Posts Categorized: In The News

Posted by & filed under In The News.

Jim Sinclair’s Commentary

Monetization of market-less bankrupt debt with no guarantee of recovery in value is the ULTIMATE ACT OF INFLATION, in this case, the US dollar.

Axiom: To monetize debt is to inflate currency

Monetize

What Does Monetize Mean?

1. To convert into money.
2. To convert from securities into currency that can be used to purchase goods and services.

Investopedia explains Monetize…

For example, you’ll often hear Internet marketers talk about "monetizing website visitors." This is another way of saying that the marketers are trying to figure out a way of making money from website visitors, such as through advertising, ecommerce, etc.

http://www.investopedia.com/terms/m/monetize.asp?viewed=1

New York Fed Begins Purchases of Agency Mortgage Debt (Update1)
By Craig Torres

Jan. 5 (Bloomberg) — The Federal Reserve Bank of New York started buying mortgage-backed securities today as part of a $500 billion program to support the U.S. housing market.

The New York Fed “began purchasing fixed-rate mortgage- backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae,” the Fed bank said in a statement released by e- mail. “Selected private investment managers are acting as agents of the New York Fed in these purchases.”

The central bank didn’t disclose the amount of the purchases, saying such details will be available on the New York Fed’s website beginning Thursday, Jan. 8, and will be updated each Thursday.

The Fed chose BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Co. to manage the $500 billion purchase of mortgage- backed securities it plans to complete by June.

The collapse of U.S. mortgage finance last year led to the worst credit crisis in seven decades and triggered writedowns and losses at financial institutions exceeding $1 trillion.

The central bank has expanded credit by $1.3 trillion over the past year through programs extending liquidity to banks, bond dealers and other financial institutions. The Fed plans to create money to purchase the bonds, boosting bank reserves.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

The following reasons offered at a press conference of the NY Fed (not really) assure us that Zimbabwe/Mugabe economics will never occur in the USA.

1. There was no theft of funds here.
2. The use of the trillions of dollar of bailout money is totally transparent.
3. Those that caused the problems have been dealt with severely.
4. The Balance Sheet of the US Fed is pristine.
5. The Fed will of course mop up all the excess liquidity as soon as they get set up as the Miraculous Hedge Fund, retaining goofy Madoff as their manager floating $5 trillion in the internal US credit market as China opts out.

Zimbabwe’s money man plans to keep on printing
January 1 2009

The activists print anti-Gono fliers in English and Shona and target people standing in line at banks to withdraw money. They feature cartoons of Gono loading Reserve Bank money into the back of cars or gulping down feasts, usually with his foot on a child’s skeleton.

"IT’S YOUR MONEY — TAKE IT NOW!" screams one flier.

"IF GONO STAYS WE WILL ALL DIE!" bellows another.

"Gono is the weak link in the Mugabe regime because he’s become incredibly powerful and incredibly bloated, and he’s got very few friends in the system," said one activist involved in the project, who spoke anonymously for fear of reprisals. "No ministry can get access to cash without going to Gono. He controls everything. He’s become this power-mad individual who’s loathed by the whole country."

He said other members of the group regarded the GonoGoNow project as their most dangerous anti-regime activity. "They think Gono would kill over this," said the activist.

Gono recently launched his book, "Zimbabwe’s Casino Economy," dashed off in 60 days. In an economy where most U.S. dollar transactions are banned, his book is priced at $40.

Tony Hawkins, an independent Harare-based economist whose citation awarding Gono an MBA distinction is appended, these days describes Gono’s performance as "disastrous."

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Jim Sinclair’s Commentary

Pakistan today!

India Set to Show Pakistan Links to Mumbai Attacks, Times Says
By Jay Shankar

Jan. 4 (Bloomberg) — India will release evidence next week of Pakistani involvement in the terrorist attacks on Mumbai, the Times of India reported, citing officials it didn’t identify.

A detailed confession by the lone surviving terrorist, Ajmal Kasab, will highlight a report to be delivered to India-based diplomats of the U.S., U.K., China and other countries, as well as to officials in foreign capitals, the newspaper reported. A copy will also be given to Pakistan, it said.

The report includes photographs and identities of all 10 terrorists, phone logs, data from a global positioning system device and call intercepts, the paper said.

Other evidence includes a logbook recovered from the vessel that carried the terrorists from Karachi, records of satellite phones used by the attackers and transcripts of conversations between the terrorists and their “handlers” in Pakistan during the Nov. 26-29 attack, the Times reported, quoting government sources it didn’t identify.

The U.S. Federal Bureau of Investigation was granted “unprecedented” access to all the evidence and intelligence collected by India, according to the newspaper.

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Jim Sinclair’s Commentary

Remember the comparative interest rate gang that declared that to be the sole determinant of a currency’s value? Where have those bulls all gone?

Evans says Fed needs to mimic below-zero rates
Sat Jan 3, 2009 9:37pm EST
By Ros Krasny

SAN FRANCISCO (Reuters) – A grim economic outlook highlights the need for the Federal Reserve to step up quantitative measures to boost growth, with official interest rates already effectively at zero, Charles Evans, president of the Chicago Fed, said on Saturday.

