Posts Categorized: In The News

Posted by & filed under In The News.

Jim Sinclair’s Commentary

  1. If today does not get you wild about the Gold Bank’s unending desire to pick your pocket then you are simply numbed to the experience.
  2. The Gold Banks are losing their rich uncle so today was an act of bravado to show us. It was not oil.
  3. If you have had enough of the gold banks then push back as per yesterday’s second review of taking delivery either of the kilo or 100oz. bars.
  4. Gold is a currency that moves inverse to the US dollar, and will in the main remain so. A change in percentage moves with gold ahead of the dollar in the inverse is possible in 2009.
  5. The dollar rally has been totally technical in terms of international flows of currency that absolutely has no legs to hold it up. Harry Schultz’s call on the USDX topping at or near .88 looks quite good
  6. As far as the depth of the problems goes, it is still bottomless. The following article speaks to this.
  7. The Golden Age of the Financial Criminal, marked by flagrant violations of law and regulations, may be reined in with some spectacular trials.

A credit crater too big to fill?
As the movement of money across borders comes to a grinding halt, governments can only manage the decline. Don’t be surprised to see markets roll back to 1995 levels — or lower.
By Jon Markman

Despite a weeklong surge in stocks, it’s becoming increasingly clear that credit has suffered a catastrophic setback.

It’s as if a set of asteroids hit Manhattan, London and Tokyo, carving a massive hole in the architecture of finance. The initial buildings in the impact crater, Lehman Bros. (LEHMQ), Bear Stearns and Northern Rock, were quickly incinerated. But now the toxic rain and tsunamis that were kicked up are rolling onto the survivors in waves and cutting off their air supply.

New data from world money centers suggest the movement of money around the globe has simply ground to a halt, as institutions in the United States, Europe and Asia that are receiving taxpayer dollars from governments are socking it away to shore up their balance sheets, reserve against liabilities expected in the near future and sustain their unprofitable operations.

“Governments are not really trying to save the system anymore,” said Satyajit Das, a banking expert in Sydney, Australia. “They now realize that’s impossible. They are just trying to manage the decline.”

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Jim Sinclair’s Commentary 

Are you sure your Treasury instrument money market fund is in US Treasury instruments, or are they in OTC derivative based on Treasury instruments? I wager you the latter. The problems out there have no cure without consequences more dangerous than the problems themselves. 

“She said that scrutiny by the SEC and the Fed, and widespread investigations into short-selling practices, are driving the industry to rein in questionable practices with Treasuries.” 

Delivery failures plague Treasury market
Total hit a record $2.29 trillion as of Oct. 1
By Dan Jamieson
October 19, 2008, 6:01 AM EST

The credit crisis is causing a growing number of delivery failures with Treasury securities.

The latest data from the Federal Reserve Bank of New York showed that cumulative failures hit a record $2.29 trillion as of Oct. 1. The federal settlement period is T+1 (trade date plus one day).

The outstanding U.S. public debt is $10.3 trillion.

“Current [fail] levels are at historic levels,” said Rob Toomey, managing director of the Securities Industry and Financial Markets Association’s funding and government and agency securities divisions. “There’s been significant flight to quality” with the market turmoil, he said.

With the strong demand for Treasury securities, “some of the entities that bought Treasuries are not making them available in the [repurchase] market, which is the traditional way to get them,” Mr. Toomey said.  

Unlike some past bouts with high failure rates that involved particular bond issues, the current high fails involve all types of maturities, he said.

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Jim Sinclair’s Commentary

Someone with ethics and understanding would take exception to flushing FASB 157 down the toilet. Doing so would allow Wall Street to go back to good old lying their asses off with regards to the valuation of OTC derivatives. Schiller can look back with 20/20 vision but it is a loser looking forward. Nobody and no formula has a clue what 2011 will look like. Trashing FASB 157 will not simply set back reform, it will kill it stone cold before arrival. Nothing to the Wall Street creeps is temporary. Crime is permanent.

Mark-to-market manipulation
Commentary: Efforts to change accounting rules would set back reform
By David Weidner, MarketWatch
Last update: 12:01 a.m. EST Nov. 4, 2008

NEW YORK (MarketWatch) — Mark-to-market — or fair-value — accounting has one big problem: Some very powerful people are trying to change it.

A movement spurred by bankers including Aubrey Patterson, chief executive of Bancorpsouth Inc. (BXS) and Wall Street power brokers including Blackstone Group (BX) Chief Stephen Schwarzman are arguing for at least a temporary suspension of Financial Accounting Standards Rule 157.

Patterson and other supporters argued for the rule’s suspension in a Securities and Exchange Commission roundtable Oct. 29. Other critics of FAS 157 included Damon Silvers, AFL-CIO general counsel, and Bradley Hunkler, an insurance executive from Western & Southern Life.

Simply put, these guys want the government to stop requiring mark-to-market accounting so the financial industry can put blinders on to the deep trouble that lies on its balance sheets. Not surprisingly, the proponents of a suspension would also apparently benefit from it.

For guys like Patterson, it would mean his bank wouldn’t have to take big charges each quarter to build reserves. Bancorpsouth increased its reserves by 50% to $16.3 million to gird against loan losses at the end of the third quarter.

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Jim Sinclair’s Commentary

Recall what I told you about GE being a major entity in credit default derivatives?

In reading this article, keep firmly in mind no matter how loud the Geeks scream there is no question that bankruptcy takes nominal value to full value. The Geek BS does not work when one party to the special performance contract fails and cannot perform.

Credit Swaps Top $33 Trillion, Depository Trust Says
By Shannon D. Harrington 

Nov. 4 (Bloomberg) — Credit-default swaps totaling $33.6 trillion are outstanding on government debt, corporate bonds and asset-backed securities worldwide, the Depository Trust & Clearing Corp. said in a report that gives the broadest data yet on the unregulated market.

After canceling out overlapping trades, Italy’s government debt tops the list with $22.7 billion in contracts, the report on DTCC’sWeb site today shows. A net amount of $16.6 billion of contracts are outstanding on Spain; $12.4 billion on Deutsche Bank AG, Germany’s largest bank; and $12.1 billion on General Electric Co.’s finance arm, GE Capital Corp., the report shows.

“Publishing this data will provide greater transparency in a critical market,” Tim Ryan, the head of the Securities Industry and Financial Markets Association in Washington said in a statement today. “This is an important initiative upon which the industry will continue to build.”

Before netting, Turkey topped the list with $188.6 billion in contracts, and dropped to $7.6 billion after redundant trades were subtracted. On a gross basis, $15.4 trillion of transactions were linked to individual corporate, sovereign and asset-backed bonds, and about $14.8 trillion was tied to indexes. The New York-based DTCC estimates it sees about 90 percent of all trades.

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Jim Sinclair’s Commentary

This has to be a joke of some kind. In 2006 the cancer of OTC derivatives was growing like a locust storm at Bear Stearns.

NY Fed hires former Bear Stearns chief risk officer
Tue Nov 4, 2008 9:29am EST

NEW YORK, Nov 4 (Reuters) – The Federal Reserve Bank of New York has hired the former chief risk officer of Bear Stearns Cos, Michael Alix, to advise on bank supervision, according to a release in the Fed’s Web site.

