Posts Categorized: In The News

Posted by & filed under In The News.

Dear CIGAs,

The Financial Bubble Machine is cooking like never before in history. The result is higher prices even if Miss Cleo has less clients.

Hyperinflation is a currency event. It is not the product of increased business demand for anything. Right now we are fighting the battle at .8200 on the USDX.

When this battle is lost the drama above starts.

Lose it will. If not tomorrow, then very soon.

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Jim Sinclair’s Commentary

You are going to hear the term "Legacy Assets" a lot more in the near future.

Here is the formal definition:

Q: What is legacy assets?

A: Legacy assets are those assets which are less productive (outdated) and in some cases least productive overtime, they are just on the brink of being a liability.

When assets lose considerable value they are often termed as legacy assets.

Literal meaning of the word legacy is outdated or obsolete.

The informal definition is "worthless OTC derivative junk paper."

Jim Sinclair’s Commentary

Whatever it is, wherever it is, if it fits into the matrix of the OTC derivative meltdown it is being bailed out.

This has nothing to do with altruism; it is credit default derivatives that matter.

Who is going to bail out the US dollar? Not the Chinese.

Treasury plans help for muni bond market
By Tom Braithwaite in Washington and Nicole Bullock in New York
Published: May 15 2009 00:56 | Last updated: May 15 2009 00:56

The US Treasury would provide a backstop to stricken states like California, which are struggling to raise debt, under legislation due to be introduced to Congress.

Proposals published on Thursday would see the Treasury acting as a reinsurer in the market and the Federal Reserve setting up bond purchase agreements, which were commonly provided by banks until the credit crisis.

The changes present an even greater use of federal money and oversight into new areas of the market, with billions of dollars from the $700bn troubled assets relief programme – which has been used to buy stakes in banks and car companies.

Rating agencies would also come under pressure to improve state and local governments’ credit ratings, with the Securities and Exchange Commission tasked with checking that they are not assigning too high a risk of default compared with corporate bonds.

Barney Frank, the Democratic chairman of the House Financial Services Committee, who supports legislation, said that he would hold hearings into the changes on May 21.

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Jim Sinclair’s Commentary

Wall Street’s solution to "Melt Down America" is to cause the greatest bubble burst of all time.

The final result will be hyperinflation. About that there is no question at all.

It is economic law that has been all but forgotten for years that is just about to resurface with a bang.

Easy Money Did Us In – Geithner
May 14, 2009

In an interview with Charlie Rose on Tuesday, Tim Geithner admitted the bubble was caused by Greenspan’s easy money policy. Unfortunately, Charlie didn’t ask the obvious follow-up: “Why will this time be different? Why will Bernanke’s easy money policy lead to different results?”

Rose: “Looking back, what are the mistakes and what should you have done more of? Where were your instincts right, but you didn’t go far enough?”

Geithner: “…I would say there were three types of broad errors of policy and policy both here and around the world. One was that monetary policy around the world was too loose too long. And that created this just huge boom in asset prices, money chasing risk. People trying to get a higher return. That was just overwhelmingly powerful.”

Rose: “It was too easy.”

Geithner: “It was too easy, yes….

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Jim Sinclair’s Commentary

Here is a map accurate to today. 1,300,000 people displaced. Pakistan refuses to divulged where the nukes are to US. The UN calls the displaced people a major humanitarian problem and the surge results in strengthening the Taliban recruiting program.

Pakistan conflict map

Research by the BBC Urdu’s service into the growing strength of Taleban militants in north western Pakistan shows that only 38% of the area remains under full government control.

This map of the area is a snapshot of the current situation. However, with ongoing fighting between the Pakistan armed forces and the Taleban the situation on the ground could change in the future.

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Jim Sinclair’s Commentary

When I give you a resource on a certain strength why do many of you immediately believe the person is a sage on all subjects, quoting everything they say as gospel and running to me with your unfounded fears?

Martin Armstrong is a master timer and that is all. If he was a master of all subjects he never would have had all the trouble he has had in his life.

Alf fields is a master at price levels.

Please leave it there.

There are no masters of all talents out there.

 

Jim Sinclair’s Commentary

Here are today’s Greens-hoots.

More deflation signposts

CNBC had an article on its website that ran with the following headline: "Recession Special: Lobster at Lunch-Meat Prices? Yes, Please". Consumer attitudes towards high-end cuisine are shifting rapidly towards less expensive options. Fisherman in Nova Scotia are complaining that lobster prices have been so beaten down that they are now fetching the same price as bologna at the supermarket. At one fish market in Cape Cod, lobster prices dropped nearly 50% against year-ago levels.

Loan demand falls with frugality

We have frequently noted that loan demand is playing a key role in the decline in credit. From the Wall Street Journal page A2 we would highlight "Worries About the Economy Weigh on Loan Demand." The article cites a young couple paying cash for their new car. They rationalize it by noting that, although paying upfront involves sacrifice "it means living more frugally", it also means that they live "more freely."

Keeping the supply of credit flowing

We see from the New York Times that the Senate rejected the idea of price caps (no, not for bankers) for credit cards. Voting down a proposal to cap interest rates on credit cards at 15% by 60 to 33, the Senate made it more likely that credit will remain available for consumers, in our view. After all, banks got into trouble in the first place by not adequately charging and accounting for credit risk.

Defaults surging, according to S&P

In a report that was released yesterday, S&P reported that a staggering $541.2 billion of rated debt defaulted in the first three months of this year. Across the globe, some 62 companies defaulted, the largest number since the first quarter of 2002.

Foreclosures mounting

Home foreclosures jumped for the third consecutive month. According to the latest data from RealtyTrac, foreclosures totaled 342,038 in April, which means that for every 374 households in this country, one is going into some stage of the foreclosures process. Since January, foreclosures have surged nearly 25%. As unemployment mounts, we suspect delinquencies and foreclosures will continue to rise. This added source of supply into an already depressed residential real estate market will continue to put downward pressure on home prices, in our view.

One more data point reflecting a weak economy

The Department of Transportation released its transportation services index and it dropped 2.7% in March. On a year-over-year basis, the index deteriorated to -6% in March from -5.3% in February. The index consists of a freight component (consists of for hire trucking, railroad freight services, waterway transport, pipeline and air) and a passenger component (consists of mass transit, intercity passenger rail, and passenger air).

Retail sales disappoint again

Retail sales fell 0.4% M/M in April versus consensus expectations for a flat outturn and BAS-ML (-0.8% M/M). Core sales (ex building materials, gasoline and auto dealers) were down 0.3% M/M and in March were revised down by 0.1%. We had factored in a slightly more negative decline in retail control for April, and therefore see some upside to our real consumption forecast of -2.8% Q/Q annualized in 2Q and overall GDP estimate of -4.8% Q/Q. Yesterday’s results suggest that weakness in consumer spending is here to stay, with rising unemployment, the end of the tax filing season, a higher savings rate and overall, more cautious behavior all significant headwinds. Keep in mind that tax refunds were up 15% Y/Y in April and were expected to boost results by the majority of consensus ? this money is either being channeled into savings or used to pay down debt.

Auto sales posted a surprising 0.2% increase despite a drop in unit sales from 9.8M to in March to 9.3M units in April. And while underlying gasoline prices rose to $2.10/gallon from $2.01/gallon in March, stations reported a 2.3% decline in sales given weaker demand and an offsetting seasonal factor. Excluding autos and gas stations, sales fell 0.3% on continued discounting and sluggish consumer demand. Spending at drug, building material/garden, sporting goods stores and restaurants all posted very light gains over the month, while spending in every other category fell significantly. Electronics retailers reported a 2.8% M/M decline after falling 7.8% in March as spending in this arena clearly reflects the negative weight of tighter credit and a shift away from discretionary products. Even food retailers posted a 1.0% M/M decline ? a category that has been trading negative with positive gains every other month.

Inventories cut, but still remain too high

Business inventories fell by 1.0% M/M in March for the seventh straight monthly decline. This was roughly in line with consensus (-1.1%), but a bit lighter than Banc of America Securities-Merrill Lynch expectations (-1.3%). Companies continued to play catch-up to the slowdown in domestic and foreign demand, which left many holding too much product. Indeed, while sales (down 1.6% M/M) have plummeted by 18.4% from the nearby peak, inventories have only been cut by 6.8%, leaving the inventory-to-sales ratio (I/S) at an 8-year high of 1.44 months in March. This marks only a slight improvement versus February, with persistent imbalances in each business sector, and suggests that ongoing cutbacks in production will likely be necessary to work through stocks in the months ahead. Retail inventories, the new information from this report, fell by 0.7% M/M in March, after larger declines in the prior four months. Sales fell by 1.3% M/M, boosting the I/S ratio to an uncomfortably high 1.55 months, with the most significant imbalances at building material/garden and clothing stores, as well as auto dealers. The April sales decline suggests that retailers still have more work to do and will likely have to offer ongoing promotions and discounts to lure in consumers.