Evans said that based on the outlook for rising unemployment, falling industrial production and a wider output gap, economic models suggest rates should be below zero.

"If it were not constrained by zero, those models would want to push it below zero, but that’s not possible," Evans told reporters after a panel at the American Economic Association’s meeting in San Francisco.

Quantitative easing, a way to flood the banking system with large amounts of money, "is a way to mimic below-zero rates and provide support to the economy," he said.

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Posted by & filed under In The News.

Dear CIGAs,

A misjudgment by Israel, Pakistan goes nuclear and 2012 is tomorrow. If this is not it, it is close.

Israeli tanks roll into Gaza strip as ground invasion begins
BY ERICA SILVERMAN in Ramallah, West Bank and CHRISTINA BOYLE in New York
DAILY NEWS WRITERS
Updated Saturday, January 3rd 2009, 7:18 PM

Israeli troops and tanks crossed into the Gaza Strip under the cover of darkness Saturday, signaling the start of a bloody ground offensive that military leaders warned would not be short.

Hamas, which seized control of Gaza a year and a half ago and has been attacking Israel with rockets, responded with defiant threats.

"We will fight till our last breath. Your invasion of Gaza will not be a cakewalk. Gaza will be your cemetery," Hamas spokesman Ismail Radwan said.

Israeli officials called up tens of thousands of reservists and warned the incursion would not end quickly.

"It won’t be easy and it won’t be short," Defense Minister Ehud Barak said in a televised address. "We do not seek war, but we will not abandon our citizens to the ongoing Hamas attacks."

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Israel’s Worst Fears
Its U.S. ambassador says the big threat is that Iran has almost enough fuel for its first nuclear weapon.
Published Jan 3, 2009
From the magazine issue dated Jan 12, 2009

Sallai Meridor has been Israel’s ambassador to the United States since 2006. During that time, his government’s main strategic worry has been Iran, and that remains so today despite the fighting in Gaza. Israel warns that Iran is making rapid progress toward a nuclear bomb—Meridor calculates that Tehran should have enough fuel for its first bomb sometime in 2009—and that Israel will take military action unless the United States and other allies step in. A former intelligence officer, Meridor recently met with NEWSWEEK editors in New York to discuss Iran and how best to deal with it. Excerpts:

NEWSWEEK: Is there a timetable on Iran’s nuclear program? The CIA is saying they could have a weapon by 2015.
MERIDOR: Look, this is the most critical issue for America and the Western world. The major concern is instability and the potential for nuclear weapons to escape the region, which is not necessarily going to wait until Iran has a nuclear warhead on a missile. The closer they get to having a bomb, and the closer they are perceived to be, you can expect Iran’s neighbors to start acting on the assumption that Iran is going to have a bomb.

How close is Iran?
The last IAEA [International Atomic Energy Agency] report, some weeks ago, indicated that the Iranians already have 630 kilograms of low-enriched uranium. The previous report found 480 kilograms. At that pace they are producing close to 2.5 kilograms a day. And over the past few months they have had a technological breakthrough. Experts differ on how much low-enriched uranium you need for a first bomb. But even if you took the more conservative assumption, sometime in 2009 they will have enough. That nobody would argue against: no intelligence service, no experts.

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Jim’s Formula:
September 1, 2006

1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.

2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella – Goldilocks situations.

3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.

4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.

5. Lower profits leads to lower Federal Tax revenues.

6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.

7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.

8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).

9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.

10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.

11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.

12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.

I heard all this “slow business” as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.

U.S. Debt Expected To Soar This Year
$2 Trillion Increase May Test Federal Ability to Borrow
By Lori Montgomery
Washington Post Staff Writer 
Saturday, January 3, 2009; Page A01

With President-elect Barack Obama and congressional Democrats considering a massive spending package aimed at pulling the nation out of recession, the national debt is projected to jump by as much as $2 trillion this year, an unprecedented increase that could test the world’s appetite for financing U.S. government spending.

For now, investors are frantically stuffing money into the relative safety of the U.S. Treasury, which has come to serve as the world’s mattress in troubled times. Interest rates on Treasury bills have plummeted to historic lows, with some short-term investors literally giving the government money for free.

But about 40 percent of the debt held by private investors will mature in a year or less, according to Treasury officials. When those loans come due, the Treasury will have to borrow more money to repay them, even as it launches perhaps the most aggressive expansion of U.S. debt in modern history.

With the government planning to roll over its short-term loans into more stable, long-term securities, experts say investors are likely to demand a greater return on their money, saddling taxpayers with huge new interest payments for years to come. Some analysts also worry that foreign investors, the largest U.S. creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the United States as the bedrock of the global financial system.

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Jim Sinclair’s Commentary

This is one way to cut down on public assistance. Starve our fixed income retirees out of the equation.