Alix will serve as a senior advisor to William Rutledge in the Bank Supervision Group and his appointment is effective Nov. 3, according to the release dated Oct. 31

At Bear Stearns, an investment bank that collapsed in March and has become hallmark of the global credit crisis, Alix served as chief risk officer from 2006 to 2008 and global head of credit risk management from 1996 to 2006.

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 Jim Sinclair’s Commentary

The financial saviour of the planet, the US Federal Reserve, may need to be saved itself much sooner than you or they imagine. A planetary Weimar – it is possible going towards probable.

What Happens when Countries Go Bankrupt?
By SPIEGEL Staff

First it was mortgage lenders. Then large banks began to wobble. Now, entire countries, including Ukraine and Pakistan, are facing financial ruin. The International Monetary Fund is there to help, but its pockets are only so deep.

No, Alexander Lukyanchenko told reporters at a hastily convened press conference last Tuesday, there is “no reason whatsoever to spread panic.” Anyone who was caught trying to throw people out into the street, he warned, would have the authorities to deal with.

Lukyanchenko is the mayor of Donetsk, a city in eastern Ukraine with a population of a little more than one million. For generations, the residents of Donetsk have earned a living in the surrounding coalmines and steel mills, a rather profitable industry in the recent past. Donetsksta, a local steel producer, earned €1.3 billion ($1.65 billion) in revenues last year.

But last Tuesday the mayor, returning from a meeting with business leaders, had bad news: two-thousand metalworkers would have to be furloughed. Lukyanchenko doesn’t use the word furlough, instead noting that the workers will be doing “other, similar work.” But every other blast furnace has already been shut down, and one of the city’s largest holding companies is apparently gearing up for mass layoffs.

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Jim Sinclair’s Commentary

Now the fun really starts because the statute of limitations hasn’t stopped. I am bullish on public companies that specialize in building Federal prisons and bearish of Greenwich, CT mansions valued over $20,000,000.

Now That Election Is Over, Its Back To The Crisis
Danny Schechter
Posted November 4, 2008 | 06:55 PM (EST)

The election is all but over, but the debate over who is responsible for the financial crisis is just beginning to become more intense.

We know that the FBI has opened a criminal investigation of 26 companies, indicted 400 mortgage scammers and started 1400 criminal white collar cases There are 40 task forces allegedly looking into the fraud at the heart of the subrprime pyramid scheme.

But now we also know that the Bush Administration has made a the prosecution of white collar crime a lesser priority with more agents tasked to chase terror suspects than the men and women who brought our economy down.

Reported Newser:

“A short-staffed FBI is laboring to keep up with white collar crime linked to the nation’s financial crisis, the New York Times reports. FBI officials predicted millions of dollars’ in mortgage fraud years ago, but the Justice Department wanted agents focused on counter-terror. When the FBI warned of a fraud “epidemic” in 2004, only 15 of its 13,000 agents were on the case.”

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Posted by & filed under In The News.

Dear CIGAs, 

The last pillar required for a massive gold move is the 30 year USA long bond breaking below its 35 year up trend line.

The most important points: 

“America is bankrupt. American government bonds are extremely overvalued. “The world’s last bubble.” America is in debt for over 13.000 billion (13 trillion) dollar and adds a 1.000 billion dollar debt each year. According to Rogers this can not continue for long. Therefore, he went short in long-term US goverment bonds. “These bonds have peaked.” By the way: Rogers owns Dutch government bonds. “They are safe.”

“The fact that the dollar is gaining rapidly is only temporary”, Rogers says. “All hedge funds were short on the dollar and because of the appreciation of the dollar there is a short squeeze for the dollar. Managers have to close thier positions and they have to buy dollars instead.” “This is temporary, within a year you have to get rid of the dollar. Fundamentally it is a drama.” 

Jim Rogers: America is bankrupt (English version)

America is bankrupt, according to investment legend Jim Rogers. “The American government bonds are the world’s last bubble and the price of commodities has to increase.”

Charismatic
The famous and charismatic investor, guru if you will, Jim Rogers, visited ABN Amro Netherlands last Friday. RTL Z was at ABN headquarters as well and recorded a number of statements, investment tips and opinions about the world economy.

Rogers
During the seventies Jim Rogers (66) managed a successful hedge fund with George Soros. After that, he traveled and went into commodities. Click here for the wikipedia entry for Rogers. 

Last Friday Rogers went at it in front of a roomful of ABN private banking clients. We had an exclusive 15-minute interview with Rogers.

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Jim Sinclair’s Commentary

More from Pakistan. The drones did it. 

Pakistan condemns U.S. missile strikes
SAEED SHAH
November 3, 2008 at 10:39 PM EST

ISLAMABAD – Tensions increased between Pakistan and the United States Monday when President Asif Zardari and other officials roundly rebuked American military commander General David Petraeus over U.S. missile strikes inside Pakistan.

Gen. Petraeus, credited with pulling Iraq away from the brink, has now been charged with developing a strategy to rescue the war in Afghanistan. He has overall charge of the Middle East and Central Asia, including Iraq and Afghanistan, as head of U.S. Central Command, and made Pakistan his first visit to the region.

Pakistan’s co-operation is considered vital if the Taliban insurgency in Afghanistan is to be quelled, but Islamabad has been incensed by U.S. missile attacks inside its territory against suspected militants. 

Mr. Zardari told Gen. Petraeus, according to a statement issued by the President’s office, that “continuing drone attacks on our territory, which result in loss of precious lives and property, are counterproductive and difficult to explain [for] a democratically elected government. It is creating a credibility gap.” on those bombing drones.

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Jim Sinclair’s Commentary

When the lower rate is so desirable I imagine the feeling among regulators, officials and of course the obedient brown nose media is that of “who cares.”

Note there is no media coverage of the strong doubt remaining amongst rational people that Lie-bor, as a tool of the bankers, does the necessary in the best interest of those who report their cost of dollars that constitute the much watched Libor rate.

Maybe they will declare Libor at ½ percent soon.

London Interbank Offered Rate (LIBOR)

Definition:
Interest rate at which the London banks are willing to offer funds in the inter-bank market. LIBOR is the average of rates which five major London banks are willing to lend $10 million for a period of three or six months, and is the benchmark rate for setting interest rates for adjustable-rate loans and financial instruments.

Link…

 

Bankers Cast Doubt On Key Rate Amid Crisis
By CARRICK MOLLENKAMP

 LONDON — One of the most important barometers of the world’s financial health could be sending false signals.

In a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable.

Libor plays a crucial role in the global financial system. Calculated every morning in London from information supplied by banks all over the world, it’s a measure of the average interest rate at which banks make short-term loans to one another.

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Lie-bor?
by Jeffrey Cane  Apr 16 2008

Questions grow about a major rate.

One of the arcane financial acronyms that has gained much prominence over the course of the credit crisis is Libor-the London interbank offered rate. It is the average interest rate when banks make short-term loans to one another.

It is one of the most important credit benchmarks, used by banks and financial institutions around the world.

Carrick Mollenkamp of the Wall Street Journal reports that there are growing suspicions that some banks may be underreporting the rates they are paying for short-term loans, undermining the accuracy of the Libor. 



