s Bair Says Insurance Fund Could Be Insolvent This Year
By Alison Vekshin

March 4 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the deposit insurance fund could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.

“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.

“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”

The FDIC last week approved a one-time “emergency” fee and other assessment increases on the industry to rebuild a fund to repay customers for deposits of as much as $250,000 when a bank fails. The fees, opposed by the industry, may generate $27 billion this year after the fund fell to $18.9 billion in the fourth quarter from $34.6 billion in the previous period, the FDIC said. The fund was drained by 25 bank failures last year.

Smaller banks are outraged over the one-time fee, which could wipe out 50 percent to 100 percent of a bank’s 2009 earnings, Camden Fine, president of the Independent Community Bankers of America, said yesterday in a telephone interview.


Jim Sinclair’s Commentary

Ah yes, life in the country is looking better every day.

Brzezinski warns of riots in US
Sat, 21 Feb 2009 15:34:12 GMT

Zbigniew Brzezinski, a former national security advisor, has warned that the US could witness riots if economy continues its downward spiral.

"There’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!" said Brzezinski, President Jimmy Carter’s national security advisor, in a recent interview with NBC.

"In 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets," he added.

At least 3.6 million jobs have been wiped out throughout the US since the recession began in December 2007. The jobless rate officially reached a 16-year high of 7.6% (11.6 million people) last month.

Earlier this week, a new Federal Reserve report said that US unemployment could increase to 8.8%, causing the economy to contract for a full calendar year for the first time since 1991, when a contraction of 0.2% was registered.


Jim Sinclair’s Commentary

Here is another item that speaks nasty to the US dollar.

Financial TV seems to be uninterested in this most interesting development.

Chinese yuan set to replace dollar
by Maurizio d’Orlando
01/03/2009 17:55

Milan (AsiaNews) – While the comments of economic observers have focused on what is happening to U.S. public debt and to financial markets overseas, the news media rarely mention what is happening in Asia, almost as if there were not a strong correlation between the two phenomena. But it is logical that a substantial accumulation of foreign exchange reserves in China, Japan and throughout Asia corresponds to an unprecedented supply of dollars, the global reserve currency.

But Asia now understands that the increase of money supply decreases the intrinsic value of a currency. That is why China is seeking a possible and rational attempt to decouple Asian currencies from the dollar, as recent news stories report [1].

In practice, China is trying to make its currency convertible and give it a role as a reserve currency. The first experiment is limited to transactions between Hong Kong and the neighboring provinces. It is also proposed that the yuan renminbi be used in 8 neighboring countries, including Russia. With these countries, agreements have already been signed for the settlement of contracts in the Chinese currency. Perhaps it is no coincidence that the news was released on Christmas Day, when Western markets are closed, reducing the impact on the dollar. In addition, the first weeks of January are usually fairly quiet. This means that although for now the trial is limited, China is preparing to establish full convertibility of its currency to all other currencies. Many in China have spoken out directly or indirectly in this regard: for example, Wu Xiaoling, former vice governor of the central bank, and Zhao Xijun, a professor of finance at Renmin University of China. The current governor of China’s central bank, Zhou Xiaochuan, in early December in Hong Kong had indicated that if the value of the dollar fluctuated drastically, its use as a settlement currency (for commercial transactions) would cause problems. It is clear that Chinese exporters, behind the scenes, are asking the government for permission to charge in yuan instead of dollars, which are losing value. Other warnings came in the middle of last December: the increase in purchases of U.S. Treasury bonds should not lead to the supposition that the U.S. can borrow its way out of the financial crisis [2]. Finally, on January 1, a well-known Chinese economist, Wu Jinglian, wrote that China must change its development model [3], with reference to the paradigm of economic growth driven by exports. We note, incidentally, that even the pope, who obviously has mainly pastoral responsibilities, has said the world must change its model of development [4] ("Are we are prepared to conduct together an in-depth review of the dominant development model, to correct it in a comprehensive and forward-looking way?" Benedict XVI asked).


Jim Sinclair’s Commentary

Disinformation to the extreme:

Money goes in the front door of AIG who is in trouble over OTC derivatives. Then the money goes out the back door to the OTC derivative counter-party. This is no black hole, it is a very green hole enriching the unidentified and unknown new trillionaires.

The Feds’ Bailout Black Hole
Bailouts Are Hard To End – One Reason Not to Start Them, Says Declan McCullagh
March 4, 2009 | by Declan McCullagh

(CBS) If it wasn’t already obvious, this week’s$30 billion check that the U.S. Treasury handed to insurer American International Group should demonstrate the folly of propping up crippled companies.

This is the fourth bailout to AIG, which already has put over $170 billion in government funds at risk, and it won’t be the last. AIG lost $62 billion in the last three months of 2008.

Call it the Feds’ Bailout Black Hole. Once taxpayer funds cross its event horizon, they seem to disappear forever.

It’s not just AIG, of course. General Motors has received $13.4 billion from the Feds so far, and said last month that it will need another $16.6 billion.

That request will almost certainly be granted, even though GM reported last week that it lost $31 billion in 2008, or $3,700 on every vehicle sold. With sales off a stunning 53 percent from a year before, and a gale-force economic storm building, expect GM executives to show up in Washington to request a third or fourth or fifth round as well.


Jim Sinclair’s Commentary

Now do you understand why $9.5 trillion has yet to save one home or produce one job?

U.S. private sector cuts 697,000 jobs in February
Wednesday March 4, 2009, 9:23 am EST
By Burton Frierson

NEW YORK (Reuters) – U.S. private sector job losses accelerated in February, according to a report by ADP Employer Services that suggests hefty employment declines are on the way in the government’s payrolls report due on Friday.

ADP said on Wednesday that private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.

It was the biggest job loss since the report’s launch in 2001 and showed the misery of declining employment spreading broadly and evenly throughout the economy.

The service sector, which often resists the grip of recession longer than other areas, accounted for more than half of the total losses, reflecting the rapid deterioration of the economy in recent months.

"None really escaped the sword here," Joel Prakken, chairman of Macroeconomic Advisers, whose firm jointly developed the ADP report, said about the service sector.