Mortgage apps drop to lowest level since March

Mortgage applications fell to the lowest level since March as rising unemployment, tight credit conditions and falling property values restrain demand. Mortgage applications fell 8.6% for the week ended May 8. Since peaking on April 3, mortgage applications have fallen 28.4%. Mortgage applications for refinancing dropped 11.2%. Note that since April 3, refinancing activity has alternately increased and decreased. However, as refinancing activity is off 32.7% since April 3, the trend is clearly down. Mortgage applications for purchase increased for the second consecutive week.

Jim Sinclair’s Commentary

What is behind us cannot be fixed. What is in front of us can be fixed.

The problem is behind, and not in front. The quadrillion plus is behind us, not in front.

Obama Proposes a First Overhaul of Finance Rules
By STEPHEN LABATON and JACKIE CALMES
Published: May 13, 2009

WASHINGTON — In its first detailed effort to overhaul financial regulations, the Obama administration on Wednesday sought new authority over the complex financial instruments, known as derivatives, that were a major cause of the financial crisis and have gone largely unregulated for decades.

The administration asked Congress to move quickly on legislation that would allow federal oversight of many kinds of exotic instruments, including credit-default swaps, the insurance contracts that caused the near-collapse of theAmerican International Group.

The Treasury secretary, Timothy F. Geithner, said the measure should require swaps and other types of derivatives to be traded on exchanges or clearinghouses and backed by capital reserves, much like the capital cushions that banks must set aside in case a borrower defaults on a loan. Taken together, the rules would probably make it more expensive for issuers, dealers and buyers alike to participate in the derivatives markets.

The proposal will probably force many types of derivatives into the open, reducing the role of the so-called shadow banking system that has arisen around them.

“This financial crisis was caused in large part by significant gaps in the oversight of the markets,” Mr. Geithner said in a briefing. He said the proposal was intended to make the trading of derivatives more transparent and give regulators the ability to limit the amount of derivatives that any company can sell, or that any institution can hold.

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Jim Sinclair’s Commentary

Ratings have become a farce. The former controller general is an honest person so his opinion does not count.

US Could Lose Its AAA Rating, Says Former Comptroller General
Joe Weisenthal|May. 13, 2009, 6:41 AM

Even though the tax and revenue fundamentals of the US are awful, it’s presumed that the US can hang onto its AAA rating for awhile. For one thing, we have a great track record (which helps a bit), we have a pretty solid political system, a largely free market economy and the ultimate fallback, the ability to print up our own currency. That’s a real benefit.

But as we put more and more debt from both the private sector and the states onto the Federal balance sheet, that’s bound to add some pressure.

In an FT Op-Ed, David Walker, the former Comptroller General of the US, lays out the scenarios by which the US could lose its AAA rating.

Obviously, our rampant spending and debt guarantees are an issue, but this is the part that we found particularly insightful:

…failure by the federal government to create a process that would enable tough spending, tax and budget control choices to be made after we turn the corner on the economy would send a signal that our political system is not up to the task of addressing the large, known and growing structural imbalances confronting us.

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Jim Sinclair’s Commentary

This is a Wall Street’s solution to Motors going broke.

You take what works and you put it in one basket with some funding so they can screw it up again.

You take many dealers and throw them in the s**t heap. In that s**t heap called "bad motors" you put all the litigation and liabilities (parts manufacturers not paid selectively) plus very few dollars so it can’t under any circumstances work.

You declare victory assuming those that object, like hedge funds, can be summarily silenced by threatening to regulate their derivatives.

Nobody runs the numbers on the near 800 dealers, sales personnel and reception fired, the broken lunch wagons and the cars for sale stored at some abandoned airport that no one sees. Many parts dealers owed money can go fly a kite unless they are connected.

This is a pure Wall Street paper shuffle at its best; a shell game with no consideration for the fallout even if there is no delay in the bankruptcy. God help us all if somebody in the bankruptcy actually demands that contracts be adhered to in legal priority of payments.

Why not add a Stress Test and declare all motor companies have passed, with the exception of Kaiser Frazier and Studebaker. That might buy a few days before the nonsense of this plan becomes clear.

The system says if you cannot pay, you default. Now that Wall Street is in charge we are all going to default via a default in the US dollar, the final result of all this avoidance of the real.

Chrysler Plans to Shut One Quarter of Its Dealers
By NICK BUNKLEY
Published: May 14, 2009

DETROIT — About a quarter of Chrysler’s dealers are receiving letters Thursday telling them that the company plans to eliminate them by June 9.

Chrysler, which filed for bankruptcy protection two weeks ago, sent letters to 789 of its 3,200 dealers, revoking their franchises with the carmaker. It also filed a list of the dealers it is cutting in bankruptcy court Thursday.

Other dealers received letters welcoming them to the new Chrysler.

“It just says whether you’re in or out,” said Anthony Viviano, who owns two Dodge dealerships in Detroit’s suburbs and is president of the Detroit Dodge dealers’ association. “Some of my fellow dealers have already called and said they’re out. They got the poison letter.”

One of Mr. Viviano’s two dealerships was on the list.

But he said some dealerships could be saved by rulings from Chrysler’s bankruptcy judge or if other dealers decide to sell their franchises.

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Jim Sinclair’s Commentary

What makes the Banksters think that society is going to remain tolerant?

"If we didn’t live in a tolerant society, the chairman and the rest of the board would be hanging by their necks with piano wire out on the road."
–AIB shareholder, Gary Keo

Top Irish banker pelted with eggs

One of Ireland’s top bankers was pelted with eggs on Wednesday as hundreds of angry shareholders attended a meeting.

Dermot Gleeson, chairman of Allied Irish, ducked to avoid the missiles after addressing an extraordinary general meeting at its Dublin HQ.

Pensioner Gary Keogh said he felt compelled to throw the eggs after Mr Gleeson tried to speak over another shareholder.

Mr Keogh, from Blackrock in south Dublin, was removed from the building.

He said he was extremely angry after losing his pension in the economic downturn.

"The whole board should be replaced by Mickey Mouse and Donald Duck," he added.

"I have no pension. My pension now is wiped out because of AIB. I cannot sell the shares because they are useless.

"If we didn’t live in a tolerant society, the chairman and the rest of the board would be hanging by their necks with piano wire out on the road."

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Jim Sinclair’s Commentary

The following is a by subscription service.

Yes, he is correct. When this bubble blows it will blow .72, .62 and maybe .52 right out of the dollar support mechanism.

The common share of the US Fed and Treasury bubble maker, the US dollar, will be the most abused entity as a result of the Wall Street fix for all problems. Fix Wall Streeters and forget the problem.

The "Bailout Bubble" — The Bubble to End All Bubbles

KINGSTON, NY, 13 May 2009 — The biggest financial bubble in history is being inflated in plain sight, said Gerald Celente, Director of The Trends Research Institute.  "This is the Mother of All Bubbles, and when it explodes," Celente warns, "it will signal the end to the boom/bust cycle that has characterized economic activity throughout the developed world."

Either unwilling or unable to call the bubble by its proper name, the media, Washington and Wall Street describe the stupendous government expenditures on rescue packages, stimulus plans, buyouts and takeovers as emergency measures needed to salvage the severely damaged economy.

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Posted by & filed under In The News.

Dear Friends,

I am again posting my Bloomberg interview because it contains the only means of maintaining the general equity rally that has taken place as I anticipated.

Regulation of OTC derivatives as announced by the White House today is good going forward, but useless looking back. It therefore window dressing and not affirmative action. My presentation contains the only method that can give legs to the recent equity rally.

I know you read this and have respect for my experience in markets even if we disagree on the end result.

Listen to what I said in that interview. Failing to take the action suggested therein risks a total economic implosion that will create intolerable tensions between the US and China over their discomfort with the condition of their US dollar investments and the policy of Quantitative Easing.

Today the wrong target was struck with a useless action.

Respectfully yours,
Jim Sinclair

Click here to listen to Jim’s Bloomberg interview…

Jim Sinclair’s Commentary

It is how the quadrillion plus notional value behind us that will affect the world, not what is in front of us that is the problem.

Obama to detail regulation plans for derivative securities
12:26 PM, May 13, 2009

The Obama administration is expected today to announce new efforts to regulate the massive market for credit-default swaps and other derivative securities.

Treasury Secretary Timothy F. Geithner plans a press briefing at 1 p.m. PDT.

The administration plans "to detail its initiative to regulate the exotic financial contracts that helped fuel the global [financial] crisis and crippled some of the biggest names on Wall Street, such as American International Group," the Washington Post reports.

From Bloomberg News:

The U.S. Treasury will tell banks to increase transparency in the over-the-counter derivatives market by making prices available on centralized computer platforms, according to people familiar with the plan.

Electronic execution of trades including interest-rate and credit-default swaps would allow users of the financial instruments to get greater price transparency and make processing trades easier. Transactions in the $684 trillion over-the-counter derivatives market are now typically conducted over the phone between banks and customers.

"Anything that will bring transparency to this market will help the market, but the dealers who broker the deals would make less money," said Paul Zubulake, a senior analyst with Boston-based Aite Group. "More transparency for the buy-side is less profit for the sell-side."