His report is a startling revelation. If the Libor is viewed as unreliable, the credit crisis may be much worse than previously thought, with borrowers receiving loans tied to the index getting a cheaper rate than they should.

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Jim Sinclair’s Commentary

Brokerage full service retirement plans will be retired before you will. Gold is all that will protect your retirement.

Lehman Good-for-Retirement Notes Worth Pennies for UBS Clients
By Bradley Keoun and David Scheer

Nov. 3 (Bloomberg) — UBS AG, Switzerland’s largest bank, faces dozens of claims in the U.S. from clients who bought “100 percent principal protected notes” issued by Lehman Brothers Holdings Inc. that are now almost worthless.

Six attorneys hired to represent clients in the cases say UBS brokers touted the so-called structured notes as low-risk investments and failed to emphasize they were unsecured obligations of Lehman, which filed for bankruptcy in September. State regulators are fielding so many calls about Lehman’s notes they’re considering a task force to investigate the sales, said Rex Staples, general counsel for the North American Securities Administrators Association Inc., a group of 67 state and provincial regulators based in Washington.

“The sales pitches were that it’s good for retirement accounts, and good for the safe, fixed-income part of people’s portfolios as an alternative to owning stocks, because it’s less risky,” said Seth Lipner, a lawyer in Garden City, New York, hired by two holders of Lehman notes sold by UBS, including a 65- year-old accountant who says he lost $1.4 million in retirement savings. “Of course, it turned out to be more risky.”

Any awards for investors would add to the financial industry’s burgeoning costs for compensating individuals who bought supposedly safe investments that crumbled in the credit crunch. Banks and securities firms, including Zurich-based UBS, Citigroup Inc. and Merrill Lynch & Co., already have had to swallow more than $3.6 billion in fines and market losses on auction-rate securities they had to buy back from clients under orders from the U.S. Securities and Exchange Commission and regulators in New York, Massachusetts and other states.

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Posted by & filed under In The News.

An observation of the mercurial manipulation of the paper gold price and our need to stop whining and start pushing back:

If tonight there were 1,366 millionaires who would purchase Comex gold contracts and take delivery of that value of gold, the manipulation would end.

Note the gold Bank Hammer that hit as the Comex gang were just ending their morning naked Wicca services.

 

Jim Sinclair’s Commentary 

Who said things are far worse internationally than in the good ole USA? 

GM Oct. sales fall nearly half; Ford drops 30 pct.
Monday November 3, 2:26 pm ET
By Tom Krisher and Bree Fowler, AP Auto Writers 

GM’s US sales plunge 45 pct., Ford down 30 pct.; industry could have worst month in 25 years

DETROIT (AP) — General Motors’ October U.S. sales plunged 45 percent and Ford’s dropped 30 percent, as low consumer confidence and tight credit combined to scare customers away from showrooms. 

The results released Monday — along with a 23 percent drop at Toyota and a 25 percent decline at Honda — are strong indications that sales for the industry as a whole may perhaps be the worst in 25 years.

Detroit-based General Motors Corp. said its light trucks sales tumbled 51 percent compared with the same month last year, while demand for passenger cars fell 34 percent. 

The results were less severe at Ford Motor Co., which said its Ford, Lincoln and Mercury car sales were off 27 percent, while light truck sales for the three brands were down more than 30 percent.

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Sacked Lehman Brothers Bank Employees Blockade Head Office

Dear Friends,

This is the oxymoron of the century and a formula for a very weak dollar and hyper-inflation in the midst of ugly business conditions. All of this will become evident quite soon, probably after Christmas.

The Fed as a central bank to the world
Jacqueline Thorpe, Financial Post
Published:Sunday, November 02, 2008

Nicolas Sarkozy may be pushing for a new financial order but Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Henry Paulson have beaten him to it.

While the French President dreams of global economic cooperation ahead of the G20 summit in Washington, the Fed is quietly becoming central bank to the world, backed by the full might of the U.S. Treasury and a teflon-coated greenback.

Last week saw a new program added to the barrage of bailouts, backstops and stimuli announced by the United States — US$30-billion currency swap lines for Brazil, Mexico, South Korea and Singapore. This is on top of the unlimited supply of greenbacks the United States has provided to the major economies.

The United States will swap wons for greenbacks, allowing South Korean banks to fulfill local demand for U.S. dollars, which had been starved by the freeze-up in the inter-bank lending markets. Banks can then provide those greenbacks to their local customers to allow them to carry out international business.

In April, South Korea will swap its wons back, for a fee of course. David Rosenberg, chief North American economist at Merrill Lynch was quick to pick up on the irony. “The U.S. was supposedly the basket case nation with the massive deficits whose currency was destined to lose its reserve status and whose credit rating was going to get cut at some point,” he said in a note last week. “It is the U.S. that is being called upon to provide unlimited swap lines with Europe one day, and funding for emerging markets the next.”

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Currency Swap:

A swap that involves the exchange of one currency (e.g., US dollars) for another (e.g., Japanese yen) on a specified schedule.
www.cftc.gov/educationcenter/glossary/glossary_co.html

Jim Sinclair’s Commentary

Swaps may be dated for maturity by mutual agreement between parties. I sense that these swaps now financing the planet are from the Fed through the bouquet of perma-swaps in the form of 28 day perma-loans at the Begging Bowl Loan Window.

Jim Sinclair’s Commentary

No problem, just call the Fed and they will make good on a perma 28 day loan.

Citi says credit card losses may rise through 2009
Bank suffers $1.4 billion hit from card-backed assets in latest quarter
By Greg Morcroft, MarketWatch
Last update: 1:44 p.m. EST Nov. 2, 2008

NEW YORK (MarketWatch) — Citigroup said that it lost $1.4 billion in the third quarter from credit card securitizations and that it expects such losses will continue, possibly reaching record levels in 2009.

The result compared to a gain of $169 million from credit card securitizations in the year-earlier period.

“Credit card losses may continue to rise well into 2009, and it is possible that the company’s loss rates may exceed their historical peaks,” the banking giant said in its filing with the Securities and Exchange Commission late Friday.

Citi (C:13.77, +0.12, +0.9%) also said it added $3.9 billion to overall credit reserves, including $2.3 billion for its North American consumer business and $855 million for consumer business outside the U.S.

Citi said the additional reserve to the North American segment was mostly due to a weakening of leading credit indicators, including higher delinquencies on first mortgages, unsecured personal loans, credit cards and auto loans.

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Jim Sinclair’s Commentary

Do it soon or lose the opportunity soon.

Physical Certificates Take a Step Closer to Extinction
by Edward C. Kelleher

The Depository Trust Company, (DTC), a DTCC subsidiary, has announced it will no longer issue physical certificates for withdrawals-by-transfer (WTs) for more than 5,500 issues beginning January 1, 2009.

DTC plans to eliminate WTs of physical certificates for all issues that participate in DTCs Direct Registration System (DRS). Instead, DTC will process these WTs in DRS statement form. This change is pending approval by the Securities and Exchange Commission (SEC). (About 1,550 additional issues are eligible for, but not participating in, DRS and do not offer the investor the opportunity to receive a DRS statement.)

