Posts Categorized: In The News

Posted by & filed under In The News.

Dear CIGAs,

You are going to see a great deal more of this.

Do you honestly know how bad things are going to get?

Do you really accept that the US dollar is going to take a historical percentage of value hammering in the final quarter of 2009?

Do you recognize that as pressure to deliver gold hits the COMEX exchange with titanic force, the ratio traders will totally explode and kill the spread traders?

Do you have any idea how long it is going to be before real green shoots become crops?

Do you know that certain medicines are already in short supply for economic reasons?

There is only a small minority out there that really understands. There is no need for bank holidays as long as QE and TARP type programs are grown to meet the growing demand.

I have long told you that our financial leaders will burn the barn down before letting nature take its course. The barn is the US dollar.

Look out the window and stop listening to MOPE.

Please give food, not money.


In the 1930s insurance companies did this to pay claims. These California IOU claims will probably trade at 25% of face value. They will trade in today’s world of paper shufflers.

California set to issue IOUs as fiscal crisis weighs
By Dan Whitcomb and Ciara Linnane Dan Whitcomb And Ciara Linnane
Wed Jun 24, 10:00 pm ET

LOS ANGELES/NEW YORK (Reuters) – California’s controller said on Wednesday that he would have to issue IOUs in a week if lawmakers can’t quickly solve a $24 billion budget deficit, and the state’s treasurer plans to tap a reserve fund to meet debt service costs.

The measures came as a budget crisis deepened in the most populous U.S. state and the gridlocked legislature failed to pass a proposed $11 billion in cuts.

"Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Controller John Chiang said in a statement announcing that he would be forced to use IOUs to pay the state’s bills beginning on July 2.

"The state’s $2.8 billion cash shortage in July grows to $6.5 billion in September and after that we see a double digit freefall," Chiang said. "Unfortunately, the state’s inability to balance its checkbook will now mean short-changing taxpayers, local governments and small businesses."

State Treasurer Bill Lockyer, meanwhile, is planning to draw on reserves for economic recovery sales tax bonds, according to a spokesman.


Jim Sinclair’s Commentary

In Addis Ababa, Ethiopia, mothers are telling their kids to eat all their food because children are starving in America.

US cities may have to be bulldozed in order to survive
Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.
By Tom Leonard in Flint, Michigan
Published: 6:30PM BST 12 Jun 2009

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.


The Saga of Make Believe Bank Profits

There was lots of talk today about Bank of America’s second quarter loss.

The reality is that the first quarter profits by the financial group was all a gift from FASB which allowed the financial group to value their worthless derivative paper at whatever their computer models said.

The profits were attributed to their trading department as that camouflaged mark-ups on previously marked down OTC derivatives now taken in as profit.

This magical accounting exercise profits will now depend on business activity and recognition of loan losses plus credit card lay downs.

This quarter, the third quarter, substance will begin to overcome form (accounting fabrications blessed by FASB). This will make it much harder to keep the party going via management of perception economics.

MOPE, Management of Perception Economics, is outlined in the book, "Die Zeit Ohne Beispiel."

Bank of America Heads for Quarterly Loss, Citi Says (Update1)
By David Mildenberg

June 25 (Bloomberg) — Bank of America Corp. will post a second-quarter loss as it builds reserves to cushion defaults on credit cards and consumer loans, Citigroup Inc. analyst Keith Horowitz said.

Mounting losses on consumer credit will erase a $5 billion gain from the sale of China Construction Bank Corp. shares, bringing the quarter’s loss to 11 cents a share, Horowitz said in the report dated yesterday. The bank is also facing an $875 million charge from the Federal Deposit Insurance Corp. to help bolster the agency’s fund and $2 billion of writedowns tied to the Merrill Lynch & Co. unit.

Citigroup’s estimate contradicts the consensus among the 22 analysts surveyed by Bloomberg, which predicts a profit of 8 cents a share for Bank of America. While Horowitz cut his price target on the stock by $2 to $18 a share, he affirmed his “buy” rating, saying that the need to build reserves may be peaking at the Charlotte, North Carolina-based lender.

Bank of America “will emerge from this cycle faster than peers,” Horowitz wrote. “We remain confident that even with expected credit deterioration” in the quarter, “there is more than adequate capital cushion to absorb embedded credit losses.”

The bank fell 11 cents to $12.24 at 11:48 a.m. in New York Stock Exchange composite trading. The shares have dropped 13 percent this year.


Jim Sinclair’s Commentary

If the Fed increases QE all this will go away. If they do not, by legislative action, the Fed will fade away. Watch!

Lawmaker accuses Fed of "cover-up" in BofA deal
Wed Jun 24, 2009 7:03pm EDT
By Kim Dixon

WASHINGTON (Reuters) – The Federal Reserve sought to hide its involvement in Bank of America Corp’s (BAC.N) acquisition of Merrill Lynch as Merrill’s financial condition worsened, the top Republican on the House Oversight and Government Reform Committee said on Wednesday.

The Fed "engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies," Representative Darrell Issa said in a statement released to Reuters.

Bernanke has in the past denied any inappropriate pressure on Bank of America. Fed spokeswoman Michelle Smith on Wednesday referred to a letter Bernanke sent Representative Dennis Kucinich on April 30 and later testimony in which he offered an "unconditional assertion" that he did not ask Bank of America CEO Ken Lewis to withhold information regarding Merrill.

