Posts Categorized: In The News

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

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Jim Sinclair’s Commentary

This is where we are headed:

Usdollar100Marx.jpg

 

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.

Regards,
Jim

 

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:

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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.

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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
By BERNARD CONDON and NATHAN VARDI 
Forbes.com
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.

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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.

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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.

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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.

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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.

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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.

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Posted by & filed under In The News.

BAILOUT FEVER

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.

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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…”

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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.

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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.

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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."

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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.

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Jim Sinclair’s Commentary

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

MI5 ALERT ON BANK RIOTS
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

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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.

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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.

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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.

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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.”

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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
By PETER S. GOODMAN
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.

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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.

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Posted by & filed under In The News.

Dear CIGAs,

The following is the nature of all the beasts.

2 Money Managers Held in New Wall St. Fraud Case
By ZACHERY KOUWE
February 26, 2009

For two decades, Paul Greenwood and Stephen Walsh looked like Wall Street wizards.

Their supposed investment prowess lured hundreds of millions of dollars from public pension funds and universities and earned the two lavish trappings of success: stately homes, a stake in the New York Islanders and, for Mr. Greenwood, a horse farm that once belonged to Paul Newman.

But on Wednesday morning, federal agents arrested the two money managers on accusations filed by the United States attorney for the Southern District of New York in what has become all too familiar on Wall Street: Their investment fund was in fact a $667 million fraud — a small-scale version of the $50 billion fraud that Bernard L. Madoff is suspected of orchestrating.

But unlike Mr. Madoff, who is accused of masterminding a global Ponzi scheme, Mr. Greenwood and Mr. Walsh simply stole their investors’ money, the authorities said. Their two firms, the WG Trading Company and Westridge Capital, misappropriated funds from a host of deep-pocketed investors, including state and city pension funds, Carnegie Mellon University and the University of Pittsburgh.

Theirs is the latest in a series of alleged Wall Street frauds that have come to light as the bear market has deepened, exposing wrongdoing that was hidden in good times, when so many were making money. Indeed, federal agents arrested two other money managers on Wednesday in separate fraud cases.

Mr. Greenwood and Mr. Walsh never developed the sort of wide following that Mr. Madoff had enjoyed. But their arrest is nonetheless a startling turn of events for the pair, who first rose to prominence on Wall Street in the 1980s. They had devised a computerized trading program called Shark, which enabled traders to spot investment opportunities in the stock, bond and futures markets.

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Posted by & filed under In The News.

Obama last evening:

"All we have to fear is fear itself." If you were not already concerned that this experience, as Paul Volcker recently told us is extremely serious and probably a long term one, the use of the Franklin D. Roosevelt’s message should concern you. This is a 1929 redo times 2.

The Process of the Swiss release of Account Holder’s Identity and Transactions:

a. The US prosecutor requests 52,000 such names garnered more than likely from anti-terrorist reviews of bank wire transfers.
b. The Swiss request proof of illegal activity.
c. That places the cart before the horse because the US request needs the Swiss data to make a case.
d. Assuming proof of illegality is produced then…
e. The party concerned has the opportunity in secrecy to prove to the Swiss authorities that there was no illegality involved.

As far as an embargo of US Swiss bank assets of the bank are concerned, they are overwhelmingly defunct OTC derivatives, useless, and valueless, and will remain so.

The net result is some executives of the Swiss Bank do time at the Danbury, CT. Country Club Correctional Center while the balance of the non-US Swiss bank executive take the US off their travel list for the next 100 years.

Thursday February 26th 2009, a catch all spending bill will be voted upon by the US legislative and will pass. It contains more than 9020 pork barrel spending amendments. An example of this pork is $2,000,000USD to promote interest in astronomy in Hawaii.

Posted by & filed under In The News.

Dear Friends,

Nothing has changed in the last 12 hours.

The Chairman of the Fed is speaking.

Tonight President Obama gives a major address, that is if major means to be concluded by the time involved to deliver it.

The equity market is in a deep oversold condition so a rally is not hard to produce in the index and then into the Dow.

Gold guys are so scared of $1000 that the traders who think they can trade gold and gold shares for insurance are out.

The “Oh my God! $1000 did not hold!” is the war cry of the gold guy dumping. Thank God this is not an army – so many of their tanks only have a reverse gear.

The negative PR flows in the Euro are to help the major hedge funds in their effort to financially break Middle Europe. These flows are now reaching spiritual levels.

Nothing has changed in the last 12 hours so emailing Trader Dan, Monty or myself asking is wasting your time and ours.

Respectfully,
Jim

 

Jim Sinclair’s Commentary

Would you buy this ETF if it was offered to you?

