Posts Categorized: In The News

Posted by & filed under In The News.

Jim Sinclair’s Commentary

What a disaster has befallen on the financial industry thanks to OTC Derivatives manufacturers, 158 year old Lehman and 95 year old Merrill. We are yet to witness the final chapter of this horror story which is the death of the US dollar with America’s permanent fall from grace.

Thank you to the army of geeks who still do not know what all the fuss is about, to management that counted their bonuses but knew nothing about derivatives and regulators that were not at home.

Merrill 95-Year Run Ends as Bank of America Buys Firm
By Zachary R. Mider

Jan. 1 (Bloomberg) — Merrill Lynch & Co.’s 95-year run as an independent company is coming to an end as Bank of America Corp. completed its acquisition of the broker for about $33 billion in stock.

Bank of America, the biggest U.S. home lender, closed the purchase today, the Charlotte, North Carolina-based company said in a PRNewswire statement. Scana Corp., South Carolina’s biggest utility owner, will replace New York-based Merrill Lynch in the Standard & Poor’s 500 Index.

Merrill Lynch was founded by Charles E. Merrill in January 1914 and evolved into the world’s biggest brokerage, with an army of 17,000 financial advisers. After more than $50 billion of losses and writedowns tied to the collapse of the U.S. subprime mortgage market, Merrill agreed in September to a sale, escaping the fate of bankrupt Lehman Brothers Holdings Inc.

Bank of America, led by Chief Executive Officer Kenneth Lewis, 61, plans to cut 30,000 to 35,000 positions from the combined companies in the next three years because of the merger and a weak U.S. economy. Merrill CEO John Thain, 53, will remain as president of investment banking, trading and brokerage.

Bank of America rose 84 cents, or 6.3 percent, to $14.08 yesterday in New York Stock Exchange composite trading, valuing Merrill shares at $12.10 in the stock-for-stock exchange. That’s 88 percent less than their high of $97.53 in January 2007.

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Jim Sinclair’s Commentary

There is something so obviously wrong with all this, yet the public remains quiet.

Government aid could save U.S. newspapers, spark debate
Wed Dec 31, 2008 6:50pm EST
By Robert MacMillan – Analysis

NEW YORK (Reuters) – Connecticut lawmaker Frank Nicastro sees saving the local newspaper as his duty. But others think he and his colleagues are setting a worrisome precedent for government involvement in the U.S. press.

Nicastro represents Connecticut’s 79th assembly district, which includes Bristol, a city of about 61,000 people outside Hartford, the state capital. Its paper, The Bristol Press, may fold within days, along with The Herald in nearby New Britain.

That is because publisher Journal Register, in danger of being crushed under hundreds of millions of dollars of debt, says it cannot afford to keep them open anymore.

Nicastro and fellow legislators want the papers to survive, and petitioned the state government to do something about it. "The media is a vitally important part of America," he said, particularly local papers that cover news ignored by big papers and television and radio stations.

To some experts, that sounds like a bailout, a word that resurfaced this year after the U.S. government agreed to give hundreds of billions of dollars to the automobile and financial sectors.

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Jim Sinclair’s Commentary

Who dun it?

Pakistani Militants Admit Role in Siege, Official Says
By RICHARD A. OPPEL JR. and SALMAN MASOOD
Published: December 31, 2008

ISLAMABAD, Pakistan — Pakistani authorities have obtained confessions from members of the Pakistani militant group Lashkar-e-Taiba that they were involved in the terrorist attacks in Mumbai in November that killed more than 160 people, a Pakistani official said.

The confessions are sure to put pressure on Pakistan’s leaders; senior Pakistani officials have repeatedly complained in recent weeks that India had not provided them evidence of Pakistani complicity.

American and British officials — and Indian investigators — have said for weeks that their intelligence clearly points to the involvement of Lashkar in the Mumbai attacks. That evidence has been deeply uncomfortable for Pakistan, whose premier spy agency, the Directorate for Inter-Services Intelligence, helped create, finance and train Lashkar in the 1980s to fight a proxy war against Indian forces in the Indian-controlled portion of Kashmir.

But now, after weeks of stonewalling, it also seems clear that Pakistan may use its investigation to make the case that the Mumbai attackers were not part of a conspiracy carried out with the spy agency, known as the ISI, but that the militants were operating on their own and outside the control of government agents.

The most talkative of the senior Lashkar leaders being interrogated is said to be Zarrar Shah, the Pakistani official said. American intelligence officials say they believe that Mr. Shah, the group’s communications chief, has served as a conduit between Lashkar and the ISI. His close ties to the agency and his admission of involvement in the attacks are sure to be unsettling for the government and its spy agency.

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Jim Sinclair’s Commentary

Happy New Year Pakistan. Obama plans a massive troop increase?