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Jim Sinclair’s Commentary

The stairs on the Golden Ladder that will be climbed are:

$900
$961
$1024
$1089
$1156
$1224

The steps on the USDX us dollar are:

.8200
.7200
.6200
.5200

The timing was April 19th and middle June to establish the launch period.

Jim Sinclair’s Commentary

You talk about rolling the dice? Any delay or glitch in the bankruptcy and the damage to employment and suppliers will be extreme.

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Jim Sinclair’s Commentary

My granddaughter and her friend in Tanzania last week:

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Uncle Joseph Kahama with his niece and nephew at his home in Tanzania last week.

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Jim Sinclair’s Commentary

– New Accounting Fraud for Monthly Federal Deficit Reporting
– Annual Retail Sales Plunge a Depression-Like 10.1%
– Monthly "Core" Retail Sales Down 0.1% versus Official 0.4% Decline

"Flash Update" by subscription service available at http://www.shadowstats.com/

Jim Sinclair’s Commentary

Hyperinflation is a currency event defined by .82, .72, .62, and .52 (as posted here) on the USDX. This is undoubtedly coming as a product of various causes but most certainly because of Quantitative Easing (printing money out of thin air).

China has demanded a guarantee of value of their huge dollar reserve position.

You can’t guarantee the dollar’s value with more dollars because by definition calling the guarantee would increase dollar supply. That would only further complicate the Chinese problem of too many dollars.

They would be better advised to buy gold directly from the USA, giving back the dollar denominated instruments while getting gold in exchange. That is the only guarantee that would have any meaning.

China will go for it in the form of a guarantee tied to dollar levels versus some measure. The USDX would do fine for this.

China fears bond crisis as it slams quantitative easing
China has given its clearest warning to date that emergency monetary stimulus by Western governments risks setting off worldwide inflation and undermining global bond markets.
By Ambrose Evans-Pritchard
Last Updated: 1:13PM BST 07 May 2009

"A policy mistake made by some major central bank may bring inflation risks to the whole world," said the People’s Central Bank in its quarterly report.

"As more and more economies are adopting unconventional monetary policies, such as quantitative easing (QE), major currencies’ devaluation risks may rise," it said. The bank fears a "big consolidation" in the bond markets, clearly anxious that interest yields will surge as western states try to exit their QE experiment.

Simon Derrick, currency chief at the Bank of New York Mellon, said the report is the latest sign that China is losing patience with the US and aims to diversify part its $1.95 trillion (£1.3 trillion) foreign reserves away from US Treasuries and other dollar securities.

"There is a significant shift taking place in China. They are concerned about the stability of the global financial system so they are not going to sell US bonds they already have. But they are still accumulating $40bn of fresh reserves each month, and they are going to be much more careful where they invest it," he said.

Hans Redeker, head of currencies at BNP Paribas, said China is switching into hard assets. "They want to buy production rights to raw materials and gain access to resources such as oil, water, and metals. They know they can’t keep buying bonds," he said

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Jim Sinclair’s Commentary

The most successful recruiting program so far in Pakistan is the Surge that can now claim adding a new 500,000 people to the already 800,000 displaced.

Pakistan military faces humanitarian crisis
updated 3:30 a.m. EDT, Wed May 13, 2009

Pakistan’s military is dealing with more than a million Pakistanis who have been displaced by fighting since last year, a military spokesman said Tuesday.

The military has set up headquarters to manage the 1.3 million internally displaced people, spokesman Gen. Athar Abbas said.

That number includes 500,000 Pakistanis who were uprooted from their homes since August, before the latest military push against Taliban militants in the country’s northeastern region, he said

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Posted by & filed under In The News.

Dear CIGAs,

The Social Security Fund has been Washington’s piggy bank for everything from pork bellies to war.

Payback time starts in 2014, but what if the pay back is just more IOUs?

Hyperinflation is the only way out for Washington’s inability to pay back the Social Security Fund debt. Hyperinflation is the only way out of most entitlements.

Sounds like a plan to me.

Medicare, Social Security Funds Worsen in Recession
By Alison Fitzgerald

May 12 (Bloomberg) — The financial health of Social Security and Medicare, the two main safety nets for American retirees and the elderly, is declining as the recession cuts payroll-tax contributions just as the baby-boom generation begins to retire.

The Social Security trust fund will run out of assets in 2037, four years sooner than previously forecast, the trustees said today. Spending on Medicare, the health insurance plan for the elderly, will reach a legal limit by 2014, the same year predicted in 2008, the trustees’ report said.

The deteriorating position of the two funds puts pressure on Congress and President Barack Obama to come up with ways to cut costs and boost revenue for both. Obama yesterday said fixing the nation’s health-care system is an “imperative for America’s economic future.”

“After we have passed health-care reform that puts our nation on a path to lower growth in health-care costs and expanded affordable coverage, this president will work to build a bipartisan consensus to ensure the long-term solvency of Social Security,” Treasury Secretary Timothy Geithner said today in a statement.

The trustees’ annual report also estimated that Medicare’s hospital fund will be exhausted by 2017, two years earlier than predicted a year ago.

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Jim Sinclair’s Commentary

Should any bondholder insist on their contractual rights in court, the bankruptcy of the motor companies will be a greater catalyst for disaster than Lehman already has been.

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Jim Sinclair’s Commentary

It started with housing in California and moved East. Municipal bankruptcy will do the same. Think about all the insured guaranteed municipal bonds in which the guarantee and insurance is not worth the OTC derivative it is written on. This is chapter two of the disaster where the black hole appears. L.A. is kaput.

Mayor Villaraigosa wants council to declare emergency and calls for layoffs
1:36 PM | May 12, 2009

Citing a $529-million budget deficit, Mayor Antonio Villaraigosa urged the City Council on Tuesday to declare a fiscal emergency and called for mandatory work furloughs and layoffs targeting 1,000 city employees.

"The gravity of the fiscal emergency that we face is enormous," Villaraigosa said. "Unless we act with urgency, the city will face a cash flow crisis, raising the prospect of running out of cash between November and February. "

The mayor said the city should commence layoffs of 1,000 city employees beginning July 1 but warned that thousands more could be phased in during the upcoming fiscal year. He said the layoffs would include management as well as regular staff.

Meanwhile, the mayor said he plans to implement the work furlough plan within 30 days. He said he has invited a labor representative to discuss the impact of the plan, which would require up to 26 furlough days for civilian city employees next fiscal year.

He said he would also be working with the City Council and labor officials to develop a buyout program to permanently reduce the city’s civilian workforce.

The mayor said that the city’s budget deficit could exceed $1 billion in fiscal year 2010-2011 if it doesn’t act now.

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Fannie and Freddie Will Need Almost $100 Billion in 2010
Posted May 12, 2009 12:42pm EDT by John Carney
From The Business Insider, May 12, 2009:

The Office of Management and Budget released a report yesterday on the budgets and proposed overhauls of Fannie Mae and Freddie Mac that included the possibility of liquidating their assets. But don’t get your hopes up.

The two government run mortgage finance companies have been scandalously costly for tax-payers, costing Americans far more in bailout money than they ever saved in cheaper mortgages. The OMB says that the two companies will need at least $92.2 billion more in fiscal 2010. This is on top of the $78.2 billion in aid they’ve received since they were taken over by the government in September.

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Jim Sinclair’s Commentary

Remember the time-honored Middle Eastern battle strategy:

1. Here comes the Surge.
2. All fall down and bury your weapons.
3. Put on street clothes and join the march of 500,000 refugees.
4. After the Surge photos are over, quietly dig up your weapons, bury your street clothes and bleed the big guy to death.

The Pakistan Surge is the best recruiting plan for the Taliban. When will the West learn?

Pakistan’s Swat offensive risks wider backlash
Tue May 12, 2009 1:46pm BST
By Luke Baker – Analysis

LONDON (Reuters) – Pakistan’s heavy-handed offensive against the Taliban in northwest Pakistan is misguided and risks further destabilizing the country, western military and intelligence experts argue.

By throwing up to 15,000 troops and heavy weaponry against an estimated 5,000 Taliban in Swat, a valley northwest of Islamabad, the Pakistan army may make short-term gains, but it increases the likelihood of terror-style attacks on targets in more stable areas of eastern Pakistan in the longer-term.

While the army essentially had no choice but to go on the offensive after the Taliban broke a peace accord and the U.S. administration piled on pressure for action, the broader strategy needs overhauling, the analysts say.

"On this occasion, the Pakistan army has accepted that the breach of the Swat agreement by the Taliban did in fact represent a threat which it couldn’t overlook or fail to respond to," said Nigel Inkster, an expert on transnational threats at London’s International Institute for Strategic Studies and a former director in Britain’s secret intelligence service.

"That said, the techniques that are being deployed go against all accepted best-practice in dealing with a counter-insurgency, particularly the use of heavy fire power.

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Jim Sinclair’s Commentary

The US dollar rally may end? The rally ended exactly where Dean Harry Schultz said it would at .8900 USDX.

Mr Rogers makes much too much of IMF gold. Where was he in the 70s? IMF gold will be sucked out of the IMF by other central banks, therein allowing them to get rid of the wilting US dollar.