If permitted by an issuer, investors may take their DRS statement to their transfer agent and exchange it for a physical certificate.

DTCs DRS is a book-entry system that enables investors to register their shares electronically with the issuing company or its transfer agents. Instead of a paper certificate, investors receive a statement of their holdings. In 2008, all the major and regional exchanges in the United States mandated that DRS become a listing requirement for all issues. (DTC is the only registered clearing agency operating a DRS.)

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Jim Sinclair’s Commentary

Now that we know there is a serious situation due to the decline of gold reserves without any present relief in the inventory of the majors, please consider the following article.

Mining consolidation anticipated
Peter Koven, Financial Post
Published:Sunday, November 02, 2008

Since mining industry share prices began their historic collapse several weeks ago, investors have wondered when the inevitable consolidation will begin.

According to law firm Fasken Martineau, it is only a matter of time before it gets underway. However, this round of consolidation will look nothing like the last one, and it will not be led by the large companies like Xstrata PLC that dominated the last cycle.

In a presentation to mining industry insiders late last week, Fasken partner Greg Ho Yuen advanced the theory that the intermediate companies will be the ones that kickstart a new wave of acquisitions rather than the senior companies.

The reason is that the sudden fall in commodity prices is forcing the majors to take time to re-evaluate all of the multi-billion-dollar mine developments they were planning. The more nimble intermediate producers will be able to take advantage of the weak markets faster to buy up distressed juniors.

“Because intermediates are smaller and more focused on a few projects, their period of self-evaluation will have either been completed or can be completed very quickly,” Mr. Ho Yuen said in an interview.

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Jim Sinclair’s Commentary

Come on, the drone did it, not the US!

Pakistan Warns U.S. Against Further Airstrikes on Tribal Areas
By Candace Rondeaux
Monday, November 3, 2008; 10:40 AM

ISLAMABAD, Nov. 3 — Pakistan’s defense minister cautioned the newly appointed head of the U.S. Central Command on Monday that launching further missile strikes in the country’s troubled tribal areas could increase tensions between the two countries.

Pakistani Defense Minister Chaudhry Ahmad Mukhtar issued the blunt warning to Gen. David H. Petraeus during his first official visit to Pakistan as head of the U.S. war in neighboring Afghanistan. Mukhtar, who also called for more coordination between the U.S. and Pakistani militaries, said the recent increase in U.S.-led cross-border strikes had created “bad blood” between the two allies. On Friday, 27 people were killed in two separate U.S. airstrikes in northwest Pakistan.

The Pakistani Defense Ministry said in a statement released shortly after the meeting that frequent attacks inside Pakistan by U.S. Predator drones “could generate anti-American sentiments” and “create outrage and uproar” among Pakistanis.

Petraeus, who took charge of the wars in Afghanistan and Iraq on Friday, and U.S. Assistant Secretary of State Richard A. Boucher met with Mukhtar and Pakistan’s top military officer, Gen. Ashfaq Kayani. It was part of the first leg of a tour that is expected to include a visit soon to Afghanistan.

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Jim Sinclair’s Commentary

Look for fiscal stimulation next. How about a new Roosevelt CCC?

Worst job losses since March 2003 predicted
Jobs, manufacturing, credit data to be released
By Ruth Mantell, MarketWatch
Last update: 12:01 a.m. EDT Nov. 2, 2008

WASHINGTON (MarketWatch) — Retailers may not be so merry as this holiday shopping season gets underway.

Consumer confidence hit an all-time low in October, buried under heap after heap of dismal financial and economic news. Worried consumers aren’t going to be rushing into stores or splurging on holiday gifts.

In recent days, data have shown that U.S. consumer spending in September was down 0.4% on a year-over-year basis, the first such drop since the recession of 1991. And it turns out that the U.S. economy contracted at a 0.3% annualized rate in the third quarter, as consumer spending declined at the fastest rate in 28 years.

Why such worry? On top of watching their retirement savings dwindle and foreclosure notices rise, reports about mass layoffs keep rolling in. With weekly initial claims for state jobless benefits hugging the half million mark, a bottom of the labor market doesn’t appear to be in sight.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Between 400,000 and 1,000,000 STILL cannot get access to their savings.

Don’t follow the spin, and let your guard down. This is the beginning, not the end. This could have been you!

The primary target that should be faced has not been even been aimed at. That target is called over the counter derivatives.

Part of the rescue is the use of an OTC derivative by the Federal Reserve – a swap.

Reserve Funds investors still waiting for their money
30 Oct 2008 11:53 am

This isn’t good:

At least 400,000 people, and perhaps as many as a million, can’t get access to their savings, a problem that has quietly persisted in spite of widely publicized federal efforts to restore confidence in money-fund investments.

Some of these customers — who, like most Americans, assumed their money funds were as safe and accessible as bank accounts — are getting desperate.

“Longer term, I just don’t know how we’ll deal with it,” said John Oakes, a retired engineer in Austin, Tex., who can’t tap $20,000 in a Reserve account to pay his mother’s nursing home bill. “They say we may get some money this week, but we don’t know if we’ll get 100 percent, 90 percent or 30 percent.”

Sandra and Lawton Dews, a retired couple in North Myrtle Beach, S.C., had more than $250,000 — 35 percent of their retirement assets –invested in the Reserve US Government Fund.

“They even bragged that you could sleep at night if you invested in their funds,” Mrs. Dews said. “In the past month and a half, we don’t sleep at all.”

Her insomnia began soon after Sept. 15, when the Reserve Fund was hit by a wave of redemptions, apparently because its largest fund had a stake in notes backed by the newly bankrupt Lehman Brothers.

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Jim Sinclair’s Commentary

Gold will never entirely separate from the US dollar. The tie may loosen in favour of gold, but will never fully part. Look at the dollar supply and demand. The world needs hundreds of billions of dollars to stave off a potential Weimar situation until the USA joins that club themselves.

The world does not need the same in euros, yen or rubles; only dollars. Is the Federal Reserve the lender of last resort to the entire planet? Does that not make many of you the lenders of last resort to those who accept worthless collateral or swaps that promise to pay paper backed by nothing in exchange for freshly created electronic paper backed by nothing sometime in the distant future?

IMF needs hundreds of billions of dollars more: Brown

RIYADH (AFP) – Prime Minister Gordon Brown said the International Monetary Fund (IMF) needs “hundreds of billions of dollars” to help countries at risk of collapsing amid the world financial crisis.

Brown, who is in Saudi Arabia, told reporters Saturday during a four-day tour of Gulf states that countries which had benefited from recent high oil prices could contribute to the plan.

Brown also stressed that Britain welcomed investment from Gulf sovereign wealth funds “as long as they play by our rules and operate in a commercial manner.”

Brown, whose struggling premiership has been boosted by his leadership in the financial panic, wants the IMF’s 250 billion dollar bailout fund for affected countries to be extended to prevent “contagion” elsewhere.

He has not previously indicated the amount of cash by which he believes the IMF, which is set to bail out Hungary, Ukraine and Iceland, needs to boost its coffers.

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Jim Sinclair’s Commentary

That seems a tad wrong.