"The Federal Reserve acted with the highest integrity throughout its discussions with Bank of America," Bernanke wrote to the Ohio Democrat, who chairs a subcommittee on the Oversight panel.

The Democrat who heads the committee, Edolphus Towns of New York, has called Bernanke to testify on Thursday. "I am not going to prejudge these issues. We are not even close to finishing the Bank of America-Merrill Lynch investigation at this point," Towns said in a statement.


Jim Sinclair’s Commentary

This information is worth paying for:

– GDP Revisions Little More Than Statistical Noise but Watch Out for July 31st Benchmark Revisions
– Annual Plunge in Durable Goods Orders Continued
– Worst of the Downturn Still is Ahead
By subscription:

Posted by & filed under In The News.


Jim Sinclair’s Commentary

Although the inviting conclusion is the little guy is screaming for attention, his elevator does not go to the top floor.

N. Korea threatens US; world anticipates missile
By HYUNG-JIN KIM, Associated Press Writer

SEOUL, South Korea – North Korea threatened Wednesday to wipe the United States off the map as Washington and its allies watched for signs the regime will launch a series of missiles in the coming days.

Off China’s coast, a U.S. destroyer was tailing a North Korean ship suspected of transporting illicit weapons to Myanmar in what could be the first test of U.N. sanctions passed to punish the nation for an underground nuclear test last month.

The Kang Nam left the North Korean port of Nampo a week ago with the USS John S. McCain close behind. The ship, accused of transporting banned goods in the past, is believed bound for Myanmar, according to South Korean and U.S. officials.

The new U.N. Security Council resolution requires member states to seek permission to inspect suspicious cargo. North Korea has said it would consider interception a declaration of war and on Wednesday accused the U.S. of seeking to provoke another Korean War.

"If the U.S. imperialists start another war, the army and people of Korea will … wipe out the aggressors on the globe once and for all," the official Korean Central News Agency said.


Jim Sinclair’s Commentary

What genius came up with this idea? Maybe checking the value of Fannie and Freddie first might be a good idea.

Fannie, Freddie asked to relax condo loan rules: report
Mon Jun 22, 2009 10:48am EDT

(Reuters) – Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said.

In March, Fannie Mae (FNM.N)(FNM.P) said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent, the paper said. Freddie Mac (FRE.P)(FRE.N) is due to implement similar policies next month, the paper said.

In a letter to the CEO’s of both companies, Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner warned that a 70 percent sales threshold "may be too onerous" and could lead condo buyers to shun new developments, according to the paper.

The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos, the paper added.

In an interview with the paper, Weiner said the rules have "had a real chill on the ability to get these condos sold," at a time when prices of condos have fallen enough to attract potential buyers.


Jim Sinclair’s Commentary

Interesting glitch in the statistics.

Failure to foreclose is an unwillingness to recognize loses on the part of the lender.

Not paying mortgage, yet stuck with keys
Backlog of seriously delinquent mortgages imperils recovery
By Renae Merle
updated 9:17 p.m. MT, Tues., June 23, 2009

A growing number of American homeowners are falling into financial limbo: They’re badly behind on payments, but their banks have not yet foreclosed.

The backlog of seriously delinquent mortgages, which so far affects about 1 million borrowers, is a shadow over hopes for a rebound in the nation’s housing markets. It masks the full extent of the foreclosure crisis and threatens to depress prices even further just as some parts of the country are hinting at recovery. For lenders, it could portend even more financial losses tied to the mortgage meltdown.

"It just means foreclosure rates are going to keep rising," said Patrick Newport, an economist for IHS Global Insight.

Rising mortgage delinquencies were at the root of the recession, and many economists say an economic recovery will be difficult until the housing market recovers and home prices stabilize.

And even though a delayed foreclosure can be a blessing for some troubled homeowners, for others, it simply prolongs the financial distress, leaving them on the hook for the condition of the property. Even if they move out, they cannot move on.


Jim Sinclair’s Commentary

The economic enemy of my economic enemy is my economic friend. A new cold economic war wrinkle.

Russia, Venezuela sign $4 bln joint bank deal

MOSCOW (AFP) — Russia and Venezuela signed a deal Tuesday to set up a new bank with starting capital of four billion dollars (2.9 billion euros) to fund joint projects as Moscow ramps up its role in South America.

The agreement was signed at Russian Prime Minister Vladimir Putin’s residence near Moscow by the deputy finance ministers of the two countries.

"We are moving to a high level of political and economic co-operation," Putin said as he greeted Venezuela’s Vice President Ramon Carrizalez, who told Putin there was now a "strategic" partnership between their two countries.

The bank will be 51-percent owned by Russia through the state-controlled lenders VTB and Gazprombank, with the rest going to various Venezuelan partners, Russian Deputy Finance Minister Dmitry Pankin told reporters.

The new bank is due to be created by the end of 2009, Pankin said.


Posted by & filed under General Editorial, In The News.

"The lie can be maintained only for such time as the State can shield the people from the political, economic and or military consequences of the lie.

It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State."

