Posts Categorized: In The News

Posted by & filed under In The News.

Jim Sinclair’s Commentary

This is what $1650 gold is made of.

“When the Fed gets finished here they will have an inflation nightmare on their hands,” said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisor Services Ltd. in Austin, Texas. “There is a lot of downside in conservative government bonds.”

Treasury Real Yields at 16-Month High as Deflation Bets Die
By Dakin Campbell

Feb. 2 (Bloomberg) — For the first time since 2007, Treasury investors are betting that inflation will accelerate.

The yield on 10-year notes exceeds the consumer price index by 2.74 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.

Deflation was the growing concern for investors in 2008 as government bond yields fell to historic lows in December, the Reuters/Jefferies CRB Index of commodities tumbled 53 percent since July and home prices plunged 18 percent amid a deepening recession. Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.

“When the Fed gets finished here they will have an inflation nightmare on their hands,” said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisor Services Ltd. in Austin, Texas. “There is a lot of downside in conservative government bonds.”

MacQueen is selling 30-year Treasuries, which are more sensitive to inflation expectations than shorter-maturity debt.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Does anyone see a trend here?

Daschle Fixes Tax ‘Issues,’ Has Obama’s ‘Confidence’
By Robert Greene and Hans Nichols

Jan. 30 (Bloomberg) — Tom Daschle paid back taxes and interest to fix “issues” identified when preparing to be President Barack Obama’s nominee as Health and Human Services Secretary, White House spokesman Bill Burton said.

Obama “has confidence” that Daschle, 61, “is the right person to lead the fight for health-care reform” and will be confirmed, Burton said in a statement today.

The New York Times reported today that Daschle paid more than $100,000 in back taxes and interest, citing “administration officials.” The Times and ABC News said Daschle paid the taxes on the use of a car and driver provided for free by Leo Hindery Jr., a founder of the private equity firm InterMedia Advisors.

Senate Finance Committee Max Baucus, a Montana Democrat, and ranking Republican Charles Grassley, of Iowa, will meet on Feb. 2 to discuss nominations, said Carol Guthrie, committee spokeswoman, in a telephone interview.

She declined to provide any further details.

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Posted by & filed under In The News.

NakedTOShorts

Jim Sinclair’s Commentary

Is it possible that protection of the Hedge Fund bullies has run its course?

It is possible the destructive bullies like JO have shot their wad but don’t know it.

Is the end of all this misbehavior and destruction of value finished by Madoff and the displays of Wall Street disdain for normal humanity?

How about King Street and Bay Street with their jitney crimes?

Where is your outrage with last one minute sellers?

You can borrow mine because I have more than enough to go around.

They will have their comeuppance one way or another. This I promise you personally.

Obama Calls Bonuses ‘Shameful’ as Dodd Vows to Reclaim Money
By Dawn Kopecki and Julianna Goldman

Jan. 29 (Bloomberg) — PresidentBarack Obama fed a swelling populist revolt against Wall Street bonuses, calling it “shameful” that banks doled out $18.4 billion as taxpayers bail out companies and the U.S. remains mired in a recession.

The bonuses are “the height of irresponsibility,” Obama said today before meeting Treasury Secretary Timothy Geithner and Vice President Joe Biden at the White House. Firms need to “show some restraint and show some discipline,” Obama said.

The president joined politicians such as Senator Christopher Dodd, who today called for using “every possible legal means to get the money back.” The bonus pool for 2008 by New York City financial companies was the sixth-largest ever amid record losses in the securities industry, State Comptroller Thomas DiNapoli said in a report yesterday.

Banks and financial firms have fired 265,000 people since the collapse of the subprime mortgage market triggered the worst financial crisis since the Great Depression. Bear Stearns Cos. and Lehman Brothers Holdings Inc. collapsed, while Merrill Lynch & Co. was taken over by Bank of America Corp. and Goldman Sachs Group. and Morgan Stanley converted into bank holding companies. The Treasury Department program has injected about $200 billion into banks across the country from the Troubled Asset Relief Program.

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Jim Sinclair’s Commentary

It is quite probable that the bombastic gold and gold share legal and illegal short sellers no longer carry all the Aces.

The Holy Ganges starts with a trickle and becomes a roar. At $900 gold is no trickle.

Hedge funds offer to price in gold
ByJames Mackintosh and Javier Blas
Published: January 29 2009 00:15

A hedge fund has begun offering investors the chance to have their investment denominated in gold, as worries grow over governments debasing their currencies by printing money.

