Posts Categorized: In The News

Posted by & filed under In The News.


Jim Sinclair’s Commentary

Outside of the Wall Street party in the real economy things are extremely painful.

Should CIT implode the real economy will simply roll over dead.

4 million home loans are delinquent
Mortgage lenders say the flood of foreclosures has not yet crested. Highwater mark should come this fall.
By Les Christie, staff writer
Last Updated: August 20, 2009: 5:46 PM ET

NEW YORK ( — The number of Americans who have fallen at least 30 days behind on their home loan payments jumped 44% in the second quarter from a year ago, according to an industry report.

That puts delinquencies at a record 9.24% of mortgages, according to the National Delinquency Report from the Mortgage Bankers Association (MBA). That represents more than 4 million of the 45 million borrowers covered by the report.

What the rate does not include, however, are loans already in foreclosure. Some 4.3% of all the mortgages are in that stage, up from 3.85% three months earlier and 1.55 percentage points from one year ago.

The combined percentage of loans past due and those already in foreclosure hit 13.16% during the quarter, the highest ever recorded by the MBA survey

"There was a major drop in foreclosures on subprime ARM loans," said Jay Brinkmann, chief economist for the MBA, in a prepared statement. "The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase."


Jim Sinclair’s Commentary

With a 70% recidivism this massive release is extremely poor judgement.

Fire the politicians. Keep the prisoners.

California bill would free more than 27,000 inmates

(CNN) — A controversial bill that California legislators say would allow the early release of more than 27,000 inmates from crowded prisons will be taken up by the state Assembly on Monday.

The Senate on Thursday passed the corrections package 21-19, after Senate President Pro Tem Darrell Steinberg, D-Sacramento, assured senators the changes would protect the public from the most violent offenders.

The legislation also would direct more resources toward parolees, he said.

Senate Republicans say the bill would undermine public safety. All 15 Senate Republicans voted against the measure.

Both houses of the legislature are controlled by Democrats.

Consideration of the bill comes as California faces a mid-September deadline for reducing its prison population by about 40,000 inmates. A special panel of three federal judges issued the order, contending the crowded prison system violates prisoners’ constitutional rights.


Jim Sinclair’s Commentary

The dollar is toast on a simple supply/demand equation.

Whatever official sources say multiply that number by two.

AP sources: $2 trillion higher deficit projected
Higher number over next decade could spell trouble for Obama in Congress

WASHINGTON – The Obama administration expects the federal deficit over the next decade to be $2 trillion bigger than previously estimated, White House officials said Friday, a setback for a president already facing a Congress and public wary over spending.

The new projection, to be announced on Tuesday, is for a cumulative 2010-2019 deficit of $9 trillion instead of the $7 trillion previously estimated. The new figure reflects slumping revenues from a worse economic picture than was expected earlier this year. The officials spoke only on the condition of anonymity ahead of next week’s announcement.

Ten-year forecasts are volatile figures subject to change over time. But the higher number will likely create political difficulties for President Barack Obamaclip_image004 in Congress and could create anxiety with foreign buyers of U.S. debt.

Earlier this week, the White House revealed that it expects a budget deficit for the fiscal year ending Sept. 30 to be nearly $1.6 trillion. That figure was lower than initially projected because the White House scratched out $250 billion that it had initially added to the budget as a bank rescue contingency. The administration ultimately did not ask Congress for that money.

Still that number, together with the 10-year projection, represents a huge obstacle for an administration trying to undertake massive policy overhauls in health care and the environment.


Jim Sinclair’s Commentary

Cash for Clunkers, the Washington give away, ends in a bureaucratic nightmare.

Only 37% of dealer requests for payment have been processed. This type of expert administration of business is going run GM.

‘Clunkers’ to Close After Fueling Sales, Dealer Anger (Update4)
By Angela Greiling Keane

Aug. 21 (Bloomberg) — The U.S. “cash for clunkers” trade-in program will stop accepting applications on Aug. 24, bringing to a close an effort that helped revive auto sales and drew the ire of dealers for slow repayments.

The clunkers plan, which offers auto buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, has recorded more than 489,000 dealer transactions worth $2.04 billion in rebates, according to Transportation Department data released today.

The deadline will give car dealers and buyers time to complete purchases and apply for rebates from the remainder of the $3 billion provided by Congress, the department said. Dealers have complained of difficulty running their businesses while awaiting program payments, and the agency said it’s adding workers to help process claims faster.

“Obviously there was a lot more latent demand than many thought,” said Michael Robinet, an analyst at CSM Worldwide Inc. in Northville, Michigan. “That bodes well for the market. But we are past the honeymoon now and we have to see what the market looks like in the post-clunker environment.”

Applications for rebates won’t be accepted after 8 p.m. New York time on Aug. 24, the agency said yesterday.


Jim Sinclair’s Commentary

Pretty soon Joe’s Pizza Parlor can buy a bank for one large pepperoni.

Meanwhile the banking shares index is on a bull tear. The Wall Street / Main Street disconnect is at a spiritual level.

FDIC Is Set to Loosen Rules to Buy Failed Banks

In an attempt to attract more buyers for failed banks, the Federal Deposit Insurance Corp. is expected next week to soften its proposed restrictions on private-equity firms buying collapsed lenders, according to people familiar with the matter.

While FDIC officials still are hammering out details of the final rule, the agency is expected to back away from some parts of its July proposal, including a requirement that buyout firms that bid on failed institutions maintain much thicker capital cushions than banks, these people said.

The FDIC, grappling with 77 bank failures this year, the most since 1992, is trying to strike a delicate balance.

It wants to lure more capital into the banking industry but is wary of putting banks in the hands of investors who might promote risky lending practices or ditch the investments if profits don’t quickly materialize.

The FDIC’s original proposal sparked an outcry among private-equity firms, which warned that the rules were unnecessarily onerous and would deter them from bidding on failed banks.


Jim Sinclair’s Commentary

The FDIC is broke and its income is a total illusion

The FDIC’s Stupid Tax On Banks
Joe Weisenthal Aug. 20, 2009, 2:00 PM

In theory the FDIC acts as a kind of insurance co-op among banks. They’re charged assessments to keep the FDIC’s coffers flush, and when one goes down, the customers deposits are replenished from this money.

That’s in normal times. In abnormal times — when there is a wave of systemic bank failures, such as there is now — it’s not really an insurance organization at all. It’s just the conduit for taxpayer cash to make depositors whole.

The blog Winterspeak wonders: why does the FDIC continue to assess fees, and what are they for? He argues, we think correctly, that FDIC fees are basically a banking tax; they’re not insurance premiums. But then, why are we taxing banks at a time when we want them to loosen the purse strings and lend more. It really doesn’t make sense.

The only reason we keep the assessments, it would seem, is to keep up an illusion that somehow the banking system is self-insured, and that it’s not just backstopped by Uncle Sam. But of course it is. This is a terrible reason to keep up a system. So let’s just have the FDIC purely backstopped by the Treasury, and let’s eliminate this constraint on lending.


Jim Sinclair’s Commentary

A couple of times a week China is, one way or another, reducing their dollar position for minerals, materials and energy.

Sinopec completes China’s biggest foreign takeover
Updated: 2009-08-19 15:01

Sinopec Group said Tuesday it has completed its $7.5 billion acquisition of Addax Petroleum, obtaining new reserves in Africa and the Middle East in China’s biggest foreign corporate takeover to date.

State-owned Sinopec Group is the parent of Sinopec Corp., also known as China Petroleum & Chemical Corp., Asia’s biggest refiner by volume. It wants to expand its production capacity to profit from rising crude prices that have cost it billions of dollars in recent years due to government caps on retail fuel prices.


Jim Sinclair’s Commentary

Of all the problems so far, the failure of pension funds to meet their obligation will have the most negative impact on the social order.

Written by  Chris H. Sieroty
August 20, 2009

At a time when the state government has reduced education spending, cut back services to the poor and implemented workplace furloughs to close a $24.6 billion deficit, California faces additional financial problems from its public pensions.

The nation’s largest pension fund, the California Public Employees’ Retirement System, or CalPERS, reported a record 23.4 percent drop in the value of its assets last year to $180.9 billion from $237.1 billion a year earlier.

Even before the recession, the annual taxpayer contribution to the fund increased from $4.2 billion in

2003-04 to $7.2 billion last fiscal year.

"Pensions are a major issue, because unfunded liabilities could bankrupt a number of cities and counties," Bob Stern, president of the Center for Governmental Studies in Los Angeles told

"The recent rebound in the stock market has eased the pressure on pension funds. But pension funds will have to seek additional payments from cities and counties to cover unfunded liabilities as more employees reach retirement age."


Jim Sinclair’s Commentary

When the coalition of one finally leaves Iraq what will have been accomplished?

Not much.

Bombs Hurt Maliki Case That Iraq Can Guard Itself
Published: August 20, 2009

BAGHDAD — In recent months, Prime Minister Nuri Kamal al-Maliki has sought to convince Iraq that it is finished with war. He ordered blast walls around Baghdad pulled down, including those near the Foreign and Finance Ministries. He has refused to ask the American military for help in any major way since Iraqi soldiers took full security responsibility in the cities on June 30.

Then two trucks drove into downtown Baghdad on Wednesday, detonating huge bombs that killed nearly 100 people and that gravely wounded Mr. Maliki’s case that Iraq is ready to defend itself without American help. The attacks also deepened a widespread dissatisfaction with Mr. Maliki, with some critics accusing him of polishing his political image as the man who restored security to Iraq at the expense of actual safety


Jim Sinclair’s Commentary

You have heard this here since the USDX was at 117. These fellows are extremely late comers.

Buffett, Pimco warn of greenback’s decline
Heavyweight investors point to unchecked U.S. government spending, massive debt sales as red flags
From Thursday’s Globe and Mail Last updated on Friday, Aug. 21, 2009 09:40AM EDT

Warren Buffett and Pacific Investment Management Co., two of the biggest forces in American investing, are joining the swelling chorus of concern that the U.S. dollar is doomed to long-term decline unless policy makers find a way to rein in government spending growth.

Mr. Buffett, in an op-ed piece in The New York Times, warns that unchecked spending and the massive debt sales necessary to finance it may result in inflation and "will certainly cause the purchasing power of the currency to melt. The dollar’s destiny lies with Congress."

Pimco, which runs the world’s largest bond fund, argues in a commentary published yesterday that the U.S. dollar is already losing credibility as a reserve currency, which signals a continuing decline for the greenback.

The argument is that with U.S. dollars flooding out of the Treasury, the supply will swamp demand and drive down the currency. Along with that, some believe that inflation will take off.

It’s a popular thesis among some more pessimistic economists such as Nouriel Roubini, and it’s a concern for big holders of U.S. Treasury bonds, such as China. At home in the United States, however, questioning the safety of the greenback has for many been taboo, almost unpatriotic.


Jim Sinclair’s Commentary

More ways for China to get rid of dollars and pounds.

Bank of China ‘Cherry Picks’ U.K. Mortgage Borrowers (Update1)
By Zijing Wu and Kevin Crowley

Aug. 20 (Bloomberg) — Bank of China Ltd., the nation’s third-largest commercial lender, will seek to “cherry-pick” prime borrowers as it expands into real-estate lending in the U.K., according to the head of the bank’s British retail unit.

“Before the financial crisis you didn’t have a choice, you couldn’t cherry-pick the good customers,” Xixu Sun, chief retail banking officer at Bank of China U.K. Ltd., said in an interview in London. “Now you have that choice, because there’s a drought in terms of mortgage loans provided by banks.”

The Chinese state-owned bank is looking to win so-called prime customers with good credit histories who are struggling to get mortgages from Britain’s traditional real estate lenders, Sun said. U.K. mortgage approvals plunged to about 48,000 in June, less than half the 108,000-a-month average between 2003 and 2007, according to Bank of England figures.

“There’s a gap, particularly for the high-end market,” said Jaap Meijer, a banking analyst at Evolution Securities Ltd. in London. “The big banks have been very restrictive on lending.”

The average U.K. house price dropped 11 percent to 191,423 pounds ($316,000) in the 12 months to June, the Department for Communities and Local Government said last week.


Jim Sinclair’s Commentary

This is a very good article for new readers.

Six Important Gold Price Indicators
August 20, 2009

Here are six things I’m personally keeping an eye on to gauge the direction of the price of gold:

1. COT report. This report shows that commercial traders — generally believed to be "smart money" traders involved in day-to-day operations of the commodity in question — are short gold. The commercial traders are increasingly short while others are increasingly long; in such a scenario, when the non-commercials run out of fuel in their trend, they will start liquidating, and the commercials can see this as an opportunity to add to their short positions and push the market further down.

Below is the chart that illustrates.

Click to see enlarged chart

2. Consolidation on daily chart. Below is a daily chart. We see consolidation via a pennant formation — a formation that often precedes a sharp breakout. Accordingly, I think there could be a sharp breakout if the market can break above resistance at $980 or support near $925.

3. US banking system still under stress. US banks are still failing, and more may be on the way. Bank failures increase the need for safe havens, which gold, with its long history of serving as a stable monetary commodity, can provide.