–Joseph Goebbels, of the perception modification school of economic thought

Jim Sinclair’s Commentary

A look back at the FT Alphaville Blog on QE:

Today’s Fed announcement on GSE purchases launches explicit QE that kills two birds with one stone. QE offsets the current deflationary impact of financial system distress and directing these purchases towards GSE debt and MBS may help reduce mortgage rates, a key goal to stabilizing the housing market. While QE may offset current deflationary risks, longer term these measures must be temporary to avoid creating their own problems of inflation and dollar devaluation, a risk highlighted by today’s USD decline and increase in gold…


Jim Sinclair’s Commentary

The evening news is so whitewashed and irrelevant that people are finally waking up to what a waste of time watching it is.

New All-Time Lows for Both CBS & ABC Evening Newscasts
Tuesday, Jun 23

Breaking: TVNewser has learned the CBS Evening News has once again set an all-time low last week with 4.89 million Total Viewers and 1.42 million A25-54 viewers. But it was also the lowest (since records began in the 1991-’92 season) for ABC’s World News with Charles Gibson. The Gibson program drew 6.42 million Total Viewers and 1.77 million A25-54 viewers.

Both CBS’s Katie Couric and ABC’s Charlie Gibson were off last week.

More details to come…

> Update: Insiders tell us at least one network is looking into the continued impact of the digital TV transition which occurred June 12.

> Update (2): NBC averaged 7.75m Total Viewers Mon-Wed but on Thursday and Friday gave their program a different Nielsen code — "Nitely News." (The correct spelling is "Nightly News"). This is despite the fact that the network had regular coverage on those days. We’re trying to determine if the U.S. Open Golf Championship had something to do with the coding change. Had Thursday and Friday been included, the average would have been lower. On Friday "Nightly" averaged 6.29m Total Viewers.

> Update (3): An NBC insider tells us, even though the broadcast had full national coverage, the U.S. Open tends to affect viewership so the Thursday and Friday shows were not in the average. NBC says this is normal procedure.


Posted by & filed under In The News.

Dear CIGAs,

The US dollar has topped all of its bear market rallies by up-slanting head and shoulder formations. It looks like it has done it again.

A low in June according to Armstrong is more meaningful than any other direction or time combination, indicating the high probability of the gold price trading at $5000. Alf holds out the possibility that an overrun in this leg takes gold to $3500. The reverse head and shoulders formation inverse to the US dollar reads $1270. I anticipate $1224 and $1650.

Click chart to enlarge in PDF format


Jim Sinclair’s Commentary

Green Shoots have turned out to be just more spin and BS. The greater mirage has been the US dollar rally on orchestrated hot air post G8.

IMF says dollar adjustment might be needed

06.22.09, 06:39 AM EDT

PARIS, June 22 (Reuters) – An increase in exports is needed for a sustained recovery in the United States and this may require an adjustment in the value of the U.S. dollar, IMF chief economist Olivier Blanchard said on Monday.

‘For the US, it is absolutely no question that a sustained recovery has to come from a large increase in exports, that may not be very easy to do. This may require fairly substantial adjustments in the dollar,’ he told a conference.



Jim Sinclair’s Commentary

Israel will do whatever they deem necessary for their survival.

Jewish Leader: Obama May Be ‘Most Hostile President to Israel’
Monday, June 22, 2009 11:53 AM
By: Ronald Kessler

President Barack Obama’s refusal to take a stand on protests in Iran stands in sharp contrast to demands he has made on Israel, Morton Klein, president of the Zionist Organization of America, says in a Newsmax interview.

“I think he should take a strong stand to support the protesters in Iran who want to transform that society into one that promotes democracy and human rights,” Klein says. ”But while meddling in Israel’s affairs and making specific demands, he explicitly states he refuses to meddle in Iran’s policies and has said almost nothing.”

Klein says leaders of Jewish organizations are rethinking their support of Obama in light of his attitude toward Israel.

“There are many leaders in the organized Jewish world who have privately discussed this issue with me, and say they are deeply concerned about Obama’s actions and policies toward Israel, and now they’re rethinking their support for Obama during the campaign and the election,” says Klein, whose organization of 30,000 members is the oldest pro-Israel group in the country.

Based on the president’s speech in Cairo on June 4 and many of his foreign policy appointments, Klein thinks Obama “may become the most hostile president to Israel ever.”

Obama’s speech was “inimical to Israel and supportive of the stream of false Palestinian Arab claims concerning Israel,” Klein says. “He is relentlessly pressuring Israel while applying virtually almost no pressure on the Palestinian Authority to fulfill its written obligations.”


Posted by & filed under In The News.

Dear CIGAs,

Remember my advice from a few years back? If you have not accomplished financial privacy DO NOT attempt to.

Jim Sinclair’s Commentary

A quote from Stratfor concerning Iran on media fascination with a clouded focus:

A Question of Support

This is also what happened in Iran this week. The global media, obsessively focused on the initial demonstrators — who were supporters of Iranian President Mahmoud Ahmadinejad’s opponents — failed to notice that while large, the demonstrations primarily consisted of the same type of people demonstrating. Amid the breathless reporting on the demonstrations, reporters failed to notice that the uprising was not spreading to other classes and to other areas. In constantly interviewing English-speaking demonstrators, they failed to note just how many of the demonstrators spoke English and had smartphones.


Jim Sinclair’s Commentary

Anyone looking for work? The only problem is you have to put a bag over your head for the duration of the ride to and from.

There were advertisement in the New York Post and Bloomberg by the CIA looking for someone that understands OTC derivatives and swaps. That is an admission from government that is unusual.