Stick to the normal’s and stay away from the exotics.

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Posted by & filed under In The News.

Comex Gold Delivery:

The Comex loves to inform people that they will need to have their gold re-assayed by the Comex in order to sell it if withdrawn from the COMEX vault.

Hogwash.

Call Mr. Arthur Blumenthal at Stacks in New York at 212-582-2580 or visit them at http://www.stacks.com to set up your account in case of a need for funds. They have been in business since 1935 and know what a good gold bar looks like. No re-assay is required.

So there it is. JB Slear is your gold bullion delivery man and Mr. Blumenthal will turn your gold into cash if your needs ever overcome your reasons for holding gold.

Jim Sinclair’s Commentary

J B Slear, our gold bullion delivery man, asks if the US Fed is trying to keep too many balls in the air?

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Maybe the US Treasury has a few in the air as well.

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It looks like the White House is going to challenge the last 2 contestants.

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Jim Sinclair’s Commentary

This situation is totally FUBAR, out of control, and deadly.

Let’s all give a rousing thank you to the manufacturers and distributors of OTC derivatives.

AIG was Bear Stearns’ biggest wastepaper basket to throw OTC derivatives into, making billions in the process.

Remember the advertisement in the WSJ by all the Bear Directors from hell supporting the big guy at AIG?

AIG in talks with U.S. government, sees $60 billion loss: source
By Paritosh Bansal Paritosh Bansal

NEW YORK (Reuters) – American International Group Inc (AIG.N), which was rescued twice last year by the U.S. government, is in talks with authorities for more aid as it looks to post its largest-ever quarterly loss, a source familiar with the matter said on Monday.

AIG is expected to post a roughly $60 billion fourth-quarter loss, the source said.

The loss would be among the largest in corporate history, exceeding Time Warner’s $54 billion loss in 2002 and dwarfing the $24.5 billion loss AIG posted in the third quarter, when the government increased its rescue package for the troubled insurer to about $150 billion.

The latest round of talks with the government include the possibility of additional funds for the insurer and trading debt for equity, another source said.

The situation is fluid and other options are being discussed, this second source said, adding that it was unclear where the talks would lead.

AIG may also look to convert preferred shares held by the government into common stock, Bloomberg reported, citing an unnamed source.

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Jim Sinclair’s Commentary

One of the many, many more events which will in time totally overwhelm the fraudulent credit default derivative OTC garbage paper. Extensions are simply short delays in a death penalty. You have to love those guaranteed muni bonds that our dear OTC derivative dealers and distributors sold to every pensioner and widow they could find through retirement funds.

Jefferson County, Alabama unable to make $636 million sewer debt payment due Friday
Owes $636 million Friday; extension eyed
Thursday, February 19, 2009
BARNETT WRIGHT

Jefferson County is unable to make a $636 million sewer debt payment due Friday and will vote today whether to ask creditors for an extension, county officials said Wednesday.

A special meeting has been scheduled for this morning to sign an agreement with creditors to delay the payment until April 20. That will allow state and federal officials time to help come up with a solution for the county’s sewer debt crisis, said Commission President Bettye Fine Collins.

The money due Friday is in addition to the $3.2 billion sewer debt and a result of accelerated principal and interest payments due to banks because of downgrades to the county’s bond ratings.

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Jim Sinclair’s Commentary

What drives me crazy is that auditors who charge huge fees are all over small public companies by opening every book and looking in every cranny.

These same auditors audit a hedge fund, are not given access to the hedge fund’s broker records to check the offset, yet still sign off on the audit.

What the hell?

Plausible Deniability
MONDAY, FEBRUARY 23, 2009

"At least 11 of the nearly two dozen investor lawsuits filed since Mr. Madoff was arrested on December 11 name the national branches of PWC, Ernst & Young, KPMG or BDO as co-defendants. Among the top five, only Deloitte so far appears to have escaped a Madoff-related lawsuit. … Auditing experts said it would have been very unusual for a hedge fund’s auditors to be given access to the books of the fund’s broker dealer", my emphasis, Brooke Masters, Stanley Pignal and Joanna Chung at the FT, 6 February 2009.

"The [SEC] reached a partial settlement with money manager Bernard Madoff, but the main question–what kind of criminla case the government will bring remains up in the air. … Federal prosecutors in New York have until Wednesday to file a criminal indictment against Mr. Madoff, reach a plea deal or seek an extension of time to give them more time to build a case. … Madoff settled the civil case without admitting or denying wrongdoing, which is customary for SEC cases", my emphasis, Kara Scannel at the WSJ, 10 February 2009.