Banks to Continue Paying Dividends
Bailout Money Is for Lending, Critics Say
By Binyamin Appelbaum
Washington Post Staff Writer
Thursday, October 30, 2008; A01

U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.

The government said it was giving banks more money so they could make more loans. Dollars paid to shareholders don’t serve that purpose, but Treasury officials say that suspending quarterly dividend payments would have deterred banks from participating in the voluntary program.

Critics, including economists and members of Congress, question why banks should get government money if they already have enough money to pay dividends — or conversely, why banks that need government money are still spending so much on dividends.

“The whole purpose of the program is to increase lending and inject capital into Main Street. If the money is used for dividends, it defeats the purpose of the program,” said Sen. Charles E. Schumer (D-N.Y.), who has called for the government to require a suspension of dividend payments.

The Treasury plans to invest up to $250 billion in a wide swath of U.S. banks in return for ownership stakes, which the government will relinquish when it is repaid.

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Jim Sinclair’s Commentary

FDIC’s capital shrinks weekly bit by bit.

Alpha Bank & Trust fails, taken over
October 31, 2008 | 10:04 AM

ALPHARETTA – Regulators descended upon Alpha Bank & Trust on Old Milton Parkway like a swarm of bees Friday as it became the latest bank closed by the Ga. Department of Banking and Finance and the second in the Alpharetta area. Integrity Bank was closed Aug. 29, though technically its headquarters were in Johns Creek city limits by virtue of being east of Kimball Bridge Road.

The Federal Deposit Insurance Corporation (FDIC) was named receiver.

Depositors saw the change Monday as the bank’s two branches – one on Old Milton Parkway in Alpharetta and the other in Marietta – reopened under control of Stearns Bank, National Association of St. Cloud, Minn. That bank assumed the insured deposits of Alpha Bank & Trust in an agreement with the FDIC.

Depositors of the failed bank automatically became depositors of Stearns Bank. Deposits continue to be insured by the FDIC, so customers do not need to change banks to retain their deposit insurance coverage.

As of Sept. 30, Alpha Bank & Trust had total assets of $354.1 million and total deposits of $346.2 million. Stearns Bank did not pay the FDIC a premium for the right to assume the failed bank’s insured deposits.

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Jim Sinclair’s Commentary

New gold reserves come from the explorers, making the pressure on the juniors wholly illogical. In time this will cost the shorts.

Gold production ‘in crisis’ – AngloGold Ashanti CEO
By: Martin Creamer

Gold production was “in crisis” and a gold price of $900-to-$1 000/oz was needed to arrest the downward trend, AngloGold Ashanti CEO Mark Cutifani said on Thursday.

Cutifani said that the world had seen a decline in the production of gold across the globe in the past seven years, and that the industry could experience another decline of production at up to 5% a year for the next five years.

“The gold industry from a production perspective is in crisis,” he said.

There had been a 20% to 30% production decline in South Africa in the last five years and grades are continuing to diminish in opencast mines around the world.

That lack of production, he said, would result in gold’s fundamentals improving.

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Jim Sinclair’s Commentary

There is nowhere to hide other than gold.

Fears after run on Kuwait bank
By Andrew England
Published: October 31 2008 02:00 | Last updated: October 31 2008 02:00

The outlook for Kuwait’s banking system is shifting towards negative for the first time in a decade, Moody’s rating agency said yesterday – a sign likely to heighten concerns about potential weaknesses in the nation’s financial services.

The Moody’s report comes days after a run on Gulf Bank, Kuwait’s second-largest commercial bank, following revelations that it had incurred significant losses as a result of derivatives trading.

Standard & Poor’s revised outlooks on six Gulf banks from positive to stable, a further sign analysts are becoming more cautious.

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Jim Sinclair’s Commentary

The world needs a flood of dollars according to the IMF and the Fed means to make sure it happens. Talk about a formula for a dollar decline!

“That’s even after a boost this week from an International Monetary Fund emergency loan program for emerging markets and the U.S. Federal Reserve’s decision to pump as much as $120 billion into Brazil, Mexico, South Korea and Singapore. The Fed said yesterday that it aims to “mitigate the spread of difficulties in obtaining U.S. dollar funding.”

`Panic’ Strikes East Europe Borrowers as Banks Cut Franc Loans
By Ben Holland, Laura Cochrane and Balazs Penz

Oct. 31 (Bloomberg) — Imre Apostagi says the hospital upgrade he’s overseeing has stalled because his employer in Budapest can’t get a foreign-currency loan.

The company borrows in foreign currencies to avoid domestic interest rates as much as double those linked to dollars, euros and Swiss francs. Now banks are curtailing the loans as investors pull money out of eastern Europe’s developing markets and local currencies plunge.

“There’s no money out there,” said Apostagi, a project manager who asked that the medical-equipment seller he works for not be identified to avoid alarming international backers. “We won’t collapse, but everything’s slowing to a crawl. The whole world is scared and everyone’s going a bit mad.”

Foreign-denominated loans helped fuel eastern European economies including Poland, Romania and Ukraine, funding home purchases and entrepreneurship after the region emerged from communism. The elimination of such lending is magnifying the global credit crunch and threatening to stall the expansion of some of Europe’s fastest-growing economies.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Was this by omission or commission? Greenspan was neither asleep nor stupid. He knew exactly what he was doing.

Greenspan Slept as Off-Books Debt Escaped Scrutiny (Update1)
By Alan Katz and Ian Katz

Oct. 30 (Bloomberg) — As George Miller welcomed 60 bankers to the chandeliered Charlotte City Club one evening in September, the focus was on more than the recent bankruptcy of Lehman Brothers Holdings Inc. From their 31st-floor perch, members of the American Securitization Forum, which Miller leads, fretted about the future of their $10.7 trillion industry

The bankers were warned that a Financial Accounting Standards Board plan would force trillions of dollars back onto balance sheets, requiring cash reserves to soar. Their business of pooling and reselling assets had dropped 47 percent in the first six months of the year, and the industry couldn’t afford another setback.

The next day, Miller, 39, the forum’s executive director, took that message from North Carolina to a Senate hearing in Washington examining the buildup of off-balance-sheet assets. “There are great risks to the financial markets and to the economy of moving forward quickly with bad rules,” he said of FASB’s proposal.

Miller was trying to preserve an accounting rule for off- the-books assets that helped U.S. banks export toxic debt around the world. It is a loophole that Jack Reed, the Rhode Island Democrat who chairs the Senate securities subcommittee, said had contributed “to the severity of the current crisis.”

The damage to date: more than $680 billion dollars in losses and writedowns, about one-third of that by European banks.

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Posted by & filed under In The News.

Dear Friends,

This is not making a direct comparison, but instead speaks to my colleagues that believe the only way velocity of money increases is by a turn for the better in business activity. I will give them that this is the scenario wherein increased monetary stimulus transmits into inflation. What they are ignoring is another more likely scenario which is a significant depreciation of currency, in a short period of time, which we know can look like a long fishing line (straight down). This scenario produces much more intense inflation in the midst of a recession or depression.

The next possibility is significant fiscal stimulation directly on the heels of monetary stimulation which can result in some degree of either alternative listed above.