Don’t apply unless you like water-boarding

Offshore Banking Scandal Continues, But What Indictments?

June 22, 2009 (FinancialWire) (By Bud Burrell) — Going back some six years, I have repeatedly commented on and described the shameful crises of offshore banking, brokerage, hedge funds, naked shorting, money laundering, and support for terrorism.  I have heard promise after promise of additional pending indictments, or recovery of stolen funds, or both, and I have patiently waited for the system to work.

It has all been for naught, as not a single indictment of a material character has come down except for the notorious Amir Elgindy, other than the truncated action against the criminal Badian brothers, and their coterie of facilitators.  The manipulation of Sedona Corporation by this conspiracy should be the best case in the industry, yet all the Federal authorities have done is blow the case by the numbers.  Further, there is even less evidence of any material recovery of the funds spirited offshore by these highly organized criminal enterprises.

I know and have worked closely with many US Attorneys and their investigators from various Federal agencies.  I have seen their frustration with the system.  Probably no one organization has suffered more severely than the FBI, whose retention rate is now approaching the pregnancy term of an Elephant, 20 months.  It is not their collective fault. Rather it is a signal of the wholesale corruption of our political, legal and judicial systems for the protection of hugely funded vested interests, whose integrity is non-existent.

I have repeatedly told the story of how criminals and their facilitators set up complex interlinked and layered structures mixing international business corporations with offshore irrevocable trusts, set up in non-matching venues/jurisdictions, using offshore banks protected in every case by banking secrecy laws.  All of the major global brokers, banks, significant hedge funds, select money managers, and many major corporations have set up all forms of complex special purpose entities (SPE’s) most Americans first heard of in relation to the hiding of profits by Enron.


Jim Sinclair’s Commentary

Iran today and tomorrow.


Jim Sinclair’s Commentary

The parade marches on.

Three more US banks fail; year’s tally reaches
22 June 2009

The Federal Deposit Insurance Corporation (FDIC) has closed three more US banks, taking the number of failures so far this year to 40.

The latest failures are Southern Community Bank, Fayetteville, Georgia; Cooperative Bank, Wilmington, North Carolina; and First National Bank of Anthony, Anthony, Kansas.

United Community Bank, Blairsville, Georgia, will assume all of the deposits of Southern Community Bank. The offices of Southern Community Bank will reopen for normal business hours as branches of United Community Bank, and their deposits will continue to be insured by the FDIC.

Southern Community Bank is the seventh FDIC-insured institution to fail in Georgia, the sixth being Silverton Bank, National Association, Atlanta, on May 1, 2009.

As on May 29, 2009, Southern Community Bank had total assets of $377 million and total deposits of approximately $307 million. United Community Bank paid a premium of 1 per cent to acquire all of the deposits of the failed bank. In addition to assuming all of the deposits of the failed bank, United Community Bank agreed to purchase approximately $364 million of assets. The FDIC will retain the remaining assets for later disposition.


Posted by & filed under In The News.

Dear CIGAs,

His growing popularity now is surprising and indicative of things to come.

Dr. Paul Slams Federal Reserve’s New Dictatorial Powers

Ron Paul on Healthcare

Having practiced medicine for over 30 years, Congressman Paul gives his perspective on the past and future of healthcare in this country, and the effects of government and special interests on quality, costs, and access.

Jim Sinclair’s Commentary

Was there a full moon this weekend? The Sheeple and their Media were out in full howling at the moon.

The two main business headlines this weekend are:
1. House Health Plan – BOLD on benefits, silent on the cost issue.

2. Chevy Volt Won’t Make Money But Still Key To Any GM Revival

Both are world class moronic statements.

Jim Sinclair’s Commentary

It is staring you in the face!

What errors do you hear every day on Financial TV?

  1. Crude is a currency.
  2. Crude is a dollar item.
  3. Crude is overvalued fundamentally.

What no one has recognized due to complacency is that the ugly face of hyperinflation is staring right at you. There is no demand pull ingredient in the energy market that can account for what is now over a double and headed for a triple.

Read on and understand.

Basis for Complacency

The unprecedented amount of monetary creation is being entertained because financial leaders see demand push inflation as highly improbable.

There is no quick fix to this business contraction because the cause is yet to be focused on: the enormous amount of OTC derivative instruments that cannot be dealt with in any practical manner. They are contracts for special performance that lack standards that prevent listing or clearing and are unfunded.

The West is in for a long period of slow business activity.

What is not being considered is the future of Western economies and that the dollar is based on confidence, a very subjective and fickle element to depend on.

The problem faced then is a cost-push inflation that has nothing whatsoever to do with the level of business activity.

This cost-push inflation is a currency related phenomena, which historically occurs as a result of QE when confidence in the currency of the practitioner nation begins to lose value at an accelerating rate. The result has always been a currency driven hyperinflation that takes birth in the worst of business condition.

“The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services.”

Jim Sinclair’s Commentary

Spending, a spending, a spending we will go!

The nuttier one is the $4500 for a clunker paid by you and me.

$12 billion in gold is a joke with today’s central bank gold hungry Asian demand

What a boon to offload $12 billion USDs for gold

Congress Backs War-Funding Bill, ‘Cash for Clunkers’ (Update1)
By Brian Faler

June 18 (Bloomberg) — A $106 billion war-spending bill won final congressional approval after the Senate voted to retain a “cash for clunkers” provision aimed at helping the auto industry.