4. The Federal Reserve is still aggressively monetizing. The Federal Reserve has stated they will continue to print money and buy assets through the end of October. Additional money creation without the creation of additional productivity stands to devalue the currency, and is the kind of event that can precipitate a run on a currency. Currency devaluation, particularly when it stems from monetary policy put forth by governmental/quasi-governmental agencies, is bullish for gold, as gold is regarded as a hedge against currency devaluation resulting from central banking policies.

5. Financial fraud rising. Courtesy of Jesse comes the chart below, which shows that financial fraud is rising in the US. Fraud weakens the US dollar and the political economy it stems from, and thus could be seen as bullish for gold.

Click to view enlarged chart

6. Financial Fraud in Comex. Comex recently permitted gold futures contracts to be settled not only with physical delivery, but with delivery of shares of gold exchange-traded funds like GLD. GATA explains how this inflates the amount of paper gold, much of which may not be backed by real physical gold. This may result in a split in the gold market — prices for physical delivery and prices for paper gold.

Disclosure: Long physical and paper gold.


Jim Sinclair’s Commentary

MOPE is basically major smoke and mirrors.

This equity rally since April is built on smoke, mirrors and FASB’s collapse on ethics in accounting.

This is a 1932 repeat and as a repeat will sputter out in time.

Insurers’ Biggest Writedowns May Be Yet to Come: Jonathan Weil 
Commentary by Jonathan Weil

Aug. 20 (Bloomberg) — How many legs would a calf have if we called its tail a leg?

Four, of course. Calling a tail a leg wouldn’t make it a leg, as Abraham Lincoln famously said.

Nor does calling an expense an asset make it an asset. This brings us to the odd accounting rules for the insurance industry, includingLincoln National Corp., which uses Honest Abe as its corporatemascot.

Look at the asset side of Lincoln National’s balance sheet, and you’ll see a $10.5 billion item called “deferred acquisition costs,” without which the company’s shareholder equity of $9.1 billion would disappear. The figure also is larger than the company’s stock-market value, now at $7 billion.

These costs are just that — costs. They include sales commissions and other expenses related to acquiring and renewing customers’ insurance-policy contracts. At most companies, such costs would have to be recorded as expenses when they are incurred, hitting earnings immediately.

Because it’s an insurance company selling policies that may last a long time, however, Lincoln is allowed to put them on its books as an asset and write them down slowly — over periods as long as 30 years in some cases — under a decades-old set of accounting rules written exclusively for the industry.


Jim Sinclair’s Commentary

Whatever derivatives do not do to the financial entities, bad business and litigation will.

Regardless, the banking share index is on a bull tear because right now FASB has allowed them to mark up their OTC derivatives to false levels.

The plan for private capital to buy toxic paper failed because the values they are being held at on the books of the Wall Street banks are nowhere near real value and therefore cannot be sold.

In New Phase of Crisis, Securities Sink Banks
AUGUST 21, 2009

U.S. banks have been dying at the fastest rate since 1992, mainly because of bad loans they made. Now the banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks.

Federal officials on Thursday were poised to seize Guaranty Financial Group Inc., in what would be the 10th-largest bank failure in U.S. history, and broker a sale of the Texas bank to Banco Bilbao Vizcaya Argentaria SA of Spain. Guaranty’s woes were caused by its investment portfolio, stuffed with deteriorating securities created from pools of mortgages originated by some of the nation’s worst lenders.

Texas-based Guaranty Financial Group was crippled by investing in securities issued by other lenders.

Guaranty owns roughly $3.5 billion of securities backed by adjustable-rate mortgages, with two-thirds of the loans in foreclosure-wracked California, Florida and Arizona, according to the company’s latest report. Delinquency rates on the holdings have soared as high as 40%, forcing write-downs last month that consumed all of the bank’s capital.

Guaranty is one of thousands of banks that invested in such securities, which were often highly rated but ultimately hinged on the health of the mortgage industry and financial institutions. "Under most scenarios, they were good and prudent investments — as long as we didn’t have a housing or banking crisis," says John Stein, president and chief operating officer at FSI Group LLC, a Cincinnati company that invests in financial institutions.


Posted by & filed under In The News.

Jim Sinclair’s Commentary

As in the 70s, first by the French and later on by the Saudis, COT was buried by failing to perceive their short of gold operation was no longer against a small minority but that they were opposed by governments. Now it is Asia and Russia, the latter of which have no love for the USA.

From a member of LeMetropole Café that Bill Murphy copied to me:

Large Russian Gold purchase for July 2009


I have been tracking the Russian central bank gold holdings since October of 2006 when they stood at 12.5 million ounces. Russia just reported their gold holdings as part of their Official reserve assets. See link below.

On the 20th of each month, Russia reports its gold holdings for the prior month. As of Aug 20, the Russian gold reserves now stand at 18.3 million ounces for July of 2009. This is an increase of 600,000 ounces of gold during the month of July 2009. Russia is now also showing their gold holdings for June 2009 on the link above.

The July 2009 increase of 600,000 ounces is the biggest one month increase in their gold holdings since I have kept records. The largest one month increase in gold holdings prior to today’s report was a 400,000 ounce increase in Oct. 2008, August 2008, and Sept. 2007.

Russia tends to increase their gold holdings every month. The only question is, how much they will increase their gold holdings this month? Russian purchases tend to be heavy in the August, September, October time period based on past history. If an average gold price is used of $930/oz for July, the 600,000 ounce purchase represents $558,000,000. Not exactly chump change.

It is going to get real expensive for the banks to keep the gold price under $1,000/oz.


Jim Sinclair’s Commentary

MOPE would present this as unexpected and temporary. It is neither.

U.S. jobless claims unexpectedly rise
Thu Aug 20, 2009 8:54am EDT

WASHINGTON (Reuters) – The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week, a government report showed on Thursday, fanning worries of an anemic recovery from the worst recession in 70 years.

Initial claims for state unemployment insurance benefits rose 15,000 to a seasonally adjusted 576,000 in the week ended August 15 from 561,000 the prior week, the Labor Department said. Analysts polled by Reuters had forecast new claims slipping to 550,000 last week from a previously reported 558,000.

"I think that we’re hoping for the numbers to stay below 600,000, and not until we get below 500,000 can we be more certain that there is an economic recovery," said Linda Duessel, market strategist at Federated Investors in Pittsburgh.

Futures for the Dow Jones industrial average and the Nasdaq turned negative after weak jobless data, while U.S. government debt prices erased losses.

While economic data continue to point to a pending upturn from the recession that started in December 2007, doubts over the sustainability of the recovery are causing companies to be cautious.


Jim Sinclair’s Commentary

Gold demand is only starting. It is still a baby yet to mature.

This figure will be exceeded right here in 2010.

Gold investment demand up by 500% in India
2009-08-20 15:05:00

MUMBAI (Commodity Online): Gold is becoming a major investment avenue for Indian investors. Despite high local prices, dollar volatility and fall in general demand for jewellery, retail investment demand for gold has taken a sharp upswing of 515.8 per cent to 109 tonnes in the second quarter (April-June) of calendar 2009 from 17.7 tonnes in the first quarter.

Retail investment demand in India — the leading bullion market in the world — returned to positive levels from the dishoarding seen during the first quarter, but was nevertheless weak in comparison to year-earlier totals. Demand for bars and coins at 21.0 tonnes was less than half the 48.1 tonnes recorded in Q2’08.

Experts said despite the recent near record rupee prices, investor appetite and consumer affinity for gold remains healthy. While the most recent quarter-on quarter improvement was in large part a seasonal improvement, experts expect a healthy rebound in activity. A stronger economic outlook than many regions, and the forthcoming festival season suggest that demand for gold will continue to build on recent trends.

However, total gold offtake was down 38 per cent on Q2’08, with jewellery, the largest component of demand, falling 31 per cent.

Although demand failed to match the exceptional levels seen in previous quarters when the economic and financial crisis was at its peak, demand nevertheless remained very robust throughout the quarter. Investment demand witnessed a strong quarter. This indicates a growing recognition of gold as an important and independent asset.


Jim Sinclair’s Commentary

Has Gono been reading JSMineset?

Eventually the SSCI will have a gold component in a unique modernized method.

Gono wants Zim dollar back
Moses Mudzwiti Published:Aug 19, 2009

ZIMBABWEANS have laughed off their central bank’s proposal to bring back the local dollar as a means of dealing with the problem of “change” during transactions.

Controversial central bank governor Gideon Gono has differed with Finance Minister Tendai Biti, who last month declared he had put a “tombstone on the grave of the Zimbabwe dollar”.

Gono wants to revive the dead currency and link it to gold reserves held in the country. He says bringing back the Zimbabwe dollar will make trading easier because people are struggling to find small change. “We anchor our Zim dollar to the gold available. It will not only be RBZ, but all stakeholders,” Gono was quoted as saying in state media yesterday.

“We can even print gold coins. The Zim dollar can then gain as it is anchored on gold. We need to think outside the box.”

However, ordinary people and serious businesses brushed aside Gono’s suggestions as retrogressive.


Jim Sinclair’s Commentary

Tomorrow is Friday, the weekly, "Bank Go Broke" day.

Friday is every week’s "Drain Plug Day" for the undercapitalized FDIC.

What is your wager this week? Two banks, maybe seven banks go broke?

Texas bank failure
August 20, 4:22
Rosemary Terpolilli

Guaranty Bank (based in Austin) is expected to be seized by the FDIC this week.

This savings institution has over $13 billion in assets.

This is the second largest bank failure for Texas, (just behind the July 1988 failure of First Republic at $17 billion in assets).

Based on multiple reports, the Spanish Bank, Banco Bilbao Vizcaya has won the bidding for Guaranty.

Guaranty has over 150 locations in Texas and California with 8 branches in Bexar County.

The failure of Guaranty Bank can be attributed largely to the downturn in the housing market, mortgage-backed securities business and the homebuilder construction loans in California.


Jim Sinclair’s Commentary

Fees do not have the chance of a snowball in hell of keeping up with drain of weekly bank failures. This is another bailout candidate in the not to distant future. The bailout will not be by guarantees, but rather pure QE created cash.

FDIC May Add to Special Fees as Mounting Failures Drain Reserve
By Alison Vekshin

Aug. 20 (Bloomberg) — Colonial BancGroup Inc.’s collapse and the prospect of mounting failures among regional lenders may prompt the Federal Deposit Insurance Corp. to impose a special fee as soon as next month to boost reserves by $5.6 billion.

The FDIC board might act sooner than expected after the Aug. 14 failure of Alabama-based Colonial cost the agency’s insurance fund $2.8 billion, and as banks such as Chicago-based Corus Bankshares Inc. report dwindling capital and Guaranty Financial Group Inc. of Austin, Texas, says it may fail. The fund fell to the lowest level since 1992 in the first quarter.

“With the failure of Colonial Bank and the possible near- term failures of one or two more large banks, the FDIC may be forced to levy a special assessment on the industry sooner than it had planned,” said Camden Fine, president of the Independent Community Bankers of America, an industry group.

The failure of 77 banks this year is draining the fund, prompting the agency in May to set an emergency fee of 5 cents for every $100 of assets, excluding Tier 1 capital, to raise $5.6 billion in the second quarter. The agency has authority to set fees in the third and fourth quarters, if needed, to prevent a decline in the fund from undermining public confidence.

The FDIC board has until Sept. 30 to adopt a fee that banks would set aside in the third quarter. The agency has already signaled another special fee this year.


Jim Sinclair’s Commentary

Any new home built today is vastly overpriced for today’s market. That is a formula for instant foreclosure on the builders loan but that will not stop builders. As long as there is a lender at any rate builders will borrow as most builders live off the builder’s loan.

Home Builder Group ‘Looking Under Every Rock’ to Slash Costs
By James R. Hagerty
August 11, 2009, 2:30 PM ET

Despite hopes that the housing market is starting to bottom out, the National Association of Home Builders is still struggling to lower its costs.

The Washington-based trade group will close its offices for the business week starting Aug. 24 and for the three days before Thanksgiving in the final week of November, Jerry Howard, chief executive officer, said in an interview. That will mean eight unpaid working days off for all of the 341 staff members.

The association has reduced its workforce by about 15% since December.

The need to slash costs results from a steep drop in fees from members. The number of member companies has fallen to about 190,000 from a peak of 256,000 in May 2007, Mr. Howard said.  Although Mr. Howard said “we are starting to see a bottom in the housing market,” he added that home builders remain under severe pressure. “We’re not in a recovery mode yet,” he said, and the group’s membership may fall further.


Jim Sinclair’s Commentary

The dire conditions in pension funds will be the most socially unsettling of all the problems brought to us by the OTC derivative manufacturers and distributors.

Sears Posts Unexpected Loss on Pension Costs, Store Closures
By Sarah Shannon and Lauren Coleman-Lochner

Aug. 20 (Bloomberg) — Sears Holdings Corp., the biggest U.S. department-store company, reported an unexpected second- quarter loss on pension-plan expenses, severance payments to fired employees and costs to close stores.