Osmium Capital Management, a $178m hedge fund manager based in Bermuda, is launching a new share class allowing investors to hold shares measured as troy ounces of the fund, rather than US dollars, sterling or euros.

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Jim Sinclair’s Commentary

A simple common recession has been turned into a planetary economic disaster. None of this ever needed to happen.

Greed devoured common sense and a blind eye was turned against the obvious worthlessness of OTC derivatives under even mild market pressure.

From this point we are proceeding toward a Global Weimar in which only gold has value. Everything else churns, value wise, violently as in a death spiral.

All of this is the doing of the OTC derivative manufacturers and distributors who are now pig rich as their reward for bloody murder of the planet’s formerly sound economies.

Among humans, these mass murders are "Siafu" and should be referred to as "Siafu." Siafu are predacious by nature.

Where is your RAGE?

Airlines report ‘shocking’ plunge in traffic
By Kevin Done, Aerospace Correspondent

The airline industry reported on Thursday an "unprecedented and shocking" plunge in global air cargo traffic.

Air freight accounts for 35 per cent of the value of goods traded internationally and the International Air Transport Association said traffic volumes had fallen by 22.6 per cent year-on-year in December.

Giovanni Bisignani, Iata director general, said, "there is no clearer description of the slowdown in world trade. Even in September 2001 (after the 9/11 terrorist attacks in the US), when much of the global fleet was grounded, the decline was only 13.9 per cent."

International passenger traffic fell in December by 4.6 per cent. Iata said the drop was less dramatic than in cargo, as volumes had been supported by year-end leisure travel that had been booked in advance.

Airlines are still struggling to reduce capacity to match falling demand, however, and are flying with more empty seats. Capacity was reduced by 1.5 per cent year-on-year in December, resulting in airlines filling only 73.8 per cent of available seats, down from 76.2 per cent a year ago.

"Until this comes into balance, even the sharp fall in fuel prices cannot save the industry from drowning in red ink," said Mr Bisignani.

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Jim Sinclair’s Commentary

Are you tired of the manipulation of gold on the Comex? There is a very easy way to make right what is clearly WRONG!

Get into the fight, and stop fighting with your mouth.

Dan, Monty and I can lead, but we need a few warriors with us.

dogs

Jim Sinclair’s Commentary

The following cartoon was sent in courtesy of CIGA Annette.

silvertsunami

 

Russian prime minister Vladimir Putin calls for end of dollar stranglehold
By Ambrose Evans-Pritchard in Davos
Last Updated: 11:13AM GMT 29 Jan 2009

Russian prime minister Vladimir Putin has called for concerted action to break the stranglehold of the US dollar and create a new global structure of regional powers.

"The one reserve currency has become a danger to the world economy: that is now obvious to everybody," he said in a speech at the World Economic Forum.

It is the first time that a Russian leader has set foot in the sanctum sanctorum of global capitalism at Davos.

Mr Putin said the leading powers should ensure an "irreversible" move towards a system of multiple reserve currencies, questioning the "reliability" of the US dollar as a safe store of value. "The pride of Wall Street investment banks don’t exist any more," he said.

For all his bluster, Mr Putin’s bargaining power is weakening by the day. Russia’s foreign reserves have fallen by 34pc since August to $396bn (£277bn) after months of capital flight and the collapse in the price of Urals crude oil to $45 a barrel. The rouble also fell to a record low yesterday after sliding for weeks in a controlled devaluation.

Mr Putin said: "We are witnessing a truly global crisis. The speed of developments beats every record, and the strategic difference from the Great Depression is that under globalisation this touches everyone. This has multiplied the destructive force. It looks exactly like the perfect storm."

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Jim Sinclair’s Commentary

Nail the Comex the way they deserve and gold will be at $1224-$1250 five trading days later.

I am not suggesting breaking the playing field in any way, but rather taking delivery of your Comex gold and therein reducing the warehouse supply by 50% so shorts have to have gold.

How about those new funds buying gold, the ones that are buying real physical gold, not paper. Many are readers here.

It is a real possibility as this fund is one of the most notorious of the bank short sellers. With that sceptic’s attitude maybe this fund is going to send the Comex gang a good 250,000 volt shock.

I think it might just happen on the next three deliveries.

That would be the rest of his Grandfather’s advice.