Jim Sinclair’s Commentary

As long as you see no return to the short sale uptick rule and no action taken against naked and pool short sellers, no 1930s type rally will occur and GE will be driven into bankruptcy along with motors and all major US industries.

Since these people are far from stupid, logic suggests the disaster is engineered. What comes next is not socialism, it is socially disguised fascism.

Short-Sale Rule Undermined as Bernanke Backs Review
By Edgar Ortega

March 4 (Bloomberg) — The revival of Securities and Exchange Commission rules aimed at curbing speculators who seek to drive down stocks may be hindered by a report from the agency’s own economists.

Daniel Aromi and Cecilia Caglio, economists at the SEC in Washington, said in a December report to former Chairman Christopher Cox that the so-called uptick rule was less effective when needed most, during panics that drive prices down and volatility up. Even with delays imposed by the curb, short sellers in a simulation executed trades 25 percent faster on average when stocks plunged than when prices were steady, according to the study.

“The uptick rule is not going to slow down the market that much,” said Michael Pagano, a finance professor at Villanova University in Villanova, Pennsylvania, who read the report. “The time when you’d want to see the uptick rule become more binding is exactly when you have high volatility, and particularly when you have large negative returns.”

Regulators are considering restrictions on speculators after theStandard & Poor’s 500 Index fell 54 percent in the 20 months since the uptick rule was eliminated. Mary Schapiro, who succeeded Cox, said in January during her confirmation hearings that examining the rule is “one of the things that I would be committed to doing very quickly.” Federal Reserve Chairman Ben S. Bernanke told Congress last week that the measure, removed after 69 years on the books, should be revisited.


Jim Sinclair’s Commentary

This area of disintegration is more serious than either Iraq was and Iran is.

It will take the world by surprise and markets into total turmoil – more so than they are presently if that can be believed.

Has Pakistan become the central front?
Posted by: Myra MacDonald

In a report released late last month, the U.S. Atlantic Council think tank warned that the ramifications of state failure in Pakistan would be far graver than those in Afghanistan, with regional and global impact. “With nuclear weapons and a huge army, a population over five times that of Afghanistan and with an influential diaspora, Pakistan now seems less able, without outside help, to muddle through its challenges than at any time since its war with India in 1971.”

The report, co-sponsored by Senator John Kerry and urging greater U.S. aid, said time was running out to stabilise Pakistan, with action required within months. It’s not even been two weeks since that report was released, and already events in Pakistan have taken a dramatic turn for the worse – from the confrontation between President Asif Ali Zardari and former prime minister Nawaz Sharif to Tuesday’s attack on the Sri Lanka cricket team in Lahore.

“Pakistan’s disintegration, if that is what is now being witnessed, is a tragedy of Shakespearean dimensions, a riveting spectacle, and a clear and present danger to international security,” said a comment piece in Britain’s Guardian newspaper. ”But who in the world can stop it?”

The first question to ask is whether Pakistan has now become the central front in the battle against al Qaeda and its Islamist allies in the Taliban and other militant groups. During his election campaign, President Barack Obama said the central front was Afghanistan rather than Iraq. After he took office he shifted this to “Af/Pak” with the appointment of Richard Holbrooke as special envoy to Afghanistan and Pakistan. With turmoil now reaching Punjab, the heartland of Pakistan, he might need to shift his focus even further east.


Is Pakistan in a state of war?
Lee Glendinning, Wednesday 4 March 2009 09.37 GMT


Pakistan is in a state of war, the Independent declares on its front page today, following comments from the country’s interior minister after the attack on the Sri Lankan cricket team in Lahore yesterday, which killed six policemen and two bystanders, and injured seven players and officials.

The Guardian reports that Pakistani police had allegedly received specific warnings that militants were planning to ambush the Sri Lankan team, but were unable to prevent the attack because of the country’s political crisis.

The broadsheets examine the significance of the incident, with the Telegraph noting that the commando-style terrorist attack confirms Pakistan is one of the most dangerous places on earth.

"It is all the more dangerous for appearing so civilised, especially in cities such as Lahore, where fine gothic Victorian architecture, white colonial bungalows, and people’s passion for cricket, polo and tea conspire to make visitors feel safe,” the paper notes.

The tabloids focus on the role of former England cricketer Chris Broad, who shielded one colleague from gunfire, and is declared a "bloody hero" by the Mirror in its splash today.



American’s New Dream Car:


Detroit take notice!

Fiat Topolino
From Wikipedia, the free encyclopedia

The Topolino was the name given to an automobile model manufactured by Fiat from 1936 to 1955.

The Topolino (the Italian name for Mickey Mouse, meaning "little mouse") was the name given to the first Fiat 500 which was one of the smallest cars in the world at the time of its production. Launched in 1937, three models were produced until 1955, all with only minor mechanical and cosmetic changes. It was equipped with a 569 cc four-cylinder, side valve, water-cooled engine mounted in front of the front axle, and so was a full-scale car rather than a cyclecar. (The radiator was located behind the engine.)

Its top speed was about 53 mph (85 km/h), and it could achieve about 39.2 miles per US gallon (6.00 L/100 km; 47.1 mpg-). The Topolino sold for about 8,900 lire. Nearly 520,000 models of the Topolino were sold.

In 1955 the mid-size rear wheel drive Fiat 600 was launched by Fiat and that would become the design basis for the new Fiat 500, the 500 Nuova (often called bambino). The 500 Nuova is often thought, mistakenly, to be the only model 500 Fiat.


Jim Sinclair’s Commentary

As usual the Comex is having their way with you.

Since few who can take delivery are, one can only assume you enjoy the experience.

To all things there is a limit however, and surprisingly that means the Comex gold manipulators as well.

Demand for gold soared in 2008
Natalie Kenway

Demand for gold increased by 64% in 2008, with most investors preferring physical gold such as bars or coins, according to the World Gold Council (WGC).

A report released by Lipper Fund Market Information (FMI) says that European investors sought to diversify assets away from the collapsing financials sector and hedge against the threat of inflation, which may return because of quantitative easing.

“The most striking trend has been the reawakening of investor interest in holding physical gold, with demand for bars and coins rising 87% last year according to the WGC. The most dramatic surge was in Europe, where bar and coin demand increased from just nine tonnes in the fourth quarter of 2007 to 114 tonnes in same quarter in 2008, a 1,170% increase,” says the report.