The net loss was $94 million, or 79 cents per share, compared with a profit of $65 million, or 50 cents, a year earlier, Hoffman Estates, Illinois-based Sears said today in a statement distributed by PR Newswire. Analysts had projected earnings of 35 cents per share, the average of six estimates compiled by Bloomberg.

The “severe decline” in capital markets last year increased Sears’ pension expenses by an estimated $160 million to $175 million for 2009, the company said. Sales fell to $10.6 billion, below the $10.7 billion average estimate of analysts, as consumers spent less on home appliances and clothing. Like other retailers, Sears suffered as consumer spending declined in the face of rising joblessness.

“The overall retail market remains difficult,” Bruce Johnson, the company’s interim chief executive officer, said in the statement.

Expenses rose to $103 million in the 13 weeks ended Aug. 1, Sears said, after the company closed 28 outlets.


Jim Sinclair’s Commentary

This is following every twist and turn you were presented with by the 2006 Formula.

Still, few believe what is coming. I have been argued with and insulted now for the past nine years.

U.K. Has Record July Deficit as Recession Curbs Taxes (Update3)
By Reed V. Landberg

Aug. 20 (Bloomberg) — Britain had an 8 billion-pound ($13.2 billion) budget deficit in July, the largest for the month since records began in 1993, as the recession ravaged tax revenue and the cost of unemployment benefits surged.

The shortfall compared with a surplus of 5.2 billion pounds a year earlier, the Office for National Statistics said in London today. It came in a month when the Treasury usually gets a boost from quarterly tax payments. Britain last had a deficit in July in 1996.

The U.K. will have the biggest deficit in the Group of 20 next year, when Prime Minister Gordon Brown faces re-election, according to the International Monetary Fund. Brown is urging G- 20 leaders to keep up a coordinated fiscal stimulus until a world economic recovery is more certain. The Conservative opposition says spending cuts and possible tax increases are needed to curb debt.

“They’re completely disastrous numbers,” Paul Mortimer- Lee, an economist at BNP Paribas SA, said on Bloomberg Television in London. “With the economy in a parlous state, not much tax is being collected. The chancellor’s estimate for the deficit is going to be overshot by a considerable margin.”

The Treasury forecasts a deficit of 175 billion pounds in the fiscal year that began in April. In the first four months, the shortfall was 50 billion pounds, more than triple the level a year earlier.


Jim Sinclair’s Commentary

Look, if you privatize war, there should be guarantees and returns by the merchants of death.

Maybe they will take credit card points for minor hits?

Wasn’t there a popular company in New Jersey, Murder Inc., that used to do this business?

Blackwater tied to CIA assassination plot
Millions were spent on program, which did not capture or kill any suspects
By Mark Mazzetti
updated 8:04 p.m. MT, Wed., Aug 19, 2009

WASHINGTON – The Central Intelligence Agency in 2004 hired outside contractors from the private security contractor Blackwater USA as part of a secret program to locate and assassinate top operatives of Al Qaeda, according to current and former government officials.

Executives from Blackwater, which has generated controversy because of its aggressive tactics in Iraq, helped the spy agency with planning, training and surveillance. The C.I.A. spent several million dollars on the program, which did not capture or kill any terrorist suspects.

The fact that the C.I.A. used an outside company for the program was a major reason that Leon E. Panetta, the new C.I.A. director, became alarmed and called an emergency meeting to tell Congress that the agency had withheld details of the program for seven years, the officials said.

It is unclear whether the C.I.A. had planned to use the contractors to capture or kill Qaeda operatives, or just to help with training and surveillance. American spy agencies have in recent years outsourced some highly controversial work, including the interrogation of prisoners. But government officials said that bringing outsiders into a program with lethal authority raised deep concerns about accountability in covert operations.

Officials said that the C.I.A. did not have a formal contract with Blackwater for this program but instead had individual agreements with top company officials, including the founder, Erik D. Prince, a politically connected former member of the Navy Seals and the heir to a family fortune. Blackwater’s work on the program actually ended years before Mr. Panetta took over the agency, after senior C.I.A. officials themselves questioned the wisdom of using outsiders in a targeted killing program.



Jim Sinclair’s Commentary

Here is the truth of the matter. How hard is it for F-TV to recognize?

End of Recession Is Premature; GDP Will Slide Further
August 20, 2009

Looking at the data from the Bureau of Economic Statistics, here are some interesting comparisons.

GDP during the great depression – from the end of 1929 to the end of 1933, GDP declining a whooping 45.6%. The second dip was a modest 6.3% between the end of 1937 and 1938.

The only other year over year declines in GDP were 1945 / 1946 and 1948 / 1949.

Between 2007 and 2008 – GDP rose 2.6% and that should not have been declared a recession.

I say the recession began at the end of 2008 – In the first two quarters of 2009, GDP is down from 14.441 trillion to 14.150 trillion, a decline of 2.0%. Look for more declines right through 2011.

Tax bills are pressuring distressed homeowners – Homeowners are falling behind on property taxes. Another sham of the mortgage meltdown was not requiring homeowners to escrow property taxes. Now this issue is causing foreclosure proceedings and draining budgets of state and local governments.

Current lending standards requires 20% down with property taxes, homeowner insurance, community fees and homeowner association fees managed by the servicing bank and paid as a part of the homeowners monthly mortgage payment.

How I summarized my thoughts on the US economy in USA Today on Tuesday: 
I don’t think there is a recovery.


Posted by & filed under In The News.



My corporate obligations must take priority. The incoming faxes, phone calls and emails have gone totally over the top.

Nobody can answer for me as this knowledge in unique. It is the product of 50 year experience.

I simply cannot return all the calls, emails and faxes from the general readership.

My corporate obligations must continue to take priority, which they are.

Jim Sinclair’s Commentary

Nothing has changed but FASB’s previous collapse under pressure of Wall Street and Washington.

The junk is still junk and now has false values back again declared as trading profits via false mark ups.

Troubled Assets Not Going Anywhere
Alexandra Zendrian, 08.19.09, 04:00 PM EDT

It looks like these assets are here for at least five years, which means caution when investing in the banking sector.

It’s recently been reported there are 294 U.S. banks with proportions of troubled assets at 90% or higher. This is despite the fact that the Troubled Asset Relief Program has been in effect since late 2008, at a cost of hundreds of billions of dollars. With that mind, it’s easy to imagine such assets remaining on bank balance sheets forever. OK, maybe "forever" is a stretch, but they sure aren’t going anywhere any time soon. In fact, our investment advisers foresee these assets troubling bank balance sheets for another five to 10 years.

What does that time frame mean for you? With uncertainty surrounding the banking sector and a lengthy run needed to cure the sick banks, it means to either stay away or approach with caution.


Jim Sinclair’s Commentary

Tanzania has every chance of becoming THE leading nation on the African continent. When they do they will hold that position

Survey identifies deepwater potential off Tanzania
Published: Aug 19, 2009
Offshore staff

LONDON – Dominion Petroleum has completed the first phase of interpretation of 2D seismic data over Tanzania’s offshore block 7.

The 4,350 km (2,703 mi) of 2D data was acquired between late 2007 and early 2008. Analysis has revealed several large structural closures in water depths Dominion describes as suitable for most drillships and semisubmersibles.

One Palaeocene sandstone prospect in 1,520 m (4,987 ft) of water has a mapped probable closure of 103 sq km (39.7 sq mi), and could potentially hold 1,000 MMbbl of recoverable oil, the company claims.

In the southwest of neighboring Uganda, Dominion has conducted an airborne and magnetic gravity survey over the Lake Edward segment of Exploration Area 4B (EA4B). Last November, the company also completed a 2D seismic data survey that included 130 km (80.8 mi) on Lake Edward.

Preliminary interpretation has revealed the presence of a large sedimentary basin that deepens to the west and which is fragmented into various tilted blocks, similar to those that have yielded oil discoveries in the north of Lake Albert.


Jim Sinclair’s Commentary

Note the deal is in dollars. This is almost a daily event.

What numb-nut still professes China is in dollar prison?

Ecuador in $1bn oil deal with China
By Naomi Mapstone in Lima
Published: August 17 2009 21:02 | Last updated: August 17 2009 21:02

Ecuador has reached out to China to ease its liquidity crisis, signing a deal to supply the energy-hungry nation with 69m barrels of oil over the next two years in return for a $1bn advance payment.

China is also offering a $1bn loan, according to comments by Fander Falconi, foreign minister, reported in Ecuadorean Hoy, a local newspaper.

China has sought to secure long-term access to oil from Ecuador at a time when the Andean nation is running perilously low on liquidity following the commodities crash and its controversial default on $3.2bn in foreign debt that it argued was “illegitimate”.

The leftist administration says it has paid $900m to repurchase about 91 per cent of the Global 2012 and 2030 bond issues, a deal that weakened its already strained relations with foreign investors and multilaterals.

The Andean Development Organsation (CAF) and the Latin America Reserve Fund (FLAR) have lent close to $1bn between them to Ecuador in recent months, and the country is expecting a $500m loan from the Inter-American Development Bank. But Rafael Correa, president, refuses funds from the International Monetary Fund.


Jim Sinclair’s Commentary

Settlements and/or dismissals in circumstances as large as these indicate a desire on the part of party that filed criminal action, and made serious accusations presented by legal counsel in court, to bury the affair.

The inviting conclusion on such matters as this is that the initiated party has something very big to lose at the hands of the accused.

The apparently dumbest attorney in legal history made an original statement saying that "if this program found its way into wrong hands it could be used to manipulate markets."

You decide what this case development is about. It is actually comic relief at the highest level.

Ex-Goldman programmer eyes US dismissal; talks go on
Mon Aug 17, 2009 6:00pm EDT

NEW YORK, Aug 17 (Reuters) – A federal judge has granted more time for the government to seek an indictment against or work out a settlement with a former Goldman Sachs Group Inc (GS.N) programmer accused of stealing trade secrets, after the programmer’s lawyer said she wants the case dismissed.

U.S. Magistrate Judge James Francis delayed further proceedings by 30 days until Sept. 16 to let the government and Sergey Aleynikov, the former programmer, continue talks.

Assistant U.S. Attorney Joseph Facciponti said talks to resolve the case have gone on from July 7 to as recently as Aug. 13, and that justice would be served by giving the parties more time. Talks were previously extended on Aug. 3.

It is common for prosecutors to ask to extend a deadline for seeking an indictment while plea negotiations are taking place. The request does not mean a settlement is forthcoming.

Prosecutors have accused Aleynikov of downloading stolen Goldman proprietary code onto a home computer, a theft that could cost the Wall Street bank millions of dollars.


Jim Sinclair’s Commentary

Federal debt literally poses a life risk.

This is a social and political problem as well as an economic concern.

Buffett understates the obvious.

Buffett Says Federal Debt Poses Risks to Economy
By Shamim Adam

Aug. 19 (Bloomberg) — The U.S. must address the massive amounts of “monetary medicine” that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency, billionaire Warren Buffett said.

The “gusher of federal money” has rescued the financial system and the U.S. economy is now on a slow path to recovery, Buffett wrote in a New York Times commentary yesterday. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in “uncharted territory.”

The government is trying to spark business and consumer spending through a $787 billion stimulus plan spanning tax cuts and infrastructure projects, while the Treasury and the Fed have spent billions more on separate programs to rescue financial institutions and resuscitate the banking system. The U.S. budget deficit is forecast to reach a record $1.841 trillion in the year that ends Sept. 30.

“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Buffett, 78, said. “For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”

The “greenback emissions” will swell the deficit to 13 percent of gross domestic product this fiscal year, while net debt will increase to 56 percent of GDP, Buffett said.


Jim Sinclair’s Commentary

You expected something different with Washington running the show?

The Volt will flop unless they become police and military vehicles.

I know cars.

CARS: U.S. taxpayers subsidizing pricey Volt
Published: 08/19/09 12:05 am | Updated: 08/19/09 8:56 am

Re: “As gas prices rise, the Volt’s looking good” (editorial, 8-14).

The editorial should have included the net dollar loss each Volt will have for GM. Even with a price tag of $40,000, this is a loss for Government Motors. Taxpayers have given GM $70 billion, and it would have been great to share the total cost to the taxpayers for each sale over and above the $7,500 tax credit we give to the buyers.

At $40,000, I cannot afford a Volt. But each time one is sold, I make a payment through my taxes.



Jim Sinclair’s Commentary

The US seems to always select exactly the wrong person to act as a puppet.

The West never gets its puppets right. Russia does much better.

He will win
He will steal it.

Doesn’t everyone in the Free World do it?

Battle over ballot boxes in Afghanistan

A look at the men vying for the country’s leadership in the Aug. 20 election.


Abdullah is a former foreign minister who has risen in the polls to about 25 per cent support and could force President Hamid Karzai into a run-off election. The trained ophthalmologist was a leading member of the Northern Alliance – a group of warlords and politicians from Afghanistan’s north who helped oust the Taliban during the 2001 U.S.-led invasion. His father was Pashtun and his mother was Tajik. He is seen as the favourite of the Tajiks, who dominate the north and make up around a quarter of the Afghan population. Abdullah has talked about cleaning up government corruption as well as changing the government to a parliamentary system.