Afghanistan and Pakistan take center stage in 2009
Under Obama, the US may send 20,000 more troops and encourage talks with the Taliban in an effort to reclaim the upper hand in Afghanistan.
By Anand Gopal | Correspondent of The Christian Science Monitor
from the January 2, 2009 edition

Kabul, Afghanistan – At times in 2008 Afghanistan eclipsed Iraq in levels of violence, and international attention is returning to the country for the first time since 2001. With the Obama administration planning a massive troop increase, Afghanistan and Pakistan look to be at the center of the administration’s foreign policy for 2009.

What is at stake?

In 2008, violence reached record levels across the country – there were 50 percent more insurgent attacks in the first seven months of 2008 than in the same period in 2007, according to Agency Coordinating Body for Afghan Relief (ACBAR), a Kabul-based aid organization. Insurgents are "conservatively estimated to be active in over 35 percent of the country," says Nic Lee of the Afghan NGO Safety Office, a Kabul-based nongovernmental organization. The Taliban and its allied movements effectively control large parts to the Pashtun-dominated south and east, including many districts close to Kabul. Nearly as many international troops have been killed in Afghanistan this year as in Iraq, despite the fact that almost twice as many soldiers are deployed in Iraq.

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Jim Sinclair’s Commentary

There is no moral will to face the problem and revamp the system therefore there is no possible chance of avoiding hyper-dollar-inflation. Simply NO chance!

Treasury Opens Door to Aid for Broad Array of Firms, Industries
By Rebecca Christie

Jan. 1 (Bloomberg) — The U.S. Treasury threw the door open to taxpayer financing for a widening array of companies and industries by drafting broad guidelines on aid to the auto industry.

The Treasury’s guidelines, published yesterday, would let officials provide funds to any company they deem important to making or financing cars. That leaves room for the government to provide money from the Troubled Asset Relief Program beyond loans already committed to General Motors Corp., GMAC LLC and Chrysler LLC.

“There are going to be other industries that are going to have just as good a case,” as the auto companies, former St. Louis Federal Reserve Bank President William Poole said in an interview on Bloomberg Television. “We don’t know what those other industries are going to be. Where does this process stop?”

Shares of auto suppliers including American Axle & Manufacturing Holdings Inc. and Lear Corp. jumped yesterday after Treasury announced the guidelines. The Motor & Equipment Manufacturers Association has been lobbying for the use of federal funds as a backstop in case parts makers can’t collect money the auto manufacturers owe them.

Analysts have speculated that companies such as GM’s bankrupt former parts unit Delphi Corp., might be eligible for assistance. The Treasury guidelines may encourage more guessing on what companies and industries are next, said Vincent Reinhart, resident scholar at the American Enterprise Institute in Washington.

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Jim Sinclair’s Commentary

The sheer size of this continuing free lunch bailout program guarantees two things:

– Gold meeting and exceeding my price objective of $1650 by multiples

– A drop in the value of long bonds that takes the appearance of a very, very long fishing line as the US is shocked by an unwillingness of Asia to finance the incomprehensible size of the bailout free lunch for those wholly responsible for the disaster in the first place.

There simply is no moral engine that can power any alternative ending.

There are no more than 745 days left in this drama.

U.S. throws GMAC $6 billion lifeline
Treasury injects $5B into finance firm key to General Motors’ survival, while automaker gets $1B loan to make its own investment in GMAC.
By Tami Luhby, CNNMoney.com staff writer
Last Updated: December 29, 2008: 11:03 PM ET

NEW YORK (CNNMoney.com) — In yet another move to prop up the crumbling U.S. auto industry, the government announced Monday that it will pump $6 billion into GMAC Financial Services, a financing company critical to the survival of General Motors.

The rescue package has two parts. The Treasury Department is injecting $5 billion directly into GMAC in exchange for preferred equity shares that pay an 8% dividend. GMAC also is issuing warrants to Treasury in the form of preferred stock. If exercised, the warrants will pay a 9% dividend.

Also, the government will lend $1 billion to GM that the automaker will invest in its financing arm. GMAC needs the funding to convert to a bank holding company, a necessary step to receiving the bailout money.

The Federal Reserve said last week that it would approve GMAC’s conversion to a bank holding company, subject to certain conditions.

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Posted by & filed under In The News.

Dear CIGAs,

There is something so comforting about being missed.

IMGP2020

 

Jim Sinclair’s Commentary

Igor is WRONG!

It is NOT the US, it is the US dollar.

It is NOT in 2010, but rather between the first week of January 2011 and the third week of June 2012.

However, if he was by some unforeseen circumstance correct, geographically it would be rather good for the Cando and Euro between January 14th, 2011 and the third week of June 2012.

It is amazing what hyper-dollar- inflation can do for a resource based currency without a chronic deficit problem.

"As goes Motors, so goes the USA"

" The annual convention of Economic Experts was called off due to unforeseen circumstances."