Regards,
Jim

Global Crisis? This is the real crisis!
Sunday, October 26th, 2008

If you think that the current economic crisis is something that has never happened in history before, you may be wrong! After the collapse of the agriculture sector in Zimbabwe in 2000, the inflation in that country skyrocketed to 231 million percent a year! Just think about it – 231 000 000%! Unemployment went up to 80% and a third of country’s population left it.

Let`s now have a look at the photos that you may not be able to see anywhere else in the world.

Here is a boy getting change in 200 000 dollar notes!

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Jim Sinclair’s Commentary

The article below discuses what could easily have been the quasi-Iceland event.

Be assured it will come to a significant country after a downgrade of their Federal debt.

Note in this article in one dynamics sentence they say Pakistan twice.

IMF bailout lifts Hungarian markets
By David Jolly
Wednesday, October 29, 2008

Hungarian stocks and the currency soared Wednesday after the country secured more than $25 billion in backing from global institutions led by the International Monetary Fund.

Dominique Strauss-Kahn, the IMF managing director said late Tuesday in Washington that a deal to provide Hungary with a €12.5 billion, or $15.7 billion, 17-month stand-by loan arrangement had been reached. The EU said it was ready to provide a loan of €6.5 billion or about $8.1 billion, while the World Bank agreed to provide €1.0 billion, or $1.3 billion.

“The Hungarian authorities have developed a comprehensive policy package that will bolster the economy’s near-term stability and improve its long-term growth potential,” Strauss-Kahn said in the statement. “At the same time it is designed to restore investor confidence and alleviate the stress experienced in recent weeks in the Hungarian financial markets.

The package must still go to the IMF’s executive board for approval in early November.

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Jim Sinclair’s Commentary

From the viewpoint of a person on the executive committee of a NYSE brokerage firm (when that meant something) it is a little hard to believe that no one in this institution had any idea of some massive OTC derivative entered into by a trader.

Here is a neat idea. The rub is if that was done in the US, they would have to empty all maximum-security prisons and re-open Alcatraz in order to hold the OTC derivative gang. Maybe this will happen in a Democratic Administration. Stay tuned.

Those 29 year olds with hundreds of millions of dollars in their Greenwich, CT air conditioned indoor private tennis courts might consider it a good idea to check out to a non-extraditing country and instantly transfer their funds out of the US.

Caisse d’Epargne trader is held

French police have detained a trader for questioning over the loss of 751m euros (£601m) at savings bank Caisse d’Epargne, judicial officials say.

He was taken into custody as part of an inquiry into whether anyone was criminally liable for the loss, made as a result of complex derivative trades.

The bank initially put the loss at 600m euros, but has since revised it upward.

The bank’s top three executives have all resigned since the loss came to light earlier this month.

Chief executive Charles Milhaud stood down after saying he accepted full responsibility for the lost cash and is expected to leave without a pay-off.

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Jim Sinclair’s Commentary

I will give you three guesses who and what are totally responsible for the destruction of mankind, not with a gun but with a scam. Subprime loans, my arse!

Gulf Bank head steps down after losses on derivatives
By Robin Wigglesworth in Abu Dhabi
Published: October 29 2008 02:00 | Last updated: October 29 2008 02:00

The crisis in Kuwait’s banking sector deepened yesterday when the chairman of Gulf Bank resigned over derivatives losses and Fitch Ratings downgraded the bank, the country’s second biggest lender.

Kutayba Al Ghanim replaced his brother, Bassam Al Ghanim, as chairman of Gulf Bank after depositors started to withdraw deposits from the stricken lender on Sunday – the first known bank-run in the region during the crisis – even though the Kuwaiti central bank pledged to support the bank and guarantee all deposits in the country.

Fitch Ratings downgraded Gulf Bank’s individual rating to D from B/C. While affirming the long-term issuer default rating of A+, the agency placed the bank under review for individual downgrades for a “serious lapse” in risk management and possible capital base erosion from “potentially large losses”.

Adding to the bank’s woes, Moody’s Investors Service yesterday placed Gulf Bank’s Aa3 long-term local and foreign-currency deposit ratings, and C bank financial-strength rating on review for possible downgrade. The Prime 1 short-term ratings were not affected, according to the credit rating agency.

“It is completely understandable. I wouldn’t trust them [the ratings agencies] if they hadn’t done this,” said a Gulf Bank spokesman.

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Jim Sinclair`s Commentary

If required, the Fed will pay the many kinds of entities now at the begging bowl loan window to borrow money. Soon a major fiscal stimulation bill requiring more drafts on the Fed’s permanent overdraw facility will be initiated.

I still have one pressing question: Why did the Fed let Lehman go?

Fed Cuts Rate to 1% to Avert Prolonged Recession
By Craig Torres

Oct. 29 (Bloomberg) — The Federal Reserve cut its benchmark interest rate by half a percentage point to 1 percent, matching a half-century low, in an effort to avert the worst U.S. economic downturn in the postwar era.

“Downside risks to growth remain,” the Federal Open Market Committee said today in a statement in Washington. “Recent policy actions, including today’s rate reduction, coordinated interest-rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth.”

Central bankers worldwide are trying to revive credit and stop a self-reinforcing downturn in consumer spending and bank lending from triggering a global recession. Today’s decision follows the half-point reduction the Fed coordinated with the European Central Bank and four other central banks on Oct. 8. Borrowing costs were pared today in Norway and China.

The U.S. economy shrank at a 0.5 percent annual rate last quarter, the most since the 2001 recession, the Commerce Department’s report on gross domestic product will probably show tomorrow. Economists expect the slump to persist in the fourth quarter, according to the median estimate.

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Jim Sinclair`s Commentary

If anyone has the potential of locking on to the real why of this collapse, OTC derivatives, it is Andrew Cuomo.

New York Demands Bonus Pay Data From Citigroup, Wells
By Karen Freifeld

Oct. 29 (Bloomberg) — New York Attorney General Andrew Cuomo sent letters to JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co. and six other banks that received taxpayer bailout funds, demanding bonus information for top management.

Cuomo said he wanted a “detailed accounting” of expected payments to top executives in the “upcoming bonus season,” including information on the expected bonus pool for this year, according to a copy of the letters sent today. He requested information on bonuses from before and after the banks knew they would receive funds from the Troubled Asset Relief Program.

Cuomo told the boards of directors he thought they were in the best position to respond to the requests because top management has a “significant interest in the size of the bonus pools.” He said he would have “grave concerns” if the expected bonus pool increased in any way as a result of the receipt of taxpayer funds.

“In this new era of corporate responsibility we are entering, boards of directors must step up to the plate and prevent wasteful expenditures of corporate funds on outsized executive bonuses and other unjustified compensation,” Cuomo wrote in the letter.

The other banks are Goldman Sachs Group Inc., Bank of New York Mellon Corp., Merrill Lynch and Co., Morgan Stanley, State Street Corp. and Bank of America Corp. Representatives of the nine firms declined to comment or couldn’t immediately be reached for comment.

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Jim Sinclair`s Commentary

What will the US Treasury fail to guarantee? Lenders will never voluntarily give borrowers any break.