Bashardost is a parliamentarian and former planning minister with a somewhat eccentric reputation. When not out campaigning, he spends much of his time working in a tent near the parliament building. His frugal style and populist rhetoric, criticizing corruption and cronyism in the government, have earned him enough of a fan base that he’s garnering as much as 10 per cent in polls. Bashardost is Hazara, a minority ethnic group that is largely Shiite Muslim and thus was a major target of the Sunni Muslim Taliban during their reign. He spent many years abroad, including in France, and according to his website, has an extensive academic background.


Ghani is a 60-year-old, Western-educated former World Bank official who previously served as Afghanistan’s finance minister. Considered a technocrat with a focus on detail, Ghani has been floated as a potential chief executive for the government – someone who runs the day-to-day affairs under the president. The multilingual Ghani, an ethnic Pashtun, has made eliminating corruption from government a major theme of his campaign, and has pledged such programs as establishing model economic zones in the country and starting a women’s-only university, but he is still considered a long shot. He also is a leading advocate for foreign investment.


Karzai was named the interim Afghan leader in December 2001 after the ouster of the Taliban, then won a five-year-term as president in 2004. He briefly supported the Taliban in the 1990s, but broke with them amid signs they were falling under the influence of foreign Islamist extremists. His father, a Pashtun tribal chief, was assassinated in 1999 – purportedly by the Taliban. Karzai was among the few Pashtun exiles to mount armed resistance to the Taliban in Afghanistan after the U.S.-led attack of 2001. The 51-year-old is the front-runner, but his popularity has slipped amid Afghan anger over government corruption.

– Associated Press



Jim Sinclair’s Commentary

And this means what for the US dollar?

Buffett: Debt Mountain Could Turn America Into A Banana Republic (BRK)
Joe Weisenthal
Aug. 19, 2009, 6:48 AM

Berkshire Hathaway CEO Warren Buffett, a supporter of Barack Obama and an indirect beneficiary of the bailouts, writes in a NYT op-ed to warn about the crushing mountain of debt the US government is now building up.

After laying out the staggering numbers, he concludes thusly:

I want to emphasize that there is nothing evil or destructive in an increase in debt that is proportional to an increase in income or assets. As the resources of individuals, corporations and countries grow, each can handle more debt. The United States remains by far the most prosperous country on earth, and its debt-carrying capacity will grow in the future just as it has in the past.

But it was a wise man who said, “All I want to know is where I’m going to die so I’ll never go there.” We don’t want our country to evolve into the banana-republic economy described by Keynes.

Our immediate problem is to get our country back on its feet and flourishing — “whatever it takes” still makes sense. Once recovery is gained, however, Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources.



Jim Sinclair’s Commentary

You have to love the consistency of GM.

GM Cancels Buick SUV One Week After Announcing It 
By Katie Merx and Jeff Green

Aug. 19 (Bloomberg) — General Motors Co. said it canceled plans for a new Buick sport-utility vehicle announced Aug. 6 after potential customers said the model lacked the “premium characteristics” they expect from the brand.

The decision was made Aug. 14, after GM earlier in the week showed the SUV and other future vehicles to consumers, dealers, employees, analysts and news reporters, Vice Chairman Tom Stephens said on a company blog. The plans for the SUV called for a plug-in hybrid version, which also was canceled, he wrote.

The speed of the cancellation shows that the largest U.S. automaker since emerging from bankruptcy in July “is listening and moving quickly,” Stephens wrote. Chief Executive Officer Fritz Hendersonhas said he wants to transform GM to be more responsive to customers and make speedier decisions.

“It’s obviously a sign of a faster GM and a GM more open to outside feedback,” said Jim Hall, principal of auto consulting firm 2953 Analytics in Birmingham, Michigan. “It also suggests there were already concerns inside the company about the product.”

The plug-in hybrid technology that was to be used for the Buick SUV will be applied with no delay to another vehicle that Detroit-based GM will discuss soon, Stephens wrote. GM had said it would begin selling the Buick SUV plug-in hybrid version in 2011, after the gasoline-only model began sales in late 2010.


Posted by & filed under In The News.

Dear CIGAs,

Here is the new symbol of Wall Street.


Jim Sinclair’s Commentary

Tic, tock the dollar drops…

Treasury International Capital (TIC) Data for June

WASHINGTON –The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for June 2009. The next release, which will report on data for July 2009, is scheduled for September 16, 2009.  

Net foreign purchases of long-term securities were $90.7 billion.

Net foreign purchases of long-term U.S. securities were $123.6 billion. Of this, net purchases by private foreign investors were $105.2 billion, and net purchases by foreign official institutions were $18.4 billion.

U.S. residents purchased a net $32.9 billion of long-term foreign securities.

Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $71.3 billion.

Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $19.5 billion. Foreign holdings of Treasury bills decreased $11.3 billion.


Jim Sinclair’s Commentary

And around the country it goes, the royal screwing of the geezers and those looking forward to retirement.

You know, "Cash for Coggers" or "Gas for Geezers" might be a necessary program quite soon. If you can’t pull your own weight it is Dr. Kevorkian time.

State pensions
Discourage double dipping
Tribune Editorial
Updated: 08/18/2009 05:48:37 PM MDT

Utah’s pension system for government workers took a hit from the Wall Street collapse, and actuaries estimate it is now underfunded by about $3 billion. One way to cut those losses would be to discourage early retirements.

This state has a peculiarly generous policy that allows people to retire and take pension benefits from the system, then go back to work full time for a state agency and receive large 401(k) contributions from their employer. According to an audit in 2006, no other state has a policy like this that encourages double-dipping. The Legislature should put an end to it.

Admittedly, the resulting savings will not come anywhere close to rescuing the state’s retirement system, but it’s a start.

Utah traditionally has provided state and local government employees, including teachers, police officers and firefighters, a defined benefit pension plan. The employee receives a lifetime benefit based on a formula which accounts for years of service and average salary. The employer has funded the entire plan.

This contrasts with a defined contribution plan, such as a 401(k), in which an employee has an individual account to which both she and the employer contribute. The employee decides how to invest the money and there are no guaranteed benefits.

Often, a police officer will retire after 20 years of service and begin to draw his defined-benefit pension. But if he goes back to work for a different police agency that is part


Jim Sinclair’s Commentary

Here comes the royal screwing of Main Street.

CalPERS Admits California "Pension Costs Unsustainable" – So What To Do About It?

In an unusual display of honesty CalPERS Actuary Says "Pension Costs Unsustainable"

The CalPERS chief actuary says pension costs are "unsustainable," and the giant public employee pension system plans to meet with stakeholders to discuss the issue.

"I don’t want to sugarcoat anything," Ron Seeling, the CalPERS chief actuary said as he neared the end of his comments. "We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else’s — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) … unsustainable pension costs. We’ve got to find some other solutions."

Dwight Stenbakken of the League of California Cities told the seminar that pension benefits are "just unsustainable" in their current form and difficult to defend politically.

"I think it’s incumbent upon labor and management to get together and solve this problem before it gets on the ballot," he said.

"I actually think it is sustainable," said Terry Brennand of the Service Employees International Union. He said the basic problem is investment losses, not high benefit levels.


Jim Sinclair’s Commentary

Disaster, phase two, starts in September.

Mortgage deliquency rate hits all time high in 2Q
Aug 17 02:39 PM US/Eastern

NEW YORK (AP) – The delinquency rate on U.S. mortgage loans hit an all-time high in the second quarter, but the pace of growth for the rate slowed, a possible sign the mortgage crisis may be beginning to turn the corner.

Data provided by credit reporting agency TransUnion shows the ratio of mortgage holders who are 60 days or more behind on their payments increased for the 10th straight quarter, to 5.81 percent nationwide for the three months ended June 30.

That’s up 65 percent, from 3.53 percent, in the 2008 second quarter.

Deliquency of 60 days is considered a precursor to foreclosure, because of the difficulty homeowners would have coming up with two back payments to bring themselves current.

While the deliquency rate hit a new high, however, the increase from the first quarter to the second was 11.3 percent. In the two prior quarters, the rate jumped nearly 16 percent.


Jim Sinclair’s Commentary

Soon China will have all the minerals and energy but few of the dollars.

Heard any pinhead, xenophobic, talking head idiots say China is in a dollar prison lately?

Exxon, China ink $41 billion Australian gas deal
Tue Aug 18, 2009 7:36am EDT
By Fayen Wong and Chris Buckley

PERTH/BEIJING (Reuters) – Australia and China struck their biggest trade deal ever on Tuesday as the world’s two most valuable listed oil companies, Exxon Mobil and PetroChina, agreed a $41 billion liquefied natural gas deal.

"It’s a statement about the nature of our two economies and the fact that Australia is important to China, just like China is important to Australia," Australian Resources Minister Martin Ferguson told Reuters in Beijing.

The gas sale agreement between Exxon and PetroChina comes just weeks after Exxon inked a A$10 billion Gorgon LNG sales deal with India’s Petronet, which marked Australia’s first ever LNG contract with India.

The deals, along with regulatory approvals process from the federal government now nearing completion, means that the Gorgon project partners could approve the massive LNG project, located off Western Australia, by early as next month.

The latest Gorgon gas sale would bring PetroChina’s total LNG purchase from the project to a total of 3.25 million tonnes per annum (mtpa) for 20 years — making it the largest buyer of gas from the project.


Jim Sinclair’s Commentary

Does not 9.4 people rather than 9.5 people out of 10 unemployed cure all our financial problems?

This writer apparently does not watch F_TV

Joblessness spurs foreclosure fears
Published: Aug. 17, 2009 at 11:36 PM

WASHINGTON, Aug. 17 (UPI) — Worsening joblessness is taking the place of subprime mortgages as the major cause of U.S. foreclosures, financial industry professionals say.

Citing Mortgage Bankers Association figures, The Washington Post reported Monday that the largest share of foreclosures during the first quarter of 2009 shifted from subprime loans to prime loans — indicating larger numbers of unemployed Americans going to foreclosure. Bankers and economists are concerned growing unemployment will further complicate efforts to unwind the foreclosure crisis, the newspaper said.

Citing a report on Moody’s, the newspaper said an estimated 1.8 million homeowners will lose their homes in 2009 — up from 1.4 million in 2008. At the same time, the federal government has encountered more difficulty helping people keep their homes after job loss than in the case of mortgage payments shooting up due to higher interest rates.

Mark Calabria, director of financial regulation studies at the Cato Institute, a libertarian think tank based in Washington, told the newspaper (foreclosures caused by) unemployment are a "much harder nut to crack."

"It’s much easier to bash lenders than to create jobs," he said.


Jim Sinclair’s Commentary

Rolling thunders is heard over middle America

CIT Second-Quarter Loss Narrows, Reserve for Bad Loans Triples
By Linda Shen and Dakin Campbell

Aug. 18 (Bloomberg) — CIT Group Inc., the commercial lender seeking to avoid bankruptcy, had a ninth straight quarterly loss as reserves for bad loans more than tripled.

The net loss narrowed to $1.62 billion, or $4.30 a share, in the second quarter from $2.07 billion, or $7.88, in the same period a year earlier, New York-based CIT said yesterday in a regulatory filing. Nine analysts surveyed by Bloomberg estimated a per-share loss of $1.53.

CIT Chief Executive Officer Jeffrey Peek is negotiating with bondholders and considering asset sales to stave off a bankruptcy filing. The lender, which provides financing to almost a million small- and mid-sized businesses, has lost more than $5 billion in the past nine quarters as bad debts soared and the company was cut off from the commercial-paper market, its traditional source of funding.

“I don’t think there’s any good news to come in terms of credit quality,” said Sameer Gokhale, an analyst with KBW Inc. in an interview before the earnings were released.

Provisions for loan losses in the quarter rose to $588.5 million, more than triple the $152.2 million in the year-ago period. Net charge-offs rose to 2.81 percent, up from 2.41 percent in the first quarter, the company said.


Jim Sinclair’s Commentary

China will buy only if China wishes to buy. China is not in dollar prison. Whomever tells you that is a xenophobic fool.

China cuts US Treasury holdings in June
Updated: 2009-08-18 10:45

NEW YORK: China reduced its holdings of US Treasury debt in June by the biggest margin in nearly nine years, according to a US Treasury Department report issued on Monday.

China cut its net holdings by 3.1 percent to $776.4 billion in June from $801.5 billion in May, the report says. This is also the first large-scale reduction of US Treasury debt by China so far this year.

However, its June holdings were still larger than April’s $763.5 billion and $767.9 billion in March, according to the statistics of the Treasury Department.

Reuters data show the drop in China’s Treasury holdings in June was the biggest percentage reduction since a 4.2 percent cut in October 2000.

On the other hand, Japan, the second-largest holder of US Treasury securities, increased its holdings to $711.8 billion in June from $677.2 billion in May.


Jim Sinclair’s Commentary

Merkel’s speech would have you believe she does not know or has not heard of the Wall Street takeover of Washington DC.

