Posts Categorized: In The News

Posted by & filed under In The News.

Dear CIGAs,

Check back here every Friday for the FDIC failed bank web link.

http://www.fdic.gov/bank/individual/failed/banklist.html

 

Jim Sinclair’s Commentary

The following site provides the up to date map of where citizen’s money has gone to make good on OTC derivative winnings as per our video post today.

http://www.treasury.gov/initiatives/eesa/docs/transaction_report_02-10-09.pdf

 

Jim Sinclair’s Commentary

They all have blood on their hands. How about the courage to go with life after your fortune is gone, you are unemployable and your pension has gone broke owning OTC derivatives called Securitized Investment Vehicles. These killers might as well have built crematoriums.

They carry just that – Karma. Death is easy. Life is hard. They will pay, this I assure you of.

OTC derivative manufacturers.
OTC derivative distributors.
Predatory Hedge Funds.

Their only protection is anonymity. God will not help them when they are all identified. They cannot live in the sunlight just like the demons of Lanka could not. They are demons by night, hiding in the foul lairs waiting to devour the lame, halt and widowed.

Who will stand to help the widows son? We meet upon the Square.

Bernard Madoff has ‘blood on his hands’ over William Foxton suicide
A former British soldier who shot himself was facing bankruptcy after becoming the victim of Bernard Madoff’s alleged fraud, his son said

Susan Thompson
From Times Online
February 12, 2009

Bernard Madoff, the disgraced financier accused of the biggest fraud in corporate history, was accused of having "blood on his hands" after a former soldier killed himself over the loss of his family’s life savings.

The son of William Foxton, 65, said that his father was so distraught after losing his family’s entire savings in the alleged Ponzi scheme that he shot himself with a handgun in a park in Southampton on Tuesday.

Mr Madoff, 70, is under penthouse arrest and 24-hour surveillance after being arrested on December 11.

He was accused of one count of securities fraud after authorities said that he admitted to running a scheme over many years with losses of $50 billion (£35 billion).

Willard Foxton, of London, said that his father, a grandfather of two and a former French Foreign Legionnaire, was “brought low by the greed of Bernie Madoff”.

Mr Foxton said: “I spoke with my father recently and he confided in me that he was in ‘an absolute s***fight’ with his banks’, as his life savings had been invested in two hedge funds: the Herald USA Fund and Herald Luxembourg Fund.

More…

Jim Sinclair’s Commentary

Real wealth is called to our attention by Marty M. and Lao Tzu.

"Being deeply loved by someone gives you strength, while loving someone deeply gives you courage."
–Lao Tzu

Jim Sinclair’s Commentary

On the brink? You have to be kidding. They are broke. just go to the controller of the currency month report of derivative exposure versus capital. It screams broke right at you.

Keep in mind that the USA Controller of the Currency is now using a value to maturity to calculate notional value. This has reduced the amount of notional value outstanding by 80%. Anything stated at 20% of its value is a bullshit statistic. It still screams BROKE.

All of this hell is a gift to you from the pig rich OTC derivative manufacturers and distributors. they have killed us all to some degree.

Large U.S. banks on brink of insolvency, experts say
By Steve Lohr
Friday, February 13, 2009

Some of the large banks in the United States, according to economists and other finance experts, are like dead men walking.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are insured by the U.S. government. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.

The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.

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Jim Sinclair’s Commentary

Pakistan owns up.

Pakistan Sees Terror Role
Official Recognition on Mumbai Attack Is Concession to India
By ZAHID HUSSAIN in Islamabad and MATTHEW ROSENBERG in New Delhi

Pakistan publicly acknowledged for the first time Thursday that last year’s terrorist attack on Mumbai was partly planned on its soil and said it had arrested most of the key plotters, the clearest sign yet that Pakistan intends to cooperate with international efforts to prosecute those behind the attacks.

Interior Ministry chief Rehman Malik’s announcement appeared to mark a break from Pakistan’s equivocation over the role of its people in the attacks. While India and the U.S. urged Islamabad to take responsibility, some Pakistani officials had suggested the plot was hatched elsewhere.

"Some part of the conspiracy has taken place in Pakistan," Mr. Malik said. "I want to assure our nation, I want to assure the international community, that we mean business."

Detailing a strong Pakistani link to the three-day rampage in November, Mr. Malik said six people have been charged in Pakistan with "abetting, conspiracy and facilitation" of a terrorist act, and several other suspected plotters are in Pakistani custody or under investigation.

India’s Foreign Ministry called Pakistan’s statement "a positive development" and said it would share whatever additional information it could.

More…

 

Jim Sinclair’s Commentary

Friday the 13th, 2009 is a good Friday for the banking system. Four down and few thousand to go.

Nebraska, Florida, Illinois banks are latest failures
12 banks have failed so far in 2009, 37 shut since credit crisis began
By John Letzing, MarketWatch
Last update: 7:37 p.m. EST Feb. 13, 2009

SAN FRANCISCO (MarketWatch) — Loup City, Neb.-based Sherman County Bank, Cape Coral, Fla.-based Riverside Bank of the Gulf Coast and Pittsfield, Ill.-based Corn Belt Bank and Trust Company were closed by regulators Friday, bringing the number of U.S. bank failures for 2009 to 12 and 37 total since the start of the credit crisis, the Federal Deposit Insurance Corp. said.

Nebraska has not seen a bank failure since 1990, according to the FDIC. However, Riverside Bank follows Fla.-based Ocala National Bank, which failed on Jan. 30. Prior to Corn Belt Bank, the last Illinois bank to fail was National Bank of Commerce on Jan. 16.

Nebraska’s Sherman County Bank had roughly $129.8 million in assets as of Feb. 12 and $85.1 million in deposits, the FDIC said.

Wood River, Neb.-based Heritage Bank has agreed to assume all of the failed bank’s deposits, and will purchase roughly $21.8 million worth of its assets, the FDIC said.

The FDIC estimated the cost of the failure to its deposit-insurance fund will be $28 million.

More…

Jim Sinclair’s Commentary

The G7 is no longer the ball in world economics. The back seat may become permanent.