Savers facing accounts with no interest
Millions of savers are braced for zero per cent accounts within days as the Bank of England is poised to cut interest rates to the lowest level in its 315-year history.
By Edmund Conway and Myra Butterworth
Last Updated: 1:44PM GMT 03 Jan 2009

Experts have warned the return on savings could plumb new depths with the Bank expected to take unprecedented steps to regain control over the economy.

They widely believe the Bank will reduce borrowing costs to below their 2 per cent level – and possibly all the way down to 1 per cent – in its first meeting of the year next week.

More than 7 million people have saving accounts which already pay interest of 1 per cent or less. If a cut is passed on in full by banks, these accounts will dive towards negative territory for the first time on record.

Many elderly people who rely on the income from savings have found themselves struggling in recent months as returns fall.

Just 18 months ago average interest rates on savings accounts were as high as 6 per cent. But consecutive cuts by the Bank’s Monetary Policy Committee have led to banks slashing their savings rates, with the current average rate being just 2 per cent.

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Posted by & filed under In The News.

To our friends at the Comex, I say:

"Utinam barbari spatium proprium tuum invadant!" (May barbarians invade your personal space!)
–Complimentus Via CIGA Rusty Bayonetium

Jim Sinclair’s Commentary

The ABSOLUTE END of the hedge fund era is spelled "MADOFF."

SEC Said to Probe More Ponzi Schemes After Madoff Disclosures
By David Scheer

Jan. 2 (Bloomberg) — U.S. regulators working to untangle Bernard Madoff’s alleged $50 billion Ponzi scheme are probing other money managers suspected of using similar tactics, two people with knowledge of the inquiries said.

The U.S. Securities and Exchange Commission is pursuing at least one case in which investors may have been cheated out of as much as $1 billion, according to one person, who declined to name the manager and asked not to be identified because the probe isn’t public.

Regulators may discover additional Ponzi arrangements as declining stock markets prompt investors to withdraw their cash and they question how their money is being managed. This week, the SEC said it halted what the agency described as a $23 million scam targeting Haitian-Americans, and said the Florida- based operators had tried as recently as last month to bring in more investors.

Investigators haven’t found evidence the suspected frauds are of the same magnitude as in the Madoff case, which would be the biggest of its kind in history, the people said. In a Ponzi scheme, early investors are typically paid with money from later participants.

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Madoff Mess Is Nothing New
William P. Barrett, 12.18.08, 06:00 PM EST
Forbes Magazine dated January 12, 2009

The scope of the unfolding Bernard L. Madoff scandal– $50 billion and counting–is breathtaking. But aside from the extra zeros, little about it is new. In fact, the ploys and plays on human nature that Madoff used to pull off his brash heist have a long, infamous history.

The Reputation Ruse
Madoff was the former chairman of Nasdaq and thus a trusted Wall Street wheel. Investors counted on his reputation, rather than on diligent inspection of his audits, to safeguard their money.

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Biggest Bums Of 2008
Robert Lenzner
12.24.08, 03:38 PM EST

It’s hard to surpass Bernie Madoff for being a bum, but several executves and highly placed officials come awfully close.

The biggest bum of 2008 (and for decades prior) is Bernard Madoff, whose knavish duplicity betrayed the trust of small and large investors across the globe. The Madoff Ponzi scheme is a criminal act that has decimated important foundations like the Picower and destroyed the wealth of widows and orphans.

Our bums list should include those conspirators in this scheme (family or otherwise), the handful of investors who claim they knew it was a scam but did not inform the government (they know who they are), the greedy fools behind the feeder funds that facilitated Bernie at his cheating (our sympathy to the family of Rene-Thierry Magon de la Villehuchet, the investment manager who lost more than $1 billion with Madoff and took his own life two days before Christmas).

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L’Oreal Family Mixed In With Madoff
Javier Espinoza, 12.24.08, 10:40 AM EST

Fortune of billionaire heiress Liliane Bettencourt may have been exposed to Wall Street fraudster Bernard Madoff.

Liliane Bettencourt, the billionaire heiress to the L’Oreal cosmetics empire, may have become the latest victim of Bernard Madoff’s Ponzi scheme. Bettencourt entrusted part of her $22.9 billion fortune to the alleged Wall Street fraudster through a fund managed by New York-based Access International Advisors, press reports said on Wednesday. It is the second time this month Bettencourt has hit the headlines for financial reasons, having earlier provoked ire from her daughter for offering part of her fortune to a photographer friend.

According to French market regulator Autorite des Marches Financier, a total 500.0 million euros ($699.5 million) from approximately 100 French funds were exposed to Madoff’s fraud, out of which 40.0 million euros ($55.9 million) came from private individuals.

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Madoff Investor Reportedly Kills Self
Andrew Farrell, 12.23.08, 04:50 PM EST

French aristocrat who managed money in New York dies, apparently by his own hand.

The fallout from Bernie Madoff’s alleged massive Ponzi scheme is far more than financial. Thierry Magon de La Villehuchet, a fund manager who invested with Madoff, apparently committed suicide at his office.

De La Villehuchet, found dead this morning, was co-founder and chief executive of Access International Advisors, which had invested $1.4 billion with Madoff.