Merkel sees "old arrogance" back on markets
Mon Aug 17, 2009 1:39pm EDT

BERLIN, Aug 17 (Reuters) – German Chancellor Angela Merkel said on Monday arrogance was returning to financial markets and politicians should take steps to ensure they could not be "blackmailed" in future.

Merkel, in an election campaign speech to her conservative Christian Democrats (CDU), did not say which financial market players she was talking about; but last month she said bankers on Wall Street and in the City of London should not be allowed to dictate how money is made.

Merkel is seeking re-election as chancellor in a federal vote on Sept. 27. Parties on both the left and the right of the political spectrum have repeatedly attacked the role played by banks in the financial crisis.

Tighter controls of the financial sector were crucial to ensuring "sustainable growth" in the global economy, she said.

Merkel said that as states struggled with the financial burden of propping up the global economy "an old arrogance was returning" among some market players.


Jim Sinclair’s Commentary

Check out the following video of me driving an amphibious car.


Jim Sinclair’s Commentary

Mark to market accounting needs no defense as it mandates TRUTH. Arguments to the contrary mandate blatant LIES.

In Defense Of Mark-To-Market
Jeremy Newman, 08.18.09, 01:05 PM EDT

It is consistent, objective and transparent.

Blame for the global economic turmoil and subsequent banking crisis has, throughout the last 18 months, been placed at the door of many parties: from rating agencies to governments, regulators to bankers and many more. More recently, mark-to-market accounting has been given a share of the blame.

Accounting standards and the accountancy profession are not responsible for the banking crisis. The losses incurred by banks are not merely accounting losses, they are very real cash losses. Many banks are suffering huge liquidity problems, not merely accounting conundrums . A mark-to-model system–in which each financial organization would be allowed to value and account on an individual model basis–is less transparent than mark-to-market and will lead to inconsistencies and lack of comparability. It is a far riskier system.

Mark-to-market, on the other hand, has the benefits of consistency, objectivity and transparency. It ensures that two similar financial assets are given similar values whether they were originated by the financial institution or bought in the market place; and it ensures that assets are valued by reference to an objective external market view rather than a potentially biased internal view.

In the wake of the banking crisis, many changes have taken place–or are taking place–in mark-to-market accounting. The Financial Accounting Standards Board (FASB) in the U.S. has relaxed mark-to-market rules after political pressure from banking and financial services lobbies.

The International Accounting Standards Board initially said it would not follow suit and warned against rash changes. However, after substantial pressure, the IASB has issued an exposure draft that is similar in many ways, albeit with some potentially significant differences, to the FASB guidelines. Throughout September, the IASB will hold round tables across North America, Asia and Europe to debate these proposals. At the same time, the FASB has announced this week that it may now expand the use of mark-to-market to cover all financial instruments. Who would have thought accounting standards could prompt such a heated debate?


Jim Sinclair’s Commentary

There isn’t a snowball’s chance in hell that Banksters will do this unless forced by the turn coat cowards at FASB.

Banks Should Give Better Data on Illiquid Assets, Scholes Says 
By Jeff Kearns and Shannon Harrington

Aug. 18 (Bloomberg) — Banks should give fair-value estimates for more of their illiquid assets, by listing them on public exchanges and expanding mark-to-market accounting, because investors deserve a clearer picture of their worth, Nobel Prize-winning economist Myron Scholes said.

Investors need better pricing data to accurately value the debt and equity securities of banks, he said in a Bloomberg Radio interview today. Scholes, 68, was awarded the Nobel for helping invent a model for pricing options.

“I’d like to see us encourage many more securities held on the books of the banks be migrated to exchanges if possible,” he said. Doing so would “allow for market discovery and market pricing as much as possible,” Scholes added.

The Financial Accounting Standards Board said Aug. 13 that it will consider expanding fair-value rules to loans, a step that might accelerate banks’ recognition of losses and trigger lower earnings and book values. Accounting rules now let companies recognize most loan losses only when management judges them probable. Applying fair value to loans would require earlier recognition of losses.

Regulators need to “blow up or burn” the private over- the-counter derivative markets to help solve the financial crisis, Scholes said on March 6. Because markets had frozen, investors weren’t getting timely prices to inform their decisions, he said then, speaking at New York University’s Stern School of Business.


Jim Sinclair’s Commentary

After all the surges and high fives, no matter how many, SUSTAINABILITY is the name of this deadly game.

Pakistan Not Ready to Fight Taliban Again
August 18, 2009 1:35 PM
Posted by Farhan Bokhari

Pakistan’s army may require months to prepare for a new military offensive against the Taliban in a restive region along the country’s unsettled border with Afghanistan, a senior Pakistani general on Tuesday told President Obama’s envoy for the Afghanistan-Pakistan region according to senior Pakistani officials.

Lt. Gen. Nadeem Ahmed, a widely respected army commander, met with Ambassador Richard Holbrooke, Mr. Obama’s envoy, to brief him on Pakistan’s northwest frontier province, specifically the areas at the center of Taliban activity.

It is this region which is of the most interest to the U.S. as Afghanistan heads in to Thursday’s presidential elections. In the past, U.S. officials have complained about Taliban militants crossing the border with relative ease to attack Afghan and western troops in Afghanistan before returning to Pakistan’s soil to reorganize.

Earlier this month, Baitullah Mehsud, the senior leader of Taliban militants in Pakistan, was killed in a missile attack which was widely believed to have been carried out by a U.S.-operated drone.

Mehsud’s killing prompted speculation that the Pakistani military may attack the southern part of the Waziristan region along the country’s border with Afghanistan, taking advantage of disarray among the Taliban. Mehsud’s killing led to infighting among the Taliban. So far, the Pakistani Taliban have failed to rally behind a new leader who could emerge as a replacement for Mehsud.


Jim Sinclair’s Commentary

When the lights go out at CIT, the lights go out in the real economy.

CIT is to the real economy as Lehman was to the fraud ridden financial industry.

That makes CIT much more important.

NY Fed, FDIC See Threats Posed By CIT
By DONNA CHILDS | A Dow Jones Newswires column

The Federal Reserve Bank of New York and the U.S. Federal Deposit Insurance Corp. at last appear to be getting to grips with CIT Group Inc. That they recognize the threats posed by the company should be a lesson to Wall Street firms.

The N.Y. Fed last week ordered CIT report daily cash positions and daily client funding, some weeks after the FDIC had issued a cease and desist order against CIT Bank prohibiting it from accepting brokered deposits and requiring it to submit a capital plan.

In their second-quarter earnings calls, leaders of various investment banks unequivocally dismissed their risk exposures to CIT. Such confidence looked misplaced, for CIT has complex and opaque financial relationships.

In some cases, CIT advances funds against the accounts receivable it buys from small businesses. In others, it provides trade credit, protecting clients against payment default by their customers.

In such cases, clients obtain financing from banks, collateralizing the bank loans by assignment of the credit balances from CIT. The failure of CIT to release those balances in a timely manner impairs the clients’ ability to repay their banks. Those banks, in turn, have financial obligations to investment banks.


Jim Sinclair’s Commentary

Japanese economic stimulus "Cash for Clunkers" program?

Top 10 vehicles bought by people trading clunkers

As of Friday, car buyers in the U.S. had signed deals to trade in 358,851 clunkers for new vehicles, getting rebates of up to $4,500 from the federal government. Most of the trades have been pickup trucks and sport utility vehicles. The top 10 vehicles purchased by those making clunker trades:

1. Toyota Corolla
2. Honda Civic
3. Ford Focus
4. Toyota Camry
5. Toyota Prius
6. Hyundai Elantra
7. Ford Escape (front-wheel-drive)
8. Honda Fit
9. Nissan Versa
10. Honda CR-V (four-wheel-drive)

Jim Sinclair’s Commentary

While the West sleeps China is cornering the world’s keynatural resources.

They have a plan and the West does not.

China and Australia sign energy deal
By Jamil Anderlini in Beijing and Peter Smith in Sydney
Published: August 18 2009 16:04 | Last updated: August 18 2009 16:04

China’s largest energy company agreed on Tuesday to buy $41bn worth of Australian natural gas at a signing ceremony intended to put a positive gloss on strained relations between the two trading partners.

Martin Ferguson, Australia’s energy and resources minister, was in Beijing to witness the signing of Petrochina’s agreement to buy 2.25m metric tonnes a year of liquid natural gas from the Gorgon project off the coast of Western Australia.

At current gas prices, the deal, which is with ExxonMobil, the world’s largest western oil company, would be worth $41bn over the next 20 years and is Australia’s largest-ever trade deal, Mr Ferguson said.


Jim Sinclair’s Commentary

Hyperinflation is the least understood economic phenomena.

It is always a currency event as a collapse in confidence. It always occurs during dire business conditions.

81 days to go!

Millions, Billions, Trillions
Germany in the Era of Hyperinflation
By Alexander Jung

During the hyperinflation in Germany of 1920s, the country’s currency, the mark, went crazy. The government of the Weimar Republic may have been able to clear its debts, but it came at the cost of the citizens’ savings. It’s an era that is still part of the national psyche today.

Editor’s note: During the global economic crisis, politicians and economists in the United States and Britain often criticized Berlin for its reluctance to initiate the kinds of expensive stimulus programs promoted by Washington. One of the most oft-cited reasons in Germany for racking up more debt than necessary to revive the economy was the fear of hyperinflation. From 1922-1923, hyperinflation plagued Germany and helped fuel the eventual rise of Adolf Hitler. The following article about this national trauma has been translated from a special issue of SPIEGEL on the history of money.

You could say journalist Eugeni Xammar had a stroke of reporter’s luck when the Barcelona daily La Veu de Catalunya sent him to Berlin in the fall of 1922, a pivotal moment in the country’s history. In the months that followed, it was the most exciting place in the world to report from. Germany’s financial structures collapsed, and the mark began its descent into near worthlessness.

"The price of tram rides and beef, theater tickets and school, newspapers and haircuts, sugar and bacon, is going up every week," Xammar wrote in February 1923. "As a result no one knows how long their money will last, and people are living in constant fear, thinking of nothing but eating and drinking, buying and selling. There is only one topic on everyone’s lips in Berlin: the dollar, the mark, and prices. … Have you seen this? For heaven’s sake, stop! I’ve just bought a six-week supply of sausages, ham, and cheese."


Jim Sinclair’s Commentary

"So what," is quite correct.

The FDIC is adjusting something else to QE.

Everything of size that requires bailing out will be bailed out. You and I can go to hell!

The FDIC Is Broke. Now What? (Part II)
August 18, 2009

Making Matters Worse

An additional pressure on the DIF stems from the fact that losses from prior FDIC enforcements have been dramatically higher than initial estimates. With each new FDIC report, we see less money in the DIF kitty than expected. This next article does a great job of articulating that this is because bank assets are worth a lot less than originally thought:

On January 1 2009 the FDIC reported it had $17,276 million in the DIF and according to press releases for each failed bank, the estimated total costs for FDIC’s DIF during Q1 amounted to $2,146 million, leaving $14,997 million in the fund. However, according to the latest FDIC Quarterly report the fund counted $13,007 million at the start of Q2, – a difference of $1,990 million.

In other words, the estimated spending on failed banks during Q1 was $2,147 million, but the bill ended up around $4,137 million instead (and probably still counting).

This is why Q2 is even more interesting, since the estimated costs are $11,504 million, thus leaving only $833 million in the fund for supporting failing banks in the future. Moreover, the real total cost for the first quarter in 2009 was almost twice the estimates. If Q2 is even close to this figure, the FDIC’s DIF will (very) soon be out of funds.

However, we have detected that DIF costs/bank assets have steadily increased under the period of discussion.

We believe the main reason for this lies in a de facto relaxation of accounting standards, even before the FASB 157 amendment on March 15 earlier this year. Basically the relaxation allows banks to write-off the parts of their losses caused by the slowdown in the market – but it does this by allowing them to decide what a fair price in a ‘normal’ market would be.


Jim Sinclair’s Commentary

In case you have not read this you might consider it.

Indicators suggest gold poised for big breakout by end Q3
In an assessment of the current gold market, Donald W. Doyle, chairman of top coin dealers Blanchard &
Co. sees very positive signs for the gold price in the short term.
Author: Blanchard & Co.
Posted:  Tuesday , 04 Aug 2009

NEW ORLEANS  – The slow trading months of summer are usually a time when gold prices decline, but economic analysts at Blanchard and Company, America’s largest precious metals investment firm, say that indicators this year have them believing the metal is poised for a big breakout by the end of the third quarter.

Specifically, inflation, possible hyper-inflation, dollar weakness, and supply/demand and investor demand fundamentals are all positive for the price of gold toward the end of the summer, says Donald W. Doyle, Chairman and CEO of Blanchard and Company.

While gold remains range bound, it does so at levels above $900 per ounce, which Doyle says he sees as a springboard to greater price gains, and even new record highs, through the remainder of the year – and beyond.