G-7 Takes ‘Back Seat’ as Financial Crisis Pushes G-20 to Fore
By Simon Kennedy

Feb. 13 (Bloomberg) — The Group of Seven, whose finance chiefs convene this weekend in Rome, is ceding its traditional power to rebuild the world economy to a broader body of governments that now wield greater sway over global growth.

As U.S. Treasury Secretary Timothy Geithner and European Central Bank PresidentJean-Claude Trichet join their G-7 counterparts, it’s the Group of 20 that occupies the vanguard responding to the financial crisis.

The shift in influence to the group, whose membership ranges from the U.S. to China to Saudi Arabia, reflects the fact that industrial nations lack the resources to fix the world’s economic woes alone. That curbs the G-7’s scope to deliver new initiatives this week, say economists and former officials.

“The world has changed,” said Paul Martin, Canada’s former prime and finance minister who attended G-7 meetings and helped establish the G-20 a decade ago. “The G-20 reflects the realities of the global economy. Its finance ministers are becoming the dominant policy-making body.”

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Jim Sinclair’s Commentary

Here is today’s prime question:

Why, all of a sudden, is Mr. Monk (at Davos) so bullish on gold, assuming it has little to do with the gold price?

NOTICE!

Due to recent state and city budget cuts, the cost of electricity, still high gas and oil prices for the consumer, as well as current job market conditions and the continued decline of the U.S. economy with lack of immediate impact for Federal Stimulus plans and ill targeted Treasury financial firm bailouts…

The Light at the End of the Tunnel has been turned off.

Sincerely,
The Management

Jim Sinclair’s Commentary

This is the story of every single one of the walking financial wounded entities being or soon to be bailed out. Here is where they made their billions that has broken their companies, but in no way injured those that benefitted from the deluge of money made in the manufacturing and distribution. You are paying for their secured profits.

"The company made huge profits selling credit default swaps – insurance contracts which protected investors against the risk of companies being unable to pay their bills. But at the end of 2007 it began to report drastic quarterly losses. In April last year Mr Cassano was nudged into retirement but kept on in a consultancy role for £700,000 a month for nine months."

Fraud probe into UK firm’s role in collapse of world’s largest insurer AIG
By Arthur Martin and Ben Laurance
Last updated at 11:50 PM on 12th February 2009

A fraud investigation was launched last night into a UK firm’s alleged criminal involvement in the multi-billion-pound collapse of the world’s largest insurer.

The probe by the Serious Fraud Office into AIG Financial Products will focus on those with ‘inside knowledge’ of the collapse.

Investigators will try to establish how it lost almost £8billion and brought its American parent, AIG, to its knees.

The downfall of AIG, now 80 per cent owned by the U.S. government, was one of the pivotal events in the start of the global financial crisis.

The company was forced to seek £59billion ($85billion) in emergency credit from the Federal Reserve.

Part of the inquiry into the Mayfair-based subsidiary is likely to focus on its boss, Joseph Cassano.

Since starting AIG Financial Products in 1987, Mr Cassano, 53, is thought to have earned almost £200million.

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Jim Sinclair’s Commentary

With all the media screaming “the problems are worse for others,” an examination of the following should clear that misconception up.

Rescue Efforts Ding U.S.’s Triple-A Rating
By LIZ RAPPAPORT

The creditworthiness of the U.S. is deteriorating more rapidly than most of its triple-A rated brethren.

The effects of the U.S.’s efforts to solve the financial and economic crisis are taking a toll on the country’s ability to uphold a triple-A rating, according to a report published by Moody’s Investors Service, though the agency shied away from warning of any ratings downgrade. As the government moves forward with President Barack Obama’s $789.5 billion stimulus package and the Treasury gears up to borrow as much as $2 trillion with new debt sales this year, Germany, France, Canada and Scandinavian countries are pulling ahead of the U.S. as stronger credits, said the report. While all face headwinds, they remain triple-A.

"By the end of a two year period, the U.S. debt ratios will be higher and moving the country’s metrics to the lower end of the pack," said Steven Hess, sovereign credit analyst at Moody’s. Mr. Hess said that while the analysis on the U.S. is the current view, "this triple rating isn’t assured forever."

Regardless of the U.S. spending spree, investors around the world still buy U.S. Treasury bonds when they become anxious about the financial system, as it is the world’s largest bond market and functions in dollars, the world’s reserve currency. The 10-year Treasury rose in price Thursday to yield 2.732%, while the two-year bond rose as well, to yield 0.883%. The U.S. and the United Kingdom are what Moody’s called "resilient triple-A" rated nations facing big tests as the economic downturn stresses their ability to harvest revenue from taxes and as they take on debt to rescue large financial institutions and restore markets to health. Moody’s notes, though, that the U.S. is uniquely positioned to restore its financial health once the crisis abates, given the size of its economy and its tax base.

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Jim Sinclair’s Commentary

Is this intended to be read as the US Federal Reserve acting in a proper way by doing unlimited amounts of dollar swaps with other central banks in order to support all the nations deemed critical to the national security of the US?

This is exactly how Chairman Volcker bankrupted the USSR. It is exactly how forces at the heart of Anti-Americanism and Anti Globalism will bankrupt the USA.

Intelligence czar: Economy is top threat to U.S.
Says prolonged crisis could cause some nations’ governments to collapse
Updated 6:07 p.m. MT, Thurs., Feb. 12, 2009

WASHINGTON – The economic crisis has trumped bullets and bombs in the intelligence agencies’ latest assessment of threats to the United States.

That shift is a reflection of the depth of the unfolding recession, but also of the progress made in the war against terrorists and the Obama administration’s more expansive definition of national security.

Sounding more like an economist than the war-fighting Navy commander he once was, National Intelligence Director Dennis Blair told a Senate panel Thursday that if the crisis lasts more than two years, it could cause some nations’ governments to collapse. And a number of allies the United States depends on might no longer be able to afford to meet their own defense and humanitarian obligations, he said.

Blair said the financial meltdown, which started in the United States and quickly infected other countries, already has eroded confidence in American economic leadership and belief in free markets.

"Time is probably our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests," he told the Senate Intelligence Committee, as Congress prepares to vote Friday on a $789 billion stimulus package.

More…

Posted by & filed under In The News.