Action by the Senate today sends the measure to President Barack Obama for his signature. The Senate passed the bill on a 91 to 5 vote; the House approved the measure earlier this week.

Senator Judd Gregg, a New Hampshire Republican, led the effort to drop a provision providing as much as $4,500 to people who trade in their vehicles for more fuel-efficient models. He said the plan, which would cost $1 billion, was a poor use of tax dollars when the government is projected to run its biggest budget deficit since 1945.

“It is a clunker,” Gregg said of the plan. “Why should our children and our grandchildren have to pay the bill” for the government subsidizing “somebody to buy their car today? How fiscally irresponsible is that?” he said.

Senator Debbie Stabenow, a Michigan Democrat, said the proposal was needed to help auto dealers hit by an “economic tsunami.” She said the plan would “help those who have been having an extremely difficult time just holding their head above water.”


Jim Sinclair’s Commentary

No, but the dollar is in for a very cold and hard winter, being conspicuously absent from present levels during Christmas festivities.

Is this the death of the dollar?
After two smugglers were stopped last week with what at first appeared to be $134bn in US state bonds, the tension and paranoia surrounding the fate of the dollar hit a new high.
By Edmund Conway
Published: 7:32PM BST 20 Jun 2009

Border guards in Chiasso see plenty of smugglers and plenty of false-bottomed suitcases, but no one in the town, which straddles the Italian-Swiss frontier, had ever seen anything like this. Trussed up in front of the police in the train station were two Japanese men, and beside them a suitcase with a booty unlike any other. Concealed at the bottom of the bag were some rather incredible sheets of paper. The documents were apparently dollar-denominated US government bonds with a face value of a staggering $134bn (£81bn).

How on earth did these two men, who at first refused to identify themselves, come to be there, trying to ride the train into Switzerland carrying bonds worth more than the gross domestic product of Singapore? If the bonds were genuine, the pair would have been America’s fourth-biggest creditor, ahead of the UK and just behind Russia. No sooner had the story leaked out from the Italian lakes region last week than it sparked a panoply of conspiracy tales. But one resounded more than any other: that the men were agents of the Japanese finance ministry, in the country for the G8 meeting, making a surreptitious journey into Switzerland to sell off one small chunk of the massive mountain of US bonds stacked up in the Japanese Treasury vaults.

In the event, late last week American officials confirmed that the notes were forgeries. The men, it appeared, were nothing more than ambitious scamsters. But many remain unconvinced. And whether fake or otherwise, the story underlines one important point about the world economy at the moment: that the tension and paranoia surrounding the fate of the US dollar has hit a new high. It went to the heart of the big question: will the central bankers in Japan, China and elsewhere continue to support the greenback even in the wake of the worst financial crisis in modern history, or will they abandon it as America’s economic hegemony dissipates?


Jim Sinclair’s Commentary

Sustainability is the key in Pakistan vs. the Taliban, or it is another waste of a Surge.

Here is a terrifying thought as Al Qaeda really does NOT need Pakistan to go nuclear. All they need is gold and bearer bonds, two nameless and impossible to trace currencies.

Al Qaeda says would use Pakistani nuclear weapons
Mon Jun 22, 2009 2:39am IST
By Inal Ersan

DUBAI (Reuters) – If it were in a position to do so, Al Qaeda would use Pakistan’s nuclear weapons in its fight against the United States, a top leader of the group said in remarks aired on Sunday.

Pakistan has been battling al Qaeda’s Taliban allies in the Swat Valley since April after their thrust into a district 100 km (60 miles) northwest of the capital raised fears the nuclear-armed country could slowly slip into militant hands.

“God willing, the nuclear weapons will not fall into the hands of the Americans and the mujahideen would take them and use them against the Americans,” Mustafa Abu al-Yazid, the leader of al Qaeda’s in Afghanistan, said in an interview with Al Jazeera television.

Abu al-Yazid was responding to a question about U.S. safeguards to seize control over Pakistan’s nuclear weapons in case Islamist fighters came close to doing so.

“We expect that the Pakistani army would be defeated (in Swat) … and that would be its end everywhere, God willing.”


Posted by & filed under In The News.

Jim Sinclair’s Commentary

You think these fellows would consider a compromise?

Iran’s Top Leader Dashes Hopes for a Compromise
Published: June 19, 2009

TEHRAN — Iran’s supreme leader, Ayatollah Ali Khamenei, sternly cut off any compromise over the nation’s disputed elections on Friday. In a long and hard-line sermon, he declared the elections valid and warned of violence if demonstrators continue, as they have pledged, to flood the streets in defiance of the government.

Opposition leaders who failed to halt the protests, he said, “would be responsible for bloodshed and chaos.” The tough words seemed to dash hopes for a peaceful solution to what defeated candidates and protesters call a fraudulent election last week, plunging Iran into its gravest crisis since the Islamic Revolution in 1979.

“Flexing muscles on the streets after the election is not right,” he said, before tens of thousands of angry supporters at Tehran University. “It means challenging the elections and democracy. If they don’t stop, the consequences of the chaos would be their responsibility.”

But opposition leaders, who stayed home Friday, called for yet another huge rally on Saturday afternoon, setting the stage for a possible showdown between protesters and security forces, perhaps a violent one.