‘"Gold is performing strongly at the same time the stock market is making a mild rally and as the dollar continues to stay at a level that we consider to be inordinately high," Doyle says. "Typically, gold would be declining – but that’s not happening, and there are solid reasons why."

Doyle says demand is central to gold’s current sustained high price levels, with Chinese and Russian central banks adding to their holdings and investor demand continuing at record levels.



Jim Sinclair’s Commentary

There is a serious problem between the Administration and the Fed, but the problem is Quantitative Easing and Bernanke’s reluctance to go to infinity.

The Fed has to lose this one as the Administration appoints Bernanke’s successor. The Fed is headed towards being cops on the traffic beat.

Trouble Ahead: Obama And The Fed
Irwin M. Stelzer: More Questions Than Answers Expected In the Coming Months
August 17, 2009

(Weekly Standard)  Irwin M. Stelzer is a contributing editor to The Weekly Standard, director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).

Almost exactly two years ago economists discovered that the problems in the housing and mortgage markets had spread to the financial sector. Subprime mortgages proved highly infectious, a couple of Bear Stearns funds collapsed, banks suddenly looked at their neighbors with such suspicion that they refused to lend to them, and economists dusted off their copies of histories of the Great Depression, looking for a guide to the future.

One year later they returned those books to the shelves as the "real economy" seemed to prove itself resistant to the diseases afflicting those greedy, over-bonused bankers. But summer’s lease on a recovery proved all too short, and in a few months there was a run on the essays of one Ben Bernanke, in an effort to learn what the Federal Reserve Board chairman had in mind to stop the rush to economic collapse. We discovered that he was indeed in the great tradition of Walter Bagehot, who wisely advised in 1873 that "whatever bank or banks keep the ultimate banking reserve of the country must lend that reserve more freely in time of apprehension." The Fed not only pumped money into a frozen credit system to thaw it out, but joined the federal government in inventing new ways to cope with what was clearly a panic.

And now, two years after subprime mortgages became the domino that toppled or almost toppled many institutions, one year after the mother of all recessions scared consumers into zipping their wallets, corporate executives into cutting investment and letting inventories run down, it is glad, confident morning again in America.


Jim Sinclair’s Commentary

Green shoots are illusions of MOPE.

Jobless spike compounds foreclosure crisis
Economists estimate 1.8 million borrowers will lose their homes this year
By Renae Merle
updated 9:36 p.m. MT, Mon., Aug 17, 2009

WASHINGTON – The country’s growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, according to bankers and economists, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind.

Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody’s And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase.

"It’s a much harder nut to crack, unemployment," said Mark A. Calabria, director of financial regulation studies at the Cato Institute. "It’s much easier to bash lenders than to create jobs."

During the first three months of this year, the largest share of foreclosures shifted from subprime loans to prime loans, according to the Mortgage Bankers Association. The change to prime loans — traditionally considered safer — reflects the growing numbers of unemployed who are being caught up in the foreclosure process, economists say.

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, has proposed using $2 billion in government rescue funding to provide emergency loans to these borrowers. "We are going to be seeing more foreclosures because of prolonged unemployment," he said. "These are people who weren’t in trouble and wouldn’t be in trouble if they hadn’t lost their job."


Jim Sinclair’s Commentary

The US dollar is no safe haven. Read the BBC.

China reduces holdings in US debt

China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.

China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC’s Chris Hogg.

Japan and the UK – second and third largest holders of US debt – increased their holdings over the same period.

China’s holding of US debt is about 7% higher than at the turn of the year.

Inflation fear

In recent months the US government’s budget deficit has widened thanks in part to the Obama administration’s costly stimulus plan.

Our correspondent in Shanghai says that China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar.

This would then erode the value of the debt China holds in the US currency.

In June, China cut its holdings of US securities by about $25bn, a fall of 3.1%.

‘Dollar alternative’

The sales were made as the US treasury secretary was visiting Beijing to try to reassure the Chinese that their investment in his country’s government debt is safe.

In 2008, the Chinese increased their holdings in US debt by 52% over 12 months.

"China has said it would like to establish an alternative to the US dollar as the world’s favoured currency for foreign exchange reserves," said our correspondent.

"So far there is no evidence that there is a suitable alternative. But these figures suggest they are exploring ways to diversify their investments where they can."


Jim Sinclair’s Commentary

According to John Williams of the must have report:

– July Housing Starts Showed Ongoing Depression
– Volatile PPI Reflected Unusual Seasonal Factors

Mark to market graph Bloomberg.jpg

Posted by & filed under In The News.

Visit for Breaking News, World News, and News about the Economy

Dear CIGAs,

The dollar is doomed. The dollar is a safe haven for short term short sighted imbeciles.

The Fed cannot and will not stop.

They have no practical means to drain ten cents worth of this massive unprecedented experiment.

As the economy moves back into crisis, even more dollars will be printed.

Now we are bailing out commercial loans. Next is CIT because it cannot and will not be allowed to fail.

If CIT goes, an immediate collapse of the real US economy will be heard all over the planet as the dollar breaks wide open.

Fed Extends TALF Program for Commercial Real Estate
By Scott Lanman

Aug. 17 (Bloomberg) — The Federal Reserve extended by three to six months an emergency program aimed at restarting credit markets, a move that may cushion the commercial real- estate industry from rising defaults and falling prices.

The Term Asset-Backed Securities Loan Facility, with a capacity of as much as $1 trillion, will expire June 30 for newly issued commercial mortgage-backed securities, instead of Dec. 31, the Fed and U.S. Treasury said today in a statement in Washington. For other asset-backed securities and CMBS sold before Jan. 1, the plan was extended three months to March 31.

Commercial property values have fallen 35 percent since peaking in October 2007, according to Moody’s Investors Service. The extension may help firms such as Vornado Realty Trust, which is considering the sale of commercial MBS through the TALF. Almost $165 billion of mortgages for skyscrapers, shopping malls and hotels are due this year.

While financial-market conditions “have improved considerably in recent months,” the markets for ABS and CMBS “are still impaired and seem likely to remain so for some time,” the Fed and Treasury said.

The central bank said it doesn’t intend to make other types of collateral eligible for the program, indicating officials rejected adding residential mortgage-backed securities after considering such a move for several months. The Fed didn’t rule out a future expansion.


Jim Sinclair’s Commentary

Answer: Not a chance.

Can Kenya follow in Tanzania’s gold footsteps?
AIM listed junior, Red Rock Resources, has entered into a deal with Canadian-based Kansai Mining on a Kenyan gold project and is intent on bringing the country back as a significant gold producer in its own right.
Author: Lawrence Williams
Posted:  Monday , 17 Aug 2009

LONDON – Red Rock Resources (AIM:RRR) which is perhaps better known for its proposed association in Western Australian manganese and iron ore with Brian Gilbertson’s Pallinghurst and Jupiter Mines, has announced it has entered into a deal with Kansai Mining (TSXV:KAN) which could bring it operating control over the latter’s very interesting Migori gold project in south western Kenya, close to the Tanzanian border.

The Migori project tenements are on the Migori Greenstone Belt lying just north of the Tanzanian border. This belt hosts outcropping gold shows, structures and geochemical anomalies along the entire 68km strike length of the two tenements. It also hosts the famous Macalder copper-zinc-gold-silver volcanic massive sulphide (VMS) deposit, discovered by Falconbridge in the 1930s and mined until the early 1960s. It is one of ten such greenstone belts in the area, eight of which are across the border in Tanzania which has seen dramatic growth in gold exploration and exploitation in recent years. Historically the area has seen a number of gold mining operations.

Under the agreement, Red Rock can acquire up to 60% of Mid-Migori Mining Company, the Kansai subsidiary set up to develop the project and which owns the beneficial title and mining rights of the tenements.

Commenting today, Red Rock chairman Mr Andrew Bell said: "The Tanzanian craton just extends into Kenya, and due in part to its location this Kenyan belt has not attracted attention. There is potential here for the development of a gold field with several million ounces, including surface and high grade zones that can be brought into early production."


Jim Sinclair’s Commentary

Let’s keep our eye on the ball. The Fed cannot stop.

The "stop" has a powerful economic recovery in the formula which will NOT occur.

Fed Faces Its Zimbabwe Moment
Joshua Zumbrun, 08.11.09, 05:45 PM EDT

Is the central bank confident enough about the recovery to take the economy off life support?

WASHINGTON — When stock markets plumbed new lows in March, the Federal Reserve responded with nearly every tool in its box. It announced it would create new money to buy $1.25 trillion in mortgages and $300 billion in government debt.

That purchase of government debt looked particularly ominous. Creating new money to buy government debt is the sort of strategy that’s known to destroy economies–just ask Zimbabwe, which suffered so much hyperinflation that it destroyed its currency. The Zimbabwe central bank printed bills in the denomination of 100 trillion Zimbabwean dollars, then found they had value only as a novelty item on eBay. Eventually, Zimbabwe was forced to abandon its currency altogether.

But the difference between the U.S. Federal Reserve and the Reserve Bank of Zimbabwe (one would hope) is that the Federal Reserve will stop before it wrecks the dollar.


Jim Sinclair’s Commentary

Good proposal! If every CIGA went onto the SEC website comment page and backed this it would overwhelm the commission. Come on now, do something other than bitch!

This sounds like an uptick rule to me. They better hurry because after September the fat lady will have sung.

S.E.C. Floats a Short-Selling Proposal
Published: August 17, 2009

The Securities and Exchange Commission, after months of considering what to do about short-selling, came up with a new idea on Monday that could make it virtually impossible to place an order to sell stock short and be sure it would be executed quickly.

The commission asked for additional comments on that idea, delaying for at least a month the possibility of commission action.

The proposal would require that short sales be made only at a price higher than the current best price being offered by would-be buyers of the stock. It is similar to the so-called tick-test, which was effective on many stock markets before 2007, but would be more restrictive and could be easier to apply given the current structure of markets. There is now no limit on short-selling, so long as the seller can locate shares to borrow.

Short-sellers trade borrowed shares of a stock, hoping to buy them back later at a lower price and pocket the difference.

The latest proposal is not a completely new idea; the S.E.C. suggested it deep in its earlier proposal, but did not request detailed comment on it. That it is now seeking comment could indicate that at least some members of the commission think the approach could be a good one.


Jim Sinclair’s Commentary

There is NO SAFE HAVEN in the US dollar when the finances of the USA are a total disaster.

The bailouts have made things infinitely worse, not better.

More debt at unprecedented levels cures a credit lock up crisis.

Bailing out Wall Street means nothing to the US banking system as a whole. All of this was unnecessary before Lehman failed as then there was a means of preventing this disaster.

NOT now!

Coming Soon: Banking Crisis of Historic Proportions
August 16, 2009
John Lounsbury

With everyone (well, almost everyone – I am one of the lonely skeptics) convinced that we have stepped back from the "edge of the abyss", the title of this article may be viewed as laughable. When you connect the dots, as I will in this article, you will at least stop laughing, and, maybe, realize that we still have a big problem.

We have a confluence of five factors that have the potential to create damage to banking not seen in 80 years, and that includes the Great Depression. We’ll hit these factors one at a time.

First Factor: Banks Are Not Doing Enough Business

Commercial bank credit growth has dropped to 2%, according to Jesse’s Cafe Americain (here). The recent history of credit growth is shown in the following graph.

Now, it is a good thing that banks are conserving capital, since they need to increase capital to offset bad loans.

But, if asset valuations deteriorate (and that is quite possible), the banks need to increase earnings to "earn their way" out of their problem. Interest paid by the Fed for reserves on deposit there (by the commercial banks) are not producing nearly the same level of income as new credit issued commercially under our fractional reserve banking system with much higher interest .

If credit issuance does not increase year over year, banks can not improve their financial condition unless the quality of their existing loan portfolio improves.

As discussed in the third factor, below, just the opposite is anticipated for loan portfolios.

So the first factor in this perfect storm is that the banks are not doing enough business.


The U.S. Banking Crisis Is Just Beginning
August 16, 2009
Jeff Nielson

The dichotomy between the fantasy-world of U.S. business reporting and the real world continues to widen. While the media has unequivocally claimed that “the worst is over” for the U.S. banking sector, the employees and shareholders of the 77 U.S. banks which have already gone belly-up this year might choose to dispute this claim.

Five more insolvent U.S. banks were seized by the FDIC in its weekly salvage operations Friday night. As is becoming increasingly common, even with the large bribes which it offers potential buyers, it couldn’t find takers for all of these bankrupt companies.

Bank bankruptcies have already more than tripled the total for all of last year, and are steadily accelerating. Meanwhile, for a nearly endless list of reasons, the crisis in this sector can only get much worse.

Thanks to the U.S. accounting ‘watch-dog’ – the FASB – legalizing fraudulent accounting (see “FASB strong-armed into mark-to-fantasy accounting”), the “solution” which the bankster oligarchs have come up with to the mass-insolvency of U.S. banks is to simply hide a lot more bad loans. Indeed, fraudulent accounting has become a way of life for the U.S.

It began when the U.S. federal government simply stopped reporting the exponential increase in liabilities from its benefit programs in its own budget – contrary to its own law requiring all of its corporations to report such liabilities.