Dear CIGAs,

The following are two observations of mine today:

  1. Talk about gold stocks outperforming gold on this move with charts and diagrams is on financial media and should get some attention from all those illegal, legal and pool gold share short sellers.
  2. The newest SPIN is the conversation of if the banks will pay back the Federal money they have received in order not to be subject to events like yesterday’s severe public dressing down. How the hell can they pay it back? They are broke.

Jim Sinclair’s Commentary

The press is alight with articles declaring that European financial institutions are up to their eyeballs to the tune of $24 trillion in Toxic Paper known as failed OTC derivatives.

This may be so, but the writer has no way of fact checking that assumption.

The bottom line of this as it pertains to the dollar/euro price is who bails out those institutions.

So far the producer of the capital to bail out Euroland financial institutions has not been the ECB, although they applied the money.

It has been the US Federal Reserve via swaps with the ECB that has provided the paper (money for lack of a better name).

The answer to all these question is always, "Follow the Money," not “Read the headlines.”

Three men went to jail for the invention of the exact vehicle, the OTC derivative, but not one of the insider financiers is suffering one second of incarceration or loss of their own trillions.

This reaffirms my sad conclusion that the best investment a man can make with $1,000,001 in the past many years has been a donation of $1,000,000 to the success political party.

European bank bail-out could push EU into crisis
A bail-out of the toxic assets held by European banks’ could plunge the European Union into crisis, according to a confidential Brussels document.
By Bruno Waterfield in Brussels
Last Updated: 3:50PM GMT 11 Feb 2009

“Estimates of total expected asset write-downs suggest that the budgetary costs – actual and contingent – of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned.

"It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems.”

The secret 17-page paper was discussed by finance ministers, including the Chancellor Alistair Darling on Tuesday.

National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors – particularly those who lend money to European governments – have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.

The Commission figure is significant because of the role EU officials will play in devising rules to evaluate “toxic” bank assets later this month. New moves to bail out banks will be discussed at an emergency EU summit at the end of February. The EU is deeply worried at widening spreads on bonds sold by different European countries.

More…

Chinese Dollar Holdings:

Concerning China making sales of dollar denominated instruments they hold in reserve, that is most unlikely. What is more likely is that the momentum of Chinese buying will fall sharply. Any opportunities the Chinese Central Banks have to offload dollars for things or lend dollars to their industry will be taken advantage of as that is the way to decrease their holdings without overt impact on the US dollar market. Any sales of gold by the IMF would offer just such an opportunity.

Posted by & filed under In The News.

Dear CIGAs,

This shall be.

Jim Sinclair:
Gold will appreciate to $1224 and then to $1650. All this will be history by January 14th 2011

Alf Fields: 
Major ONE up from $256 to $1,015 (actually 4 times the $255 low); 
Major TWO down from $1015 to $699, say $700 (a decline of 31%); 
Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low); 
Major FOUR down from $3,500 to $2,500 (a 29% decline); 
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

Martin Armstrong:
A major high is possible as early as 2010-2011 with the potential for an exponential rally into 2015 if there is any kind of a low going into 2011.

 

Jim Sinclair’s Commentary

The only protection the predatory hedgies have is to hide.

They have killed more people than the Battle of Antietam in the USA Civil War.

It time legs plus a few other things will be broken as their identities becomes public knowledge.

Problems with securitization
February 10, 2009, 6:01 PM

breakleg

More…

 

Jim Sinclair’s Commentary

It takes BALLS to advise Gordy, the gold buffoon.

Recession ‘worst for 100 years’

The current global recession is "the most serious for over 100 years", cabinet minister Ed Balls has said.

Mr Balls, a former economic adviser to Gordon Brown, said it was "more extreme and more serious than that of the 1930s", the Yorkshire Post reported.

He told a Labour conference that these were "seismic events that are going to change the political landscape".

Shadow Treasury minister Phillip Hammond said the remarks were "staggering and very worrying".

Mr Balls, the schools secretary, made the comments at Labour’s Yorkshire conference at the weekend, the newspaper reported.

The BBC’s political editor Nick Robinson said Mr Balls and Downing Street have attempted to play down the significance of his remarks, insisting he had been pointing out the unique nature of the global financial crisis and was not predicting that the impact on ordinary people would be worse than that experienced during the Great Depression of the 1930s.

More…

 

Jim Sinclair’s Commentary

I am no fan of this man with the exception of his methods of interrogation. I would love to have him jumping up and down over the lack of and lack of enforcement of the uptick rule in shorting equities.

A Proposal to Shore Up Banks With Pension Funds
By MARY WILLIAMS WALSH
Published: February 9, 2009

Financial institutions in the United States probably need hundreds of billions of dollars in additional assistance, and one congressman wants to harness state and local pension funds to help them.

“Some of us are getting tired of writing checks with public money” and seeing no results, said Representative Gary L. Ackerman, Democrat of New York.

Rather than rely more heavily on the Treasury, which has already put $350 billion in the nation’s banks, Representative Gary L. Ackerman sees an opportunity in the trillions of dollars in public pension funds. Most of the funds suffered giant losses last year in the market turmoil. But they do not need all of their assets immediately, because their time horizon for paying benefits is decades long.

Mr. Ackerman, Democrat of New York, is sponsoring legislation that would allow public pension funds to pool some of their money and use it to create a sole-purpose entity that would buy $50 billion to $250 billion worth of preferred stock in America’s banks. That would strengthen the banks’ balance sheets and, Mr. Ackerman hopes, get them lending again.

“Some of us are getting tired of writing checks with public money” and seeing no results, Mr. Ackerman said. He said pension fund officials who had heard about the measure so far were eager to participate.

More…

 

Jim Sinclair’s Commentary

Dear Moody’s, Standard and Poors,

Assuming that your rating of US Treasury instruments is correct, why would China be concerned?

Either you are right or the Chinese are right. Which is it?

China Needs U.S. Guarantees for Treasuries, Yu Says (Update2)
By Belinda Cao and Judy Chen

Feb. 11 (Bloomberg) — China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.

The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

Benchmark 10-year Treasury yields climbed above 3 percent this week on speculation the government will increase borrowing as President Barack Obama pushes his $838 billion stimulus package through Congress. Premier Wen Jiabao said last month his government’s strategy for investing would focus on safeguarding the value of China’s $1.95 trillion foreign reserves.