Gold attracts more flows amid recession
Wed Jan 28, 2009 9:29am GMT
By Frank Tang and Jennifer Ablan

NEW YORK (Reuters) – Gold, the traditional safe haven in times of economic turmoil, proved to be more a commodity that everyone loved to hate last year even amid the turbulence that engulfed world markets.

But as 2009 gets under way the yellow metal has found huge traction with money managers.

In the last eight sessions, gold has rallied as much as $100 (70 pounds) an ounce to hit a near four-month high of $915.30 on Monday — in spite of a rising dollar.

The furious rally in the bullion stems from expectations that the U.S. government will need to borrow about $2 trillion of debt this year to finance its rescue packages for the battered banking sector. Already, outstanding Treasury debt stood at $5.5 trillion at the end of September.

Against this backdrop, investors are largely shunning everything from U.S. Treasuries to stocks, which are down 10 percent and 7.5 percent so far this year, respectively, while pouring cash into gold.

"I think gold is rising because of fiscal deterioration and the prospect that the U.S. may be downgraded," said Tom Sowanick, chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey.

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Jim Sinclair’s Commentary

Nail the Comex the way they deserve and gold will be at $1224-$1250 five trading days later.

I am not suggesting breaking the playing field in any way, but rather taking delivery of your Comex gold and therein reducing the warehouse supply by 50% so shorts have to have gold.

How about those new funds buying gold, the ones that are buying real physical gold, not paper. Many are readers here.

It is a real possibility as this fund is one of the most notorious of the bank short sellers. With that sceptic’s attitude maybe this fund is going to send the Comex gang a good 250,000 volt shock.

I think it might just happen on the next three deliveries.

That would be the rest of his Grandfather’s advice.

Gold attracts more flows amid recession
Wed Jan 28, 2009 9:29am GMT
By Frank Tang and Jennifer Ablan

NEW YORK (Reuters) – Gold, the traditional safe haven in times of economic turmoil, proved to be more a commodity that everyone loved to hate last year even amid the turbulence that engulfed world markets.

But as 2009 gets under way the yellow metal has found huge traction with money managers.

In the last eight sessions, gold has rallied as much as $100 (70 pounds) an ounce to hit a near four-month high of $915.30 on Monday — in spite of a rising dollar.

The furious rally in the bullion stems from expectations that the U.S. government will need to borrow about $2 trillion of debt this year to finance its rescue packages for the battered banking sector. Already, outstanding Treasury debt stood at $5.5 trillion at the end of September.

Against this backdrop, investors are largely shunning everything from U.S. Treasuries to stocks, which are down 10 percent and 7.5 percent so far this year, respectively, while pouring cash into gold.

"I think gold is rising because of fiscal deterioration and the prospect that the U.S. may be downgraded," said Tom Sowanick, chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey.

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Jim Sinclair’s Commentary

This is total horse-shit.

A so called asset that has no market is worth nothing at all.

How packages of broken and semi broken mortgages are going to make each item have value when it is only a negotiated value as so many parts of the package are permanently broken and semi broken is as impossible as a Gordian knot to undo.

They are worthless items that accounting rules are giving a break to by allowing them to be valued at any value at all.

Here is another amoral, bombastic statement that you have no right to know the TRUTH about.

What a disgrace!

Let the banks holding your assets "Lie" to you regarding values, and all will be well. How far have we sunk into a state of total disgrace as human beings?

Let The Bank of England refuse to tell pound holders how many pounds are outstanding and all will be well.

The USA no longer publishes M3 because people might find out what is really happening in fiscal stimulation.

Why not let public companies issue shares and never tell stockholders how many are outstanding?

Where is your OUTRAGE?

Robert Rubin Says Mark-to-Market has Done ‘Damage’
By Josh Fineman and Ian Katz

Jan. 28 (Bloomberg) — Robert Rubin, who quit his post as senior counselor at Citigroup Inc. this month, said an accounting rule forcing companies to mark down assets every quarter to reflect market value has “done a great deal of damage.”

“I spent my whole life at Goldman Sachs believing in mark- to-market accounting, and having said that, if you look at the experience from the last two years, I think mark-to-market accounting has led to terrible vicious cycles in asset prices,” Rubin, the former U.S. Treasury secretary, said during a discussion at the 92nd Street Y late yesterday.

Companies including Citigroup and American International Group Inc. say mark-to-market, also known as fair-value accounting, doesn’t work when few buyers are willing to trade assets like subprime mortgages. Proponents such as the U.S. Financial Accounting Standards Board say the rule adds to transparency and gives investors information about companies.