Jim Sinclair’s Commentary

The Hunt for Red October?

Was there something or somebody on that ship that Russia wanted back badly?

NATO and Russia together seems a tad over the top for a freighter that might have been carrying Vodka where the crew and captain got into the cargo.

Finland denies missing ship carries nuclear material
By Orlando Rodrigues (AFP) – 1 day ago

PRAIA — Finnish authorities dismissed talk Sunday that the Arctic Sea was bearing a cargo of nuclear material, as Russia and NATO joined forces in an international hunt for the missing vessel.

Jukka Laaksonen, head of the Finnish Radiation and Nuclear Safety Authority, said firefighters conducted radiation tests on the ship — last reported off Cape Verde — at a port in Finland before it began a voyage full of intrigue.

But he dismissed as "stupid rumours" reports in British and Finnish newspapers that the ship could be carrying a "secret" nuclear cargo that could explain why it was attacked on the Baltic Sea before vanishing.

"Some fireman for some reason thought that there might be some radioactivity involved in this shipment and that was a very stupid idea. There was no basis for that," Laaksonen told AFP.

Finnish police said Saturday that the ship’s Helsinki-based operator, Solchart Management, had received a ransom demand for the Arctic Sea, raising fresh hopes for its 15-strong Russian crew.


Jim Sinclair’s Commentary

This is not dollar positive. This is a natural development in the downward spiral of my 2006 Formula.

Fed Says Banks Tightened Lending During Quarter Through June
By Craig Torres

Aug. 17 (Bloomberg) — U.S. banks tightened standards on all types of loans in the second quarter and said they expect to maintain strict criteria on lending until at least the second half of 2010, a Federal Reserve Report showed today.

“Domestic banks indicated that they continued to tighten standards and terms over the past three months on all major types of loans to businesses and households,” the Fed said in its quarterly Senior Loan Officer survey. “The net percentages of banks that tightened declined compared with the April survey.”

The report suggests that lenders and borrowers are wary of taking on more risk until the U.S. economy shows clear signs of growth. Most banks expected standards across all loan categories “would remain tighter than their average levels over the past decade until at least the second half of 2010,” the report said.

“Consumer and commercial borrowers have clamped down,” Kevin Fitzsimmons, a managing director at Sandler O’Neill & Partners LP in New York, which specializes in bank research, said before the report. “You just need some economic growth to materialize and then you will see more lending.”


Jim Sinclair’s Commentary

Not this time, but in time Israel will make a serious miscalculation. It will happen.

Israelis shoot Egyptian officer at border
Mon, 17 Aug 2009 10:20:37 GMT

Israeli soldiers on patrol along the Israel-Egypt border have opened fire at an Egyptian security officer, the Israeli army says.

"The soldiers saw a suspect individual approach with a rifle which he was arming. They shot in the air and then towards him," said an unnamed Israeli army spokeswoman on Monday.

The Israeli army radio later announced that the Egyptian man sustained a shoulder wound.

The radio station had initially said the Israelis had returned fire after the Egyptian man shot at them.

According to the Israeli spokeswoman, a joint Israeli-Egyptian team will investigate the incident.

Egyptian officials said 21-year-old Central Security conscript, Abdel Salam Mohamed Abdel Salam, was taken to a hospital where police were waiting for him to regain consciousness.


Jim Sinclair’s Commentary

China is in competition with India as North America sleeps.

Canada’s traditional minerals firms are more interested in business from Hedge Funds.

Tata Steel in talks with 2 mining firms for JV

NEW DELHI: Aiming raw material security primarily for its global operations, the world’s sixth largest steelmaker, Tata Steel, is scouting for iron ore and coking coal mines worldwide and is in talks with two mining firms in Vietnam and South Africa for joint ventures.

“We have an option in a South African iron ore mine to enter into a joint venture with the promoters. This project is currently under evaluation,” Tata Steel said in its annual report for 2008-09.

Tata Steel will also take a minority stake in an iron ore mine in Vietnam to feed its proposed JV steel unit there. ."Tata Steel will take a 30 per cent share in the Thach Khe iron ore mine that is about 60 km from the steel project,” the report added.

The steelmaker in 2007 entered into an agreement with Vietnam Steel Corporation to set up a mill. Tata Steel will have a 65 per cent stake in the JV. The South African mine would primarily cater to its European steel firm Corus, which lacks raw material security.

“The highest priority is being given to … ensuring raw material security for the European operations which do not have captive iron ore and coal resources,” Tata Steel Chairman Ratan Tata said in the report. Tata Steel, however, did not give details of estimated reserves of the two mines. – PTI


Jim Sinclair’s Commentary

Chicago IOUs.
Broke towns.
Broke cities.
Broke states.
Broke country.
Broken currency!

Thank you OTC derivative manufacturers and distributors, present and past.
The dollar is a safe haven? What a shock the mainline thinking and F-TV is going to have.

City Government Closed For Business On Monday
Aug 14, 2009 6:59 pm US/Central

CHICAGO (STNG) ― If you planned to check out a library book, visit a city clinic or have your garbage picked up on Monday, you’re out of luck.

The City of Chicago will basically be closed for business on Aug. 17, a reduced-service day in which most city employees are off without pay, according to a release from the Office of Budget and Management. City Hall, public libraries, health clinics and most city offices will be closed.

Emergency service providers including police, firefighters and paramedics will be working at full strength, but most services not directly related to public safety, including street sweeping, will not be provided, the release said.

That also includes garbage pickup. Residents who receive regular collection on Mondays should expect trash to be picked up the following day, the release said. Some other customers may experience a one-day delay as collectors catch up.

As part of the 2009 budget, three reduced-service days were planned for 2009, days which are unpaid for all affected employees — the Friday after Thanksgiving; Christmas Eve; and New Year’s Eve. The City Council recently approved moving the reduced-service day planned for New Year’s Eve to Monday.


Jim Sinclair’s Commentary

Yes, but will it not be better because it has Czars and the government is running it?

GM: Still Making the Same Mistakes
By Ed Wallace
August 17, 2009 7:08AM

General Motors, you introduce cars far too long before they can be bought. You make promises you can’t keep. And then, instead of building value and driving margins up to where GM returns to profitability, you’re once again diminishing how customers view your products by constantly finding ways to drive the prices down.


Jim Sinclair’s Commentary

Small at first but larger and larger as time passes.

Renminbi business underlines HK’s status: CS

Renminbi business will add to the breadth and depth of Hong Kong’s financial market and underline the city’s strengths as an international financial centre, Chief Secretary Henry Tang says.

Speaking at the launch of HSBC Bank (China) Limited’s renminbi retail bonds offering this afternoon, Mr Tang said Hong Kong plays a strategic role as the Mainland financial market reaches out to the world, adding renminbi business development in the city is one of the most important policy initiatives.


Jim Sinclair’s Commentary

The 43 percent must be employed at Goldman and live in Greenwich, CT.

Poll: 57% don’t see stimulus working
By Brad Heath, USA TODAY

WASHINGTON — Six months after President Obama launched a $787 billion plan to right the nation’s economy, a majority of Americans think the avalanche of new federal aid has cost too much and done too little to end the recession.

A USA TODAY/Gallup Poll found 57% of adults say the stimulus package is having no impact on the economy or making it worse. Even more —60% — doubt that the stimulus plan will help the economy in the years ahead, and only 18% say it has done anything to help improve their personal situation.

That skepticism underscores the challenge Obama faces in trying to convince the public that the stimulus has helped turn the economy around. It also could complicate the administration’s plans to overhaul the nation’s health care system.

"This is a wake-up call for the administration." says House Minority Whip Eric Cantor, R-Va. "People see the stimulus hasn’t worked, and now you want to lay on over $1 trillion in a health care plan."

The administration declined to comment on the poll results.

The stimulus package contains $288 billion for tax cuts and $499 billion in new spending, much of it meant to pay for unemployment and other social services. The $1 billion "cash for clunkers" program was not part of the bill, although its $2 billion expansion comes from stimulus funds.


Jim Sinclair’s Commentary

CIGA Green Hornet says correctly, "It always starts in California and migrates everywhere in the USA."

Those expecting and those on pensions are about to get a nationwide screwing.

Governor wants to revamp battered public-worker pension programs
By Dale Kasler
Published: Monday, Aug. 17, 2009 – 12:00 am | Page 1A
Last Modified: Monday, Aug. 17, 2009 – 7:30 am

Weeks after wrapping up a deal to close a $26 billion budget deficit, Gov. Arnold Schwarzenegger is taking aim at what he calls California’s next great fiscal problem: the state’s battered pension system.

Reviving an idea he floated during budget negotiations in June, Schwarzenegger wants legislation creating a two-tier system that would deliver lower benefits to newly hired public employees – not only state workers but firefighters, police officers, teachers, and other local-government employees.

Along with proposed cutbacks in retiree health benefits, Schwarzenegger says, the plan would save $90 billion over the next 30 years.

The Republican governor says the state’s pension system faces tens of billions of dollars in unfunded obligations and is increasingly unaffordable.

"We cannot continue promising people things that we cannot deliver," Schwarzenegger said at a July press conference.


Jim Sinclair’s Commentary

This will be raid on more bugs than even the ABA knows of.

ABA May Suggest Mutual Funds’ Derivatives Risks Disclosure
08-17-2009 | Source:

An American Bar Association task force studying mutual funds’ use of derivatives is likely to suggest measures to seek more disclosure of mutual funds’ derivative risks,Investment News reports. The move is aimed at ensuring investors and fund directors are better-informed about the risks involved with the use of financial instruments.

The task force is also mulling whether theSecurities and Exchange Commissionshould impose specific limits on the ability of funds to invest in derivatives that raise leverage. ABA is unlikely to recommend banning the use of derivatives by mutual funds entirely, as derivatives can improve the efficiency of certain investments.


Jim Sinclair’s Commentary

Very soon huge money in the cash gold market is going to squash the gold banks.

Middle East investors join flight to safety of gold
Mon Aug 17, 2009 5:52am EDT
By Amena Bakr – Analysis

DUBAI (Reuters) – Uncertainty over the world economic outlook is changing Middle East gold buying behavior, with individuals seeking bars and coins as a buffer against hard times, rather than snapping up jewelry for aesthetic reasons.

Investors are following those in the rest of the world into gold, partly compensating for lower consumption from the region’s traditional retail demand base.

"People’s confidence in the stock market went down with the financial crisis," said Ahmed Bin Sulayem, executive chairman of the Dubai Multi Commodity Center (DMCC). "Investing in gold right now is a no brainer.

Investment in bullion in the Middle East was mostly coming from individuals, rather than from funds and institutional bodies, said Sampth Muthu, commodities analyst at Standard Chartered Bank Dubai.

The surge in investor demand could be seen across the region, said Jeffrey Rhodes, chief executive of INTL Commodities DMCC, an independent financial firm based in Dubai.


Jim Sinclair’s Commentary

In the car world the Volt is a joke. Cash for Volts is the next car Czar plan.

No turn in, just cash.

Volt Sticker Shock
By Eric Peters on 8.17.09 @ 6:07AM

We live in incoherent times, but maybe someone can explain it to me: How does a $40,000 "economy" car make economic sense?

The $40k is the price GM will reportedly charge for its all-electric Volt sedan — due out in late 2010 as a 2011 model. Unlike current hybrids, which mostly get going on their internal combustion engines — with their battery packs and electric motors providing a supplemental boost — the Volt will be propelled entirely by electric motors and batteries. The small onboard gasoline-burning engine is only there to provide the power to charge the batteries. It is basically a generator — and is not connected to the drive wheels at all.



Posted by & filed under In The News.




Jim Sinclair’s Commentary

The only recovery is at Goldman.

U.S. Foreclosure Filings Set Third Record-High in Five Months
By Dan Levy

Aug. 13 (Bloomberg) — Foreclosure filings in the U.S. climbed to a record for the third time in five months in July as falling home prices and the recession left more homeowners unable to keep up payments or refinance.

A total of 360,149 properties received a default or auction notice or were seized last month, according to data seller RealtyTrac Inc. One in 355 households got a filing, the highest monthly rate in RealtyTrac records dating to January 2005, the Irvine, California-based company said in a statement.

“We’re in a deep hole,” Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc., said in an interview. “There is a whole new wave of foreclosures tied to the cyclical dynamics of the economy.”

Foreclosures increased as the U.S. recorded another 247,000 job losses in July and home prices fell, leaving an increasing number of mortgage holders owing more than their properties were worth. The median price of an existing single-family house dropped 15.6 percent to $174,100 in the second quarter, the most in records dating to 1979, the National Association of Realtors said yesterday. Almost one-quarter of U.S. mortgage holders are underwater, property data firm said Aug. 11.

“There are a slew of factors showing fundamental weakness on the demand side: tighter underwriting, job loss, investors who’ve been badly burned,” said Stuart Gabriel, director of the UCLA Ziman Center for Real Estate in Los Angeles. “We have not seen the bottom of the housing market.”