China may voice its concerns over U.S. government finances and the potential for a weaker dollar when Secretary of State Hillary Clinton visits China on Feb. 20, according to He Zhicheng, an economist at Agricultural Bank of China, the nation’s third-largest lender by assets. A People’s Bank of China official, who didn’t wish to be identified, declined to comment on the telephone.

Clinton Talks

“In talks with Clinton, China will ask for a guarantee that the U.S. will support the dollar’s exchange rate and make sure China’s dollar-denominated assets are safe,” said He in Beijing. “That would be one of the prerequisites for more purchases.”

More…

 

Jim Sinclair’s Commentary

When will the West learn. You cannot buy allies in Pakistan.

Pakistan Wants More From US
Washington Post – United States
By Karen DeYoung Inside the warm welcome and promises of a "new beginning" that Pakistan extended US special envoy Richard C. Holbrooke yesterday was a …
See all stories on this topic

Pakistan’s ISI problem
Boston Globe – United States
PAKISTAN has a terrorist problem, as many of the country’s leaders acknowledge. But Pakistan also has an ISI problem – the country’s powerful Inter-Services …
See all stories on this topic

Bomb injures six in NW Pakistan: police
AFP
PESHAWAR, Pakistan (AFP) — At least five people were killed and 10 others wounded Monday in a bomb blast in a troubled town in northwest Pakistan near the…
See all stories on this topic

News Analysis: New US-Pakistan partnership hinges on anti-terrorism
Xinhua – China
11 (Xinhua) — The special US envoy Richard Holbrooke is visiting Pakistan with a heavy agenda which mainly focuses on the war against terrorism in the …
See all stories on this topic

US watchful of Pakistan’s assurances on AQ Khan
Hindu – Chennai,India
Washington (IANS): Pakistan has assured the US that released Pakistani scientist AQ Khan, accused of selling nuclear secrets in the black market, …
See all stories on this topic

Human rights committee calls Miliband and Smith for questioning …
guardian.co.uk – UK
Binyam Mohamed was detained in Pakistan and questioned by MI5 officers before being "rendered" by the United States to Morocco, where his lawyers claim he …
See all stories on this topic

Posted by & filed under In The News.

Jim Sinclair’s Commentary

This and all these will be met as infinitum. The die is cast and there is no turning back. Hyperinflation is in the cards and soon.

Fannie, Freddie Funding Needs May Pass $200 Billion, FHFA Says
By Dawn Kopecki

Feb. 10 (Bloomberg) — Fannie Mae and Freddie Mac, the mortgage-finance companies seized by regulators, may need more than the $200 billion in funding pledged by the U.S. government if the housing market continues to deteriorate, Federal Housing Finance Agency Director James Lockhart said.

The companies’ needs will depend largely on the direction of home prices, Lockhart said in an interview in Las Vegas yesterday. His comments followed statements from Fannie Mae in November and Freddie Mac Chairman John Koskinen last week that the government’s funding commitment through 2009 may fall short of what the companies need to make good on their obligations.

“When we sized the amount in September, we obviously looked at stress tests and what was happening in the marketplace,” Lockhart said. “There’s been some significant events since then that weren’t in our forecast.”

The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth, according to a Feb. 3 report from Zillow.com. Following a record boom, home prices are down 25 percent on average since mid-2006 amid a tightening of lending standards and an economic recession, the S&P/Case-Shiller Composite 20-city price index shows.

Freddie Mac and Fannie Mae are the largest U.S. mortgage- finance companies, owning or guaranteeing $5.2 trillion of the $12 trillion home-loan market. The government seized control of Fannie Mae and Freddie Mac after their losses threatened to further disrupt the housing market, and pledged to invest as much as $100 billion into each company as needed if the value of their assets drops below the amount they owe on obligations.

More… http://www.bloomberg.com/apps/news?pid=20601087&sid=aId2BJIzu0cQ&refer=home

Posted by & filed under In The News.

Dear CIGAs

The US Fed is bailing out the world. Therefore the US dollar is History

1:27pm EST. Bloomberg:

The Flushed questions given to Bernanke were actually put up with a picture of the inquiring party, but no sound. A hack was talking in a picture inside a picture.

Now Bernanke is delivering his prepared speech and in full view with sound.

Bernanke just admitted that the swaps with foreign banks were for the purpose of bailing out non-US banks when he stated that the ultimate borrower on those swaps was the central banks and "NOT the banks the funds were lent to." Think about this secret just revealed and the original denial.

He is discussing the ability of the Fed to lend to individuals and partnerships in emergency situations. Individuals, partnerships, who?

Armstrong and Alf are both so correct in their predictions.

Bernanke says "Wall Street Analysts are expert specialist trained to do Asset Value Analysis" in reference to OTC derivatives.

My God, these are the exact same people that that created this entire problem and claim they could not foresee the total loss of value. Now the US Central Bank’s Chairman points at their fine, cultured and unassailable expertise.

How much more of this will people tolerate?

The answer is that tolerance is not infinite in time.

Chairman Bernanke answers critics that question the total secrecy concerning Fed injections of capital into major banks by saying the "Federal Reserve is making a full study of transparency."

Serious investors and people of position are watching this all over the Globe. What do you feel their impression is of today’s less than stellar performance by the Fed and Treasury?

A question in review of the Fed’s balance sheet said the only thing that prevents the Fed from being on the weak bank watch list is that it is the Fed.

Bernanke just smiles and assures us all is well. Of course it is.

Bernanke says that because interest rates are at 0% there is no limit to the size that the Fed balance sheet can grow because the Fed can borrow at 0%. This is true, but so academic as to fail to see the market and currency impact of that statement.

 

Jim SincIair’s Commentary

If you were watching Bloomberg at 1:12 PM EST, you just witness the most important question being asked of Bernanke totally FLUSHED off the screen.

What a disgrace!
What a shame!
What a sin against the future of all!

Armstrong is 100% correct.
Alf is 100% correct.

There is no practical plan that can make any difference now. There never was.

It is business as usual!