There is no IMF gold. It is the members of the IMF’s gold. They must agree on all aspects.

IMF gold sales are a huge crock of BS the bears make a big deal of. It sound like a silver long and gold short spread talking its own case. That is my take.

Dollar Rally Will End, Rogers Says; May Short Stocks (Update2)
By Chen Shiyin and Haslinda Amin

May 12 (Bloomberg) — The dollar’s rally is set to end in a “currency crisis,” investor Jim Rogers said, adding that he may bet on a slide in equities after nine weeks of gains.

The advance in the U.S. currency has been driven by investors covering their short sales, Rogers, 66, said in an interview with Bloomberg Television in Singapore. He may consider adding to his holdings of the yen and prefers the euro to the dollar or the pound, the investor added.

“We’re going to have a currency crisis, probably this fall or the fall of 2010,” Rogers said. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”

The dollar has climbed against all of the so-called Group of 10 currencies except the yen over the past 12 months, according to data compiled by Bloomberg. The U.S. currency was at $1.3592 per euro today from $1.3582.

Rogers joins “Black Swan” author Nassim Nicholas Taleb in avoiding the U.S. currency. Taleb told a May 7 conference in Singapore he preferred gold and copper to the dollar and the euro as the global economy faces a “big deflation.”

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Jim Sinclair’s Commentary

This dollar is so Zombie! Once it looks in a mirror it will be under .82 for starters.

US to borrow 46 cents for every dollar spent
By ANDREW TAYLOR, Associated Press Writer
Monday, May 11, 2009

The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates. Budget office figures released Monday would add $89 billion to the 2009 red ink — increasing it to more than four times last year’s all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.

The unprecedented deficit figures flow from the deep recession, the Wall Street bailout and the cost of President Barack Obama’s economic stimulus bill — as well as a seemingly embedded structural imbalance between what the government spends and what it takes in.

As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.

Just a few days ago, Obama touted an administration plan to cut $17 billion in wasteful or duplicative programs from the budget next year. The erosion in the deficit announced Monday is five times the size of those savings.

For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration’s plan. In 2010, it would borrow 35 cents for every dollar spent.

"The deficits … are driven in large part by the economic crisis inherited by this administration," budget director Peter Orszag wrote in a blog entry on Monday.

More…

Jim Sinclair’s Commentary

As Banks sell homes on foreclosure, the statistic of home sales increase. Keep this in mind, please.

Falling home prices and increasing home sales is not good news economically. It is stinking news regardless of the upcoming glee of the money bunnies or dancing, horn honking clowns.

This would be classified as a Green Shoot, another silly piece of spin.

Home Prices in U.S. Fall 14% as Banks Sell Foreclosed Houses
By Kathleen M. Howley

May 12 (Bloomberg) — The median U.S. home price dropped 14 percent in the first quarter from a year earlier as banks sold repossessed homes.

Prices fell in 134 of 152 metropolitan areas, the Chicago- based National Association of Realtors said today in a news release. The national median existing home price declined to $169,000 and distressed properties typically sold for 20 percent less than other homes on the market.

Distressed sales are increasing transactions in some markets as speculators and first-time homebuyers buy bank-owned properties. The inventory of previously owned homes on the market dropped to 3.7 million in March from 3.8 million a month earlier, according to NAR data. The number of new homes for sale fell to 311,000, the lowest since January 2002, according to the Commerce Department.

Total existing home sales fell 6.8 percent from a year earlier to a seasonally adjusted annual rate of 4.59 million units, the Realtors group said. Sales were down 3.2 percent from the fourth quarter. The figures include single family homes and condominiums and co-ops.

Seventeen states had sales increases from the fourth quarter and six states were higher than a year ago.

More…

Jim Sinclair’s Commentary

Pure creation of money out of thin air.

Fed buys $3.51 billion in Treasurys
By Deborah Levine
May 11, 2009, 11:05 a.m. EST

NEW YORK (Marketwatch) — The Federal Reserve Bank of New York bought $3.51 billion in Treasurys maturing between 2026 and 2039 on Monday. The buyback is part of the central bank’s program to keep borrowing costs lower and spur economic activity. Dealers offered $10.426 billion to be purchased. Ten-year note yields /quotes/comstock/31*!ust10y (UST10Y 3.17, -0.12, -3.50%) , which move inversely to prices, remained lower by 8 basis points to 3.21%. U.S. debt was supported by the Fed purchases and declining stock markets.

More…

Posted by & filed under In The News.

Jim Sinclair’s Commentary

You think something is out of whack here?

clip_image001 clip_image001[4]

Dear CIGAs,

The US T Car is to be introduced as the 2009.7. Note the steering wheel is on the British side but can be simply handed to the passenger and is therefore marketable anywhere.

The rear is held up by spin and hot air. All payments with be hedged by an OTC derivative issued by AIG. Every vehicle will be stress tested before issue. These vehicles will not be permitted in Greenwich, CT for obvious reasons.

 

Jim Sinclair’s Commentary

Add to this that the recent Pakistan surge has displaced half a million Pakistan people. They see American tanks, armored vehicles and helicopters on the move while the Taliban sell the message that at Washington’s behest Muslims are killing Muslims. There has to be a better way as this way has failed repeatedly.

Texas Straight Talk
On Af-Pak: Stop "Helping"

While much of the country’s attention is on other issues, a serious situation is developing in Pakistan that threatens to plunge us into another fruitless and bloody war.  It is very frustrating to see that many who were so vehemently against the wars of the last administration have suddenly lost interest in foreign policy simply because we were promised change.

Those still paying attention know that nothing could be further from the truth.  Very little has changed, except perhaps rhetoric, but what does that matter when the bombing missions are only getting deadlier?  Rather than drawing down violent military interventions into the affairs of other countries, the new administration is escalating the foreign policy of the previous administration.

In Pakistan that entails the continuation and even escalation of military interventionism just across the border with Afghanistan.  The targets are believed to be enclaves of Taliban militants, however, many innocent civilians have been caught in the deadly crossfire, severely damaging our image in the region.  Many ordinary Afghanis and Pakistanis that never had cause to take up arms against us are being provided with motivation as family and friends are killed and maimed by our clumsy and indiscriminate bombs.  Is it worth it for us to be involved in this way at such a high cost of blood, treasure and goodwill?  Is there anything to be gained by this policy?

We are helping the Taliban and other enemies to actually gain numbers and strength, while driving them down from the mountains in the border regions deeper into Pakistan, where they have been making a menace of themselves.  As our bombings follow them, beleaguered villagers have little choice but to leave their homes and join the swelling numbers of refugees or take up arms and join the fight against us.  

Nonetheless, instead of recognizing the cascading unintended consequences of trying to deal with Pakistan’s problems, all signs in Washington point to further escalation.  Both the House and Senate have newly introduced bills to triple foreign aid to Pakistan, from $500 million to $1.5 billion, with every indication that the leadership in Pakistan is taking advantage of the situation with the Taliban to milk more aid from the US taxpayer.  We are broke.  This is money we don’t have, and it is an insult to the American people to run up the national credit card for this type of military adventurism after many Americans thought they were voting for peace.

The bottom line is our involvement in Pakistan’s internal problems is not making us safer.  In fact, we are adding to the numbers of our enemies and increasing the threats to our security here at home.  We are inciting the very terrorism and extremism we are trying to stop.  Every dollar we send, even if it is for humanitarian purposes, frees up resources to make war and potentially prop up unpopular leaders.  The factions and politics of the Middle East are irrational and dangerous.  We play with fire when we meddle in their affairs, and we isolate ourselves diplomatically by making more enemies than friends.  We need to bring our troops home, end all foreign aid, and maintain a neutral stance on the world stage.  It, in fact, is the only foreign policy we can afford right now, and it would gain us more friends and trading partners than our bombs ever could.  Besides, that’s what the Constitution permits and our founders strongly advised.

More…

 

Jim Sinclair’s Commentary

Remember the Chairman making a great deal about the Inspector General’s review of the Fed when asked if the Fed’s

actions were audited by any significant oversight body?

Please take time to see the depth and breadth of this significant expert body oversight who clearly knows all there is know about every transaction entered into at the Fed.

This should shut you up about the lack of transparency and audits.

Jim Sinclair’s Commentary

Around and around it constantly goes and where it stops, nobody knows.

Official: U.S. To Replace Top General In Afghanistan.

Pentagon replaced its top general in Afghanistan Monday as President Obama tries to turn around a stalemated war.

Defense Secretary Robert Gates said he asked for the resignation of Gen. David McKiernan. Gates said new leadership is needed as the Obama administration launches its strategy in the seven-year-old campaign.

The change is aimed at "getting fresh thinking, fresh eyes on the problem," Gates told a Pentagon news conference.

The move comes as more than 21,000 additional U.S. forces begin to arrive in Afghanistan, dispatched by Obama to confront the Taliban more forcefully this spring and summer.

More…

Jim Sinclair’s Commentary

Just to further strain whatever is left of our mental powers, Bloomberg just announced a really good thing. The money bunny was smiling from ear to ear.