As if Things Weren’t Bad Enough, Russian Professor Predicts End of U.S.
In Moscow, Igor Panarin’s Forecasts Are All the Rage; America ‘Disintegrates’ in 2010
By ANDREW OSBORN

MOSCOW — For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument — that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. — very seriously. Now he’s found an eager audience: Russian state media.

In recent weeks, he’s been interviewed as much as twice a day about his predictions. "It’s a record," says Prof. Panarin. "But I think the attention is going to grow even stronger."

Prof. Panarin, 50 years old, is not a fringe figure. A former KGB analyst, he is dean of the Russian Foreign Ministry’s academy for future diplomats. He is invited to Kremlin receptions, lectures students, publishes books, and appears in the media as an expert on U.S.-Russia relations.

But it’s his bleak forecast for the U.S. that is music to the ears of the Kremlin, which in recent years has blamed Washington for everything from instability in the Middle East to the global financial crisis. Mr. Panarin’s views also fit neatly with the Kremlin’s narrative that Russia is returning to its rightful place on the world stage after the weakness of the 1990s, when many feared that the country would go economically and politically bankrupt and break into separate territories.

A polite and cheerful man with a buzz cut, Mr. Panarin insists he does not dislike Americans. But he warns that the outlook for them is dire.

"There’s a 55-45% chance right now that disintegration will occur," he says. "One could rejoice in that process," he adds, poker-faced. "But if we’re talking reasonably, it’s not the best scenario — for Russia." Though Russia would become more powerful on the global stage, he says, its economy would suffer because it currently depends heavily on the dollar and on trade with the U.S.

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Jim Sinclair’s Commentary

Thank you all you now bailed out OTC derivative manufacturers. You should consider Blackwater Security Services as you will most certainly need them, and they need the business.

Maybe Mr. Madoff should have hired Blackwater rather than asking for free services from the FBI.

Enjoy hiding the rest of your lives with your cancerous ill gotten gains at the cost of so many others’ well being. May you all rot in hell for eternity!

You are ignorant of the inescapable dire sufferings you have caused yourselves.

Holiday Sales Drop to Force Bankruptcies, Closings
By Heather Burke

Dec. 29 (Bloomberg) — U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years.

Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holdings Corp. are among chains shuttering underperforming locations.

More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.

“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. “There are a number that are real causes for concern.”

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Jim Sinclair’s Commentary

Do not for a moment think the Pakistan/India problem will just morph away. It will not.

Do not believe that mistakes will not occur in the Israeli strategy backed by the US lead by President Elect Obama.

It is possible that before retaliating you need to decide if you are prepared to really go all the way and what such a decision means. Tit for tat is a waste of time.

Turkey plays the role of victim in this unwinding scenario.

As the following article points out:

“He retired from the C.I.A. in 2006 after 29 years, and no longer has access to the nation’s most sensitive information. But his career as an analyst is far from over. As an influential terrorism adviser on President-elect Barack Obama’s transition team, he dispenses counsel to the administration-in-waiting on some of the thorniest problems it will face: as varied as the hunt for Al Qaeda’s senior leaders like Mr. Zawahri, the likelihood of another attack on American soil, and how to stave off nuclear Armageddon between India and Pakistan.”

Behind Analyst’s Cool Demeanor, Deep Anxiety Over American Policy

By MARK MAZZETTI

Published: December 26, 2008

WASHINGTON – BRUCE RIEDEL was a 28-year-old Middle East analyst at the Central Intelligence Agency on Oct. 6, 1981, the day a band of gunmen assassinated President Anwar el-Sadat of Egypt during a military parade in Cairo.

Within hours of the attack, Mr. Riedel was summoned to the agency’s seventh floor to brief William J. Casey, the irascible C.I.A. director. Over the next several months, he began compiling a dossier about the attack — what he calls the “birth of the global jihad” — and about the emergence of a cerebral Egyptian physician named Ayman al-Zawahri.

He retired from the C.I.A. in 2006 after 29 years, and no longer has access to the nation’s most sensitive information. But his career as an analyst is far from over. As an influential terrorism adviser on President-elect Barack Obama’s transition team, he dispenses counsel to the administration-in-waiting on some of the thorniest problems it will face: as varied as the hunt for Al Qaeda’s senior leaders like Mr. Zawahri, the likelihood of another attack on American soil, and how to stave off nuclear Armageddon between India and Pakistan.

Mr. Riedel is one of a chorus of terrorism experts who see the terrorist network’s base in the mountains of Pakistan as America’s greatest threat, and perhaps the biggest problem facing Mr. Obama’s new team.

He speaks angrily about what he calls a savvy campaign by Pakistan’s government under President Pervez Musharraf to fleece Washington for billions of dollars even as it allowed Al Qaeda to regroup in Pakistan’s tribal lands.

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Jim Sinclair’s Commentary

I am sure that the present Administration has no teeth in this situation.