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Could SEC Have Stopped Madoff Scam In 1992?
Liz Moyer, 12.23.08, 03:22 PM EST

An investigation into a feeder fund could have led the agency toward unearthing the fraud.

In the unfolding tale of Bernard Madoff’s alleged $50 billion Ponzi scheme, feeder firms have grabbed much of the focus.

They get their name because they marketed the funds that held the assets ultimately managed by Madoff. Lawsuits are filling the courthouses as burned investors attempt to recoup at least some of their losses from the firms. Last week New York Law School sued Ascot Partners, run by GMAC Financial Services Chairman Ezra Merkin, for losing $3 million of its money to Madoff. Other Ascot investors, including Mort Zuckerman, are expected to follow. Ascot reportedly steered $1.8 billion of client money to Madoff.

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Blumenthal May Investigate Charities Ripped Off By Madoff
Carrie Coolidge, 12.22.08, 06:30 PM EST

Connecticut’s attorney general is looking at whether trustees did required due diligence.

The list of victims who have fallen prey to Bernie Madoff’s alleged $50 billion Ponzi scheme is growing longer by the day. Among its victims are countless nonprofit organizations, ranging from Yeshiva University and Tufts University to the North Shore-Long Island Jewish Health System Foundation.

Now at least one attorney general is asking for records to determine if trustees sitting on nonprofit boards failed to perform their fiduciary responsibility to do proper due diligence.

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Jim Sinclair’s Commentary

Hey, if Enron can shred the trades why pick on goofy Madoff?

Fund Manager Ordered Not to Destroy Madoff Documents
DECEMBER 25, 2008, 11:50 A.M. ET

At a hearing Wednesday in New York state court, J. Ezra Merkin, the chairman of lender GMAC who runs funds that were invested with Bernard Madoff, was enjoined from concealing or destroying any documents related to Mr. Madoff.

Mr. Madoff was arrested for allegedly carrying out a massive fraud scheme that stretched back for decades and …

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Jim Sinclair’s Commentary

Axiom = Keep in mind that it is impossible to have a loser without either a CASH winner or a winner in position value.

QUESTION = Where have all the Trillions gone? The world according to Tarp!

WISDOM = As Forest Gump says, "That is all I have to say about that."

Jim Rogers: $700 Billion Banking Bailout is ‘Horrible Economics’
By William Patalon III
Executive Editor
Money Morning/The Money Map Report

Ask investing icon Jim Rogers about the $700 billion U.S. banking bailout, and he’ll tell you that it’s nothing but “horrible economics.”
And with good reason: Most of the major U.S. banks are already bankrupt.

“Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt,” Rogers said in a recent teleconference at the Reuters Investment Outlook 2009 Summit. “What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent. What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics.”

A long-time China bull, Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.

It was after Rogers “retired” in 1980 that the investing masses first really got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as “Investment Biker” and the recently released “A Bull in China.” He also made some historic market calls: Rogers predicted China’s meteoric growth a good decade before
it became apparent to everyone else, and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.

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Jim Sinclair’s Commentary

With one exception, energy, I agree with every point made. Think hyper – inflation and energy in dollars. Think Pakistan and energy. Outside of that – spot on!

Ten Major Threats Facing The Dollar in 2009
By: Eric deCarbonnel   Friday, January 02, 2009 11:12 AM

Ten major threats are facing the dollar in 2009.

1) Foreign central banks selling US assets

Most of the nations which have been financing the US’s massive current account deficits in recent years have either begun to sell their dollar reserves last year or are planning on selling them this year in order to support their currencies. These nations generally fall into three categories:

A) Oil Producing Nations

Oil producing nations have built up lavish spending habits and large dollar reserve in recent years as a result of profits from rising oil prices. Now that commodity prices have crashes, those profits are gone, and those Oil producing nations will have to bankroll their spending by selling their accumulated dollar assets. Saudi Arabia, for example, is projecting a 2009 Budget Deficit, which it intends to finance by selling off its US holdings. Russia, meanwhile, has already sold over 20% of its $598.1 billion reserves, and it can be expected to continue doing so this year.

B) Emerging markets that have been relying on capital flows to fund their trade deficits

Many emerging markets around the world have been running trade deficits in recent years financed by capital flows. The most prominent example from this group is India.

India’s strong capital flows from tourism, software services, and remittances not only financed its trade deficit, but also increased its foreign reserves to an all-time high of 316.2 billion in May of 2008. However, due to the global slowdown and selloff of emerging markets, those capital flows have now reversed. India’s central bank, for example, has been forced to sell off its US holdings to curb its currency’s decline, and its total reserves have decreased by $62.2 billion. The central bank’s dollar sales in October alone exceeded purchases by a record $18.7 billion. India now has $254 billion foreign reserves left, the majority of which will be sold this year to protect its currency.

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Jim Sinclair’s Commentary

Are the shorts listening? Will you be left behind or lose your behind?