Rubin joined Citigroup in 1999. Earlier this month, he announced he won’t stand for re-election to the board. Rubin, 70, proposed that a “reserve” accounting standard be adopted, which drew applause from the audience.

Citigroup received a $45 billion bailout from the U.S. government after reporting more than $85 billion of credit losses and writedowns from investments tainted by the subprime-mortgage crisis.

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Jim Sinclair’s Commentary

Money when threatened with hyper-inflation must maintain high levels of confidence. The following is the absolute opposite. It is despicable, illegal, wrong and another example of how you have no right to know you are in financial danger.

Where is your OUTRAGE?

Government Regulators Aided IndyMac Cover-Up, Maybe Others
Darrel Dochow May Not Be the Only Official Who Helped Banks Hide Financial Problems
By BRIAN ROSS, JUSTIN ROOD, and JOSEPH RHEE
Jan. 16, 2009—

A brewing fraud scandal at the Treasury Department may be worse than officials originally thought.

Investigators probing how Treasury regulators allowed a bank to falsify financial records hiding its ill health have found at least three other instances of similar apparent fraud, sources tell ABC News.

In at least one instance, investigators say, banking regulators actually approached the bank with the suggestion of falsifying deposit dates to satisfy banking rules — even if it disguised the bank’s health to the public.

Treasury Department Inspector General Eric Thorson announced in November his office would probe how a Savings and Loan overseer allowed the IndyMac bank to essentially cook its books, making it appear in government filings that the bank had more deposits than it really did. But Thorson’s aides now say IndyMac wasn’t the only institution to get such cozy assistance from the official who should have been the cop on the beat.

The federal government took over IndyMac in July, after the bank’s stock price plummeted to just pennies a share when it was revealed the bank had financial troubles due to defaulted mortgages and subprime loans, costing taxpayers over $9 billion.

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Posted by & filed under In The News.

NakedTOShorts

"Justin Oliver"

THE CONNING TOWER
By Keith Conning

Link to site…

 

Jim Sinclair’s Commentary

Ever ask yourself what the IMF may have invested their reserves in that might be hidden in the loss category? Might as well throw the world Bank into the question as well.

IMF expects G-7 growth to grind to a halt
Bloomberg News
Published: January 28, 2009

WASHINGTON: The global economy will slow close to a halt this year as more than $2 trillion of bad assets in the United States help sink economies from Russia to Britain, the International Monetary Fund said Wednesday.

Bank losses worldwide from toxic U.S. assets may reach $2.2 trillion, the IMF said in a report, more than the $1.4 trillion that the fund predicted in October. World growth will be 0.5 percent this year, the weakest postwar pace, the fund said in a separate report.

The reports signal that write-downs and losses at banks totaling $1.1 trillion so far are only half of what’s to come and that already contracting economies may worsen. Advanced and developing countries need to be "even more supportive" of demand than they already have been, with lower interest rates and fiscal stimulus, the lender said.

"Unless stronger financial strains and uncertainties are forcefully addressed, the pernicious feedback loop between real activity and financial markets will intensify, leading to even more toxic effects on global growth," the IMF said.

The IMF’s latest forecast revises its estimate of world growth down from 2.2 percent in November.

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Jim Sinclair’s Commentary

In geopolitics nothing much changes. Send me the money so I can send it to my private bank in Dubai, oops, I mean so I can fight your enemies for you.

Pakistan to US: Give us more money
Wed, 28 Jan 2009 16:33:14 GMT

Pakistan’s President Asif Ali Zardari says Islamabad’s success in fight against terrorism is pending more financial support from Washington.

"Give us the tools, and we will get the job done," Zardari said in an opinion piece published in The Washington Post on Wednesday.

Zardari said he hoped US President Barack Obama has understood that "for Pakistan to defeat the extremists, it must be stable. For democracy to succeed, Pakistan must be economically viable."

He further called on Obama to push Congress into passing a legislation introduced last year that would give an annual USD 1.5 billion aid to Islamabad for social programs.

Zardari noted that Islamabad had made "remarkable progress" in the past several months in its battle against the al-Qaeda-linked and pro-Taliban militants along the troubled Pakistan-Afghanistan border.

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Jim Sinclair’s Commentary

Listening to Grandfather’s advice is a good idea.