Bush, Saudi King talk amid Israel-Gaza bloodshed

CRAWFORD, Texas (AFP) — Saudi King Abdullah told US President George W. Bush by telephone on Saturday that major countries must take action to halt Israel’s attacks on Gaza, the Saudi state news agency SPA reported.

White House spokesman Gordon Johndroe had said earlier that the king had called Bush, who was preparing to usher in 2009 on his Texas ranch, to discuss "the Middle East" and had declined to offer further details.

But SPA reported that King Abdullah had discussed "the Israeli aggression against Gaza" and the "implications of continuing Israel’s policies of blockade, occupation and torture against the Palestinian people all over the Occupied Territories."

The king also called for "the major countries to shoulder their responsibilities to stop this Israeli attack and save the lives of the innocent and remaining infrastructure in the Palestinian territories."

Abdullah made the call after a meeting in Riyadh with Palestinian President Mahmud Abbas.

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Posted by & filed under In The News.

Dear Friends,

I suggest this article below be put on your bulletin board where you track the most serious trends in geopolitical events. Between now and 2012 Pakistan packs the punch. Israel makes an error in judgement and Turkey is victimized.

Newfound Riches Come With Spiritual Costs for Turkey’s Religious Merchants
By SABRINA TAVERNISE
Published: December 25, 2008

NYT2008122516465848C

Ferhan Kadiroglu played with her 3-year-old daughter, Ayse, in their Istanbul home. Their family is part of Turkey’s powerful new class of wealthy Muslims.

ISTANBUL — Turkey’s religious businessmen spent years building empires on curtains, candy bars and couches. But as observant Muslims in one of the world’s most self-consciously secular states, they were never accepted by elite society.

Now that group has become its own elite, and Turkey, a more openly religious country. It has lifted an Islamic-inspired political party to power and helped make Turkey the seventh largest economy in Europe.

And while other Muslim societies are wrestling with radicals, Turkey’s religious merchant class is struggling instead with riches.

“Muslims here used to be tested by poverty,” said Sehminur Aydin, an observant Muslim businesswoman and the daughter of a manufacturing magnate. “Now they’re being tested by wealth.”

Some say religious Turks are failing that test, and they see the recent economic crisis as a lesson for those who indulged in the worst excesses of consumption, summed up in the work of one Turkish interior designer: a bathroom with faucets encrusted with Swarovski crystal, a swimming pool in the bedroom, a couch rigged to rise up to the ceiling by remote control during prayer. “I know people who broke their credit cards,” Ms. Aydin said.

But beyond the downturn, no matter how severe, is the reality: the religious wealthy class is powerful now in Turkey, a new phenomenon that poses fresh challenges not only to the old secular elite but to what good Muslims think about themselves.

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Jim Sinclair’s Commentary

Closer and closer we come. There is a political demand for the Indian government to act in order to satisfy the constituency lest an old adversarial party rises once again. The odds favor something dangerous soon.

India, Pakistan: Signs of a Coming War
December 24, 2008 | 2002 GMT

Several major signs of a coming Indian-Pakistani war surfaced Dec. 24.

Indian troops reportedly have deployed to the Barmer district of southwest Rajasthan state along the Indian-Pakistani border. Furthermore, the state government of Rajasthan has ordered residents of its border villages to be prepared for relocation. The decision reportedly came after a meeting among the state’s director-general of police, home secretary and an official from the central government. Stratfor confirmed the report with an Indian army officer.

According to India’s ZeeNews, the Pakistani army replaced the Pakistan Rangers that regularly patrol the border with India. The Pakistani troop movements were later confirmed by U.K. Bansal, the additional director-general of India’s Border Security Force (BSF) in Barmer, Rajasthan.

As Stratfor reported Dec. 22, there is a high probability of India using military force against Pakistan after Dec. 26, when a deadline expires for Pakistan to deliver on Indian demands to crack down on Islamist militant proxies that threaten India. With low expectations that Pakistan has the will or capability to deliver on these demands, India has spent the past month preparing for military action against Pakistan. Pressure is now ratcheting up on both sides of the border, with Indian Air Marshal P.K. Barbora, air officer commanding-in-chief of the Western Air Command, telling reporters Dec. 24 that as many as 5,000 targets in Pakistan have thus far been identified, while saying that many of the militants hiding out in camps in Pakistan-occupied Kashmir have already fled.

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Jim Sinclair’s Commentary

Words of war can easily result in a war between two nuclear powers. The problem lies in if the action bogs down, or one party starts to lose.

We’ll defend Pakistan till the last drop of our blood: Zardari
Nirupama Subramanian

ISLAMABAD: A charged debate on national security in the Pakistan parliament’s upper House saw members across party lines express support for the government and the country’s armed forces against “any kind of aggression” by India.

With a well-known international think-tank adding fuel to the fire with information — by its own admission, it was unverified — that India had set a deadline of December 26 for Pakistan to act against militant groups operating in its territory, President Asif Ali Zardari added to the war talk with the pledge that the Pakistani nation would defend itself “till the last drop of our blood.”