Don’t Miss the Coming Gold Bull

With the massive monetary expansion experienced in recent months and the promise for unprecedented levels of money and credit supply increase in coming months, the United States Federal Reserve looks on paper to be sending America straight into hyperinflation. Germany’s post-World War I Weimar Republic, post-World War II Hungary, 2001 Argentina, and present day Zimbabwe are all analogous examples of massive debt monetization, which all led to hyperinflationary disaster. Never before has the entire world’s economy been linked to one nation’s, however, as is the case today with the United States.

In a case of economic mutually assured destruction, foreign creditor nations and their central banks can’t afford to spark a run on the US Dollar, because it would kill their own export-based economies, as well as devalue their debt repayments and foreign exchange reserves. But the United States has been financing consumption through debt for decades and has resorted to monetary expansion to finance its debt and deficit spending, which is only going to increase with Barack Obama’s infrastructure and social programs. The Troubled Assets Relief Program (TARP) itself amounts to $700B, all of which will essentially be "printed." Foreign demand for US debt is all but gone, as creditor nations are now attempting to unwind their USD positions. Huge creditor nations like China and Iran were net sellers of US Treasuries in recent months, attesting to the weakening of the American debt bubble. So where’s all this excess liquidity go?

The answer is gold, and it is the only way to prevent the hyperinflationary scenarios referenced above from materializing in the United States.

The Fed has been on a money printing binge of unprecedented proportions, but has been able to thus far "trap" the excess liquidity from reaching the consumer level, which is what causes price inflation. It started a massive foreign currency sale this summer through the Exchange Stabilization Fund (ESF) that led to a supply increase of Euros and suppression of dollar usage. It has been liquifying troubled banks by issuing them T-bills financed through monetization in exchange for toxic assets by utilizing reverse repurchase agreements. And it has used the recent deleveraging and commodity collapse (partially caused by credit defaults in many of the overleveraged institutions that were supporting the commodity bull) to supply the temporary demand for US Dollars and feeding its own foreign exchange reserves.

But the excess liquidity thus far is trapped in time-sensitive and manipulated instruments now, and without a demand for American debt, it has to go somewhere. As T-bills expire and the stock market descends further, actual currency is going to be released out of sequestration into the economy. The Fed cannot allow the market to breach below its November lows, unless it wants widespread insolvency in insurers and banks, which are legally required to halt operations in the event of insolvency. I’ve heard estimates of 7500 and 8000 in the Dow as being minimum support levels that, if broken for an extended time, would lead to economic collapse in America as financials would all go under. To prevent this and to finance Obama’s deficit spending, actual dollars will have to be injected into the system and they will be.

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Jim Sinclair’s Commentary

Law & Order – Special Victims Unit.

Paper gold has NO LIMIT, unless YOU and I limit it.

Join me in the Good Fight. Reduce the Comex warehouse holdings by 50%. Stop the daily price theft.

They did it this Africa morning again, yet they are paper tigers

More money, less Gold to push gold price to $2000
2009-01-02 10:55:00

Is more money chasing less and less gold every day? Yes, it is true. And that should be one reason why gold prices could zoom to a record $2000 levels in 2009!

According to a 2009 forecast from Mumbai-based Commtrendz Risk Management Services, all over the world broad money supplies in developed nations generally have an average growth rate of around 7% annually, while world gold supplies have hardly gone up by 1-2% over years.

In 2008, central banks around the world have acted in concert to lower interest rates to such levels that low interest rates themselves start to stimulate economies. The ECB, BOE has cut short-term interest rates by 0.75% to 2.5%, 1% to 2% respectively of late.

Japan and the US Interest rates are just about at zero. The fiscal spending programs of US could expand into multi trillions.

of dollars. The above efforts coupled with monetary stimulations in the form of direct injections into the money system, if happen to get the world out of deflationary grip could leave explosive inflationary situation on the back of high crude oil prices.

Nominal paper money increase will lead to inflationary push to whole commodities complex and crude oil should not escape from it.

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Jim Sinclair’s Commentary

Remember that thing called Jim’s Formula?

Cash-poor states eager for a piece of Obama plan
By BETH FOUHY

NEW YORK (AP) — President-elect Barack Obama’s plan to jolt the economy by overhauling the nation’s roads, bridges and transit systems has local officials clamoring for their share despite questions as to whether the program will actually work.

"California’s fiscal house is burning down," state Treasurer Bill Lockyer declared recently after a California regulatory board halted financing for some 1,600 infrastructure projects because of the state’s nearly $15 billion deficit.

California’s woes are far from unique, as the deepening economic crisis has wreaked havoc on state budgets across the country. At least 40 states are running deficits, forcing governors to raise taxes and trim spending while postponing urgent repairs to roads, bridges, hospitals and ports.

"Because of the downturn in revenues, we’re all starting to delay construction projects that are clearly maintenance. That risks public safety," said Maryland Gov. Martin O’Malley in an interview.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

What a disaster has befallen on the financial industry thanks to OTC Derivatives manufacturers, 158 year old Lehman and 95 year old Merrill. We are yet to witness the final chapter of this horror story which is the death of the US dollar with America’s permanent fall from grace.