Demand has also grown this year and the gold price broke the $1,000 an ounce mark in mid-February. Lipper says Citigroup has forecast it could reach $2,000 by the summer.

The report says: “Around 60% of gold is sold for jewellery, mainly in Asia, but when the gold price is high these sales diminish. Recently demand has been driven by investors. The price is being underpinned by weak supply, following a period since 2001 when mining output has declined due to lack of exploration. Unless a central bank starts offloading its gold, this situation is unlikely to change in the near future.”


Posted by & filed under In The News.

Dear CIGAs,

This is where we are headed:


OTC derivatives:

"Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth – the soil and the labourer." 
–Karl Marx

Dollar Fundamentals Versus Dollar Chart Painting:

Let us say that Chicago’s potential bank failure is high and only 15 banks fail in every major metropolitan area. That is one dickens of a lot of failures to come. Now this is really horrible for the US dollar so what is going on? Demand for dollars provided by the Fed to bail out the world will come to an end. China and other central banks will fill the demand created by the chart painting of whale sized hedge funds. the dollar fundamentals get worse and worse. Think what happens when the whale sized hedge funds get on the short side of the dollar, which in time they will.

That will make Alf right on the gold price.

Head of MB Financial says 25-30 local banks could fail
By Becky Yerak | Tribune reporter
4:41 PM CST, March 3, 2009

One of the Chicago market’s leading lenders says it’s "very possible" that 25 to 30 banks in the Chicago area could end up failing.

MB Financial Inc. of Chicago last Friday bought certain assets and deposits of Glenwood-based Heritage Community Bank, a 92-year-old institution shut down by regulators, and MB Chief Executive Mitchell Feiger said Monday that the "transaction is a good example of what’s coming."

"The pace of bank failures is going increase, and, in fact, I think it’s going to be very high," Feiger said during a conference call Monday about the deal.

"Say if 10 percent of banks in the country fail, which I think is a very possible number, and proportionally 10 percent of the banks in the Chicago area fail, which I think is a very possible number, then 25 to 30 banks in the Chicago area will fail," he said. "There will be more opportunities like this one." Feiger didn’t identify any banks he thinks could be on the brink.

About 300 institutions insured by the Federal Deposit Insurance Corp. do business in the Chicago area.

MB has assets of about $8.8 billion. MB agreed to buy $219 million in assets from Heritage at a discount of $14.5 million. MB said it entered into a loss-share transaction with the FDIC providing MB with "substantial protection" for loan losses.



Jim Sinclair’s Commentary

This has been low profile on CNN and Bloomberg.

Posted in free trade by emsnews on March 3rd, 2009

As worldwide car sales drop like a rock, interesting things are now showing up in the statistics.  It is not what you are but where you stand, relative to others.  This month, China just passed a new road sign: more cars were sold in China than in the US.  This is very important: we no longer control world consumer markets.  It is moving East.  Japan refused to be a world market and looked only to enrich the top 10% so Japanese car sales have been declining for a decade or more.  But with the massive Chinese population indulging in this, it means the fall of world oil prices will cease and the US will begin seriously competing with the Chinese for gasoline.



Jim Sinclair’s Commentary

Many of you have no interest in the following. I do. I have an indoor pistol range in my home. It is 65 feet long and takes 800 cubic feet of air down the shooting tube every minute, and can handle up to 50 calibre. I have targets made up of SIVs. Maybe my hobby is an endangered species. Maybe we are an endangered species. Today in Washington it is starting to look like it.

HR 45 Blair Holt Firearm Licensing & Record of Sales Act of 2009.

For your Information basically this would make it illegal to own a firearm – any rifle with a clip or ANY pistol unless:

•It is registered
•You are finger printed
•You supply a current Driver’s License
•You supply your Social Security number
•You will submit to a physical and mental evaluation at any time of their choosing
•Each update – change or ownership through private or public sale must be reported and costs $25 – Failure to do so you automatically lose the right to own a firearm and are subject up to a year in jail.
•There is a child provision clause on page 16 section 305 stating a child-access provision. Gun must be locked and inaccessible to any child under 18.

They would have the right to come and inspect that you are storing your gun safely away from accessibility to children. Not doing so is punishable by up to 5 yrs. in prison.


Jim Sinclair’s Commentary

Here is an interesting concept, but first let’s put it in perspective:

  • $9.5 Trillion could pay off 100% of all the mortgages in the USA.
  • $9.5 Trillion could pay $1400 to every person on planet earth.

If all American families saved from losing their homes please stood up,

the silence would be deafening.

The means of knowing what has really happened is the standard method of detective work. FOLLOW THE MONEY.

Jim Sinclair’s Commentary

Here is your percolating next major crisis.

Welcome To PBGC

PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of nearly 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.


Jim Sinclair’s Commentary

The certain to come bailing out of pensions guarantees hyperinflation.

General Electric:

On this one, I told you so. They have not marked down their OTC derivatives, but if they fail to mark down their auditors will not sign off on their audit. They are coming clean on at least $24 billion lost, possibly up to $60 billion as another giant bites the bailout dust.

Hyperinflation is guaranteed by OTC derivatives.



Jim Sinclair’s Commentary

This is a growing danger that in time will threaten the entire area.

Sri Lankan Cricket Team Attacked In Pakistan, Eight Killed
March 3, 2009 5:09 a.m. EST

Lahore, Pakistan (AHN) – At least eight people were killed and six members of the Sri Lankan cricket team were injured in a shooting attacked in the country’s eastern city of Lahore on Tuesday, police said.

Unknown attackers riding on motorbikes opened fire on Sri Lankan cricket team bus near Gaddafi Stadium, according to reports.

Two civilians and six police officers who were guarding the players were killed in the attack, which happened as the team was heading for the third day’s play in the second Test against Pakistan, a police official confirmed.

Sri Lankan cricket manager Brenden Kurrupu said up to five or six players were believed to have been wounded.

Among the injured players are K Sangakkara, Ajantha Mendis and T Samaraweera, a TV channel reported quoting Pakistan Cricket Board (PCB) officials.