Greenlight Founder Takes Grandfather’s Advice on Gold
By Stewart Bailey and Saijel Kishan

Jan. 28 (Bloomberg) — Greenlight Capital Inc. founder David Einhorn is finally taking his grandfather’s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending.

Since Einhorn was 10 years old, his grandfather has warned him that investing in bullion and gold-mining stocks was the only “sensible” thing to do given the threat of inflation and the risks of so-called fiat currencies, New York-based Greenlight said in a Jan. 20 letter to clients. The firm had never before considered buying bullion or mining-company shares.

“To everyone’s dismay, we believe some of Grandpa Ben’s predictions are playing out,” Greenlight said in the letter, a copy of which was obtained by Bloomberg News. “The size of the Fed’s balance sheet is exploding, and the currency is being debased.”

Greenlight is turning to the centuries-old currency to mitigate the effects of the economic collapse and government efforts to end it. Bullion gained for the eighth straight year in 2008 as governments in Europe and the U.S. rescued banks from collapse.

Greenlight said in the letter that in addition to buying gold, it has added call options on gold and the Market Vectors Gold Miners exchange-traded fund to its other investments. Call options are the right to buy a security or commodity at a set price, within a set period of time. The owner of the call profits when the security rises above the set price.

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Jim Sinclair’s Commentary

You can be sure this will not pass under the radar of all governments. This is the macrocosm experience to come, now occurring in the microcosm of Iceland

Iceland’s PM: Government Has Collapsed

Iceland’s prime minister says his ruling coalition has collapsed under pressure from the global financial crisis. Geir Haarde said he will speak to the president, Olafur Ragnar Grimsson, Monday in an effort to dissolve the government.

Mr. Haarde’s government, a coalition featuring his Independence party and the Social Democratic Alliance, has been under mounting public pressure since the crisis hit the island-nation in October.

Last week, the prime minister, who suffers from cancer, called early national elections in May and said he would not run. At the time, analysts questioned whether the government could survive four more months.

The situation worsened Sunday, when Commerce Minister Bjorgvin Sigurdsson quit, citing his role in the economic collapse and growing public demands that the government resign immediately.

Sigurdsson acknowledged that Icelanders have lost faith in their government, and he said he wants to share in the responsibility for the economic collapse.

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Posted by & filed under In The News.

Dear CIGAs,

The following is my new guard dog – he eats hedgies for lunch!

DSCF0759

Jim Sinclair’s Commentary

All hail the probable Nobel Prize Winner in Economics for 2009 and our new in place and undeniably Marxist Western economic policies.

Full Marx for such imaginative thinking
David Wighton: Business Editor’s commentary

Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take on more and more expensive debt, until their debt becomes unbearable.

The unpaid debt will lead to the bankruptcy of all banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism.” So says the Karl Marx quote that has been whizzing round Wall Street and the City.

We seemed a step closer to that prospect yesterday. Bank shares plunged again on both sides of the Atlantic amid concern that more capital injections will be required. Bank of America shares fell 20 per cent on reports that it needed further government help to complete the acquisition of Merrill Lynch. Merrill has suffered higher than expected losses in the fourth quarter and BoA is in talks with the American authorities about an infusion of capital.

Citigroup shares tumbled further, ahead of today’s results, which are expected to be horrible.

These falls took the combined value of Citigroup and BoA – so recently the two most valuable banks in the world – below that of Wells Fargo, the conservative West Coast lender.

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Jim Sinclair’s Commentary

Madoff lives in his 7.2 million dollar apartment in New York, but this poor old guy is on his own.

Where is your outrage?

93-year-old freezes to death at home after utility firm limits power use
Mon Jan 26, 4:33 PM
By The Associated Press

BAY CITY, Mich. – A 93-year-old man froze to death inside his home just days after the municipal power company restricted his use of electricity because of unpaid bills, officials said.

Marvin Schur died "a slow, painful death," said Kanu Virani, Oakland County’s deputy chief medical examiner, who performed the autopsy.

Neighbours discovered Schur’s body on Jan. 17. They said the indoor temperature was below zero Celsius at the time, the Bay City Times reported Monday.

"Hypothermia shuts the whole system down, slowly," Virani said. "It’s not easy to die from hypothermia without first realizing your fingers and toes feel like they’re burning."

Schur owed Bay City Electric Light & Power more than $1,000 in unpaid electric bills, Bay City manager Robert Belleman told The Associated Press on Monday.

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Jim Sinclair’s Commentary

Number 29 and 30 on the banks that have not been bailed out and just checked out.