 

Jim Sinclair’s Commentary

No commentary, this is just for your information:

Justice Department Follows Bush Administration in Invoking ‘State Secrets’ Privilege in Rendition Lawsuit

The Obama administration is siding with its predecessor in a federal case over the CIA’s rendition program, claiming lawsuits should not proceed because they could disclose secret national security information.
FOXNews.com
Monday, February 09, 2009

The Obama administration is siding with its predecessor in a federal court case in California over the CIA’s rendition program, saying lawsuits over renditions should not proceed because they could disclose "state secrets" and other classified national security details.

The administration made its argument Tuesday in front of the Ninth Circuit Court of Appeals, which was hearing an appeal in a 2007 case filed by the American Civil Liberties Union.

"It is vital that we protect information that, if released, could jeopardize national security," said Department of Justice spokesman Matthew Miller in an e-mail to FOX News.

In May 2007 the ACLU filed a claim against Jeppesen Dataplan, Inc., a subsidiary of Boeing Company. It charged that Jeppesen knowingly provided logistical services that aided the CIA’s clandestine flights that took five ACLU clients to secret overseas locations where they were subjected to torture and other forms of cruel, inhuman and degrading treatment.

In February 2008, the U.S. District Court granted the government’s motion to dismiss the case, after the Bush administration argued that any litigation would harm national security by revealing state secrets. The ACLU appealed that decision to the Ninth Circuit, which heard Monday’s arguments.

More… http://www.foxnews.com/politics/first100days/2009/02/09/justice-department-follows-bush-administration-invoking-state-secrets-privilege/

Jim Sinclair’s Commentary

Oh you foolish people pushing the panic button in gold shares today.

DJ PRECIOUS METALS:Weak DJIA, Inflation-Hedge Role Lifts NY Gold
By Allen Sykora
Of DOW JONES NEWSWIRES

Weakness in equities and worries about the U.S. economic stimulus plan eventually reviving inflation resulted in sharp gains for gold futures Tuesday.

Chart-based buying played a role in the gains of much of the precious metals. Platinum accelerated higher after busting through the previous highs for the year so far. And while gold didn’t top the late-January high, it nevertheless drew some buying when support at recent lows in the $890s held, observers said.

Most-active April gold rose $21.40 to $914.20 an ounce on the Comex division of the New York Mercantile Exchange.

More…

Posted by & filed under In The News.

Jim Sinclair’s Commentary

Now compare President Obama’s presentation in light of Mr. Armstrong’s article!

Obama: This isn’t your ‘run-of-the-mill recession’

(CNN) — President Obama appeared before a national audience Monday night to make the case for his economic stimulus plan, saying this is not your "run-of-the-mill recession."

The president stressed the urgency of passing the roughly $838 billion measure, which his administration and Democratic leaders say will help pull the U.S. economy out of its current skid.

"My bottom line is to make sure that we are saving or creating 4 million jobs, we are making sure that the financial system is working again, that homeowners are getting some relief," he said in his first prime time news conference.

Obama’s remarks came the day before the Senate votes on its version of the stimulus bill. The House passed its version of the stimulus bill nearly two weeks ago — without a single Republican vote. If the measure passes the Senate, the two chambers will have to reconcile the differences between the two bills.

Obama urged Congress "to act without delay," saying that only the federal government can break the "vicious cycle" gripping the U.S. economy.

"It is absolutely true that we cannot depend on government alone to create jobs or economic growth. That is and must be the role of the private sector," he said.

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Posted by & filed under In The News.

Dear Friends,

Gold is going to $1650 and that is for starters.

The US dollar is going to .6200 and then .5100.

The Safe Haven Dollar is as stupid now as the Goldilocks Economy and rear view mirror economic events were.

I am getting calls from people who either don’t read or should only be in US dollar treasury bills.

My leash is getting tight so please read JSMineset first. Email me if you do not understand something and if it was ill presented, it will be corrected. Do not call me and ask me if I have changed my mind since I posted something this morning. Remaining polite is becoming hard.

The following amount of money can:

1. Pay off every mortgage in the USA.
2. Send a check for $1400 to ever person on this planet.

Hyperinflation cannot be avoided.

Respectfully yours,
Jim

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
By Mark Pittman and Bob Ivry

Feb. 9 (Bloomberg) — The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

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Jim Sinclair’s Commentary

And finally for this evening a word from Bloomberg for the all the Pollyanna’s out there.

Bank Failures May Reach 1,000 on Bad Loans, RBC Says (Update2)
By David Mildenberg and Margaret Chadbourn

Feb. 9 (Bloomberg) — As many as 1,000 U.S. banks may fail in the next three to five years, almost double the one-year tally at the height of the saving-and-loan collapse, as losses mount on commercial real-estate loans, RBC Capital Markets analysts said.

Most of the failures will probably occur at banks with less than $2 billion in assets as their commercial customers default, said Gerard Cassidy, an analyst at RBC, in an interview today.

“There are billions of dollars of losses embedded in the system, and the system has to flush them out,” Cassidy said. “The people that are going to take the losses are the taxpayers and bank stockholders, and if regulators say there won’t be much loss to taxpayers, they will be lying.”

Regulators are taking steps to help lenders avoid losses as President Barack Obama’s administration readies a rescue package that may include guarantees for toxic assets, according to people familiar with the plan. The Federal Deposit Insurance Corp. closed nine banks so far this year after shutting 25 in 2008 and identified 171 “problem” institutions as of the third quarter.

The FDIC has already raised the estimate for the cost of U.S. bank failures through 2013 after fourth-quarter financial reports from banks signaled possible additional losses to the deposit insurance fund. The agency said failures through 2013 may cost more than the $40 billion estimated in October.

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Jim Sinclair’s Commentary

What, me worry? If I’m not why would you?

IMG_5797

Jim Sinclair’s Commentary

Here is a neat approach. The Fed buys its own paper in amounts in excess of what it issues thereby financing itself and no longer requiring China’s help.

The catch is that the value of the US government would head for the floor as rates went through the roof because there are too many treasuries already out there.

How damn stupid can a central bank be? To the degree they buy their own paper they depreciate the paper already out there. Have you ever seen a stock buyback stop a bear market in the buyback company? All a stock buyback ever does is to allow the insider a firm bid to sell into.