Banks to help Zombie Borrowers

Now we have the Dance of the Zombies – Zombie banks to lend to Zombie borrowers.

Jim Sinclair’s Commentary

Pakistan to the USA: send $1.5 billion, it is chump change anyway. Stop asking questions!

Pakistan Won’t Disclose Location of Nuclear Weapons To US
May 10, 2009

Pakistani President Asif Ali Zardari said his country isn’t adding to its nuclear arsenal and doesn’t have to disclose the location of its weapons to the U.S.

Pakistan is “not adding to our stockpile as such,” Zardari said today on NBC’s “Meet the Press” program. “Why do we need more?”

Asked whether Pakistan would tell U.S. intelligence officials where all its nuclear weapons are located, to allow for a joint strategy to keep them secure, Zardari said Pakistan is a sovereign country.

“Why don’t you do the same with other countries yourself?” Zardari said in the interview taped May 7. “I think this is a sovereignty issue, and we have a right to our own sovereignty.”

President Barack Obama said last month that, while Pakistan’s civilian government is “very fragile,” he is confident that the country’s nuclear arsenal is secure. He also said that Pakistan’s military is taking the threat of internal enemies seriously and recognizes the hazard of nuclear weapons “falling into the wrong hands.”

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Jim Sinclair’s Commentary

Lahore? Now let me think. No, Lahore is not held by the Taliban.

Shaky Pakistan Is Seen as Target of Qaeda Plots
By MARK MAZZETTI and ERIC SCHMITT
Published: May 10, 2009

WASHINGTON — As Taliban militants push deeper into Pakistan’s settled areas, foreign operatives of Al Qaeda who had focused on plotting attacks against the West are seizing on the turmoil to sow chaos in Pakistan and strengthen the hand of the militant Islamist groups there, according to American and Pakistani intelligence officials.

One indication came April 19, when a truck parked inside a Qaeda compound in South Waziristan, in Pakistan’s tribal areas, erupted in a fireball when it was struck by a C.I.A.missile. American intelligence officials say that the truck had been loaded with high explosives, apparently to be used as a bomb, and that while its ultimate target remains unclear, the bomb would have been more devastating than the suicide bombing that killed more than 50 people at the Marriott Hotel in Islamabad in September.

Al Qaeda’s leaders — a predominantly Arab group of Egyptians, Saudis and Yemenis, as well as other nationalities like Uzbeks — for years have nurtured ties to Pakistani militant groups like the Taliban operating in the mountains of Pakistan. The foreign operatives have historically set their sights on targets loftier than those selected by the local militant groups, aiming for spectacular attacks against the West, but they may see new opportunity in the recent violence.

Intelligence officials say the Taliban advances in Swat and Buner, which are closer to Islamabad than to the tribal areas, have already helped Al Qaeda in its recruiting efforts. The officials say the group’s recruiting campaign is currently aimed at young fighters across the Middle East, North Africa and Central Asia who are less inclined to plan and carry out far-reaching global attacks and who have focused their energies on more immediate targets.

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Jim Sinclair’s Commentary

Unemployment’s real figures, considering the number of people who have used all the unemployment benefits, it touching 16%. Call it the next challenge only because the focus is not there now. It is another disaster already in progress.

Next challenge for banks: Credit card losses
Number usually tracks unemployment, but this time it may be worse
By Eric Dash and Andrew Martin
updated 4:40 p.m. MT, Sun., May 10, 2009

It used to be easy to guess how many Americans would have problems paying their credit card bills. Banks just looked at unemployment: Fewer jobs meant more trouble ahead.

The unemployment rate has long mirrored banks’ loss rates on card balances. But Eddie Ward, 32 and jobless, may be one more reason that rule of thumb no longer holds. For many lenders, losses are now outpacing layoffs.

Mr. Ward lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked if he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”

In the meantime, he said, “I’m just doing what I can.”

Even if Mr. Ward can pay off his debts, experts predict that tens of thousands of Americans will not be able to, leaving a gaping hole at ailing banks still trying to recover from the housing bust.

More…

Posted by & filed under In The News.

Jim Sinclair’s Commentary

Take warning. There is no Bull equity market with legs on Armstrong’s time table yet.

Merrill’s Rosenberg: Goodbye, Thank You, Yes It’s Just A Sucker’s Rally
Henry Blodget | May. 9, 2009, 9:06 AM

Merrill’s economist David Rosenberg left the firm yesterday (planned for several months).  And he went out swinging.  David has maintained from the beginning that the recent rocket rally off the lows is just a suckers’ rally, and he reiterated that view as he walked through the doors.

Some excerpts from his swan song, which was published Thursday:

Market likely to peak the end of the week [Yesterday].  Just as the clock is winding down on my tenure at Merrill Lynch, the equity market is winding up with an impressive near-40% rally in just nine weeks. For those that were still long the equity market back at the March 9 lows, a good ‘devil’s advocate’ exercise would be to ask yourself the question whether you would have taken the opportunity, if the offer had been presented, to have sold out your position with a 40% premium at the time. What do you think you would have said back then, as fears of financial Armageddon were setting in? We haven’t conducted a poll, but we are sure at least 90% of the longs at that point would have screamed “hit the bid!”

Are we at risk of missing the turn? Fast forward to today, and within two months optimism seems to have yet again replaced fear. Are we at risk of missing the turn? What if this is the real deal – a new bull market? This is the question that economists, strategists and market analysts must answer.

Risk is much higher now than it was 18 weeks ago.  The nine-week S&P 500 surge from 666 at the March lows to 920 as of yesterday has all but retraced the prior nine-week decline from the 2009 peak of 945 on January 6 to the lows on March 9. We believe it is appropriate to put the last nine weeks in the perspective of the previous nine weeks. To the casual observer, it really looks like nothing at all has happened this year, with the market relatively unchanged. But something very big has happened because the risk in the market, in our view, is much higher than it was the last time we were close to current market prices back in early January, for the simple reason that we believe professional investors have covered their shorts, lifted their hedges and lowered their cash positions in favor of being long the market. 

More…

 

Jim Sinclair’s Commentary

For your information.

US swine flu overtakes Mexico’s as number of American cases soars to almost 3,000
The number of confirmed swine flu cases in the US has soared to 2,254, with 104 people in hospital, as the outbreak spreads around the world.
By Philip Sherwell in New York
Last Updated: 11:19AM BST 10 May 2009

There are another 700 presumed cases in the US which has overtaken Mexico, the epicentre of the outbreak, for confirmed infections after a “backlog” of laboratory tests was released. More than 4,000 people have been made ill in 29 countries, with at least 51 deaths.

The virus killed a woman in the Canadian province of Alberta, making it the third country to report a death. The unnamed victim, who was in her 30s and died on April 28th, had not travelled to Mexico but had other health problems, doctors said.

Canadian food officials also said that they suspect a herd of pigs in Alberta had been infected by a farm worker who had recently returned from Mexico in what would be the first case of human-to-swine transmission.

The death raised the confirmed global toll to 51 – 48 in Mexico, where three new deaths were reported in Saturday, and two in US border towns in Texas.

“Today there are almost 3,000 probable and confirmed cases here in the United States,” the CDC’s Dr Anne Schuchat told a news briefing. “The good news is we are not seeing a rise above the epidemic threshhold in that system.” Cases have been reported in 43 of the 50 states.

The confirmed number of new infections in Mexico, where the new mutant strain was first reported, rose from 1,204 to 1,578 as it sets up own facilities to run tests.

More…

 

Jim Sinclair’s Commentary

Who enforces this, the Sheriff of Nottingham, NY?

Let’s hear a round of applause for the Greenwich, CT OTC derivative manufacturers and distributors who hold total karmic responsibility. This is a debt that will not be bailed out. They have changed a normal modest two to four year recession into a financial disaster that will probably be the biggest of all written and oral history. When they did it they had to know this would happen.

New York City Starts Charging Rent at Homeless Shelters
By  JENNIFER MILLMAN
Updated 12:24 PM EDT, Sat, May 9, 2009

Even the homeless can’t escape the high price of a night in New York City.

City officials this month began charging rent to working families staying in public homeless shelters.

The policy stems from a 1997 state law that hasn’t been enforced until now. Under that law, shelter managers started to require families to pay a portion of their income, depending on the shelter and family size, according to  The New York Times. Residents could be expected to pay up to half their earnings.

Some shelter residents say the new rule will ruin their chances of saving enough money to get an apartment.

One single mother living in a Manhattan shelter tells the Times she got a letter saying she had to give up $336 of the $800 she makes each month as a cashier. Vanessa Dacosta makes $8.40 an hour at Sbarro. She got a letter under her door at the shelter a few weeks ago saying she’d have to fork up nearly half of what she was bringing in.

For Dacosta, who pays nearly $100 a week on child care for her 2-year-old, paying the shelter is hardly an expense she can afford.

“It’s not right,” Dacosta told the Times. “I pay my baby sitter, I buy diapers, and I’m trying to save money so I can get out of here. I don’t want to be in the shelter forever.”