Jim Sinclair’s Commentary

This the weakest link internationally.

Pakistan’s drift into the hands of extremists
The intention of the attack on Sri Lanka’s cricket team was to send a clear message to Washington: Pakistan is ungovernable
Tariq Ali, Tuesday 3 March 2009 10.32 GMT

The appalling terrorist attack on the Sri Lankan cricketers in Pakistan had one aim: to demonstrate to Washington that the country is ungovernable. This is the first time that cricketers have been targeted in a land where the sport is akin to religion. It marks the death of international cricket in Pakistan for the indefinite future, but not just that, which is bad enough. The country’s future is looking more and more precarious. We do not know which particular group carried out this attack, but its identity is hardly relevant. The fact is that it took place at a time when three interrelated events had angered a large bulk of the country and provided succour to extremist groups and their patrons.

The first is undoubtedly the foolish decision by Washington (backed by Britain) to send more troops to Afghanistan, which has now united all those resisting them in that country and the North-West Frontier province of Pakistan. Instead of searching for a viable exit strategy, Obama has gone for a surge. On several occasions, I have warned that escalating the war in Afghanistan could seriously destabilise Pakistan and its army.

Second, Senator Dianne Feinstein’s revelation that the US drones being

used to target "militants" and "terrorist havens" inside Pakistan were, in fact, being despatched by the US from military and air-force bases inside Pakistan (obviously, with the approval of the Pakistani military and civilian leaders) created mayhem in the country. The shock and dismay should not be underestimated. Half-hearted government denials further fanned the flames. Since many in the country regard Zardari and his cronies running the country as US drones, the anger was multiplied.

Domestically, the country is a mess. The People’s party has learnt and forgotten nothing. Corruption is rife and stories circulate linking the money being paid by bankers directly to the president’s house. Add to this Zardari’s refusal to honour an election pledge restoring anindependent judiciary, and his decision to manipulate tame judges to disqualify his opponents has not gone down well. The controversy was aggravated by Zardari’s move to dismiss the elected government in the country’s most populous and strategically important province, the Punjab (capital: Lahore), and impose direct rule, after its chief minister apparently refused to accept a bribe in the shape of a lucrative business deal in return for abandoning the fight to restore the chief justice fired by the military leader over a year ago.


Jim Sinclair’s Commentary

Few, if any, realize the danger of Pakistan in the hands of the Taliban.

Killings, kidnappings jeopardise Pakistan Swat truce

PESHAWAR, Pakistan (AFP) — A fragile ceasefire in Pakistan’s insurgency-hit Swat valley was hanging by a thread Tuesday after two soldiers were killed in an ambush and suspected Islamists kidnapped two local officials.

Pakistani troops and Taliban fighters traded accusations about violating a two-week ceasefire in the northwest former ski resort — ripped apart by a brutal insurgency waged by Islamist hardliners trying to enforce Islamic law.

The soldiers were escorting a water tanker in Swat valley’s Matta district when a group of militants fired on them, a security official told AFP.

In the ensuing gunfight, which lasted about an hour, three soldiers were wounded, the official added on condition of anonymity.

"Two of the injured soldiers died later at a medical facility," the official told AFP on condition of anonymity.

"The militant attack is a clear violation of the peace agreement. The security forces are exercising restraint and complying with the accord," the military said in a statement.



Jim Sinclair’s Commentary

Here comes the greatest of problems due to how deeply it will anger people, both those on pension, those about to get pensions and all those workers counting on retirement some day.

Where the public is concerned this is more powerful than Wall Street Fat Cat bailouts farce.

Pension bombs going off
By: Paul Merrion March 02, 2009

Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area’s biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.

Boeing Co.’s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don’t turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011.

Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks.


Jim Sinclair’s Commentary

1. Israel makes a serious misjudgment.

2. Pakistan goes Taliban.

3. Turkey becomes a victim

Turkey-Iran Relations: A Trade Partnership or a Gateway for Iran to Escape International Sanctions?
Publication: Eurasia Daily Monitor Volume: 6 Issue: 41
March 3, 2009 11:34 AM Age: 10 hrs
By: Emrullah Uslu

While the international community has been discussing whether Iran finally has the technological capacity to produce nuclear weapons, the diplomatic traffic between Turkey and Iran has been increasing. In addition to Iranian President Mahmoud Ahmadinejad’s visit to Turkey, nine meetings at the ministerial level were held in 2008 (December 20, 2008).

Iranian Foreign Minister Manouchehr Mottaki emphasized the energy deals between the two countries and said that "the train of bilateral relations is moving in a good condition" (Tehran Times, July 20, 2008).

It seems that the diplomatic traffic between the two countries will continue to increase in 2009. In January Ali Larijani, the president of the Iranian parliament, went to Turkey and met with Turkish President Abdullah Gul and Prime Minister Recep Tayyip Erdogan (CNNTurk, January 13). Moreover, the year 2009 has been designated as "Iran-Turkey Culture Year" (Cihan News Agency, August 21, 2008). Joint cultural activities have already been organized in Turkey. Marmara University and the Iranian Consulate in Istanbul, for example, have arranged an "Iran-Turkey Cultural Relations Conference" (IRNA, January 19, 2009).


Posted by & filed under In The News.

Dear CIGAs,

The hedgies and OTC derivatives have not only killed everything and everybody they have touched, they both have killed capitalism.

The US dollar will not escape their bloodstained, cursed hands.

All the money from the bailout goes into the company and then out to the counter parties to AIG OTC derivative counter parties.

The financial black hole idea is total bulls**t. All that money is in the system in a concentrated form.

When the super wealthy criminals have all the paper money then they will have one hell of a paper problem.

Today’s AIG Bailout Won’t Be Its Last (AIG)
Joe Weisenthal|Mar. 2, 2009, 8:15 AM|clip_image0017

This morning the government officially announced plans to prop up AIG with another $30 billion, deeming the potential systemic risk of a collapse to be too great. Perhaps we should stop calling this a bailout of AIG, which, after all, has seen its stock killed. It’s basically worthless. It’s the company’s counterparties that are getting bailed out each time.