Regulators Shut Two Community Banks
By Joe Adler
January 21, 2009

Federal regulators shut two community banks late Friday—the first failures of the new year—in what is expected to be a busy 2009 for the Federal Deposit Insurance Corp.

First, regulators closed $431 million-asset National Bank of Commerce in Berkeley, Ill., and transferred all $402 million of its deposits to Republic Bank in Chicago. The failed bank’s two branches will reopen as Republic branches on Saturday.

It was followed by the failure of $446 million-asset Bank of Clark County in Vancouver, Wash.

The FDIC said nonbrokered insured deposits at Clark County – which had a deposit total of $366.5 million – will be assumed by Umpqua Bank, in Roseburg, Ore. At the time of its failure, the Washington bank had roughly $39 million in uninsured deposits in 138 accounts, and $117.8 million in brokered deposits. Brokered depositors will be compensated for their insured portion by the FDIC directly, the agency said.

Clark County branches will reopen on Tuesday as branches of Umpqua. The failures commence the FDIC’s resolution activity in a year that most experts believe will equal or exceed the 25 closures suffered by the industry in 2008, when the housing crisis took direct hits at banks’ balance sheets.

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Jim Sinclair’s Commentary

Birds of a feather flock together.

U.N. crime chief says drug money flowed into banks
Sunday, January 25, 2009

The United Nations’ crime and drug watchdog has indications that money made in illicit drug trade has been used to keep banks afloat in the global financial crisis, its head was quoted as saying on Sunday.

Vienna-based UNODC Executive Director Antonio Maria Costa said in an interview released by Austrian weekly Profil that drug money often became the only available capital when the crisis spiralled out of control last year.

"In many instances, drug money is currently the only liquid investment capital," Costa was quoted as saying by Profil. "In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor."

The United Nations Office on Drugs and Crime had found evidence that "interbank loans were funded by money that originated from drug trade and other illegal activities," Costa was quoted as saying. There were "signs that some banks were rescued in that way."

Profil said Costa declined to identify countries or banks which may have received drug money and gave no indication how much cash might be involved. He only said Austria was not on top of his list, Profil said.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Maybe nationalized? Who are you kidding, they are!

The Economist Of The Year award is going to Lenin.

Citigroup, Bank of America May Look ‘Nationalized’ (Update1)
By Ari Levy

Jan. 23 (Bloomberg) — The U.S. government’s decision to pledge billions of additional dollars with strings attached to Citigroup Inc. and Bank of America Corp. may be nationalization by another name, according to former bankers and regulators.

Faced with pressure from lawmakers, banks have shaken up management, eliminated executive bonuses and staff and canceled conventions. They’ll be forced to do monthly reports on how they’ve boosted lending while slashing quarterly dividends to one cent a share for three years.

“When the Treasury tells a bank to pay a penny a share vs. its old dividend, you know who’s calling the shots,” said Jon Bruss, a 40-year industry veteran and founder of Hartland, Wisconsin-based Fortress Partners Capital Management Ltd., which invests in banks. “It may not be de jure nationalization but I think it’s de facto nationalization.”

While avoiding steps taken by the U.K., which this week acquired a 70 percent stake in Royal Bank of Scotland Plc, U.S. regulators are no longer passively injecting capital into the nation’s biggest banks. Investors have fled, sending Citigroup and Bank of America down by more than 50 percent this year, on concern that tougher U.S. oversight is coming after the government takeover last year of mortgage financers Fannie Mae and Freddie Mac, and insurer American International Group Inc.

Citigroup, based in New York, tumbled 56 cents, or 15 percent, to $3.11 yesterday on the New York Stock Exchange. Bank of America plunged 97 cents, or 15 percent, to $5.71. The 24- company KBW Bank Index has dropped 38 percent in 2009, following last year’s 50 percent decline.

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Jim Sinclair’s Commentary

My apology to those that object, but I believe there are three human rights.

1. Potable Water
2. Health
3. Education

A society that fails to provide this is not a society but simply a grouping of people.

I firmly believe that these requirement come before Bernard Madoff hedge fund rescues, any Administration, declaration of preemptive wars and rampant white collar theft.

Having said that the following cannot be funded without a resort to inflating away old debt, NOW. Too bad.