But the city says it’s got to find a way to cover the costs of state housing aid. Officials had to pay back $2.4 million in 2007 that they said should have been paid by residents of homeless shelters who could afford it.

More…

Jim Sinclair’s Commentary

He who has the surpluses and increasing gold holdings will overtake those that have lost the will, honor, courage and determination to be first.

Money is made today by destruction, not building, by fraudulent paper made good rather than morality in commerce.

China overtakes the US as Brazil’s largest trading partner
China has become Brazil’s most-important trading partner, disrupting a relationship between the United States and the Latin country that stretches back to the 1930s.
By Malcolm Moore in Shanghai
Last Updated: 9:57AM BST 10 May 2009

Welber Barral, the Brazilian trade minister, said total trade between Brazil and China had amounted to $3.2bn (£2.14bn) in April, representing a near twelve-fold increase since 2001.

The sum was greater than the $2.8 billion of imports and exports to the US and represented the second consecutive month that China had topped the trade table.

“It is a historic moment,” he said, adding that he expected China to remain in pole position for the rest of the year because its economy is still growing healthily. “China is now a platinum account [for Brazil],” said Douglas Smith, a Latin American economist for Standard Chartered bank.

The US has been Brazil’s principal trading partner for nearly 80 years, but a sudden surge in Chinese demand for Brazilian iron ore in the first quarter of this year dislodged the Americans.

The news is the latest sign of China’s increasing challenge to US hegemony in Latin America. China has been steadily increasing its sphere of influence and has become particularly close to the four “Red” South American countries: Venezuela, Bolivia, Ecuador and Peru.

More…

Jim Sinclair’s Commentary

Let’s not forget those that have lost everything and have now fallen out of the social net of unemployment insurance. That is the real unemployment number, not the bull the liars pose.

Think of their anger and disgust as media pumps out the good news of a supposed slowing of the problem when they cannot find jobs no matter how much they try. They are forced to do part time or off the books jobs at a slave’s wage. This probably pleases Daddy Warbucks.

This suffering means nothing to the dancing TV clowns and Bloomberg Money Bunnies that welcome us to the new bulls**t bull market.

This is disgusting in its greed. This is evil in its disdain for the suffering multitude.

How about GM shutting down more plants?
How about Dupont further cutting staff?
How about Microsoft further cutting staff?
What if the Chrysler surgical bankruptcy becomes a regular bankruptcy?

Damn those bondholders of Chrysler who are pursuing their contractual rights. Who do they think they are?

Actual U.S. Unemployment: 15.8%

This morning’s news that U.S. unemployment has hit 13.7 million, pushing the rate to 8.9 percent, tells only half the story of this recession.

The total number of Americans who are not working full-time but ought to be is actually about 22 million, or 15.8 percent, according to the Bureau of Labor Statistics.

Who are those other 8.3 million Americans? Call them the unofficially unemployed.

As The Ticker points out each time the Bureau releases the monthly unemployment figure, it does not include many out-of-work Americans.

There are many reasons for this.

The bureau, which is under the Labor Department, cannot use unemployment compensation records to count the out-of-work, because they are not reliable or up-to-date enough. The bureau also cannot count every out-of-work person.

Instead, as The Ticker reported here in December: “In the case of the monthly jobs report, the Labor Department contacts 60,000 households to determine the unemployment picture for the entire workforce, which consists of about 154 million Americans.”

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Posted by & filed under In The News.

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up home-less on the continent their fathers conquered."
–Thomas Jefferson

Jim Sinclair’s Commentary

The following cartoon was sent to me by my former partner and respected friend, Yra Harris. It is from the 1934 Chicago Tribune. Sound familiar?

clip_image001

Posted by & filed under In The News.

Dear CIGAs,

There is NO practical method, NONE, that can drain the international liquidity being produced by Quantitative Easing. That is the key to what the future, incontrovertibly, holds for the US dollar, gold and you. There simply is no question whatsoever.

Gold is headed to Alf’s number on Armstrong’s schedule and will not be diverted by any force on the planet.

The monetary expansion you can’t drain will drain the life out of the US dollar. This alone guarantees hyperinflation, yet the Western sheeple just keep plodding towards the cliff of no return.

China fears bond crisis as it slams quantitative easing
China has given its clearest warning to date that emergency monetary stimulus by Western governments risks setting off worldwide inflation and undermining global bond markets.
By Ambrose Evans-Pritchard
Last Updated: 1:13PM BST 07 May 2009

"A policy mistake made by some major central bank may bring inflation risks to the whole world," said the People’s Central Bank in its quarterly report.

"As more and more economies are adopting unconventional monetary policies, such as quantitative easing (QE), major currencies’ devaluation risks may rise," it said. The bank fears a "big consolidation" in the bond markets, clearly anxious that interest yields will surge as western states try to exit their QE experiment.

Simon Derrick, currency chief at the Bank of New York Mellon, said the report is the latest sign that China is losing patience with the US and aims to diversify part its $1.95 trillion (£1.3 trillion) foreign reserves away from US Treasuries and other dollar securities.

"There is a significant shift taking place in China. They are concerned about the stability of the global financial system so they are not going to sell US bonds they already have. But they are still accumulating $40bn of fresh reserves each month, and they are going to be much more careful where they invest it," he said.

Hans Redeker, head of currencies at BNP Paribas, said China is switching into hard assets. "They want to buy production rights to raw materials and gain access to resources such as oil, water, and metals. They know they can’t keep buying bonds," he said

Premier Wen Jiabao left no doubt at the Communist Party summit in March that China is irked by Washington’s response to the credit crunch, suspecting that the US is engaging in a stealth default on its debt by driving down the dollar. "We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries," he said.

More…

 

Jim Sinclair’s Commentary

The bigger picture is not the brighter picture.

US unemployment hits 25-year high
Fri, 08 May 2009 14:27:24 GMT

A US government report says the US economy lost 539,000 jobs in April, catapulting the unemployment rate to 8.9 percent — its highest point in a generation.

The Labor Department’s report on Friday signaled that the relentless pace of job losses was starting to level off slightly.

Estimates had projected the April job losses to rise to 590,000 against March which witnessed hemorrhages of 699,000 jobs.

Some economists say that the better-than-expected data hints that the recession is bottoming out and economic activities are expected to gradually recover toward the end of the year, Reuters reported.

"It’s a confirmation that we’re in the early stages of a turn," the New York Times quoted Ethan Harris, co-head of United States economic research at Barclays Capital, as saying.

More…

Jim Sinclair’s Commentary

Who said we are becoming more transparent? Flog that idiot!

“Ladies and Gentlemen:

TOCOM  launched their Next Generation System on May 7th and with it stopped releasing the Open Interest by Member data required to report on the daily net position changes for the seven historically largest TOCOM paper gold and silver short manipulators, and STDJ.  To see the various categories of data that will be reported by the exchange from this day forward please go to the new TOCOM website (link below) and click on the Market Data link at the top left of the page:

http://www.tocom.or.jp/news/index.html

Jim Sinclair’s Commentary

Do you recall that in the recently posted Ron Paul/Bernanke exchange much fuss was made by the Chairman over the ongoing review of the Fed by the Inspector General? Now listen to her depth of knowledge concerning Fed activity.

Fed Inspector General Knows Roughly Nothing About The Fed
05/ 8/09 09:05 AM

The inspector general tasked with overseeing and auditing the Federal Reserve knows pretty much nothing about what the Fed is doing. That’s the conclusion that comes from watching the exchange Tuesday between Rep. Alan Grayson (D-Fla.) and inspector general Elizabeth A. Coleman.

Coleman could not tell Grayson what kind of losses the Fed has so far suffered on its $2 trillion portfolio, which has greatly expanded since September.

She appeared unaware that the Fed engages in trillions of dollars in off-balance-sheet exchanges.

She is not investigating the role of the Fed in allowing the collapse of Lehman Brothers.

She did not know where the Fed has invested its $2 trillion on the liability side of the balance sheet. "I do not know. We have not looked at that specific area at this particular point on," she said.

More…

Jim Sinclair’s Commentary

This speaks for itself.

The Big Lie: Stress Test Optimism Just Wall St. Propaganda, Former Bank Regulator Says
Posted May 08, 2009 12:12pm EDT by Aaron Task

Results of the stress test brought a collective sigh of relief from Washington D.C. to Wall Street Friday, and stocks were rallying again on a growing sense the financial crisis has past.

Don’t you believe it, says William Black, an Associate Professor of Economics and Law at the University of Missouri – Kansas City.

"It’s in the interest of the financial community to send this propaganda out," Black says. "It’s remarkable not that they do it but that it still works."

In other words, this isn’t the first time we’ve been told "the crisis is over" and that "banks are well capitalized" – and probably won’t be the last.

The professor and former financial regulator foresees another wave of foreclosures and future bank losses of more than $2.5 trillion vs. the government’s $599 billion estimate.

More…

Jim Sinclair’s Commentary

Does anyone know where we can get an application for the Federal Bailout of some of our CIGAs out there that have been reporting layoffs across the board? This is just so wrong!