Thank you to the army of geeks who still do not know what all the fuss is about, to management that counted their bonuses but knew nothing about derivatives and regulators that were not at home.

Merrill 95-Year Run Ends as Bank of America Buys Firm
By Zachary R. Mider

Jan. 1 (Bloomberg) — Merrill Lynch & Co.’s 95-year run as an independent company is coming to an end as Bank of America Corp. completed its acquisition of the broker for about $33 billion in stock.

Bank of America, the biggest U.S. home lender, closed the purchase today, the Charlotte, North Carolina-based company said in a PRNewswire statement. Scana Corp., South Carolina’s biggest utility owner, will replace New York-based Merrill Lynch in the Standard & Poor’s 500 Index.

Merrill Lynch was founded by Charles E. Merrill in January 1914 and evolved into the world’s biggest brokerage, with an army of 17,000 financial advisers. After more than $50 billion of losses and writedowns tied to the collapse of the U.S. subprime mortgage market, Merrill agreed in September to a sale, escaping the fate of bankrupt Lehman Brothers Holdings Inc.

Bank of America, led by Chief Executive Officer Kenneth Lewis, 61, plans to cut 30,000 to 35,000 positions from the combined companies in the next three years because of the merger and a weak U.S. economy. Merrill CEO John Thain, 53, will remain as president of investment banking, trading and brokerage.

Bank of America rose 84 cents, or 6.3 percent, to $14.08 yesterday in New York Stock Exchange composite trading, valuing Merrill shares at $12.10 in the stock-for-stock exchange. That’s 88 percent less than their high of $97.53 in January 2007.

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Jim Sinclair’s Commentary

There is something so obviously wrong with all this, yet the public remains quiet.

Government aid could save U.S. newspapers, spark debate
Wed Dec 31, 2008 6:50pm EST
By Robert MacMillan – Analysis

NEW YORK (Reuters) – Connecticut lawmaker Frank Nicastro sees saving the local newspaper as his duty. But others think he and his colleagues are setting a worrisome precedent for government involvement in the U.S. press.

Nicastro represents Connecticut’s 79th assembly district, which includes Bristol, a city of about 61,000 people outside Hartford, the state capital. Its paper, The Bristol Press, may fold within days, along with The Herald in nearby New Britain.

That is because publisher Journal Register, in danger of being crushed under hundreds of millions of dollars of debt, says it cannot afford to keep them open anymore.

Nicastro and fellow legislators want the papers to survive, and petitioned the state government to do something about it. "The media is a vitally important part of America," he said, particularly local papers that cover news ignored by big papers and television and radio stations.

To some experts, that sounds like a bailout, a word that resurfaced this year after the U.S. government agreed to give hundreds of billions of dollars to the automobile and financial sectors.

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Jim Sinclair’s Commentary

Who dun it?

Pakistani Militants Admit Role in Siege, Official Says
By RICHARD A. OPPEL JR. and SALMAN MASOOD
Published: December 31, 2008

ISLAMABAD, Pakistan — Pakistani authorities have obtained confessions from members of the Pakistani militant group Lashkar-e-Taiba that they were involved in the terrorist attacks in Mumbai in November that killed more than 160 people, a Pakistani official said.

The confessions are sure to put pressure on Pakistan’s leaders; senior Pakistani officials have repeatedly complained in recent weeks that India had not provided them evidence of Pakistani complicity.

American and British officials — and Indian investigators — have said for weeks that their intelligence clearly points to the involvement of Lashkar in the Mumbai attacks. That evidence has been deeply uncomfortable for Pakistan, whose premier spy agency, the Directorate for Inter-Services Intelligence, helped create, finance and train Lashkar in the 1980s to fight a proxy war against Indian forces in the Indian-controlled portion of Kashmir.

But now, after weeks of stonewalling, it also seems clear that Pakistan may use its investigation to make the case that the Mumbai attackers were not part of a conspiracy carried out with the spy agency, known as the ISI, but that the militants were operating on their own and outside the control of government agents.

The most talkative of the senior Lashkar leaders being interrogated is said to be Zarrar Shah, the Pakistani official said. American intelligence officials say they believe that Mr. Shah, the group’s communications chief, has served as a conduit between Lashkar and the ISI. His close ties to the agency and his admission of involvement in the attacks are sure to be unsettling for the government and its spy agency.

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Jim Sinclair’s Commentary

Happy New Year Pakistan. Obama plans a massive troop increase?

Afghanistan and Pakistan take center stage in 2009
Under Obama, the US may send 20,000 more troops and encourage talks with the Taliban in an effort to reclaim the upper hand in Afghanistan.
By Anand Gopal | Correspondent of The Christian Science Monitor
from the January 2, 2009 edition

Kabul, Afghanistan – At times in 2008 Afghanistan eclipsed Iraq in levels of violence, and international attention is returning to the country for the first time since 2001. With the Obama administration planning a massive troop increase, Afghanistan and Pakistan look to be at the center of the administration’s foreign policy for 2009.