Everytime AIG has reworked its deal, we’ve been sure that it wouldn’t be the last time, and again, it doesn’t look like this will be either.

As significantly, the restructuring components of the government’s assistance begin to separate the major non-core businesses of AIG, as well as strengthen the company’s finances. The long-term solution for the company, its customers, the U.S. taxpayer, and the financial system is the orderly restructuring and refocusing of the firm. This will take time and possibly further government support, if markets do not stabilize and improve.

In other words, it’s a matter of when, not if AIG’s counterparties will need to be bailed out again


Jim Sinclair’s Commentary

This is where we are headed:



OTC derivatives:

"Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth – the soil and the labourer."
–Karl Marx

The last 8 years:

"For the bureaucrat, the world is a mere object to be manipulated by him."
–Karl Marx

The Federal Reserve bailouts today:

"In bourgeois society capital is independent and has individuality, while the living person is dependent and has no individuality."
–Karl Marx

What is to come:

"Men’s ideas are the most direct emanations of their material state."
–Karl Marx


Jim Sinclair’s Commentary

Contrary to present opinion, AIG is a fine insurance company. It has insured the event of hyperinflation. Hyperinflation guarantees that Alf will be correct on the price of gold.

All of this a gift from the OTC Derivative manufacturers and distributors presently counting their huge ill gotten gains.

The new way to succeed is to be politically connected while trashing your company and employees.



BNY Mellon’s fx team: Ultimately, buy gold
Posted by Izabella Kaminska on Feb 26 15:16.

Bank of New York Mellon’s London-based currency strategy team (made up of Simon Derrick and Neil Mellor) presented on Wednesday a very compelling view of what to expect in the forex markets in the next year.

The short view: euro, yen weakness cometh as the dollar strengthens. The longer three to six month view – ultimate dollar weakness and a gold rally.

Now for the very macro rationale…

Looking back over the crisis BNYM explain how most fx moves since 2001 could largely have been expected as they made complete rationale sense – eg. the development of the carry-trade because of Japan’s accomodative policy etc, and a hike in global liquidity because of low rates in the US. As they explain:


Jim Sinclair’s Commentary

On and on it goes. Hyperinflation will not be avoided.

U.S. Treasury and Federal Reserve Board Announce Participation in AIG Restructuring Plan

Washington, DC – The U.S. Treasury Department and the Federal Reserve Board today announced a restructuring of the government’s assistance to AIG in order to stabilize this systemically important company in a manner that best protects the US taxpayer. Specifically, the government’s restructuring is designed to enhance the company’s capital and liquidity in order to facilitate the orderly completion of the company’s global divestiture program.

The company continues to face significant challenges, driven by the rapid deterioration in certain financial markets in the last two months of the year and continued turbulence in the markets generally.  The additional resources will help stabilize the company, and in doing so help to stabilize the financial system.

As significantly, the restructuring components of the government’s assistance begin to separate the major non-core businesses of AIG, as well as strengthen the company’s finances. The long-term solution for the company, its customers, the U.S. taxpayer, and the financial system is the orderly restructuring and refocusing of the firm.  This will take time and possibly further government support, if markets do not stabilize and improve.

Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high.  AIG provides insurance protection to more than 100,000 entities, including small businesses, municipalities, 401(k) plans, and Fortune 500 companies who together employ over 100 million Americans. AIG has over 30 million policyholders in the U.S. and is a major source of retirement insurance for, among others, teachers and non-profit organizations.  The company also is a significant counterparty to a number of major financial institutions.


Jim Sinclair’s Commentary

Harvard is getting killed in OTC derivatives. Harvard has the greatest influence on the Obama Administration.

Does that give you a hint of what we are in for.

Failing at Harvard: Ivy Cash King Tumbles
Harvard University Pays the Price for Exotic Bets
March 1, 2009

Stocks were tumbling last fall as the new school year began, but at Harvard University, it was as if the boom had never ended.

Workers were digging across the river from Harvard’s Cambridge, Mass., home, the start of a grand expansion that was to eventually almost double the size of the university. Budgets were plump, and students from middle class families were getting big tuition breaks under an ambitious new financial aid program.

The lavish spending was made possible by the earnings from Harvard’s $36.9 billion endowment, the world’s largest. That pot was supposed to be good for $1.4 billion in annual earnings.

Behind the scenes, though, a different story was unfolding.

In a glassed-walled conference room overlooking downtown Boston, traders at Harvard Management Co., the subsidiary that invests the school’s money, were fielding questions from their new boss, Jane Mendillo, about exotic financial instruments that were suddenly backfiring.


Jim Sinclair’s Commentary

Here is a question that carries with it a logically inviting conclusion.

If one Gold ETF claims not to be an OTC derivative Gold ETF that means that others are OTC derivative Gold exchange traded funds.

Be careful "HOW" and "WITH WHAT VEHICLE" you protect yourself.

Allocated Gold Only for Dubai ETF
By: Peter Cooper, Arabian Money
Posted Monday, 2 March 2009

The Nasdaq Dubai and World Gold Council launched its long awaited gold exchange traded fund today, which is both Shariah compliant for Islamic investors and 100 per cent backed by physical gold.

‘This is not a derivative product because it is 100 per cent backed by allocated gold held in London vaults by HSBC, and audited both by traditional and shariah auditors,’ CEO of the WGC Aram Shishmanian told ArabianMoney.Net.

Allocated gold

He said it was important to understand the difference between unallocated and allocated gold. ‘The Dubai ETF has allocated gold, so there is no third party between the metal and its owner. The ETF certificate is an entitlement to one-tenth of an ounce of gold.’

Trading under the ticker symbol GOLD, the new ETF is the first new launch on the Nasdaq Dubai this year, and the one-time 60 basis point charge is exactly the same as other existing ETFs.

Will this make the Dubai ETF sufficiently different to attract regional investors who already have the exchanges of the world at their finger tips?

‘We have launched a series of ETFs around the world and have always found that a regional product stimulates new demand,’ said Simon Village, executive director of Dubai Commodities Asset Management.



Jim Sinclair’s Commentary

Lacker calls for the US Treasury to bail out the Fed. Independence is NOT the issue. The Fed balance sheet is the issue.