If the Fed does what amounts to a buyback is China the seller?

Fed Lacks Consensus on Treasuries as Yields Rise
By Scott Lanman and Craig Torres

Feb. 9 (Bloomberg) — Federal Reserve officials have failed to resolve an internal debate over whether to purchase long-term Treasuries, even as rising yields on the securities threaten to undermine the central bank’s objective of cutting borrowing costs for consumers and businesses

Policy makers are instead focusing on a program to purchase $200 billion in consumer and small-business loans and on a plan to buy $600 billion in home-finance debt, according to people familiar with the deliberations.

Forgoing purchases of Treasuries may exacerbate a jump in borrowing costs for the government as federal debt managers seek to finance an unprecedented budget deficit. Benchmark 10-year note yields this week exceeded their level of Dec. 1, when Fed Chairman Ben S. Bernanke first talked about the option. That’s raised other borrowing costs, potentially delaying a recovery.

“The Fed will get a lot more bang for its buck by buying mortgages than buying Treasuries,” said John Ryding, founder and chief economist of RDQ Economics LLC in New York and a former Fed economist. “We were kind of a little surprised when the Fed wanted to go down this route” in comments starting in December, Ryding said.

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Jim Sinclair’s Commentary

Hello, I am from the Federal Government here to help you.

GM, Chrysler May Face Bankruptcy to Protect U.S. Debt (Update3)
By Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) — General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

“They are negotiating to see if they can reach an agreement,” said Workman, a bankruptcy lawyer based in Washington. “If not, they are saying ‘We are pretty darn sure that a bankruptcy judge will allow us’” to be first in line for repayment.

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Jim Sinclair’s Commentary

Here is an FYI from CIGA Jesse. Maybe GM deserves to go broke?

General Motors to Invest $1 Billion in Brazil Operations — Money to Come from U.S. Rescue Program
By Russ Dallen
SAO PAULO — General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn’t be logical to withdraw the investment from where we’re growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company’s revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil’s automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.

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Jim Sinclair’s Commentary

Let the truth be known!

You know all these car company got the major axe, not from bad business, but first from the use of OTC derivatives by their credit arm which in turn killed business.

If you cannot borrow money to buy a car, no cars are bought!

Nissan to Cut 20,000 Jobs as Carmaker Forecasts Loss (Update3)
By Makiko Kitamura

Feb. 9 (Bloomberg) — Nissan Motor Co., Japan’s third- largest automaker, said it will slash 20,000 jobs and post its first loss in nine years as the global recession cripples car demand and a stronger yen ravages the value of overseas earnings.

The company expects a net loss of 265 billion yen ($2.91 billion) for the year ending March 31, compared with its October estimate of 160 billion yen in net income. It also scrapped its second-half dividend.

Nissan’s sales in the U.S., its biggest market, plunged 31 percent in January as demand for Altima sedans and Xterra sport- utility vehicles dried up. Chief Executive Officer Carlos Ghosn’s elimination of 9 percent of the workforce caps a month in which all of Japan’s carmakers slashed forecasts and Panasonic Corp. and NEC Corp. cut workers.

“The economic storm is wreaking havoc on everyone,” said Yuuki Sakurai general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets. “Things could get even worse.”

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Jim Sinclair’s Commentary

It is so stupid as not to be stupid.

Money given to Pakistan for any reason goes to them for one reason and into very few pockets.

Damn, country leadership can be a great private enterprise.

Police injured in Pakistan attack
BBC News – UK
A suicide bomber has driven a car loaded with explosives into a police check post in north-western Pakistan, injuring at least 15 policemen.
See all stories on this topic

Video Is Said to Be Polish Hostage’s Beheading in Pakistan
New York Times – United States
By AP DERA ISMAIL KHAN, Pakistan (AP) — A graphic video delivered to reporters on Sunday appeared to show the execution of a Polish engineer by Pakistani
See all stories on this topic

Tougher on Pakistan
News & Observer – Raleigh,NC,USA
27 news article "Taliban clamp down in Swat" suggested the need for new US foreign policy toward Pakistan. US policy undermined India’s democracy and
See all stories on this topic

Losing Hearts and Minds in Pakistan
Washington Post – United States
President Asif Ali Zardari gave a frank assessment of the challenges that Pakistanfaces, as well as outlining the need for US support in improving
See all stories on this topic

Pakistan to Present Mumbai Probe Report to Committee, Geo Says
Bloomberg – USA
9 (Bloomberg) — Pakistan has completed its investigation into the Mumbai attacks and will submit its report to a defense committee today, GEO television
See all stories on this topic

US Skeptical About Pakistan’s Restrictions on Nuclear Scientist
Washington Post – United States
Pakistan has "given us some initial commitments but we’re going to be following [the situation] very closely. The important thing is that they know we are
See all stories on this topic

Pakistan Vows to Monitor Scientist
New York Times – United States
Mr. Khan is a hero in Pakistan for developing the country’s nuclear program, and many claimed the Zardari government was detaining him at the behest of
See all stories on this topic

Nuclear Scientist Khan Isn’t Threat, Pakistani Minister Says
Bloomberg – USA
8 (Bloomberg) — Pakistan will ensure that nuclear scientist Abdul Qadeer Khan doesn’t resume selling atomic technology to other countries after his release
See all stories on this topic

Pakistan enjoys world support against Indian ‘designs’: Gilani
Daily Times – Lahore,Pakistan
Gilani described reported Indian plans to get Pakistan declared a ‘terrorist state’ as wishful thinking, and said Pakistan’s diplomacy and foreign policy
See all stories on this topic

US envoy Holbrooke to reach in Pakistan today
Times of India – India
MUNICH: US special envoy Richard Holbrooke will arrive in Pakistan on a two-day visit on Monday, Geo TV reported. He will hold separate meetings with
See all stories on this topic

Posted by & filed under In The News.

Men acquire a particular quality by constantly acting a particular way… you become just by performing just actions, temperate by performing temperate actions, brave by performing brave actions.
–Aristotle

 

Dear Friends,

Of all the charts concerning the Weimar Experience, one needs your clear understanding as it may seem to be a great contradiction. That chart is of the Weimar Equity Market during a period that could be similar in many ways to that which is coming in the future of the US dollar.