The sermon put Ayatollah Khamenei, who prefers to govern quietly and from behind the scenes, at the forefront of a confrontation not only among factions of the government but among Iranians themselves.


Jim Sinclair’s Commentary

More on Iran from Stratfor. Geopolitical situations are rarely what they appear to be. Enough said.

Iran: An Explosion and Continuing Protests
June 20, 2009 | 1437 GMT

A bomb blast near the mausoleum of Islamic Republic of Iran founder Ayatollah Ruhollah Khomeini, located in southern Tehran, has left one person dead and at least two others wounded June 20. It is not clear who was behind the blast but the authorities will use this incident to engage in a wider crackdown to quell the ongoing protests in Tehran and strengthen their claims that the unrest in the country is part of a Western-backed plan to topple the Islamic republic.

The shrine is a sensitive target, and an explosion there gives the government means to characterize the protesters as not simply angry citizens opposed to the election’s outcome but as complete renegades.


Jim Sinclair’s Commentary

Situations we keep in focus:

Will Iran Look More Like Turkey, or Turkey Like Iran?

ISTANBUL — The effort to forge new forms of non-Western modernity in the Muslim world has pushed Iran into bloody civil strife while Turkey swirls with persistent rumors of military plots against the Islamist-rooted government. The great historical question is whether, at the end of the day, Iran will look more like Turkey, or Turkey like Iran?


Jim Sinclair’s Commentary

On this one I am going to say, "I told you what this was from the Git-go."

Suitcase With $134 Billion Puts Dollar on Edge: William Pesek 
Commentary by William Pesek

June 17 (Bloomberg) — It’s a plot better suited for a John Le Carrenovel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.

The trillions of dollars of debt the U.S. will issue in the next couple of years needs buyers. Attracting them will require making sure that existing ones aren’t losing faith in the U.S.’s ability to control the dollar.


Posted by & filed under In The News.

Dear Friends,

In hard times remember the things that are most important to you. The following pictures are from my last trip to Africa.

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Jim Sinclair’s Commentary

You think the OTC derivative salesman would get a special welcome in some of these Italian towns? Maybe we should pay for their tickets and let the mayors know they are coming.

‘Impossible to Understand’ Swap Burns 290-Person Italian Hamlet
By Alan Katz, Lorenzo Totaro and Elisa Martinuzzi

June 19 (Bloomberg) — Ortenzio Matteucci points to towns down the wooded Nerina valley in Italy’s Umbria region and blames peer pressure for his decision to let Polino, population 290, buy a U.S.-inspired financial swap he didn’t understand.

A retired steelworker with wavy gray hair, Polino’s Mayor Matteucci says he agreed to the interest-rate swap because Milan, with more than 1 million residents, and local towns Arrone and Stroncone all bought derivatives to try to save money. Polino’s contract has cost the village 6,579.66 euros ($9,200) more than it has earned since the town made the deal in 2005.

“At the time I thought: Can the Province of Terni, the City of Terni and all the other municipalities bigger than us, such as Milan, be all wrong?” said Matteucci, 59, dressed in a blue polo shirt and jeans. “You can make a mistake if you don’t have an appropriate and deep knowledge of this and just follow what other local governments do.”

Derivatives have burned towns from Polino to Milan to Erie, Pennsylvania. Jefferson County, Alabama, said it might need to declare bankruptcy because of costs associated with the contracts. Responsibility for the expenses in Italy’s second- biggest city and in Umbria’s smallest village sits with elected officials who agreed to financial instruments they didn’t fully grasp, said Stefano Taurini, a lawyer who specializes in corporate law in Milan.


Jim Sinclair’s Commentary

JB Slear comments "Just another Friday night, no big thing."

United Community Banks, Inc. Announces Acquisition of Southern Community Bank
June 19, 2009 6:20 PM EDT

BLAIRSVILLE, GA — (MARKET WIRE) — 06/19/09 — United Community Banks, Inc. (NASDAQ: UCBI) announced today that its wholly-owned subsidiary, United Community Bank, has entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase the assets and assume the deposit liabilities and secured wholesale borrowings of Southern Community Bank. The Georgia Department of Banking and Finance declared Southern Community Bank closed today and appointed the FDIC as receiver. The FDIC then assigned the assets, deposit liabilities and secured wholesale borrowings of Southern Community Bank to United Community Bank under a loss sharing agreement.

"We are delighted to welcome the customers of Southern Community Bank to the family of valued customers of United Community Bank," says Jimmy Tallent, President and Chief Executive Officer of United Community Banks, Inc. "It is our number one objective to make this transition as transparent and easy as possible for both Southern Community customers and employees. Because United Community Bank elected to assume both insured AND non-insured deposits, no customers of Southern Community Bank will lose any of their deposits.

"Under the loss sharing agreement," Tallent continued, "the FDIC will reimburse United Community Bank for losses on Southern Community Bank’s loans and foreclosed properties. Also, as part of the loss sharing agreement, the acquired assets receive a 20 percent risk weighting for regulatory capital purposes, therefore the impact on our regulatory capital ratios will not be significant."

As of March 31, 2009, Southern Community Bank reported total assets of $372 million, loans of $224 million, customer deposits of $197 million and other deposits and borrowings of $155 million. Under the terms of the agreement, United Community Bank has the option to purchase, or to assume the leases on, all five Southern Community bank locations, most of which are contiguous to existing United Community Bank locations.