"If Ms. Schapiro seeks to learn from the SEC’s recent history, she might start by considering the most basic lesson from the Madoff incident. Private market participants spotted the fraud, while SEC lawyers couldn’t seem to grasp it. Rather than giving her staff lawyers still more automony, she should instead be supervising them more closely, while trying to harness the intelligence of the marketplace. Meantime, investors should remember that their own skepticism and diversified investing remain their best defenses against fraudsters", Editorial at the WSJ, 10 February 2009.

Yes, it would have been unusual. Which raises this equestion: why did Madoff have Freihling & Horowitz do its audit? Was it to give the Big 87654 plausible deniability as to each’s knowledge of Madoff’s fraud?

Quoted without comment.

SEC lawyers can’t understand the economics that drives frauds. Most SEC lawyers, in my experienence, are glorified clerks.

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Posted by & filed under In The News.

Dear CIGAs,

You may have to break with the crowd to protect yourself. Do it!

penguin

 

Jim Sinclair’s Commentary

The Detroit News reports this evening that the three top men in charge of rescuing the US auto industry own and drive non-US vehicles. It seems that the Secretary of the US Treasury and top economist Summers all own Japanese cars. The background checkers for President Obama are total zeros who have let him down badly.

How is it not hard to understand with major US car manufacturers stockpiling their products, trying to hold the prices high while giving back nothing compared to their price? Maybe the US car manufacturers are so stupid that they do not deserve to exist.

I recently thought about buying a Chevy but was totally turned off by the lack of incentive. How smart do you have to be in order to be able understand that if you pay a fat price but get zero interest financing, you have gotten nothing whatsoever.

This is another one Mia would have doped out in a nanosecond.

Jim Sinclair’s Commentary

South Korea knows it well, and is prepared to enter the financial fight. The real question is do the South Koreans know how to combat financially. It is by no matter of means simple intervention.

Honest Abe is quoted as saying the following:

"The money power preys on the nation in times of peace, and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes."

–Abraham Lincoln

Jim Sinclair’s Commentary

It will require a miracle for the US to avoid the same.

Britain faces summer of rage – police
Middle-class anger at economic crisis could erupt into violence on streets
Paul Lewis
Monday 23 February 2009

Police are preparing for a "summer of rage" as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned.

Britain’s most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming "footsoldiers" in a wave of potentially violent mass protests.

Superintendent David Hartshorn, who heads the Metropolitan police’s public order branch, told the Guardian that middle-class individuals who would never have considered joining demonstrations may now seek to vent their anger through protests this year.

He said that banks, particularly those that still pay large bonuses despite receiving billions in taxpayer money, had become "viable targets". So too had the headquarters of multinational companies and other financial institutions in the City which are being blamed for the financial crisis.

Hartshorn, who receives regular intelligence briefings on potential causes of civil unrest, said the mood at some demonstrations had changed recently, with activists increasingly "intent on coming on to the streets to create public disorder".

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Jim Sinclair’s Commentary

All governments are facing building political pressures. It is guaranteed that this microcosm has gotten the attention of the G-everything.

Latvia’s government collapses
By David L. Stern
Published: February 20, 2009

Latvia’s center-right coalition government collapsed Friday, a victim of the country’s growing economic and political turmoil and the second European government, after Iceland, to disintegrate because of the international financial crisis.

The government in Riga, faced with forecasts of a severe drop in the economy this year, was the first in Eastern Europe to succumb to turmoil caused by the crisis. Its collapse rounded out a week that saw worries about feeble investment, banks and output in Central and Eastern Europe coursing through international markets.

Latvia has had a history of revolving-door politics and complex coalitions since pulling free of the Soviet Union in 1991. Prime Minister Ivars Godmanis, who presented his resignation to President Valdis Zatlers on Friday, had been in power only since December 2007. But the precipitous plunge of Latvia’s economy, which helped provoke the worst riot since 1991 last month, played a major part in the government’s downfall.

Godmanis said he would continue to govern until a new coalition was formed.

"I am ready to continue working, but I think that responsibility for the consequences created by this government’s resignation must be taken by those parties that overturned the government," Godmanis said, according to news reports. Two of his coalition partners, the People’s Party and the Greens and Farmers’ Union, had demanded his ouster, he added. His departure comes at a critical juncture for Latvia, a former Soviet state with 2.2 million people. After entering the European Union in 2004, Latvia and its two neighbors, Estonia and Lithuania, posted Europe’s highest growth figures, earning the moniker the "Baltic Tigers." Now Latvia shows the Continent’s biggest losses.

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