House Committee on Ways and Means
For Immediate Release:
Thursday, January 22, 2009

Ways and Means Passes Economic Recovery Legislation

Bill would provide critical tax, health and unemployment benefits for families, gives incentives to create jobs

WASHINGTON, D.C. – The House Committee on Ways and Means voted today in support of a comprehensive economic recovery package to provide tax, health and unemployment relief to families while also encouraging businesses to create new jobs.  The legislation, H.R. 598, passed the Committee by a party-line vote of 24 to 13.  The legislation will now be combined with other components of the recovery package from other House Committees into H.R. 1, the American Recovery and Reinvestment Act for consideration by the full House of Representatives next week.

“This legislation will provide critical benefits and incentives to middle-America, poor-America, and businesses, large and small, who are struggling during this economic downturn,” said Chairman Charles B. Rangel (D-NY).  “This plan will go a long way to help relieve the pain these families and businesses are experiencing so that we can restore some confidence and economic security and help America maintain its prominence in the global marketplace.  Simply put, the American people cannot keep the engine of our economy running if they don’t have money to spend and this package provides tax relief and critical benefits to help them take home a little more each month and help the economy grow.”

Critical Benefits to Families, Businesses, Incentives to Create New, Green Jobs:

The Plan, as passed by the Committee will provide critical tax relief to working families and assistance with healthcare costs as well as extended and enhanced unemployment benefits for those who have lost their jobs during the economic downturn.  The Plan would also give businesses, large and small, tax incentives to invest in plants and equipment and expand to hire new workers, helping to strengthen our economy and create new jobs.   In particular, the Plan would help create new, green jobs by making a critical investment in renewable energy and energy efficiency.

Important Health Benefits, Improvements to Care:

The Plan would also provide payment incentives to encourage the widespread adoption of Health Information Technology (HIT) and establish standards for interoperability and privacy.  The investment in HIT is a critical step toward modernizing American healthcare, cutting red tape, eliminating redundant care and reducing health insurance premiums for millions.

Finally, the Plan would provide temporary subsidies to help families who have lost their jobs maintain their healthcare coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA).  This benefit will be of tremendous assistance to families struggling to find new work and maintain economic security during the downturn.

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Jim Sinclair’s Commentary

It is really never going to happen in absolute terms. Wait until you see what gold does as the dollar treasuries reveals themselves to not be a safe haven.

DJ MARKET TALK: Higher Comex Gold Decoupling From Dollar

1426 GMT [Dow Jones] – Comex gold is decoupling from its normal inverse relationship to the U.S. dollar, says Bart Melek, global commodity strategist with BMO Capital Markets. Despite a stronger dollar, February gold is up $21.70 to $880.50 an ounce as investors turn to the metal as a safe haven and monetary asset, he says. He also describes the market as tightening physically, with mining output down lately but strong investment demand for physical gold and holdings rising in ETFs. Metal that is backing the SPDR Gold Trust, the world’s largest gold ETF, rose 13.15 metric tons Thursday and now stand at a record 819.11 metric tons. March silver is up a more modest 21 cents to $11.575. (ALS)

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Jim Sinclair’s Commentary

Do you really think that the US and GB are going to avoid social unrest? Wait until you see how politicians react to these upcoming events.

It will be physically nasty, and the balance of payments together will be expensive.

Iceland Is Burning — Day 2
Iris Erlingsdottir
The Huffington Post
01-23-09

The extensive protests that shook Iceland Tuesday have continued into Wednesday and are beginning to have an effect on one of the two political parties making up Iceland’s coalition government.

Late Wednesday night, as thousands of protesters re-lit a large bonfire in front of the Parliament, the Reykjavik chapter of the Progressive Party voted to recommend to the party’s national representatives that they withdraw from the ruling coalition, and called for new elections in May 2009. As the night wore on, though, matters descended into violence. Around 1:30 am, police dispersed the crowd with tear gas, the first time tear gas had been used against Icelanders in 60 years. The crowd soon reformed and pelted riot police with stones. One officer was severely injured by a cobblestone, the newspaper Morgunbladid said.

Although the leader of the Social Democratic Alliance, Foreign Minister Ingibjorg Solrun Gisladottir, was out of the country, Prime Minister Geir Haarde, leader of the Independence Party, told reporters that he believed she remained committed to the current ruling coalition. He insisted that the government was "functional" and that holding elections this spring would result in nationwide chaos.

The rank and file members of the Social Democratic Alliance appear to differ, however. Calls for the current representatives within the Party to step aside were widely applauded at tonight’s meeting, as were calls for spring elections and a new coalition.