Should the uptick rule be reinstated internationally and forcefully applied in Canada (the front door of naked short sellers to the world) as the US dollar meets its fundamental destiny, then equities could put on and out do the 1930 rally before a total collapse (as occurred in the Weimar Equity Market experience).

Respectfully yours,
Jim

Click chart for more…

weimar_stocks

 

Jim Sinclair’s Commentary

The US dollar and US dollar proxies all top in the form of up-trending neckline head and shoulders.

$USD - SharpCharts from StockCharts_Page_1

 

Jim Sinclair’s Commentary

All that I have warned you about in the timeframe of reference (2000 to 2011) will come to the forefront. Here is the reason that no politician on this amoral planet has the stomach for.

The selection between many Kent State executions or hyperinflation will end up with hyperinflation. That is fact.

WTO chief warns of looming political unrest

BERLIN (AFP) – The global economic crisis could trigger political unrest equal to that seen during the 1930s, the head of the World Trade Organization (WTO) said in a German newspaper interview Saturday.

"The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time," Pascal Lamy told the Die Welt newspaper.

Questioned about the risks of political instability, Lamy — who wraps up his four-year term as WTO director-general in September — responded that that was "the main danger".

"This crisis weighs heavily on politics and puts peace in danger," he said.

"Some democracies are old and sufficiently stable to overcome such problems, (but) others are going to be confronted by unrest and inter-religious and inter-ethnic conflicts."

He went on to warn against protectionism, saying it would be "wrongly easy" for nations to throw up trade barriers in response to the economic and financial downturn.

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Jim Sinclair’s Commentary

Damned if you do and double damned if you do not!

Stimulus will lead to ‘disaster,’ Republican warns

 

WASHINGTON (CNN) — Leading Republicans warned Sunday that the Obama administration’s $800 billion-plus economic stimulus effort will lead to what one called a "financial disaster."

"Everybody on the street in America understands that," said Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. "This is not the right road to go. We’ll pay dearly."

Shelby, of Alabama, told CNN’s "State of the Union" that the package and efforts to shore up the struggling banking system will put the United States on "a road to financial disaster."

But Lawrence Summers, the head of the administration’s National Economic Council, said Republicans have lost their credibility on the issue.

"Those who presided over the last eight years — the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that’s collapsing more rapidly than at any time in the last 50 years — don’t seem to me in a strong position to lecture about the lessons of history," Summers told ABC’s "This Week."

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Jim Sinclair’s Commentary

The future of the dollar is poor to none.

Recent dollar strength is no different from any of the manias we have experienced in the past eight years. 30 year bonds at 147 is the most recent moment of market madness.

The Fed balance sheet qualifies it as the USA’s own "Bad Bank." That condemns the US dollar to monetary hell once the foolishness of the dollar as a "Safe Haven" is spent.

Dan Norcini’s Commentary

The following article goes to emphasize what Jim has stated repeatedly since the bailouts began in earnest, namely that the Fed has become the largest hedge fund of them all.

Also, when that former Fed governor let slip a while back in that video clip that played widely on YouTube that the Fed could always upwardly revalue the official gold holdings from its current value down near $42. Only the gold community caught the significance of that Freudian “slip” of the tongue.

They have no way out of this man-made disaster except to upwardly revalue gold which is simply another way of saying devalue the dollar. Unless that occurs, the monetary system in its current form will not survive and a Bretton Woods II will be needed. I see no way to ever make good on the sheer size of indebtedness that has been created without a currency devaluation – if one could ever call such an occurrence, “making good”. Good for the issuer of the debt but certainly not for the owner.

The Insolvency of the Fed
Daily Article by Philipp Bagus and Markus H. Schiml | Posted on 2/5/2009 12:00:00 AM

Since August 15, 1971 the US dollar has been an irredeemable paper currency. Every irredeemable paper currency in history has failed. Yet, the experiment of the US dollar and the rest of the fiat paper world continues.

During the current crisis, however, financial systems all over the world are increasingly struggling, and the end of the experiment seems closer. In fact, the Federal Reserve System has used up much of its "ammunition" for monetary interventions in an attempt to keep the experiment going, lowering its target interest rate almost to zero. Other central banks are also quickly approaching the "zero limit" for interest rates.

Figure1

During these inflationary decades, economic structures have developed that can only survive with falling interest rates. As the world approaches a zero interest rate, it appears that finally there might be a full adaptation of the structure of production to the demands of consumers, and the experiment might come to an end.

Yet, has the Fed really "run out of ammunition"? First of all: what is the Fed shooting at? It is trying to artificially stimulate the economy with its monetary policy, thereby it is also unwittingly shooting at the value of the currency. Through its monetary policy, the Fed is trying to bail out an insolvent and illiquid banking system to maintain an unsustainable structure of production. As long as the currency is not totally destroyed, the Fed will never run out of ammunition. In order to assess the ammunition left, one should have a look at the balance sheet of the Federal Reserve — especially at the assets the Fed can still obtain. The Fed’s balance sheet also gives insights on the condition or quality of the dollar.

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Jim Sinclair’s Commentary

This was the great US Balance of Trade "plus" tool that now is heading in the deficit way.

Boeing jet orders: Minus 13
More ’09 cancellations may cut production
By JAMES WALLACE
P-I AEROSPACE REPORTER

With the cancellation of another 16 orders for its 787 Dreamliner, which is two years late, The Boeing Co. has started out 2009 losing more orders than it has won.

Number of canceled orders in 2009

Boeing has won 18 orders and lost 31 through cancellations. A Russian airline backed away from its order for 15 Dreamliners a week ago. The latest 787 order cancellation came from a Dubai leasing company.

Underscoring just how difficult the current industry downturn will be, Boeing Chief Financial Officer James Bell told an industry conference Thursday that Boeing might have to lower production rates in 2010. Bell did not say so, but if fewer planes are built the company could trim or reassign some of the people who assemble its jets in Renton and in Everett.

Boeing recently announced it will reduce its work force by about 10,000 jobs this year — about half of those jobs in the Puget Sound area. The cuts are a result of the global recession and economic crisis. Airlines are cutting capacity as traffic falls. But so far, Boeing has said that most of the job losses will not be related to production because it wants to keep building jets at current rates, given a record backlog of planes.