Lacker knows what markets do not. The condition of the Federal Reserve Balance sheet is an open invitation to hyperinflation.

Hyperinflation is always associated with slow growth.

Fed’s Lacker Says Mistake to Rely on Slowing Growth
By Craig Torres and Anthony Massucci

May 23 (Bloomberg) — Federal Reserve Bank of Richmond President Jeffrey Lacker said it would be a mistake to rely on a slowing economy rather than central bank policy to curb inflation.

“It is central banks, not the labor market, that drive inflation down,” Lacker said in a speech to the Money Marketeers of New York University yesterday. “Clear communications accompanied by consistent actions could bring about a relatively prompt and low-cost reduction in inflation.”

Lacker, who alone voted to lift interest rates in the last four meetings of 2006, said after the speech he was “comfortable” for now that the Fed’s benchmark rate of 5.25 percent will achieve the bank’s aims.

His doubt that slower growth will cause inflation to recede clashes with the outlook of policy makers such as San Francisco Fed President Janet Yellen. Lacker has repeatedly warned of the danger that inflation expectations will drift higher the longer that price gains exceed officials’ comfort zone.


Fed’s Lacker:Fed credit programs risk independence
By Alister Bull

ARLINGTON, VA March 2 (Reuters) – Emergency credit market support from the Federal Reserve has sidestepped Congress and could expose the U.S. central bank to political pressure that hurts its independence, a top Fed policy-maker said on Monday.

‘Using the Fed’s balance sheet is at times the path of least resistance, because it allows government lending to circumvent the congressional approval process,’ Richmond Federal Reserve Bank President Jeffrey Lacker said.

‘This risks entangling the Fed in attempts to influence credit allocation, thereby exposing monetary policy to political pressure,’ he told the National Association for Business Economics during a luncheon speech.

Lacker, a voting member of the Fed’s policy-setting committee this year, dissented at its meeting in January to protest against targeted credit easing programs that have pumped hundreds of billions of dollars into financial markets, which have been locked up in panic over bank losses.

He objected to the intrusion of the Fed into private sector lending decisions, and would have preferred the U.S. central bank ease credit conditions via the purchase of U.S. Treasury securities.


Fed’s Lacker: Opposes Fed policy for picking winners, losers

WASHINGTON (MarketWatch) – Jeffrey Lacker, the president of the Richmond Federal Reserve Bank , said Monday that one reason he is opposed to the Fed’s new credit easing policy because it is picking winners and losers in the market. "While some market segments benefit from reduced funding costs, others may actually see their costs rise as credit is diverted to those markets that have been targeted for support," Lacker said in a speech to business economists. Lacker dissented from the Fed’s last policy statement in late January. Lacker wants the Fed to expand its monetary base but only though purchases of Treasurys because they are a more "neutral" asset class that would not impact other markets. Lacker said that there may be sound market basis that some credit channels are "frozen," suggesting that targeting credit programs are not needed.



CIGA Marc’s Commentary

The US dollar or Gold? For me the choice is simple!  Particularly thanks to Mr. Sinclair.

Emerging economies eye gold reserves as dlr fears rise
Mon Mar 2, 2009 9:11am EST
By John Irish and Luke Pachymuthu

DUBAI, March 2 (Reuters) – Major emerging economies are seeking to raise their central banks’ gold reserve holdings as fears of a sharp depreciation in the U.S. dollar mount, senior industry officials said on Monday.

Investors have been piling into gold as a safe haven as the the world’s worst financial crisis since the 1930s depression sent global stock markets crashing.

"In this recession it is India and China which are going to grow at a slow rate, but they are growing," said Aram Shishmanian, chief executive officer of the World Gold Council.

"And they will naturally be looking to gold as part of their reserve asset management strategy, and=2 0I see them buying."

China, the biggest foreign holder of dollar denominated treasury securities with some $681.9 billion or about 12 percent of treasury papers outstanding, could reverse that by paring its dollar holdings.


Posted by & filed under In The News.


Once it starts it cannot be ended. Bailout one and you will have to bail out thousands. Hyperinflation cannot be avoided. Protect yourself with gold immediately.

AIG was Bear Stearns’ wastepaper basket for OTC derivatives.

The too small to consider will all be the property of the too big to fail as very few mega financial entities take birth.

AIG May Get $30 Billion in Additional U.S. Capital
By Hugh Son and Rebecca Christie

March 1 (Bloomberg) — American International Group Inc., the insurer deemed too important to fail, may get a commitment for as much as $30 billion in new government capital after a record quarterly loss, said two people familiar with the matter.

The insurer may also be allowed to make lower payments on government loans, said the people, who declined to be identified because there was no public announcement. New York-based AIG may forfeit part of stakes in its two largest non-U.S. life insurance divisions to lower the firm’s debt, the people said.

AIG, first saved from collapse in September with a package that grew to $150 billion, had to restructure its bailout after failing to sell enough units to repay the U.S. Firms including banks relied on AIG to back more than $300 billion of assets through derivative contracts as of Sept. 30, making the insurer a “systematically significant failing institution” that has to be propped up, according to the Treasury.

“The government has accepted all the downside with little chance of upside,” saidPhillip Phan, professor of management at the Johns Hopkins Carey Business School in Baltimore. “They are trying to protect the global financial system from a complete meltdown.”

AIG, which agreed in September to turn over an 80 percent stake to the government, is set to announce a fourth-quarter loss of about $60 billion tomorrow, according to three people familiar with the matter. The company’s board was scheduled to meet today to vote on the revised bailout, according to two other people familiar with the matter.


Jim Sinclair’s Commentary

Are you still dealing with internet financial sites?

That is the exact opposite of my advice to distance yourself from financial agents.

A gold certificate is not gold. Paper gold is not gold.

"As we can see the growth of traffic begins from the time when the first notifications appeared. The users started to withdraw money from their accounts that could also caused the drop in exchangerates. As you remember the similar situation was in the beginning of e-gold crisis. That time the exchange rate of e-gold has reached 50-60%, and those who managed to get rid of e-gold currencywere in the money. So, we can say that today’s liquidity of LR is similar to the one e-gold had in the very beginning of its crisis."