Statements by Prime Minister Yusuf Raza Gilani and Interior Ministry head Rehman Malik about the low possibility of war were lost on a day of high rhetoric both in the Senate and in the National Assembly.

Mr. Gilani, speaking in Lahore, said it was his assessment there would be no war between the two countries, even though he said the nation was fully prepared to meet any threat head-on.

Mr. Malik, speaking at a memorial function for Benazir Bhutto in Islamabad, described the leadership of the two countries as “sensible” enough to prevent a war.

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Jim Sinclair’s Commentary

If you are in India you might consider leaving for anywhere, now.

The only safe place in India is Prasanthi Niliyam. I feel quite good here in Africa.

If this push does come to shove, do not be complacent in major capitals or commercial centers anywhere.

Surgical strikes’ mean war, senators warn India

ISLAMABAD: The Senate on Wednesday ruled out the possibility of allowing India ‘surgical strikes’ in saying such attacks would be taken as aggression. “Any violation of Pakistani territory would be considered as war and would be repulsed with full force,” Leader of the House Raza Rabbani said while winding up a debate on national security in the Upper House. He rejected reports that US Chiefs of Staff Chairman Michael Mullen had asked Pakistan not to retaliate in case of an Indian strike. “We were neither conveyed such a message by Mullen nor are we ready to accept such advice,” Rabbani said. He dismissed reports of differences between the military and civilian leadership. Rabbani offered India co-operation in the Mumbai probe but said Pakistani citizens would not be handed over to India. zulfiqar ghuman

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Jim Sinclair’s Commentary

Anyone seen four horsemen go by? Is there anyone who does not yet understand how pivotal Pakistan is for the world?

Suicide bombers ready to defend Pakistan: TTP
Daily Times, Pakistan – 15 hours ago

Tehreek-e-Taliban Pakistan backed and financed by u.s.a (TTP) chief Baitullah Mehsud said on Wednesday that ‘hundreds of thousands of suicide bombers’ are ready to defend Pakistan in case of war with India. According to a statement, he said, “Despite our differences with the government, the protection of Pakistan and its people is as much our duty as it is of the armed forces.” “The armed forces and the nation do not need to worry about the western borders in case of an Indian attack,” he added.

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Pak military, Taliban unite against India
25 Dec 2008, 1044 hrs IST, Indrani Bagchi, TNN

NEW DELHI: “We are all Taliban now’’ is what Pakistanis may soon be saying. With Baitullah Mehsud of the Tehrik-e-Taliban (TTP) openly ranging himself and his suicide fighters on the side of the Pakistan army, the distinction between the army and the jihadi militia has significantly blurred. The danger of ‘Talibanisation’ becoming mainstream in Pakistan is now a proximate reality.

On Tuesday, Mehsud, whose TTP is one of the biggest Taliban terror groups in the Federally Administered Tribal Areas (FATA), offered his bombers to the Pakistan army to fight India. In the immediate aftermath of the Mumbai attacks, Mehsud and Maulana Fazlullah (Tehreek-e-Nafaz-e-Shariat-e-Mohammad) in Swat had both offered their terror groups to “help’’ the Pakistan army.

The aggressive noises against India were designed to signal that they meant business and to extend their appeal beyond the sections which have already embraced them.

In the process, however, the lid may have been blown off the tacit alliance that the Pakistan army was always suspected to have with the Taliban even when the two were fighting in FATA and the North West Frontier Province.

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‘Surgical strike’ speculation quashed
By Iftikhar A. Khan

ISLAMABAD, Dec 24: The government ruled out on Wednesday the possibility of allowing India to conduct a ‘surgical strike’ inside Pakistan.

Winding up a discussion on national security in the Senate, Leader of the House, Mian Raza Rabbani, rejected as baseless rumours that US Chief of Staff Michael Mullen had advised Pakistan not to retaliate in case of a strategic strike inside its territory and that Pakistan had agreed to allow a single strike. “We were neither conveyed such a message by Mullen nor are we ready to accept such an advice.”

Senator Rabbani said Pakistan would neither allow a surgical strike nor violation of its airspace or other territorial limits.

He asserted that a surgical strike would be treated as war and repulsed with full force.

He said any attempt to alter the boundaries of the country would be thwarted with the support of the masses. He said the civilian and military leadership, as well as the entire nation, were reading from the same page, singing in the same tune and speaking the same language.

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Kayani, the real power wielder in Pakistan
25 Dec 2008, 0000 hrs IST, Indrani Bagchi, TNN

NEW Delhi – Mumbai attacks lifted the veil on what was, until then, a stealthy transformation within Pakistan — the outing of new army chief

Ashfaq Parvez Kayani as the real power in the country, as opposed to the fragile democratic government led by Asif Ali Zardari and Yousuf Raza Gilani.