Fannie Mae asks Treasury for aid

US mortgage finance firm Fannie Mae has asked the Treasury for another $19bn (£12.6bn), as it announced a loss for the first three months of 2009.

It is the second time that Fannie Mae has requested government aid in recent months. It received $15.2bn in March.

The Treasury has made available funds of $200bn each to Fannie Mae and fellow mortgage giant Freddie Mac.

Fannie Mae reported a loss of $23.2bn, but it was smaller than the $25.2bn loss it made in the previous quarter.

The firm said the loss was driven by credit-related expenses of $20.9bn.

It also took a $5.7bn loss on mortgage securities.

More…

Jim Sinclair’s Commentary

Cities raid cash from residents by increasing real estate taxes and fees as they go broke, further pushing the formula in high 6th gear.

State may raid cash from cities, county
By Kurtis Alexander
Posted: 05/08/2009 01:30:14 AM PDT

SANTA CRUZ — Call it a threat or a grim reality. Whatever it is, it’s not being welcomed at city halls across California.

The governor’s office suggested this week that if the May 19 budget-reform measures are rejected by voters, the state will have to borrow $2 billion from cities and counties.

The proposal, which comes as polls show little hope for the ballot measures, is being met with horror by local governments that face red ink of their own.

"Our budget gap is so big it’s beyond anything we could have imagined already," said Santa Cruz City Manager Dick Wilson. "If the state adds this additional burden, it’s overwhelming. … It’s appalling beyond words."

Under the state proposal, the city of Santa Cruz could be forced to hand over as much as $1.6 million next year, adding to an existing hole of $6.5 million. With a total budget of $75 million, the city is already having to make concessions — like giving up operation of two museums and a community center and asking employees to take pay cuts — which Wilson said would become more severe should the city lose more money.

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Jim Sinclair’s Commentary

Eliot Spitzer and his article have been hitting the Fed hard.

New York Federal Reserve’s Friedman Resigns Post Immediately
By Scott Lanman

May 7 (Bloomberg) — Stephen Friedman, chairman of the New York Federal Reserve Bank’s board of directors, resigned from his position effective immediately to avoid the appearance of a conflict of interest.

Friedman, a retired chairman and current member of Goldman Sachs Group Inc.’s board, had been granted a waiver to keep serving after Goldman Sachs became a bank holding company in September, a change that would have normally barred Friedman from serving as a director appointed to represent the public. Last month, he planned to depart at the end of the year.

“Although I have been in compliance with the rules, my public service-motivated continuation on the Reserve Bank Board is being mischaracterized as improper,” Friedman said in a letter to Fed officials, posted on the New York Fed’s Web site. “The Federal Reserve System has important work to do and does not need this distraction.”

Denis Hughes, the board’s deputy chair, will take over the chairman’s duties, the New York Fed said in a statement. Friedman led the search committee for the bank’s new president after Timothy Geithner’s departure to become Treasury Secretary. The New York Fed appointed William Dudley, a former Goldman economist, as president in January.

Thomas Baxter, general counsel of the New York Fed, said in the Fed’s statement that regarding Friedman’s purchases of Goldman shares in December and January, “it is my view that these purchases did not violate any Federal Reserve statute, rule or policy.”

The New York Fed posted the announcement on its Web site today.

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Jim Sinclair’s Commentary

Click the following links to view Part 1 and Part 2 of the video.

http://www.cnbc.com/id/15840232?play=1&video=1116537475

http://www.cnbc.com/id/15840232?play=1&video=1116546525

The New York Fed is the most powerful financial institution you’ve never heard of. Look who’s running it.
By Eliot Spitzer
Posted Wednesday, May 6, 2009, at 12:29 PM ET

The kerfuffle about current New York Federal Reserve Bank Chairman Stephen Friedman’s purchase of some Goldman stock while the Fed was involved in reviewing major decisions about Goldman’s future-well-covered by the Wall Street Journal here and here-raises a fundamental question about Wall Street’s corruption. Just as the millions in AIG bonuses obscured the much more significant issue of the $70 billion-plus in conduit payments authorized by the N.Y. Fed to AIG’s counterparties, the small issue of Friedman’s stock purchase raises very serious issues about the competence and composition of the Federal Reserve of New York, which is the most powerful financial institution most Americans know nothing about.

A quasi-independent, public-private body, the New York Fed is the first among equals of the 12 regional Fed branches. Unlike the Washington Federal Reserve Board of Governors, or the other regional fed branches, the N.Y. Fed is active in the markets virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks. And, like the other regional branches, it has boundless power to examine, at will, the books of virtually any banking institution and require that wide-ranging actions be taken-from raising capital to stopping lending-to ensure the stability and soundness of the bank. Over the past year, the New York Fed has been responsible for committing trillions of dollars of taxpayer money to resuscitate the coffers of the banks it oversees.

Given the power of the N.Y. Fed, it is time to ask some very hard questions about its recent performance. The first question to ask is: Who is the New York Fed? Who exactly has been running the show? Yes, we all know that Tim Geithner was the president and CEO of the N.Y. Fed from 2003 until his ascension as treasury secretary. But who chose him for that position, and to whom did he report? The N.Y. Fed president reports to, and is chosen by, the Fed board of directors.

So who selected Geithner back in 2003? Well, the Fed board created a select committee to pick the CEO. This committee included none other than Hank Greenberg, then the chairman of AIG; John Whitehead, a former chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, a former chairman of Lehman Bros. It was not a group of typical depositors worried about the security of their savings accounts but rather one whose interest was in preserving a capital structure and way of doing business that cried out for-but did not receive-harsh examination from the N.Y. Fed.

The composition of the New York Fed’s board, which supervises the organization and current Chairman Friedman, is equally troubling. The board consists of nine individuals, three chosen by the N.Y. Fed member banks as their own representatives, three chosen by the member banks to represent the public, and three chosen by the national Fed Board of Governors to represent the public. In theory this sounds great: Six board members are "public" representatives.

So whom have the banks chosen to be the public representatives on the board during the past decade, as the crisis developed and unfolded? Dick Fuld, the former chairman of Lehman; Jeff Immelt, the chairman of GE; Gene McGrath, the chairman of Con Edison; Ronay Menschel, the chairwoman of Phipps Houses and also, not insignificantly, the wife of Richard Menschel, a former senior partner at Goldman. Whom did the Board of Governors choose as its public representatives? Steve Friedman, the former chairman of Goldman; Pete Peterson; Jerry Speyer, CEO of real estate giant Tishman Speyer; and Jerry Levin, the former chairman of Time Warner. These were the people who were supposedly representing our interests!

Of course, there have been the occasional nonfinance representatives from academia and labor. But they have been so outnumbered that their presence has done little to alter the direction of the board.

More…

NY Fed chair resigns amid stock purchase questions
By Kristina Cooke Kristina Cooke – Thu May 7, 8:30 pm ET

NEW YORK (Reuters) – Stephen Friedman, chairman of the New York Federal Reserve Bank’s board of directors, resigned on Thursday amid questions about his purchases of stock in his former firm, Goldman Sachs.

Friedman, a retired chairman of Goldman Sachs who has led the New York Fed’s board since January 2008, said he quit to prevent criticism about his stock buying from becoming a distraction as the Fed battles a severe U.S. recession.

"Although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper," he said in a letter of resignation to New York Fed President William Dudley.

"The Federal Reserve System has important work to do and does not need this distraction," Friedman said.

The U.S. central bank is comprised of a seven-member Board of Governors in Washington, and 12 regional Fed banks.

Some of the regional directors are appointed by the Washington-based board. Those directors are not allowed to own shares of bank holding companies, a status that Goldman Sachs won in September to secure access to Fed lending facilities.

More…

Jim Sinclair’s Commentary

There is so much of this that you would have to arrest every money center banker everywhere. That has the ability to make this a watershed situation.

JPMorgan Reveals Threat of SEC Charges Over Alabama Sewer Deals
By Martin Z. Braun and William Selway

May 8 (Bloomberg) — JPMorgan Chase & Co., the biggest U.S. bank by market value, says it may be charged with violating federal securities laws for selling fixed-income financing that helped push Alabama’s most populous county to the brink of bankruptcy.

The potential sanctions by the U.S. Securities and Exchange Commission, disclosed yesterday in two sentences of a 162-page quarterly regulatory filing, relate to a series of bond and interest-rate swap sales in 2002 and 2003 for sewers in Jefferson County, which covers about 1,125 square miles including Birmingham, the state capital with more than 240,000 residents.

Since credit markets seized up in 2007, Jefferson County’s annual sewer debt payment more than doubled. At least seven former JPMorgan bankers are under scrutiny in a Justice Department criminal antitrust investigation of the sale of unregulated derivatives to local governments across the U.S., federal regulatory records show.

The SEC investigation of New York-based JPMorgan is the first by the commission to directly challenge the ways in which securities firms sell derivatives to state and local governments. Derivatives are contracts whose values are tied to assets, including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.

“The bigger the amount of money, the more temptation there is for corruption,” said Christopher “Kit” Taylor, who was executive director of the Alexandria, Virginia-based Municipal Securities Rulemaking Board, the national regulator of the municipal bond market, from 1978 to 2007.