Liberty Reserve is down for maintenance: users are in panic, what’s going on?
March 1, 2009 – 11:08pm | author: ayny

These days something really strange happens to one of the most popular payment processors Liberty Reserve. Being created several years ago this online payment system has become ‘number one’ for theonline investment industry. There is hardly any investment project that doesn’t use LR as a payment gateway, and the latest event around it became a real nightmare for them. Liberty Reserve is stable for two weeks.

Everything started in the second half of February. The site of the company became unavailable on February 18 without any preliminary notifications however in few hours everything was fixed. The next outage happened on February 21 though this time LR was posted a notice in their blog:

“We are currently installing updates that became available just recently for our routers. This procedure should approximately take not more than 5-9 hours, which also includes the restarting of allhardware and testing. We sincerely apologize for this unplanned event, but keeping our hardware up to date is one of the highest priorities as it assures the most secure operation.”

When the site came online some users faced the problems with login as system didn’t accept the passwords. Later on February 22 LR has posted another announcement: “We are going through final steps of testing of all updates implemented earlier. During this stage some of you may not be able to temporarily login to your account, while changes are still being tested and analyzed for maximum performance…”


Jim Sinclair’s Commentary

How can Israel live with this development?

Iran’s uranium ‘enough for bomb’

Iran has enough nuclear material to build a bomb, the United States’ most senior military commander has said.

"We think they do, quite frankly," Adm Mike Mullen, chairman of the US Joint Chiefs of Staff, told CNN.

"And Iran having a nuclear weapon, I’ve believed for a long time, is a very, very bad outcome for the region and for the world," he said.

Iran says its nuclear programme is entirely peaceful, but the West suspects it is seeking nuclear weapons.

‘One bomb’ possible

A report issued by the International Atomic Energy Agency (IAEA) two weeks ago said Tehran had built up a stockpile of fissile nuclear material. This raised concerns in the West that Iran might have understated by one-third how much uranium it has enriched.

The IAEA report showed a major increase in Iran’s reported stockpile of low-enriched uranium (LEU) since November to 1,010 kg.

Some physicists believe this stockpile is enough to be converted into enough highly enriched uranium to build one bomb.


Jim Sinclair’s Commentary

Forewarned is forearmed

Be careful of internet gold offerings regardless of appearances. They are ALL frauds.

All that glitters is not gold
STANLEY SENEVIRATNE Kurunegala north group corr.

A five member gang operating islandwide were taken into custody by Habarana police while attempting to sell a stock of fake gold nuggets early yesterday.

The modus operandi of the gang had been to sell the fake gold nuggets to a wealthy merchant claiming they had discovered the treasure.

Inquiries revealed that the suspects had been carrying on this racket over a long period and had employed over 180 others as their agents and sub agents in many parts of the country.

Police said the brain behind the racket was among the suspects already in custody.

Information also revealed that the suspects had cheated several leading businessmen in Kurunegala, Dambulla, Pelmadulla, Ratnapura, Kanthale, Anuradhapura, Polonnaruwa, Hingurakgoda, Mahiyangana and Colombo.



Jim Sinclair’s Commentary

Pakistan moving towards center stage.

Obama team lays out new Afghan-Pakistan approach

WASHINGTON (AFP) — After setting a deadline to pull US forces from Iraq, President Barack Obama is shifting gears quickly to Afghanistan and Pakistan as he lays out a broad, regional approach to fighting extremism.

The Obama administration held three days of talks last week with the foreign ministers of Afghanistan and Pakistan and said it would turn it into a regular dialogue to chart a new course in the "war on terror."

Obama has vowed to put a top priority on bringing stability to the lawless and rugged terrain between the South Asian neighbors — the home base for Taliban and Al-Qaeda militants including, most presume, Osama bin Laden.

Obama, who Friday announced a timeline to end the Iraq mission, is sending 17,000 more US troops to Afghanistan. But he said the United States needed an effort broader than just hunting and killing militants.

"We’ve been thinking very militarily, but we haven’t been as effective in thinking diplomatically, we haven’t been thinking effectively around the development side of the equation," Obama said Friday on PBS television.

"Obviously, we haven’t been thinking regionally, recognizing that Afghanistan is actually an Afghanistan-Pakistan problem, because right now the militants… are often times coming over the border from Pakistan," he said.

All three sides hailed the openness of the Washington talks, with Pakistani Foreign Minister Shah Mehmood Qureshi saying that the new administration compared with president George W. Bush’s is "really willing to listen to us."



Jim Sinclair’s Commentary

Here comes the shock of people’s lifetime. You can not contribute what you do not have. The valuation of Pension Assets is another sick cartoon.

Here comes more bailouts via a government Pension Guarantee scheme. Hyperinflation cannot be avoided.

Protect yourselves.

Pension bombs going off

By: Paul Merrion March 02, 2009

Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area’s biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.

Boeing Co.’s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don’t turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011.

Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks.


Jim Sinclair’s Commentary

Armed forces prepare to make War on British citizens in Britain.

By Geraint Jones
March 1,2009

TOP secret contingency plans have been drawn up to counter the threat posed by a “summer of discontent” in Britain.

The “double-whammy” of the worst economic crisis in living memory and a motley crew of political extremists determined to stir up civil disorder has led to the extraordinary step of the Army being put on standby.

MI5 and Special Branch are targeting activists they fear could inflame anger over job losses and payouts to failed


Posted by & filed under In The News.

Wall Street Economics

Young Chuck moved to Texas and bought a donkey from a farmer for $100.
The farmer agreed to deliver the donkey the next day.
The next day the farmer drove up and said, ‘Sorry Chuck, but I have some bad news, the donkey died.’
Chuck replied, ‘Well, then just give me my money back.’
The farmer said, ‘Can’t do that. I went and spent it already.’
Chuck  said, ‘OK, then, just bring me the dead donkey.’
The farmer asked, ‘What ya gonna do with a dead donkey?
Chuck said, ‘I’m going to raffle him off.’
The farmer said ‘You can’t raffle off a dead donkey!’
Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’
A month later, the farmer met up with Chuck and asked, ‘What happened with that dead donkey?’
Chuck said, ‘I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $898.00.’
The farmer said, ‘Didn’t anyone complain?’
Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’
Chuck now works for Morgan Stanley in their OTC Default Derivative Department.