The protests have been sparked by Iceland’s catastrophic economic collapse over the past three months, and the failure of the government to call for immediate elections or to investigate the rumored widespread malfeasance by the country’s leading bankers, businessmen, and politicians. "It should be clear to everyone that a government that has failed as utterly as the Icelandic government has can neither investigate, nor clear up the past, nor forge a new path into the future," said retired professor Njörður P. Njarðvík.

Wednesday morning began with angry protesters throwing paint at the government building and surrounding Prime Minister Geir Haarde’s car. They banged on the vehicle’s windows and pelted it with eggs for several minutes before his bodyguards and police pushed them away. The protesters gathered in front of the Parliament building banged on pots and pans while shouting "Unfit government!" "You’re fired!" and more creative insults. Although the racket calmed down to show respect to mourners at a funeral in the neighboring Reykjavik Cathedral, a mourner encouraged them to "produce enough racket to be heard across the country" when it was over.

Iceland has come to expect little change from the members of Althingi, the elected representatives, who have been widely criticized for being little but a rubberstamp for the conservative government agenda, but they claim they are getting the message. "So why aren’t the protests getting through to you, why hasn’t there been any change?" a state television reporter asked a Social Democratic Alliance representative. "We very clearly noticed the protests, and we get the message that people want change," he said without elaborating. The Conservative Party Representative’s reply to the question painfully demonstrated whose interests the Icelandic Althingi represents: "Well, representatives are just representatives," Ms. Ragnheidur Rikhardsdottir, said, "and ministers are ministers, and theirs is the power."

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Jim Sinclair’s Commentary

Now this is one way to get rid of a VP.

Obama Sends Biden on ‘Special Mission’ to Antarctica
Andy Borowitz
Posted January 22, 2009 | 08:57 AM (EST)

In the first major initiative of his presidency, President Barack Obama today dispatched Vice President Joe Biden on what he called "an important and special mission" to Antarctica.

The news of Mr. Biden’s unexpected trip appeared to take the Vice President by surprise, as he was in the middle of making a joke about Chief Justice John Roberts to members of the press corps when the president interrupted him with the news.

"Here’s how John Roberts sings the National Anthem," Mr. Biden was saying. "’Oh see can you say…’"

Mr. Obama, yanking away Mr. Biden’s microphone, then informed him of the extraordinary journey to the South Pole he was about to undertake.

The president was vague about what the mission to Antarctica would entail, but he did indicate that it could take "up to four years."

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Jim Sinclair’s Commentary

As if we did not already know this!

JPMorgan chief says worst of the crisis still to come: FT
Jan 14, 2009

LONDON (AFP) — The chief executive of US bank JPMorgan Chase, Jamie Dimon, told the Financial Times on Thursday that the worst of the economic crisis still lay ahead as hard-hit consumers default on their loans.

"The worst of the economic situation is not yet behind us. It looks as if it will continue to deteriorate for most of 2009," he told the business daily.

"In terms of our sector, we expect consumer loans and credit cards to continue to get worse."

Dimon said the bank — which bought rivals Bear Stearns and Washington Mutual last year — was prepared for a deterioration in consumer-orientated businesses but if things were worse than expected, it would have to cut costs further.

The interview was published after a fresh wave of selling hit US and European stock markets Wednesday, as an unrelenting flow of bad economic and corporate news sparked fears of a deepening global downturn.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

From the Golden Children to the Dung Heap Inhabitants. Madoff is spelled BRE-X to the hedge funds

FOCUS: Hedge Funds Not Behind Sell-Off In Banks Say Experts
Wall Street Journal – USA
to arrest concerns about the health of UK financial institutions. This general malaise and investor jitters, rather than short-selling by hedge funds,
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Hedge fund loses over $350M in Madoff affair
The Associated Press
ZURICH, Switzerland (AP) — Auriga International Advisers, a hedge fundregistered in the British Virgin Islands, has lost over 400 million Swiss francs
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US SEC charges missing Florida fund manager
Reuters – USA
Nadel’s disappearance came a little more than a month after authorities arrested New York money manager Bernard Madoff, who is accused of running a $50
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US Jews struggle to come to grips with Madoff
International Herald Tribune – France
Many more investors worldwide found themselves linked to Madoff through their exposure to hedge funds that gave him money to manage. …
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US charges missing Florida fund manager with fraud
Reuters – USA
The SEC complaint said the six hedge funds Nadel oversaw, which he valued at more than $300 million, actually contain less than $1 million.
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