Treasury, FDIC Said to Craft Plan to Curb Foreclosure
By Alison Vekshin and Robert Schmidt

Oct. 29 (Bloomberg) — The U.S. Treasury and the Federal Deposit Insurance Corp. are considering a plan that may provide at least $500 billion in government guarantees for troubled mortgages, according to people familiar with the matter.

The program, which might help millions of homeowners refinance into affordable loans, would require lenders to restructure mortgages based on a borrower’s ability to repay. Under one option, the industry would keep lower monthly payments for five years before raising interest rates, the people said.

FDIC Chairman Sheila Bair discussed the program today at an international deposit insurers conference in Arlington, Virginia, without offering details. “A framework is needed to modify loans on a scale large enough to have a major impact,” Bair said.

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Jim Sinclair`s Commentary

Recall our recent discussion on why gold is the only guarantee of your financial future saying that retirement programs are NO guarantee. This is prolific even if not yet admitted to.

Lockheed, Ryder Drain Cash as Crisis Hammers Pensions
By Pat Wechsler and Edmond Lococo

Oct. 29 (Bloomberg) — A trade group whose members include Lockheed Martin Corp., Dow Chemical Co. and General Motors Corp. is pressing Congress to help close a record $200 billion deficit in U.S. pensions created by this month’s global stock-market collapse.

The Committee on Investment of Employee Benefit Assets is kicking off a lobbying effort today to delay provisions of the Pension Protection Act that it says will force companies to drain cash flow to comply with funding rules set to take effect next year.

“This will be real money that companies will have to come up with,” said Judy Schub, managing director of the Bethesda, Maryland-based group, which represents 110 of the nation’s largest retirement plans holding almost half of U.S. assets. “The law will be forcing people to be taking money out of operations at the worst possible time.”

Aetna Inc., the third-largest U.S. health insurer, said today that pension expenses caused by stock market declines will lop 30 cents to 40 cents a share off next year’s operating earnings.

Ryder System Inc.’s pension contributions will “significantly increase in 2009” and force “cost management” to protect profit, Chief Executive Officer Gregory Swienton told a conference call Oct. 22. The Miami-based, truck-leasing company’s plan had $1.5 billion in assets in 2007 and was underfunded by $1 million, according to Standard & Poor’s Corp.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

For your information.

Turkey bombs PKK targets in N. Iraq
Tue Oct 28, 2008 9:30am EDT

ANKARA (Reuters) – Turkish warplanes bombed Kurdish separatist targets on Tuesday in northern Iraq with the backing of artillery fire from Turkey, the military said.

Violence has increased between Turkish security forces and the separatist rebels of the outlawed Kurdistan Workers Party (PKK) as tensions have risen in predominantly Kurdish southeastern Turkey.

The PKK uses northern Iraq as a base to launch attacks on targets inside Turkey.

The military said it had successfully hit the targets and that planes had returned safely to their Turkish bases. No civilians had been targeted or hit in the raid, it said.

Turkey has stepped up its military response since an attack from the PKK which killed 17 Turkish soldiers this month, and the parliament renewed a mandate earlier this month to allow military raids on separatists in northern Iraq.

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Turkey to face gas shortage if Iranian pipeline delayed

BOTAS, the state-run Petroleum Pipeline Corporation, has warned that the country could face a serious gas shortage at the beginning of 2009 if the pipeline carrying Iranian natural gas to Turkey is not completed on time, Referans daily reported on Monday.

Turkey, heavily dependent on foreign energy supplies, has faced shortage risks posed mainly by Iran’s decision to cut the flow of natural gas to Turkey in previous years. Turkish and Iranian officials agreed to build an additional pipeline to secure the flow in order to avoid a similar situation.

Any halt to the flow of gas is also a matter of concern for the production of electricity, as more than 50 percent of the country’s electricity is produced by natural gas.

Gas flow problems derive from the limited capacity of the existing pipeline, where gas loses compression while passing through Iranian cities on the Tabriz-Urumiyah line.

The amount of gas Turkey received from Iran fell to a level of 4-5 million cubic meters per day, from the expected 18-29 million cubic meters, forcing Turkey to compensate the loss by increasing Russian gas imports.

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Posted by & filed under In The News.

Dear CIGAs,

Keep your eye on the ball.

The Problem is not broken entities. That is a symptom. The basis of the problem is OTC derivatives. That is the foundation that is never addressed. If you treat symptoms without handling the cause the result is more symptoms. Because the aim of remedial actions is improper, there is little chance of a fix, only an ebb and flow in a downward spiral that lacks real intervention.

In competitive shooting it pays to aim, which is the same when attempting to right an economic crisis.

Even the Fed buying these failed special performance contracts mucks up the Fed’s balance sheet without solving the problem. It simply shifts the problem to where more serious trouble could occur, and that is in the credit rating of US Treasuries.

You can say that unless the real target is aimed at, the problem will persist. The problem now however is it is too late. There is no way to net the derivatives as many are written totally naked such as the majority of older credit default derivatives. The ability to net all OTC derivatives died as dislocations began in the ability of the final asset to maintain its value. Credit default derivatives were created on an actuarial type analysis and of course that went boom.

Jim Sinclair’s Commentary

There is no question that Pakistan tightened up its China connection to offset the US. In the final analysis this offsets nothing but complicates everything.

China reiterates support for Pakistan
* Beijing to give Islamabad soft loan, encourage investment by top business corporations

BEIJING: China will stand by Pakistan in all circumstances to safeguard the country’s sovereignty and territorial integrity, while maintaining the existing bonds of their strategic partnership.

This assurance was conveyed to Prime Minister Yousuf Raza Gilani by Chinese leaders during Gilani’s visit to Beijing that concluded on Saturday, Pakistan’s Ambassador to China Masood Khan said.

Gilani, during his interaction with Chinese Prime Minister Wen Jiabao and Chinese People’s Political Consultative Conference Chairman Jia Qingling, was assured that China would continue to help Pakistan meet new challenges in the wake of terrorism and a financial crisis.

China is supportive of Pakistan’s stand on counterterrorism, normalisation of its relations with India and its role as a frontline state to wipe out terrorism, Khan said.

Loan: China assured Pakistan that it would help the country overcome its financial difficulties. Besides giving direct financial help in terms of a soft loan, Chinese leadership will encourage its top-level business corporations to investment more in Pakistan.

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Jim Sinclair’s Commentary

It will be critical how the new president, whoever he, is handles these situations. You can be sure that he will be tested severely by his adversaries in his first six months of office.

US special forces launch rare attack inside Syria
Oct 26 05:54 PM US/Eastern
By ALBERT AJI

DAMASCUS, Syria (AP) – U.S. military helicopters launched an extremely rare attack Sunday on Syrian territory close to the border with Iraq, killing eight people in a strike the government in Damascus condemned as “serious aggression.”

A U.S. military official said the raid by special forces targeted the foreign fighter network that travels through Syria into Iraq. The Americans have been unable to shut the network down in the area because Syria was out of the military’s reach.

“We are taking matters into our own hands,” the official told The Associated Press on condition of anonymity because of the political sensitivity of cross-border raids.

The attack came just days after the commander of U.S. forces in western Iraq said American troops were redoubling efforts to secure the Syrian border, which he called an “uncontrolled” gateway for fighters entering Iraq.