Jim Sinclair’s Commentary

$42 billion in the hole according to recent reports and now a drought.

Do you think Mother Nature might be unhappy with how things are being run?

California declares drought emergency
By Peter Henderson

SAN FRANCISCO (Reuters) – California Governor Arnold Schwarzenegger on Friday declared a state emergency due to drought and said he would consider mandatory water rationing in the face of nearly $3 billion in economic losses from below-normal rainfall this year.

As many as 95,000 agricultural jobs will be lost, communities will be devastated and some growers in the most economically productive farm state simply are not able to plant, state officials said, calling the current drought the most expensive ever.

Schwarzenegger, eager to build controversial dams as well as more widely backed water recycling programs, called on cities to cut back water use or face the first ever mandatory state restrictions as soon as the end of the month.

"California faces its third consecutive year of drought and we must prepare for the worst — a fourth, fifth or even sixth year of drought," Schwarzenegger said in a statement, adding that recent storms were not enough to save the state.


Jim Sinclair’s Commentary

That is not FAIR

Senate bars FCC from revisiting Fairness Doctrine
By JIM ABRAMS – 1 day ago

WASHINGTON (AP) — The Senate has barred federal regulators from reviving a policy, abandoned two decades ago, that required balanced coverage of issues on public airwaves.

The Senate vote on the so-called Fairness Doctrine was in part a response to conservative radio talk show hosts who feared that Democrats would try to revive the policy to ensure liberal opinions got equal time.

The Federal Communications Commission implemented the doctrine in 1949, but stopped enforcing it in 1987 after deciding new sources of information and programming made it unnecessary.

President Barack Obama says he has no intention of reimposing the doctrine, but Republicans, led by Sen. Jim DeMint, R-S.C., say they still need a guarantee the government would not establish new quotas or guidelines on programming.


Jim Sinclair’s Commentary

The following quote from this article on Pakistan sums up the situation: "Their country is in mortal danger." If Pakistan is in mortal danger then so is the entire Middle East. If the Middle East is in mortal danger then so is the West.

Playing With Fire in Pakistan
Published: February 27, 2009

Almost no one wants to say it out loud. But between the threats from extremists, an unraveling economy, battling civilian leaders and tensions with its nuclear rival India, Pakistan is edging ever closer to the abyss.

In a report this week, The Atlantic Council warned that Pakistan’s stability is imperiled and that the time to change course is fast running out. That would be quite enough for any government to deal with. Then on Wednesday, Pakistan’s Supreme Court added new fuel upholding a ruling barring opposition leader Nawaz Sharif — a former prime minister — and his brother from holding elected office. That touched off protests across Punjab Province, the Sharifs’ power base and Pakistan’s richest and politically most important province.

The Sharifs charge that the Supreme Court is a tool of President Asif Ali Zardari. They are backing anti-government lawyers who have long campaigned for the reinstatement of the country’s former top judge who was dismissed by former Gen. Pervez Musharraf in 2007.

We don’t know if Mr. Zardari orchestrated this ruling, as Nawaz Sharif and many others have charged. (The government actually argued Mr. Sharif’s side in the case, which stems from an earlier politically motivated criminal conviction.) We do know the danger of letting this situation get out of control.

When Mr. Zardari became president, he pledged to unite the country. He has not. Like Mr. Zardari, Mr. Sharif is a flawed leader and no doubt is manipulating the combustible court ruling for personal political gain.


Jim Sinclair’s Commentary

Once you open this Pandora’s Box of Bailouts you cannot close it.

Protect yourself with gold! The US dollar is not strong. The non-euro, European currency units are being raided. The default derivative index is being used by Vlad the Impaler against the countries represented by the currency units being raided by the Vlads.

Citigroup’s Third U.S. Rescue May Not Be Its Last, Analysts Say
By Christine Harper

Feb. 28 (Bloomberg) — The U.S. government’s third attempt to help rescue Citigroup Inc. won’t stanch the company’s losses, which will continue to swell and may lead the bank to require more money in coming months, analysts said.

Yesterday’s action didn’t furnish the New York-based bank with new money, although it cuts expenses by eliminating dividends on preferred stock. Instead, it converted preferred shares into common equity, which absorbs the first hit in the event of further losses, at an above-market-value price of $3.25. The stock, which has fallen 78 percent since the beginning of the year, closed in New York trading yesterday at $1.50, its lowest since November 1990.

Vikram Pandit, 52, Citigroup’s chief executive officer, told investors yesterday that increasing tangible common equity to as much as $81 billion from $29.7 billion should “take the confidence issues off the table,” regarding the company’s ability to absorb losses. Still, Citigroup, which lost $27.7 billion in 2008, is expected to lose $1.24 billion in the first six months of 2009, according to the average of analysts’ estimates compiled by Bloomberg.

“There’s no difference here,” said Christopher Whalen, co- founder of Institutional Risk Analytics, a Torrance, California- based risk-advisory firm. “It won’t fix revenue, and you’re still going to see loss rates.”


Jim Sinclair’s Commentary

The worse it gets the more they will spend, ad infinitum.

Protect yourself with gold. There is nothing else.

Sharper Downturn Clouds Obama Spending Plans
Published: February 27, 2009

The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.

A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent — already abysmal — the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.

The fortunes of the American economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been invoked since the 1940s: depression.

Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 percent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent, though many experts assert this downturn is on track to be significantly worse.


Jim Sinclair’s Commentary

I heard he was just trying to make a withdrawal from his own account as the FDIC took over.

Church deacon, soccer coach, suspected bank robber
February 27th, 2009
By Steve Brusk

(CNN) — Bruce Windsor is known as many things: church deacon, soccer coach, father of four. But facing potential financial problems, he’s now known as something else: suspected bank robber.

Police say the 43-year-old owner of a real estate company walked into the Carolina First Bank in Greenville, South Carolina, late Thursday with a mask and a handgun.

In court documents filed Friday, police said he forced two bank employees into an office at gunpoint and demanded money. Police arrived minutes later with the suspect still inside, touching off a tense 90-minute standoff before he released the hostages and surrendered.