What is at stake?

In 2008, violence reached record levels across the country – there were 50 percent more insurgent attacks in the first seven months of 2008 than in the same period in 2007, according to Agency Coordinating Body for Afghan Relief (ACBAR), a Kabul-based aid organization. Insurgents are "conservatively estimated to be active in over 35 percent of the country," says Nic Lee of the Afghan NGO Safety Office, a Kabul-based nongovernmental organization. The Taliban and its allied movements effectively control large parts to the Pashtun-dominated south and east, including many districts close to Kabul. Nearly as many international troops have been killed in Afghanistan this year as in Iraq, despite the fact that almost twice as many soldiers are deployed in Iraq.

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Jim Sinclair’s Commentary

There is no moral will to face the problem and revamp the system therefore there is no possible chance of avoiding hyper-dollar-inflation. Simply NO chance!

Treasury Opens Door to Aid for Broad Array of Firms, Industries
By Rebecca Christie

Jan. 1 (Bloomberg) — The U.S. Treasury threw the door open to taxpayer financing for a widening array of companies and industries by drafting broad guidelines on aid to the auto industry.

The Treasury’s guidelines, published yesterday, would let officials provide funds to any company they deem important to making or financing cars. That leaves room for the government to provide money from the Troubled Asset Relief Program beyond loans already committed to General Motors Corp., GMAC LLC and Chrysler LLC.

“There are going to be other industries that are going to have just as good a case,” as the auto companies, former St. Louis Federal Reserve Bank President William Poole said in an interview on Bloomberg Television. “We don’t know what those other industries are going to be. Where does this process stop?”

Shares of auto suppliers including American Axle & Manufacturing Holdings Inc. and Lear Corp. jumped yesterday after Treasury announced the guidelines. The Motor & Equipment Manufacturers Association has been lobbying for the use of federal funds as a backstop in case parts makers can’t collect money the auto manufacturers owe them.

Analysts have speculated that companies such as GM’s bankrupt former parts unit Delphi Corp., might be eligible for assistance. The Treasury guidelines may encourage more guessing on what companies and industries are next, said Vincent Reinhart, resident scholar at the American Enterprise Institute in Washington.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

The sheer size of this continuing free lunch bailout program guarantees two things:

– Gold meeting and exceeding my price objective of $1650 by multiples

– A drop in the value of long bonds that takes the appearance of a very, very long fishing line as the US is shocked by an unwillingness of Asia to finance the incomprehensible size of the bailout free lunch for those wholly responsible for the disaster in the first place.

There simply is no moral engine that can power any alternative ending.

There are no more than 745 days left in this drama.

U.S. throws GMAC $6 billion lifeline
Treasury injects $5B into finance firm key to General Motors’ survival, while automaker gets $1B loan to make its own investment in GMAC.
By Tami Luhby, CNNMoney.com staff writer
Last Updated: December 29, 2008: 11:03 PM ET

NEW YORK (CNNMoney.com) — In yet another move to prop up the crumbling U.S. auto industry, the government announced Monday that it will pump $6 billion into GMAC Financial Services, a financing company critical to the survival of General Motors.

The rescue package has two parts. The Treasury Department is injecting $5 billion directly into GMAC in exchange for preferred equity shares that pay an 8% dividend. GMAC also is issuing warrants to Treasury in the form of preferred stock. If exercised, the warrants will pay a 9% dividend.

Also, the government will lend $1 billion to GM that the automaker will invest in its financing arm. GMAC needs the funding to convert to a bank holding company, a necessary step to receiving the bailout money.

The Federal Reserve said last week that it would approve GMAC’s conversion to a bank holding company, subject to certain conditions.

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Posted by & filed under In The News.

Dear CIGAs,

There is something so comforting about being missed.

IMGP2020

 

Jim Sinclair’s Commentary

Igor is WRONG!

It is NOT the US, it is the US dollar.

It is NOT in 2010, but rather between the first week of January 2011 and the third week of June 2012.

However, if he was by some unforeseen circumstance correct, geographically it would be rather good for the Cando and Euro between January 14th, 2011 and the third week of June 2012.

It is amazing what hyper-dollar- inflation can do for a resource based currency without a chronic deficit problem.

"As goes Motors, so goes the USA"

" The annual convention of Economic Experts was called off due to unforeseen circumstances."

As if Things Weren’t Bad Enough, Russian Professor Predicts End of U.S.
In Moscow, Igor Panarin’s Forecasts Are All the Rage; America ‘Disintegrates’ in 2010
By ANDREW OSBORN

MOSCOW — For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument — that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. — very seriously. Now he’s found an eager audience: Russian state media.

In recent weeks, he’s been interviewed as much as twice a day about his predictions. "It’s a record," says Prof. Panarin. "But I think the attention is going to grow even stronger."

Prof. Panarin, 50 years old, is not a fringe figure. A former KGB analyst, he is dean of the Russian Foreign Ministry’s academy for future diplomats. He is invited to Kremlin receptions, lectures students, publishes books, and appears in the media as an expert on U.S.-Russia relations.