A Syrian government statement said the helicopters attacked the Sukkariyeh Farm near the town of Abu Kamal, five miles inside the Syrian border. Four helicopters attacked a civilian building under construction shortly before sundown and fired on workers inside, the statement said.

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Jim Sinclair’s Commentary

Why shouldn’t a fertilizer manufacturer buy into the US banking industry?

Bank in Southwest Florida being sold to distant buyers
Published: Monday, October 27, 2008 at 1:00 a.m.
Last Modified: Thursday, October 23, 2008 at 8:20 p.m.

Investors from Brazil plan to buy the struggling Riverside Bank of the Gulf Coast for $23 million.

Cape Coral-based Riverside, which has offices in Nokomis and Venice, needed a capital infusion, said Chairman Elmer Tabor. The buyers were looking to get into the U.S. banking business, he said.

It was cheaper for them to buy an existing bank than to spend at least $30 million to start and grow a new one, Taber said.

“From my point of view, it really is a match made in heaven,” he said. “By infusing capital in the bank, it gets you in a position to get back on your growth plan.”

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Jim Sinclair’s Commentary

Here is some good advice when your holdings are in Honest Money in a fake world. This picture was taken of Trader Dan during the rainy season in Houston.

Jim Sinclair’s Commentary

File this relationship in your memory as it will be a topic in the future.

Pakistani PM leaves for Turkey on 5-day official visit
www.chinaview.cn
2008-10-27 19:39:59

ISLAMABAD, Oct. 27 (Xinhua) — Pakistani Prime Minister Syed Yousaf Raza Gillani Monday left for Turkey on a five-day official visit, according to official Associated Press of Pakistan (APP).

Gillani is scheduled to hold bilateral talks with the Turkish leadership in a bid to woo investors and to lobby for the Friends of Pakistan initiative to help the country overcome its financial problems.

“Turkey is our good friend and our relations are not only between the governments, but reach out deep at the people to people level,” he told reporters before boarding his special aircraft for Ankara at the Chaklala Air Base here.

Gillani said he looked forward to the Friends of Pakistan initiative to help the country steer out of the economic crisis it was currently facing.

“Pakistan is an important country and is at the forefront in fighting extremism and terrorism, while spreading the message of peace for the entire world, ” he said.

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Jim Sinclair’s Commentary

Pakistan is more than a simple threat, it is a key element in determining our future. Now watch developments concerning Turkey. The difference is that Turkey will play the victim on the world stage in the upcoming unwind of the entire Middle East.

ANALYSIS-Afghan-Pakistan threat worse for next US president
Mon Oct 27, 2008 1:28pm EDT
By David Morgan

“More disturbing still, analysts say, Pakistan is now facing an existential threat from Islamist militants at a time when the nuclear-armed nation and its new civilian government are engulfed in extraordinarily difficult economic problems.”
WASHINGTON, Oct 27 (Reuters) – The next U.S. president stands to inherit a potentially more dangerous challenge in Afghanistan and Pakistan than the situation that led to the Sept. 11 attacks in 2001.

The situation is so serious that analysts say the incoming administration will need to move quickly on a broad new initiative to address the Pashtun region, which both countries share, with a mix of military pressure and economic aid.

“It will be extremely important to have an effective new strategy right out of the box. They cannot wait for a lengthy transition,” said J. Alexander Thier of the U.S. Institute of Peace, a congressionally funded Washington think tank.

The two U.S. presidential nominees, Democrat Barack Obama and Republican John McCain, have pledged to make Afghanistan a top priority if elected to the White House on Nov. 4.

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Jim Sinclair’s Commentary

This is just a drop in today’s financial disaster bucket.

US to inject $125bln into major banks this week: Treasury
Monday, October 27 12:59 pm

Nine major US banks will receive 125 billion dollars in capital injections this week from the US government, a Treasury official said Monday.

Assistant Treasury Secretary David Nason told CNBC television that “We executed the agreements for the nine institutions late last night so the money will go out the door for these institutions early this week.”

The nine will get half of the 250 billion dollars to be invested by the government in the banks as part of a massive rescue of the financial system.

The nine banks are Citigroup, JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street and Merrill Lynch, soon to be taken over by Bank of America.

The remaining 125 billion dollars will go to smaller banks and lenders which agree to the capital for equity program, which includes mandated limits on executive compensation.

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Jim Sinclair’s Commentary

Surprise, surprise!

Smaller US banks fear predators armed with bail-out money
Andrew Clark in New York
Monday October 27 2008 16.53 GMT

America’s smaller banks are claiming they could be vulnerable to government-funded predatory takeovers as their larger rivals enjoy huge cash injections from a $250bn (£157bn) Treasury bail-out.

The list of US banks signing up for government capital swelled to at least 19 today as middle-ranking names including State Street, Capital One and SunTrust announced they were issuing shares to the Treasury in return for about $17bn.

But critics have questioned whether the funds will be put to good use. Lending remains sparse on the high street and there are fears that the recipients will simply hoard the money – or use it to buy smaller players.

Camden Fine, the chief executive of the Independent Community Bankers of America, said it was unfortunate that the US treasury had imposed few conditions on the way the money was used, other than a stipulation that dividend payouts to shareholders must not rise.

“When you have taxpayers’ money used by larger banks to purchase otherwise healthy banks, that just promotes the kind of consolidation that got us into this mess in the first place,” said Fine.

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Look who pays for the bailout
Meet the Henrys (high earners, not rich yet). They make $250,000-plus and get taxed to high heaven. And they’re about to get socked again.
By Shawn Tully with Joan Caplin
Last Updated: October 27, 2008: 12:37 PM ET

(Fortune magazine) — Bill Kwon is the embodiment of the American dream. His father – who was arrested by North Korean Communists in the early 1950s for championing democracy – brought the family from Seoul to Illinois when he was a baby. Bill worked himself ragged pursuing every opportunity America’s heartland offered, never leaving Peoria.

Just out of college, he was earning a six-figure salary at a telecom company and sleeping in his parents’ basement. Now he’s a wealth advisor earning $375,000 at Morgan Stanley (MS, Fortune 500), with a five-bedroom brick home, a minivan, a son in private school, and three younger kids to follow. “My dad never made more than $25,000 a year,” says the burly, outgoing Kwon, 39. “When I was a kid, this was the top neighborhood in Peoria. I never thought I could live here.”

For all his blessings, Kwon gets really steamed when politicians and pundits claim that he and other Americans in his income group aren’t shouldering their “fair share” in taxes and should pay more. Nor does he appreciate being branded as “rich” when it’s far from certain he’ll ever build the kind of lavish nest egg the truly wealthy enjoy, especially after the current market meltdown. “I’m not a trust-fund baby,” says Kwon. “Raising taxes for people at my income level is like being punished for success, for working hard.” Kwon’s total tax bill is already more than $100,000, and the bite is taking an ever-rising share of his raises and bonuses, not to mention his wife’s income as a photographer. Kwon fears that America risks killing the incentive for people like him by shrinking the rewards for logging extra hours or starting a business, diminishing the dream that brought his father from Korea.

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