Jim Sinclair’s Commentary

This is a major development in a geopolitical flashpoint. I assume that since the top guy has spoken out violence is not out of the question.

Stratfor has dropped their subscription price sharply. Their website is

Iran: The Supreme Leader Draws the Line


Iranian Supreme Leader Ayatollah Ali Khamenei spoke to the Iranian people during Friday prayers June 19, siding with Iranian President Mahmoud Ahmadinejad and ordering protesters to end their demonstrations. Khamenei has decided that using force to suppress the uprising is worth the risk, even if it leads to greater infighting among the power brokers of the system. It remains unclear if Ahmadinejad’s opponents will stage a showdown, but the protests have grown enough in size and energy to take on a life of their own.


Iranian Supreme Leader Ayatollah Ali Khamenei delivered a rare but critical Friday sermon prayer June 19 in which he addressed the continuing public unrest in the wake of President Mahmoud Ahmadinejad’s victory in the June 12 presidential election, as well as the schism among the country’s political leadership. As expected, he took a clear position in favor of the president, rejecting accusations of electoral fraud and framing the conflict in terms of foreign powers exploiting the Islamic republic’s internal troubles. More importantly, he warned both the protesters and their leaders to halt the demonstrations and that they would be responsible for any bloodshed.

Khamenei has clearly opted for the forcible suppression of the uprising. STRATFOR had pointed out in a previous report that the country’s elite ideological military force, the Islamic Revolution Guards Corps (IRGC) has taken command of domestic law enforcement in Tehran. Consequently, from today forward, we can expect to see security forces crush protests. That the two main defeated challengers of Ahamdinejad, former prime minister Mir Hossein Mousavi and former speaker of parliament Mehdi Karroubi did not attend the prayer session shows that they are not about to accept the verdict.

At the same time, Mousavi and Karroubi cannot be perceived as openly defying the supreme leader and they have an interest in the preservation of the cleric-led political system. Furthermore, their supporters on the streets are far more radical than they are because Mousavi and Karroubi are part and parcel of the system (something which Khamenei pointed out when he said that that all four candidates in the recent presidential election belonged to Iran’s Islamic establishment). Therefore, they will have a hard time balancing between the need to sustain their opposition to the results of the election and controlling the protesters on the streets, especially during a major security crackdown. Regardless of whether the opposition leaders choose to take charge of the demonstrations, the protests have swelled enough in size and energy to take on a life of their own.


Jim Sinclair’s Commentary

This is an extremely sad situation akin to the show now being run on the History Channel titled "Life After People."

The Packard plant, which might be considered as the start of the death of Detroit, also downed by debt, questionable management and design, is literally becoming a jungle of growth inside with a cadaver for an outside.

Michigan jobless rate is highest in decades
Auto, construction layoffs drive increase
June 18, 2009

Michigan’s unemployment rate in May shot up to 14.1%, the highest level in more than a quarter-century, according to state figures released Wednesday.

As has been the case for many years, the increase was driven by layoffs in auto manufacturing and, to a lesser extent, construction. The jobless rate was the worst since the July 1983 level of 14.2% and significantly exceeds the May U.S. unemployment rate of 9.4%. The state’s unemployment rate will likely remain the nation’s highest.

"A lot of this was expected, considering where our auto companies are," said Rick Waclawek, director of the state’s Bureau of Labor Market Information and Strategic Initiatives.

After years of steadily inching upward, Michigan’s jobless rate has been accelerating higher in recent months as layoffs have mounted. Just a year ago, in May 2008, the unemployment rate stood at 8.2%.

The auto industry’s woes continue to cost Michigan dearly. Its manufacturing industry has shed 37,000 jobs during the last two months, including 16,000 in May.


Jim Sinclair’s Commentary

In the arena of Green Shoots, the newest Bankster’s cliché, you need to ask yourself where economic recovery will come from as unemployment reaches into double digits on the understated skewed present indices. This is another reason why Shadow Statistics is so important to your trend thinking.

NY state unemployed soars to 33-year high
Thu Jun 18, 2009 3:15pm EDT
By Joan Gralla

NEW YORK (Reuters) – More than 800,000 New York state residents were unemployed in May, the highest level in 33 years, and another sign the state is still mired in recession, the state labor department said on Thursday.

The New York state unemployment rate rose to 8.2 percent in May from 7.7 percent in April, the highest level since February 1993, the agency said in a statement.

The jobless rate in New York City, which powers the state’s economy, climbed to 9 percent in May, its highest since October 1997, from 8 percent in April.

Wall Street’s securities industry helped boost city and state tax surpluses in the last boom, but James Brown, state labor market analyst, said the sector cut 900 jobs in May, and has lost 21,800 over the year.

The entire financial sector, including banking, real estate and insurance, sliced 1,900 workers, for a year-over-year loss of 28,000 jobs, Brown said.


Jim Sinclair’s Commentary

For your information.

‘Something different" happening with new flu – CDC
Thu Jun 18, 2009 5:41pm EDT
By Maggie Fox, Health and Science Editor

WASHINGTON, June 18 (Reuters) – The new strain of H1N1 flu is causing "something different" to happen in the United States this year — perhaps an extended year-round flu season that disproportionately hits young people, health officials said on Thursday.