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Jim Sinclair’s Commentary

A safe haven? Only a moron attaches that to the US dollar.

U.S. Debt Default, Dollar Collapse Altogether Likely
February 03, 2009

The prospect of the United States defaulting on its debt is not just likely. It’s inevitable, and imminent.

The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end – the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index.

Is 2009 the year that the United States formally defaults? And with that, will the dollar collapse be rolled back ten for one or more?

There are a lot of reasons to support that theory. To Wall Street economists, such an event is heresy and therefore unthinkable. Yet Wall Street is the very La-la-land that bred the idea of a perpetually indebted nation in the first place.

Number one among the indicators favoring this scenario is what is happening in the U.S. Treasuries auction market.

Last Thursday, an $30 billion auction in five-year notes failed to stir the interest of traditional primary dealers. The auction itself was saved by an anonymous “indirect” bid.

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Jim Sinclair’s Commentary

Are you looking for the money you have lost in your IRA’s at the hand of the predatory beings of the hedgie’s world? I can tell you where a lot of it has been spent.

Ex-Madam says clients paid with corporate credit cards
07 February 2009 00:54 AM

NEW YORK (Reuters) – A former madam of a high-priced New York prostitution ring alleges in a U.S. television interview to be aired on Friday that investment bankers, Wall Street lawyers, CEOs and media executives often paid for her services using corporate credit cards.

The former madam, Kristin Davis, said her clients included investment bankers from JPMorgan, Goldman Sachs, Merrill Lynch, Lehman Brothers and Deutsche Bank, according to an article about the interview posted on ABCNews.com.

The banks either declined comment or did not immediately respond to a request for comment from Reuters.

ABC news said that Davis’ client list also included a vice president of a major media company, the part owner of a Major League Baseball team, the CEO of one of the country’s largest private equity firms and a major New York real estate developer.

"Some of these guys I was invoicing on corporate credit cards," Davis told ABC’s "20/20" news magazine, according to the station’s website.

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Jim Sinclair’s Commentary

1. Israel makes a major error in judgement.
2. Pakistan goes nuclear into the wrong hands.
3. Turkey is a victim.
4. January 14th 2011

Obama’s biggest foreign policy challenge? It’s Pakistan
By JONATHAN S. LANDAY AND SAEED SHAH
McClatchy Newspapers

A nearly completed U.S. military study is expected to say that nuclear-armed Pakistan, not Iraq, Afghanistan or Iran, is the most urgent foreign policy challenge facing President Barack Obama.

Pakistan – convulsed by a growing al-Qaida-backed insurgency, hamstrung by a ruinous economy and run by an unpopular government that’s paralyzed by infighting and indecision – is critical to U.S. efforts to stabilize Afghanistan, thwart the spread of nuclear weapons and prevent tensions with neighboring India from escalating into a nuclear showdown.

The U.S. Central Command review is assessing the situation in the Middle East and South Asia as the Obama administration plans to draw down U.S. forces in Iraq and double the 30,000-strong American military presence in Afghanistan, several people involved in the study told McClatchy Newspapers. They spoke on condition of anonymity because the study is still underway and they weren’t authorized to discuss it publicly.

The assessment, they said, is expected to recommend major changes in the U.S. approach to the volatile region, including major increases in U.S. aid to Pakistan in areas such as public education, health care and good governance, in a bid to stem the poverty and illiteracy that help fuel the country’s Islamic insurgency.

Stepped up non-military aid also could ease popular anger at the government and its chief ally, the United States, which many Pakistanis accuse of stoking the insurgency by relying primarily on military offensives and missile strikes that have claimed numerous civilian lives, the officials said.

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Pakistan heads toward crisis as coalition flounders
U.S. looks on with alarm as key Western ally’s inability to deal with jihadist menace threatens to destabilize region
SAEED SHAH
Special to The Globe and Mail
February 7, 2009

ISLAMABAD — Almost a year after elections were held in Pakistan, which restored democracy after more than eight years of military rule, growing Islamist violence, a crisis of governance and an economy in a tailspin threatens this key Western ally with collapse.

The new U.S. administration of President Barack Obama has made Pakistan one of its foreign policy priorities. Aides say that the U.S. President is "scared" by what he sees in Pakistan, a country that is crucial to meeting his goals of stabilizing Afghanistan and routing al-Qaeda. Next week, Richard Holbrooke, the special envoy just appointed to handle Afghanistan and Pakistan, arrives in Islamabad on a fact-finding mission, which is expected to be followed by swift action by Washington.

Critics say the Pakistani government is gripped with paralysis, as patronage, not policy, occupies Islamabad under President Asif Zardari. Some see echoes of the last period of civilian rule in Pakistan, between 1988 and 1999, when a series of floundering governments were repeatedly toppled by the army amid allegations of massive corruption and misrule.

Already the military and civilians are privately blaming each other for inaction as jihadists push ever deeper into the country from the northwest, with a de facto extremist mini-state now existing in Swat, a valley just 160 kilometres from the capital, Islamabad. Along the border with Afghanistan, Taliban and al-Qaeda enjoy a safe haven, undermining the international coalition’s fight against insurgents in Afghanistan.

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What kind of ally is Pakistan?
Saturday, February 7, 2009

It could be an episode of "24." A rogue bombmaker peddles nuclear weapon technology to Iran, North Korea and Libya. He’s caught but then set free in the seething, violent politics of his home country.

This isn’t a Hollywood script. It’s the real-life story of A.Q. Khan, the father of Pakistan’s nuclear program. On Friday he was freed from house arrest in the country’s capital in a move that drew sharp criticism from Washington.

Pakistani leaders served up the awkward news as a hands-off legal matter and the end of a lengthy court case that began when Khan was arrested in 2004. But it carries another meaning – a very troubling one – for Pakistan’s neighbors and allies.

Quite simply, the nation isn’t a reliable force for peace or stability in a central front of the terrorism fight. Khan was accorded the status of a populist hero, a scientist who gave his country a mighty weapon to hold far-bigger India at bay. When he set up a black market network to sell nuclear supplies to three of the worst countries imaginable, he was given wrist-slap treatment and protected from international investigators.

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