Colonial BancGroup and Pennsylvania thrift shut
Regulators shut Colonial BancGroup and Pennsylvania thrift; 74 US bank failures this year
By Marcy Gordon, AP Business Writer
On Friday August 14, 2009, 8:58 pm EDT

WASHINGTON (AP) — Regulators on Friday shut down Colonial BancGroup Inc., a big lender in real estate development that marked the biggest U.S. bank failure this year, and a small bank in Pennsylvania.

The closures boosted to 74 the number of federally insured banks that have failed in 2009.

The Federal Deposit Insurance Corp. was appointed receiver of Montgomery, Ala.-based Colonial, with about $25 billion in assets, and Dwelling House Savings and Loan Association, located in Pittsburgh. The agency approved the sale of Colonial’s $20 billion in deposits and about $22 billion of its assets to BB&T Corp., which is based in Winston-Salem, N.C. The failed bank’s 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen at the normal times starting on Saturday as offices of BB&T, the FDIC said.

Dwelling House had $13.4 million in assets and $13.8 million in deposits as of March 31. PNC Bank, part of Pittsburgh-based PNC Financial Services Group Inc., has agreed to assume all of Dwelling House’s deposits and about $3 million of its assets; the FDIC will retain the rest for eventual sale.

Dwelling House’s lone office in Pittsburgh will reopen Monday as a branch of PNC Bank, the FDIC said.

The FDIC estimates that the cost to the deposit insurance fund from the failure of Dwelling House will be $6.8 million. The failure of Colonial is expected to cost the deposit insurance fund an estimated $2.8 billion.


Jim Sinclair’s Commentary

What, no major employee go away bonuses?

AIG Consumer Lender Cuts 900 Jobs as Losses Mount (Update2)
By Jamie McGee and Tian Huang

Aug. 13 (Bloomberg) — American International Group Inc.’s money-losing consumer lender slashed 900 jobs in the first half of the year as revenue plunged amid the recession.

American General Finance Corp. also closed 145 branches, the Evansville, Indiana-based lender said today in its quarterly report to regulators. The cuts represent about 11 percent of the 7,900 employees American General had as of Dec. 31, according to a separate regulatory filing. The company has about 1,400 branches according to its Web site.

The consumer unit scaled back lending and securitized receivables after losing access to usual funding sources. American General recorded a $1.3 billion net loss last year tied to subprime mortgages and was cut to the lowest investment grade by Moody’s Investors Service last month.

“We may implement further measures to preserve our liquidity and capital,” including securitizing loans and shutting more branches, American General said in the filing. “The exact nature and magnitude of any additional measures will be driven by prevailing market conditions.”

The second-quarter loss widened to $227.2 million from $31.8 million in the year earlier period, the lender said today. Revenue fell by about a third. Lauren Day, a spokeswoman for New York-based AIG, didn’t return a call seeking comment.


Jim Sinclair’s Commentary

No bees, no bats, no food. This is not a joke.

Bee Afraid, Bee Very Afraid

May Berenbaum, entomologist at the University of Illinois at Urbana-Champaign and inspiration for the X Files fictional entomologist Bambi Berenbaum, talks about colony collapse disorder and disappearing bees, as well as the importance of honeybees in agriculture.


Jim Sinclair’s Commentary

Santa strikes again. The great auto give away of your money.

The Great Auto Industry Shakeout
Paul Ingrassia, 08.14.09, 04:11 PM EDT

The bailout of America’s auto industry–General Motors, Chrysler, their finance units, their parts suppliers, Cash for Clunkers, etc.–is costing American taxpayers more than $100 billion. Let’s put that in perspective: It’s enough to pay for every car and truck sold in America for the first half of this year. For now, nobody really knows what we taxpayers will get for our money. Everybody hopes (or should hope) that GM and Chrysler become viable companies once again, but in truth, whether either company makes it is far from certain.

On paper, the new General Motors ( GMGMQ.PK – news – people )–shorn of excess debt, dealers, employees and brands–should be in great shape. But none of that painful cutting will matter unless the company can restore the faded luster of Chevrolet and Cadillac, its two core brands. The two others, Buick and GMC Truck, don’t matter nearly as much.

GM has some excellent engineers, as demonstrated by such worthy cars as the Cadillac CTS and Chevrolet Malibu. But for decades the engineers have been ham-strung by a corporate culture bereft of accountability. While GM was racking up tens of billions in losses during this decade, the only guy who got fired was former CEO Rick Wagoner–and it took President Obama to do it. Thus it was puzzling when new CEO Fritz Henderson’s first round of executive appointments all were promotions from within. In other words, there are new people in key positions but no new blood.


Jim Sinclair’s Commentary

The greatest illusion is the US dollar.

Recovery Delusion
August 14, 2009


Economic recovery is not about to come soon. Recent indications of a turnaround in the economy should not be considered permanent, as they mainly result from hugely increased government spending. Long term changes in the savings rate of the US economy point towards a necessary structural type of adjustment  before growth and full employment are restored. In addition, limited financing availability resulting from the financial crisis will not change in the short run, further restraining activity.


Jim Sinclair’s Commentary:

Israel will make a major miscalculation.

Israel urged to ‘rush’ into attack on Iran
Thu, 13 Aug 2009 09:23:39 GMT

An Israeli defense official believes Tel Aviv must rush to carry out a military strike against Iran’s nuclear facilities evenwithout US approval, a report says.

A ‘senior defense official’ said that Tel Aviv believed a military strike could ‘significantly delay’ what it claims to be an Iranian nuclear weapons program, the Israeli daily Maariv reported on Wednesday, without revealing the official’s name.

The official added that Israel could carry out such an attack without US approval but time was running out for it to be effective.

“The Iranians are creating fortifications and camouflage to defend against a strike from the air,” said the official.

“The military option is real and at the disposal ofIsrael’s leaders, but time is working against them.”


Jim Sinclair’s Commentary:

In Truth CIT should request the Fed’s Plan.  This is a situation that if not rectified immediately has the ability to deal a death blow to the real economy. Who knows, CIT might well be to the real economy, what Lehman Brothers was tto the make believe Wall Street economy.

Fed orders CIT to submit capital plan
Thu Aug 13, 2009 4:31pm EDT
By Elinor Comlay

NEW YORK (Reuters) – The U.S. Federal Reserve has ordered CIT Group Inc, the cash-strapped corporate lender struggling to avoid bankruptcy, to submit a plan for raising capital and meeting debt obligations within 15 days.

The order from the powerful regulator comes as CIT, which on Monday again warned it may seek bankruptcy protection if debt restructuring efforts fall through, scrambles to line up new financing. CIT’s shares climbed by as much as 19 percent after it announced Wednesday’s order on Thursday.

CIT, which became a Fed-supervised bank holding company in December, agreed that within 60 days it would outline how it will manage credit risk and review its system of setting aside money for loan and lease losses.

Within 75 days, CIT must submit a business plan to improve its financial condition and outline actions to strengthen its management and corporate governance, the Fed said. CIT also requires approval from the Fed before paying dividends or pursuing other transactions.


Jim Sinclair’s Commentary:

You think Mother Earth is angry? I do! Get long smoked salmon!

Millions of salmon fail to turn up in Canada
AFP – Friday, August 14

OTTAWA (AFP) – – Millions of salmon have mysteriously failed to turn up in a Canadian river as part of their annual spawning, leaving experts baffled and the local fishing industry in despair.
The Canadian government’s Department of Fisheries and Oceans projected that between six and 10 million sockeye salmon would return to the Fraser River this month.
But the official count for the annual ‘summer run’ — by far the largest of four salmon migrations that see millions of fish return to Canada’s lakes and rivers from the Pacific each year from June to late August — is now just 600,000.
Where the others went remains a mystery.
Local fishermen, quoted by the daily Globe and Mail, described the situation as "shocking," a "catastrophe" and a "crisis," while public broadcaster CBC said 2009 could end up being the worst year ever for the industry.
A record number of salmon smolts were born in the Fraser in 2005 and migrated to the ocean. Nature dictates that most of them should have returned by now to spawn.


Jim Sinclair’s Commentary:

The basic thesis is that the people who caused the crisis have no real interest nor ability to heal the crisis. Sounds quite logical to me.

‘Incompetent’ Leaders Pose Threat to Recovery: ‘Black Swan’
12 Aug 2009 | 9:36 AM ET

Incompetent policymakers are to blame for a financial crisis that will continue until substantial changes are made, author Nassim Taleb, known as the "Black Swan," told CNBC.
Taleb, principal at Universa Investments and coiner of the "Black Swan" term to explain drastic, unpredictable events, said in a live interview that choking debt, continued high unemployment and a system that rewards bad behavior will hamstring an economic recovery.
"It is a matter of risk and responsibility, and I think the risks that were there before, these problems are still there," he said. "We still have a very high level of debt, we still have leadership that’s literally incompetent …"
"They did not see the problem, the don’t look at the core of problem. There’s an elephant in the room and they did not identify it."

Jim Sinclair’s Commentary:

You know that I co-authored a book about this in the middle 90s titled, "BOOM."

China backtracks on PC software filters
By Kathrin Hille in Beijing
Published: August 13 2009 20:01 | Last updated: August 13 2009 20:01

Beijing has stepped back from attempts to force the installation of a filtering software on all personal computers produced or sold in China, finally defusing a controversy that caused uproar in the industry and threatened to spark friction over trade with the country.

The government will continue to install Green Dam/Youth Escort, a program developed at Beijing’s behest by two domestic software makers, on PCs in schools, internet cafés and other public spaces, said Li Yizhong, minister for industry and information technology.


Jim Sinclair’s Commentary:

The winners on the OTC derivatives have been bailed out. The degree of what else was done compared to taking care of the Fast Cats is pitiful.
Bleak sales are another reality check for economy
Retail sales bleak for July, reinforcing fears consumers won’t spend the economy to recovery
By Christopher S. Rugaber, AP Economics Writer
On Thursday August 13, 2009, 10:10 pm EDT

WASHINGTON (AP) — A bleak report on retail sales Thursday reinforced a nagging worry of economists: Shoppers won’t spend enough to help a recovery take hold.
The figures served as a reality check for an economy that lately has appeared poised to emerge from recession and grow again. Consumer spending powers about 70 percent of economic activity.
The Cash for Clunkers rebate program helped give auto sales to their biggest jump in six months in July, but sales sank elsewhere. Gas stations, department stores, electronics outlets and furniture stores all suffered.

Overall, sales fell 0.1 percent, the Commerce Department said, after two months of modest gains. Economists had expected a 0.7 percent increase. Excluding autos, sales fell 0.6 percent, also much worse than predicted.

Jim Sinclair’s Commentary:

Change the word "MAY" to "WILL" and you have the real story

China May Boost Energy, Mining Acquisitions by Half
By John Duce

Aug. 14 (Bloomberg) — China, unfazed by failures to invest in Rio Tinto Group and Unocal Corp., will boost spending on oil and mining acquisitions by at least half this year to take advantage of lower valuations after commodity prices slumped.

State-owned Yanzhou Coal Mining Co. yesterday agreed to buy Australia’s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion), a day after Sinochem Corp., China’s biggest chemicals trader, offered to buy Emerald Energy Plc for 532 million pounds ($881 
million) to gain oil fields in Syria and Colombia.

China National Petroleum Corp.’s plan to buy Repsol YPF SA’s Argentine unit may push Chinese purchases of overseas commodity assets to $43 billion this year, a 48 percent increase on 2008, according to data compiled by Bloomberg.

“The Chinese don’t have enough nickel, don’t have enough oil, and they  don’t have enough copper,” Jim Rogers, chairman of Rogers Holdings and  the author of books including “Investment Biker” and “Adventure  Capitalist”, said in a telephone interview yesterday. “There’s a  crisis coming. They are going around the world buying up what they  can. They’re preparing for a rainy day.”


Jim Sinclair’s Commentary:

In minerals, you are with China in Africa or you have missed the train.

August 14, 2009
China Warms to New Credo: Business First

BEIJING — So far this week, the World Trade Organization has rebuffed China in an important case involving Chinese restrictions on imported books and movies. The Chinese government dropped explosive espionage charges against executives of a foreign mining giant, the Anglo-Australian Rio Tinto, after a global corporate outcry. And on Thursday, the government said it had backed off another contentious plan to install censorship software on all new computers sold here.

Throughout its long economic boom, China has usually managed to separate its aggressive push into the global business arena from domestic politics, which remained tightly controlled by the Communist Party. But events this week raise the question of just how long it will be before the two meet.

In each of those matters, politics and business collided, and business won. Business does not always win, and when it does, as in these cases, the reasons are as often as not a matter of guesswork. But in at least some high-profile matters, China appears to be facing the reality that the outside business world can be freewheeling and defiant when its profits are threatened. And so China’s authoritarian system may also have to evolve in ways its top leaders may not readily endorse.

Beijing has a global footprint now, a consequence of its booming domestic growth and breakneck international expansion. And decisions that once were made on purely parochial grounds — like censoring Web sites, protecting the interests of its state-owned companies and restricting the flow of foreign news and entertainment into China — now have international ramifications.