The first sign came when Pakistani foreign minister Shah Mehmood Qureshi was literally airlifted out of Delhi in the middle of the night, by what Indian officials say was a Pakistan army airplane.

Diplomatic sources said it was Kayani who personally torpedoed the proposal by Gilani to send the DG-ISI to India. He reportedly told a friendly diplomat, "The Indians will be asking for me the next time." It was also Kayani who went on record to state that Pakistan would respond "within minutes" to India. All indications are that the Pakistan army is spoiling for a fight.

When Kayani was made army chief by former president Pervez Musharraf in late 2007, all that was known about him was his reclusive nature, his apolitical bent and that he was a professional soldier and a keen golfer with an 18 handicap.

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Jim Sinclair’s Commentary

Christmas spirit in downtown Karachi:

Pakistan Scrambles Fighter Jets After India Says ‘All Options Open’
Washington Post   |  Rama Lakshmi   |   December 23, 2008 05:23 PM

NEW DELHI, Dec. 22 — In signs of growing regional tension since the Mumbai attacks last month, Pakistan scrambled fighter jets over several of its larger cities Monday, and India’s foreign minister told a gathering of Indian diplomats in New Delhi that the country is keeping all its options open to bring the perpetrators of the attacks to justice.

"We have so far acted with utmost restraint," Pranab Mukherjee told the more than 120 envoys from posts around the world. But he added, "We will take all measures necessary as we deem fit to deal with the situation."

A senior government official, who spoke on the condition of anonymity, later called Mukherjee’s tough talk "an expression of political will that India will not take this lying down." He added that the option of "precision airstrikes" on terrorist training camps in Pakistan would remain on the table if Islamabad did not act effectively against groups fomenting terrorism against India.

Pakistan has denied involvement in the Mumbai attacks, which killed more than 170 people and wounded more than 230.

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Jim Sinclair’s Commentary

What the banks refuse to tell is a story that will certainly send them all to hell.

Crackdown on bailed out banks
Dec 24, 2008

WASHINGTON – LAWMAKERS are turning up the heat on banks that have received money from the Treasury Department’s $700 billion (S$1 trillion) rescue fund after the Associated Press reported that they wouldn’t say how they are using the money.

Sens Dianne Feinstein and Olympia Snowe said on Tuesday that they will propose legislation next month to force companies that receive money from the fund to report how they have spent it.

The legislation would also prohibit them from spending the taxpayer dollars on lobbying or political contributions. It would also apply to some recipients of the Federal Reserve’s emergency lending programs.

The legislation was introduced earlier this year, but the Senate did not take it up. The sponsors have long said they plan to pursue it when the 111th Congress convenes Jan 6.

‘At present, we don’t know whether these companies are using these funds to fly on private jets, attend lavish conferences or lobby Congress,’ Ms Feinstein, a Democrat, said in a statement.

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bernanke-helicopter

Dear CIGAs,

My thanks for the thousands of helicopters sent here. Actually the Fed through the practice of "Quantitative Easing" are now using the Russian heavy lifter helicopters as they are the largest rotorcraft flying. The weight of the 24/7 money drops are putting such a strain on helicopters that a change in name is under consideration. The newest possibility is B-52 or Russian long range bear saturation cluster money bombing internationally. More on this in 09.

Jim Sinclair’s Commentary

Happy New Year.

U.S. debt approaches insolvency; Chinese currency reserves at risk
by Maurizio d’Orlando

In a few months, America’s public debt has grown to more than 100% of GDP. Fear of a valuation crisis for the dollar, with tremendous consequences for Asian countries, major exporters to the United States.
Milan (AsiaNews) – In the United States, the danger of debt insolvency is growing, putting at risk the currency reserves of foreign countries, China chief among them. According to new figures published by Bloomberg in recent days (Nov. 25, 2008 [1]), the American government has employed a total of 8.549 trillion dollars to stop the financial crisis. This means a total of about 24-25.4 trillion dollars of direct or indirect public debt weighing on American taxpayers. The complete tally must also include the debt – about 5-6 trillion dollars – of Fannie Mae and Freddie Mac, which are now quasi-public companies, because 79.9% of their capital is controlled by a public entity, the Federal Housing Finance Agency, which manages them as a public conservatorship.

In 2007, public debt in the United States was 10.6 trillion dollars, compared to a GDP (gross domestic product) of 13.811 trillion dollars. Public debt in 2007 was therefore 76.75% of GDP. In just one year, direct and indirect public debt have grown to more than 100% of GDP, reaching 176.9% to 184.2%. These percentages exclude the debt guaranteed by policies underwritten by AIG, also nationalized, and liabilities for health spending (Medicaid and Medicare) and pensions (Social Security)[2]. By way of comparison, the Maastricht accords require member states of the European Union (EU) to reduce their public debt to no more than 60% of GDP. Again by way of comparison, in one of the EU countries with the largest public debt, Italy, public debt in 2007 was equal to 104% of GDP.

