Jim Sinclair’s Commentary
Quantitative easing combined with fiscal stimulation leads to the advent of the increased velocity of money. This equals lower values for the currency of the largest liquidity producer – the dollar. Confidence sunders when business activity statistics are less ebullient than the real rate of inflation. Confidence is the key as hyperinflation is a currency event, not a business event.
In Zimbabwe the price of food is doubling daily just as it did in all examples of hyper inflation.
$1 trillion is only the beginning for Obama’s fiscal stimulation.
Do you recall the low bailout estimates made when Bear blew up?
Monty Guild’s Commentary
Good call Jim. In my opinion, everything you say is exactly correct. From an economics point of view, the long term effect of these actions will be inflation.
I talk to a lot of economists. Although my Keynesian friends disagree with the inflation from money supply growth thesis, largely because it is a Monetarist viewpoint, they do admit that the current large increase in the supply of bonds could send the dollar lower. Like you and Dan, I strongly believe that the huge issuance of US bonds, and the actual printing of money to which Mr.Bernanke alluded, can only send the dollar lower. In my opinion, this will send gold and foreign currencies much higher.
Obama Team Is Seeking Stimulus Bill by New Year
By JACKIE CALMES
WASHINGTON — President-elect Barack Obama’s advisers hope to finish an economic recovery blueprint by Dec. 25 so that Democratic Congressional staff members can draft legislation by the new year, as the two branches of government try to converge on a two-year plan by late January that could total just under $1 trillion.
“The goal for completing action on this important legislation should be as close to Jan. 20 as possible,” said an e-mail message from Senate Majority Leader Harry Reid’s office to senior Senate Democratic staff members.
Some Obama advisers have sought to tamp down expectations that Mr. Obama could sign a package immediately after he is inaugurated. The opposition of some Senate Republicans and House and Senate negotiations on a final compromise could force delays into February.
Democrats familiar with the early deliberations say the preliminary price tag has grown to about $800 billion from the roughly $600 billion that House Speaker Nancy Pelosi had estimated in recent days.
Jim Sinclair’s Commentary
These reports, like the reports on WMDs in Iraq, presages a move into Pakistan "to help" the government of Pakistan kill all the bad guys as a recent article in the Washington Post suggested.
‘ISI killing US troops in Afghanistan’
Fri, 19 Dec 2008 06:01:29 GMT
Pakistan’s powerful spy agency is working with groups that support the Taliban and are killing American troops in Afghanistan, a US report says.
“All of this suggests that the Inter-Services Intelligence (ISI) is no longer certain the coalition forces will prevail in Afghanistan and that it is using militants groups in an attempt to expand its own influence,” the report said.
The report by the bipartisan Pakistan Policy Working Group also cites the Afghan government’s allegations that ISI-supported elements that orchestrated an assassination attempt on Afghan President Hamid Karzai, and that the ISI had a role in the July 7 car bombing of Indian embassy in Kabul.
The 43-page report notes Pakistan may be the greatest challenge for US President-elect Barrack Obama.
The report came as Pakistani major media outlets said that the ISI had been cleared of any involvement in the Mumbai terrorist attacks by the US’ Federal Bureau of Investigation (FBI). According to Karachi-based Dawn, FBI agents interrogated Ajmal Kasab, the lone surviving terrorist for nine hours in Mumbai. They concluded that he was a Pakistani national but ISI was not involved.
Jim Sinclair’s Commentary
Note how the markets took this both when announced as coming, and on its advent. I feel Obama’s fiscal stimulation will produce a general lift of the equity gang’s spirits, and a good lift to gold as the dollar is weighed down by the cost of fiscal stimulation.
Bush Approves $17.4 Billion Auto Bailout
By DAVID M. HERSZENHORN and DAVID E. SANGER
Published: December 19, 2008
WASHINGTON — President Bush announced $13.4 billion in emergency loans on Friday to prevent the collapse of General Motors and Chrysler, and another $4 billion available for the hobbled automakers in February with the entire bailout conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.
The loans, as G.M. and Chrysler teeter on the brink of insolvency, essentially throw the companies a lifeline from the taxpayers that will keep them afloat until March 31. At that point, the Obama administration will determine if the automakers are meeting the conditions of the loans and will continue to receive government aid or must repay the loans and face bankruptcy.
The money to aid the automakers will come from the Treasury’s $700 billion financial stabilization fund and shortly after Mr. Bush’s announcement, the Treasury secretary, Henry M. Paulson Jr., who will oversee the aid to the auto industry, said Congress would need to release the second $350 billion for that program in short order.
By law, once Mr. Paulson makes a formal request, Congress has 15 days to reject it and deny the additional money. It was unclear when that request would be sent or if lawmakers who have left Washington for the holidays, would return to debate it. The administration’s handling of the program has come under sharp criticism and several lawmakers in both parties have suggested they would oppose the release of more money.
Jim Sinclair’s Commentary
It amazes me how the obvious is always ignored as it approaches the full light of day.
Pakistan remains the world’s most serious problem.
NATO Materiel Threatened in Pakistan
Taliban Attacks on Goods for Afghanistan Mission Viewed With Growing Concern
By Candace Rondeaux and Walter Pincus
Washington Post Foreign Service
Friday, December 19, 2008; Page A23
PESHAWAR, Pakistan — A recent increase in Taliban attacks on a crucial NATO transportation route from Pakistan to Afghanistan could imperil efforts to bolster the flagging, seven-year U.S.-led military campaign in Afghanistan, U.S. and Pakistani officials say.
Attacks on NATO supply lines have become a regular occurrence in parts of northwestern Pakistan, including the country’s inhospitable tribal areas near the Afghan border. In the past two weeks, Taliban fighters have mounted at least six assaults on NATO supply depots near the Pakistani city of Peshawar, setting fire to more than 300 armored Humvees, military vehicles and other supply containers.
The attacks come as Pakistanis are increasingly calling for Western forces to stop using their territory for transport: Thousands of people rallied here Thursday to demand that the government cut off U.S. and NATO access to the main transit route.
Fears grow over Pakistan terror resolve
By James Lamont in New Delhi
Published: December 19 2008 02:00 | Last updated: December 19 2008 02:00
Fears grew last night that Pakistan’s resolve to bring the perpetrators of the Mumbai terror attacks to justice was faltering.
The government said it had lost track of one of India’s most wanted militants following his supposed arrest only a few days ago.
Shah Mahmood Qureshi, Pakistan’s foreign minister, said Masood Azhar, the leader of Jaish-e-Mohammad, a militant group, was not under arrest, contradicting his government’s previous claim that he was in custody.
"Other people have been detained but Mr Masood Azhar is at large. We have no knowledge of his whereabouts," Mr Qureshi told reporters in Islamabad. The Pakistani defence ministry said a week ago that security forces had arrested Mr Azhar, who is suspected of launching an attack on the Indian parliament in 2001 that brought India and Pakistan to the brink of war.