An unusually cool late spring may be helping keep the infection going in the U.S. Northeast, especially densely populated areas in New York and Massachusetts, the officials at the U.S. Centers for Disease Control and Prevention said.

And infections among healthcare workers suggest that people are showing up at work sick — meaning that workplace policies may be contributing to its spread, the CDC officials said.

The new strain of swine flu is officially a pandemic now, according to the World Health Organization.

So far the virus is causing mild to moderate disease, but it has killed at least 167 people and been confirmed in nearly 40,000 globally.


Jim Sinclair’s Commentary

Honest Abe’s Used Auto Emporium has now been taken over by the entire US public. I wonder if the present Administration can fund a guy in a plaid suit, white socks and black shoes to be the Clunker Czar.

Von Mises and Ricardo are revolving in the graves at a Japanese auto’s 14,000 RPM. The Chicago School has decided to shut down and enter the used car business.

The used car market auctions are presently a disaster but now will give some enterprising crooks a stop loss at $4500. No one needs to steal from Medicare if they can turn in an old junker and get $4500 in a fake new car sale with the assistance of a crooked car dealer.

Last updated: 2:07 am
June 19, 2009

Your old clunker can bring as much as a $4,500 check from Uncle Sam if you dump it to buy a new car — so long as it’s not another gas guzzler.

The government’s "cash for clunkers" incentive program designed to boost sales of fuel-efficient vehicles got the green light of Senate approval yesterday, and is on its way to be signed into law by President Barack Obama.

Ford Motor and General Motors have pressured Congress all year for the novel trade-in incentive to help break Detroit’s long and punishing sales slump.

A similar rebate program in Germany to clear clunkers off its roads caused new-car sales there to jump as much as 40 percent. Similar plans in China and France lifted sales by 15 percent and 8 percent, respectively.

Proponents are hoping for a busy autumn in vehicle sales. The first checks could start arriving by Sept. 1, with the program’s end set for Sept. 30.


June 19th, 2009 by Egon von Greyerz

No green shoots

There are no green shoots. Every single piece of economic and market news we observe confirms our view that the current optimism in the world economy is purely based on sentiment and not on facts.

The current corrective rallies in world stock markets were forecast by us in our January Newsletter. Corrective rallies create false optimism and hope. This is what we are seeing currently.

So, what indicators are telling us that things are going to get a lot worse:

· Unemployment is increasing rapidly in all countries

· Government deficits are rising at an accelerating pace

· Many local governments, counties and cities are virtually bankrupt

· Household finances are worsening rapidly

· Bank balance sheets are as leveraged and as unsound today as when the crisis started

· Banks are not recognizing that a major part of consumer loans will never be repaid

· Company failures are rising fast

· Housing market is continuing to deteriorate in most countries and especially in the  USA, UK and Spain

· Commercial real estate is in a precarious state. Banks are not writing down their loan books to market values

· US 30 year treasury bond rates are in a strong uptrend indicating the world is becoming increasingly unwilling to finance the excesses of a bankrupt US government

So what are the golden shoots?

Gold has been consolidating for the last four months and is now ready for the next major move up.

We have some very strong technical indicators which tell us that the consolidation in gold will finish at the latest next week and thereafter we will see gold going up strongly in July and for the next few months until the next consolidation in late autumn.


Jim Sinclair’s Commentary

In all fairness we do have one Green Shoot that should be recognized.

Friday, June 19, 2009

It is hard not to sneer, but apparently more than 2,200 people every day are applying for a job at McDonald’s.

The lure of the burger empire is proving too much for jobseekers from diverse employment backgrounds and the global junk food giant is finding university graduates, bank workers and teachers among their applicants. I’ll declare now that my vested interest here is that I was refused a job by McDonalds when I was just 16 years old.

Why I was knocked back still remains a mystery, as my brother, to his eternal embarrassment, was the branch’s star employee at the time and I knew the manager, who interviewed me, very well. He obviously didn’t see my future and that of the Golden Arches in karmic synchronicity.

Anyhow, with unemployment at a record level of 2.2 million, I guess it’s all stops out as people look for that first rung on the career ladder or cling to it with a vice-like grip to keep a wage, any wage, coming in. And McDonald’s are doing their best, with the company hiring 140 people a day to flip burgers, cook fries and ask customers "Would you like a large meal" at every order.

But let’s face it, even the Oxford English Dictionary looks down its nose at the McJob, describing it as ‘an unstimulating, low-paid job with few prospects’. And though McDonald’s keep fighting to have that perception changed, it’s an uphill battle.


Israel’s military planning for a multi-front war

Israel’s military has intensified coordination between the army and air force to conduct simultaneous operations in the Gaza Strip and Lebanon.

Officials said the effort reflects an assessment that Israel’s next war would include such adversaries as Hamas, Hizbullah and Syria.

"The Israeli military’s future operations will be broader and more demanding in terms of their scope and pace, with more risks than Operation Cast Lead," Israeli Defense Minister Ehud Barak said.

Operation Cast Lead marked the Israeli military attack on the Hamas regime in the Gaza Strip. The 22-day war spanned December 2008 and January 2009.

In an address to Israeli military officers on June 9, Barak envisioned a war with far greater Israeli casualties than that against Hamas. The minister said the next war would take place under more difficult conditions than the Israeli air, naval and ground campaign in the Gaza Strip, a flat area of 360 square kilometers.