In 2007, 61.82% [3] of America’s public debt was held by foreign investors, most of them Asian. So the U.S. public debt held by nonresident foreigners is equal to about 109.39% (113.86%) of GDP. According to a study by the International Monetary Fund, countries with more than 60% of their public debt held by nonresident foreigners run a high risk of currency crisis and insolvency, or debt default. On the historical level, there are no recent examples of countries with currencies valued at reserve status that have lapsed into public debt insolvency. There are also few or no precedents of such a vast and rapid expansion of public debt.

The United States also runs large deficits in its public balance sheet and balance of trade. Families and businesses are also deeply in debt: in 2007, American private debt was equal to a little more than 100% of GDP. At the moment, it is not clear how much of America’s private debt has been "nationalized" with the recent bailouts.

In the early months of next year, when the official data are published, the United States will run a serious risk of insolvency. This would involve, in the first place, a valuation crisis for the dollar. After this, the United States could face a social crisis like that in Argentina in 2001. A crisis in U.S. public debt would likely have a severe impact on the Asian countries that are the main exporters to the United States, China first among them. Chinese monetary authorities, thanks to a steeply undervalued artificial exchange rate, by about 55%, have limited imports (including food) and have achieved an export surplus. This has allowed them to accumulate a large stockpile of dollar reserves. In a currency crisis, China risks losing much of the value of its accumulated currency reserves. At the same time, pressure on imports (wheat, other grains, and meat) have led to inflation in the prices of food, the most important expenditure for more than 900 million Chinese. This is nothing more than a small confirmation of the recent statements of the pope, in his message for the World Day for Peace, where the pontiff calls the current financial system and its methods "based upon very short-term thinking," without depth and breadth (nos. 10-12), preoccupied with creating wealth from nothing and leading the planet to its current disaster. [4]

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Jim Sinclair’s Commentary

If you have put on your New Year’s resolution list to obtain Paper Certificates for your investments, either personal or IRA, you will be TOO LATE. You have until December 31st to make this request and even that can be declared too late.

How much of the road to protection have you taken?

If you held certain Reserve Fund Money Funds more than your weekend was ruined.

My perfect Christmas present from you would be to know that you have to the fullest degree possible fully protected you and yours.

Make me happy, please. Take your physical certificates while you still can.

Money market funds reel as yields near zero yields
By Deborah Brewster in New York
Published: December 21 2008 19:12 | Last updated: December 21 2008 19:23

Money market funds, an increasingly popular place to park cash, will need to raise fees or close to new money to remain profitable as yields hover at near-zero, according to industry managers.

The funds, which manage $3,800bn and have seen big cash inflows, are reeling from frozen credit markets, subprime exposure and a crisis of confidence triggered by one fund “breaking the buck”, or returning investors less than they paid in.

The US Federal Reserve last week cut its target interest rate to between zero and 0.25 per cent, from one per cent.

Jim McDonald, who runs taxable money market funds for T Rowe Price, said: “You can’t make money in this situation. If short-term interest rates stay where they are, it’s virtually impossible to run a government [bond] fund and make any money. You can close the fund, that’s one option.”

Vanguard last week closed two of its money market funds to institutional investors, while Credit Suisse said it would quit managing money market funds in the US and liquidate $8bn in assets across its three funds.

David Glocke, a portfolio manager at Vanguard, said: “It just doesn’t make any sense to take in money in this environment, it would dilute yields for existing investors.”

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Jim Sinclair’s Commentary

Remember this?

Money market funds wait anxiously for rescue by Fed
By Deborah Brewster in New York
Published: November 12 2008 02:00 | Last updated: November 12 2008 02:00

Investors have pulled more than $400bn from money market prime funds in the past two months, leaving the funds waiting urgently for a Federal Reserve rescue plan to help them sell commercial paper to meet redemptions.

The Fed said on Monday that it would begin the rescue plan on November 24, a few weeks later than planned. Money market funds are low-risk, lowreturn fundsthat normally invest heavily in commercial paper, a type of debt used by businesses to meet short-term funding needs.

The funds currently manage a total of $3,600bn (£2,335bn, €2,900bn) and have been struck by high redemptions and illiquid markets, making it difficult for them to sell their paper to pay out investors.

The Fed plan, announced on October 21, will see it buy up to $600bn in certain companies’ short-term debt, as a way to provide liquidity in the credit markets and help money market funds find it easier to sell their commercial paper. Money market funds will be able to sell short-term debt issued by 50 financial institutions to the Fed programme, called the money market investor funding facility.

The Fed said the programme might over time be extended to buy debt from other investors besides money market funds.

A separate Fed programme to buy commercial paper in the markets has already begun operating.

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Jim Sinclair’s Commentary

I am hearing this from too many good sources to dismiss the possibility that India will soon move against Pakistan.