But it’s his bleak forecast for the U.S. that is music to the ears of the Kremlin, which in recent years has blamed Washington for everything from instability in the Middle East to the global financial crisis. Mr. Panarin’s views also fit neatly with the Kremlin’s narrative that Russia is returning to its rightful place on the world stage after the weakness of the 1990s, when many feared that the country would go economically and politically bankrupt and break into separate territories.

A polite and cheerful man with a buzz cut, Mr. Panarin insists he does not dislike Americans. But he warns that the outlook for them is dire.

"There’s a 55-45% chance right now that disintegration will occur," he says. "One could rejoice in that process," he adds, poker-faced. "But if we’re talking reasonably, it’s not the best scenario — for Russia." Though Russia would become more powerful on the global stage, he says, its economy would suffer because it currently depends heavily on the dollar and on trade with the U.S.

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Jim Sinclair’s Commentary

Thank you all you now bailed out OTC derivative manufacturers. You should consider Blackwater Security Services as you will most certainly need them, and they need the business.

Maybe Mr. Madoff should have hired Blackwater rather than asking for free services from the FBI.

Enjoy hiding the rest of your lives with your cancerous ill gotten gains at the cost of so many others’ well being. May you all rot in hell for eternity!

You are ignorant of the inescapable dire sufferings you have caused yourselves.

Holiday Sales Drop to Force Bankruptcies, Closings
By Heather Burke

Dec. 29 (Bloomberg) — U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years.

Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holdings Corp. are among chains shuttering underperforming locations.

More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.

“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. “There are a number that are real causes for concern.”

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

Do not for a moment think the Pakistan/India problem will just morph away. It will not.

Do not believe that mistakes will not occur in the Israeli strategy backed by the US lead by President Elect Obama.

It is possible that before retaliating you need to decide if you are prepared to really go all the way and what such a decision means. Tit for tat is a waste of time.

Turkey plays the role of victim in this unwinding scenario.

As the following article points out:

“He retired from the C.I.A. in 2006 after 29 years, and no longer has access to the nation’s most sensitive information. But his career as an analyst is far from over. As an influential terrorism adviser on President-elect Barack Obama’s transition team, he dispenses counsel to the administration-in-waiting on some of the thorniest problems it will face: as varied as the hunt for Al Qaeda’s senior leaders like Mr. Zawahri, the likelihood of another attack on American soil, and how to stave off nuclear Armageddon between India and Pakistan.”

Behind Analyst’s Cool Demeanor, Deep Anxiety Over American Policy

By MARK MAZZETTI

Published: December 26, 2008

WASHINGTON – BRUCE RIEDEL was a 28-year-old Middle East analyst at the Central Intelligence Agency on Oct. 6, 1981, the day a band of gunmen assassinated President Anwar el-Sadat of Egypt during a military parade in Cairo.

Within hours of the attack, Mr. Riedel was summoned to the agency’s seventh floor to brief William J. Casey, the irascible C.I.A. director. Over the next several months, he began compiling a dossier about the attack — what he calls the “birth of the global jihad” — and about the emergence of a cerebral Egyptian physician named Ayman al-Zawahri.

He retired from the C.I.A. in 2006 after 29 years, and no longer has access to the nation’s most sensitive information. But his career as an analyst is far from over. As an influential terrorism adviser on President-elect Barack Obama’s transition team, he dispenses counsel to the administration-in-waiting on some of the thorniest problems it will face: as varied as the hunt for Al Qaeda’s senior leaders like Mr. Zawahri, the likelihood of another attack on American soil, and how to stave off nuclear Armageddon between India and Pakistan.

Mr. Riedel is one of a chorus of terrorism experts who see the terrorist network’s base in the mountains of Pakistan as America’s greatest threat, and perhaps the biggest problem facing Mr. Obama’s new team.

He speaks angrily about what he calls a savvy campaign by Pakistan’s government under President Pervez Musharraf to fleece Washington for billions of dollars even as it allowed Al Qaeda to regroup in Pakistan’s tribal lands.

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Jim Sinclair’s Commentary

I am sure that the present Administration has no teeth in this situation.

Bush, Saudi King talk amid Israel-Gaza bloodshed

CRAWFORD, Texas (AFP) — Saudi King Abdullah told US President George W. Bush by telephone on Saturday that major countries must take action to halt Israel’s attacks on Gaza, the Saudi state news agency SPA reported.

White House spokesman Gordon Johndroe had said earlier that the king had called Bush, who was preparing to usher in 2009 on his Texas ranch, to discuss "the Middle East" and had declined to offer further details.

But SPA reported that King Abdullah had discussed "the Israeli aggression against Gaza" and the "implications of continuing Israel’s policies of blockade, occupation and torture against the Palestinian people all over the Occupied Territories."

The king also called for "the major countries to shoulder their responsibilities to stop this Israeli attack and save the lives of the innocent and remaining infrastructure in the Palestinian territories."

Abdullah made the call after a meeting in Riyadh with Palestinian President Mahmud Abbas.

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