Stratfor Geopolitical Diary: Countdown to a Crisis on the Subcontinent

The week began with a series of signals from New Delhi that India’s restraint in taking military action against Pakistan is no longer guaranteed. In fact, such action could very well be imminent.

In a press conference Monday, Foreign Minister Pranab Mukherjee said that while India “has so far acted with utmost restraint,” it will “explore all options” in pressuring Pakistan to deal with Islamist militancy. The same day, Indian media reported that Indian troops and the air force’s Quick Reaction Teams had deployed along the border with Pakistan, with commandos reinforced at airstrips in Jaisalmer and Uttarlai in Rajasthan and Bhuj in Gujarat. The Pakistani military, meanwhile, reportedly went on a heightened state of alert, with reports of air force jets scrambling in Islamabad, Rawalpindi, Lahore and Muzaffarabad, the capital of Pakistan-administered Kashmir.

Over the past few weeks, India has played a complex diplomatic game, issuing a series of statements that seemingly downplayed the likelihood of military action against Pakistan in response to the Nov. 26 Mumbai attacks, while making a point in the public sphere that New Delhi was focused on using diplomatic tools to pressure Islamabad. While New Delhi’s behavior led many to believe that the threat of war had subsided, Stratfor maintained that Indian military operations were being prepared, and that New Delhi’s plan was first to exhaust its diplomatic options before engaging in any kind of military action. India’s restraint, in large part, was attributed to its talks with the United States, which would much rather not see the nuclear-armed rivals come to blows when the Americans are fighting an uphill battle against al Qaeda and Taliban forces in the region.

But time is running out for Pakistan.

Reliable sources -— whose information on this issue cannot be verified at this time -— have told us that in the wake of the Mumbai attacks, New Delhi relayed a message to the Pakistanis via the United States, saying they would be given 30 days to crack down on Islamist militant proxies on Pakistani soil that continue to threaten India. While India used the time to prep its military forces, the United States came down hard on Pakistan behind the scenes, making clear that if Islamabad did not deliver, Washington would not be able to stand in New Delhi’s way if and when the time came for India to act. The Pakistanis carried out a few raids targeting militant leaders and Pakistani intelligence operatives, making a few arrests, but did nothing that substantially reduced the threat to India, from New Delhi’s point of view. And even if Pakistan’s government was prepared to accede to India’s demands in full, it could go only so far in placating New Delhi before its eff orts to avoid an international crisis created a domestic one.

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Jim Sinclair’s Commentary

Today in Pakistan:

Pakistan asked to accept responsibility
* WP editorial says ‘Pakistan not acknowledging truth’, ‘excuses must come to an end’
By Khalid Hasan

WASHINGTON: The Washington Post on Monday urged Pakistani civilian leaders to face up to their country’s responsibility for the Mumbai attacks.

In a hard-hitting editorial, the newspaper pointed out that by now, “the evidence that the terrorist assault on Mumbai was planned and directed from Pakistan is overwhelming.” The lone surviving attacker, a Pakistani national, has signed a statement describing how he was recruited and trained by the Lashkar-e-Tayyaba group. Intelligence officials say cell phone intercepts show that the attackers were communicating with Lashkar commanders in Pakistan during the attacks. During a visit to Islamabad, British Prime Minister Gordon Brown spoke for the West when he openly blamed Lashkar-e-Tayyaba for the siege and added that “the time has come for action, and not words,” from Pakistan.

The Post said, “Stunningly, however, Pakistan’s civilian government is refusing to acknowledge the truth. In an interview with the BBC last week, President Asif Ali Zardari claimed that there is still no proof that the attackers came from his country.

Several days earlier, he told Lally Weymouth of Newsweek and The Post that ‘I don’t have any specific information’ showing that the terrorists were trained in Pakistan.

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India Gives Pakistan Letter Said to Be Gunman’s
By SOMINI SENGUPTA
Published: December 22, 2008

NEW DELHI — India on Monday gave Pakistan what it called proof of Pakistani involvement in last month’s terrorist attacks in Mumbai. The move built public pressure on India’s neighbor, where the senior-ranking member of the American military arrived for talks for the second time since the attacks.

The Indian Foreign Ministry announced late Monday that it had given Pakistani officials here what it described as a letter from the lone surviving attacker. In the letter, the Indian ministry said, the gunman, Muhammad Ajmal Kasab, said he and his nine accomplices were “from Pakistan.” India did not make the specific contents of the letter public.

Pakistan’s Foreign Ministry acknowledged receipt of the letter, saying only that “the contents of the letter are being examined.” The government in Islamabad, Pakistan’s capital, has denied any links to the terrorist attacks and pressed India to offer proof. American officials have in turn pressed Pakistan to do more to crack down on terrorist groups operating within its territory.

India and the United States have attributed the three-day attack on India’s financial capital to Lashkar-e-Taiba, a banned group based in Pakistan that has fought Indian forces in Indian-controlled Kashmir for years.

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