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Posted by & filed under In The News.

Dear CIGAs,

"Buy em Bull Bond Trader Ben." He better be there in Europe and Asia tonight or all hell will have broken loose before the US wakes up to find another Blacker Friday

Today’s obliterated long bond futures market is a challenge to the US Fed to "put up" or "shut up."

The US Fed has publicly threatened to buy one trillion US dollars worth of bonds.

Well, they better start cranking the electronic quantitative printing press and throw a few hundred billion at it here and now.

Markets have a nasty way of diving for zero if they conclude the Fed is bluffing. It sure looked like it today.

Jim Sinclair’s Commentary

Payback is a b***h.

He’s back. Eliot Spitzer and his article are hard hitting. Click the following links to view Part 1 and Part 2 of the video.

http://www.cnbc.com/id/15840232?play=1&video=1116537475

http://www.cnbc.com/id/15840232?play=1&video=1116546525

The New York Fed is the most powerful financial institution you’ve never heard of. Look who’s running it.
By Eliot Spitzer
Posted Wednesday, May 6, 2009, at 12:29 PM ET

The kerfuffle about current New York Federal Reserve Bank Chairman Stephen Friedman’s purchase of some Goldman stock while the Fed was involved in reviewing major decisions about Goldman’s future-well-covered by the Wall Street Journal here and here-raises a fundamental question about Wall Street’s corruption. Just as the millions in AIG bonuses obscured the much more significant issue of the $70 billion-plus in conduit payments authorized by the N.Y. Fed to AIG’s counterparties, the small issue of Friedman’s stock purchase raises very serious issues about the competence and composition of the Federal Reserve of New York, which is the most powerful financial institution most Americans know nothing about.

A quasi-independent, public-private body, the New York Fed is the first among equals of the 12 regional Fed branches. Unlike the Washington Federal Reserve Board of Governors, or the other regional fed branches, the N.Y. Fed is active in the markets virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks. And, like the other regional branches, it has boundless power to examine, at will, the books of virtually any banking institution and require that wide-ranging actions be taken-from raising capital to stopping lending-to ensure the stability and soundness of the bank. Over the past year, the New York Fed has been responsible for committing trillions of dollars of taxpayer money to resuscitate the coffers of the banks it oversees.

Given the power of the N.Y. Fed, it is time to ask some very hard questions about its recent performance. The first question to ask is: Who is the New York Fed? Who exactly has been running the show? Yes, we all know that Tim Geithner was the president and CEO of the N.Y. Fed from 2003 until his ascension as treasury secretary. But who chose him for that position, and to whom did he report? The N.Y. Fed president reports to, and is chosen by, the Fed board of directors.

So who selected Geithner back in 2003? Well, the Fed board created a select committee to pick the CEO. This committee included none other than Hank Greenberg, then the chairman of AIG; John Whitehead, a former chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, a former chairman of Lehman Bros. It was not a group of typical depositors worried about the security of their savings accounts but rather one whose interest was in preserving a capital structure and way of doing business that cried out for-but did not receive-harsh examination from the N.Y. Fed.

The composition of the New York Fed’s board, which supervises the organization and current Chairman Friedman, is equally troubling. The board consists of nine individuals, three chosen by the N.Y. Fed member banks as their own representatives, three chosen by the member banks to represent the public, and three chosen by the national Fed Board of Governors to represent the public. In theory this sounds great: Six board members are "public" representatives.

So whom have the banks chosen to be the public representatives on the board during the past decade, as the crisis developed and unfolded? Dick Fuld, the former chairman of Lehman; Jeff Immelt, the chairman of GE; Gene McGrath, the chairman of Con Edison; Ronay Menschel, the chairwoman of Phipps Houses and also, not insignificantly, the wife of Richard Menschel, a former senior partner at Goldman. Whom did the Board of Governors choose as its public representatives? Steve Friedman, the former chairman of Goldman; Pete Peterson; Jerry Speyer, CEO of real estate giant Tishman Speyer; and Jerry Levin, the former chairman of Time Warner. These were the people who were supposedly representing our interests!

Of course, there have been the occasional nonfinance representatives from academia and labor. But they have been so outnumbered that their presence has done little to alter the direction of the board.

More…

NY Fed chair resigns amid stock purchase questions
By Kristina Cooke Kristina Cooke – Thu May 7, 8:30 pm ET

NEW YORK (Reuters) – Stephen Friedman, chairman of the New York Federal Reserve Bank’s board of directors, resigned on Thursday amid questions about his purchases of stock in his former firm, Goldman Sachs.

Friedman, a retired chairman of Goldman Sachs who has led the New York Fed’s board since January 2008, said he quit to prevent criticism about his stock buying from becoming a distraction as the Fed battles a severe U.S. recession.

"Although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper," he said in a letter of resignation to New York Fed President William Dudley.

"The Federal Reserve System has important work to do and does not need this distraction," Friedman said.

The U.S. central bank is comprised of a seven-member Board of Governors in Washington, and 12 regional Fed banks.

Some of the regional directors are appointed by the Washington-based board. Those directors are not allowed to own shares of bank holding companies, a status that Goldman Sachs won in September to secure access to Fed lending facilities.

More…

Jim Sinclair’s Commentary

There will come a time when the disposed seek those who have caused their pain and suffering. CIGAs are now losing their jobs and it is heartbreaking to know they are suffering. They worked hard for companies that have been broken by the OTC derivative market. It is so wrong.

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Jim Sinclair’s Commentary

Just a drop in the phony money paper bucket. It is hardly worth writing about if you judge it by today’s standards.

All inside financial institutions will be provided with as much money as is required and when required.

To infinity it will be.

Remember that hyperinflation is a currency event and not an economic event. The barn will be burned to save all insider institutions. The Barn is the US dollar.

Gold is going to Alf’s price objectives on Armstrong’s schedule.

U.S. Says Ailing Banks Need $75 Billion
By EDMUND L. ANDREWS
Published: May 7, 2009

Federal regulators told the country’s 19 largest banks that they must raise $75 billion in extra capital by November, a more upbeat verdict on the health of the financial system than the industry had feared just two months ago.

Ten of the 19 bank holding companies deemed “too big to fail” by the Obama administration will be required to raise additional capital, according to the results of the government’s stress tests, released late Thursday afternoon. But the 10 banks will have to raise much less capital than some analysts had expected as recently as a few days ago.

“With the clarity today’s announcement will bring, we hope banks are going to get back to the business of banking,” Treasury Secretary Timothy F. Geithner said during a news briefing on Thursday afternoon.

Mr. Geithner noted that banks had a long way to go to restore the nation’s confidence in the financial industry, and that they could get a start in generating good will by lending more.

More…

Jim Sinclair’s Commentary

Gerald Celente of the Trend Research Institute, a by subscription service, said today:

"’Green shoots’ may sprout," said Celente, "but they will not flower.  The economy cannot be coerced back into growth with tons of money manure."  As the ancient parable puts it:

"A sower went out to sow his seed: and as he sowed, some fell by the way side; and it was trodden down, and the fowls of the air devoured it. And some fell upon a rock; and as soon as it was sprung up, it withered away, because it lacked moisture. And some fell among thorns; and the thorns sprang up with it, and choked it. And other fell on good ground, and sprang up, and bare fruit an hundredfold. And when he had said these things, he cried, He that hath ears to hear, let him hear." — Luke 8:4-8

Jim Sinclair’s Commentary

Remember when public bank company management worked for their Board, which in turn was legally bound to protect the stockholders?

It would seem that the bank Boards are now window dressing and the boss of the boss is the Treasury Secretary.

When Washington give $1 it takes $1000.

Now please name the new system.

Regulators put bank CEOs on notice
Banks that need capital after stress tests will have a month to give regulators a plan and to review management to make sure they have "sufficient expertise."
By Colin Barr, senior writer
Last Updated: May 7, 2009: 3:55 AM ET

NEW YORK (Fortune) — Banks that need more capital under the stress tests will have a month to present regulators with a fundraising plan, federal officials said Wednesday.

The banks will have six months to raise the funds, according to a statement from the Treasury Department, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

The banks will also have to review their management and board within a month, "to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment," the bank regulators said in a statement Wednesday afternoon.

The announcement comes just a day before the results of regulators’ Supervisory Capital Assessment Program, which covers the 19 biggest bank holding companies in the U.S., are due to be released to the public.

Wall Street has been eagerly awaiting the results since the government unveiled the stress test plan in February. The results of the tests were initially scheduled for release earlier this week, but the announcement was rescheduled for Thursday afternoon to allow banks a chance to review the findings.

More…

Jim Sinclair’s Commentary

The various predictions made by Alphaville FT assuming the worst case scenario has elucidated comments of being "too negative."

Read what is below and understand that if we return to a psychology of contraction what is outlined below will expand. Those 9 points are the story of an Empire that down spirals into a Banana Republic.

If this occurs, all of that essay will unfortunately be CORRECT.

Please protect yourselves!

Click here to review the 12 points Worst Case Scenario article from SeekingAlpha.com

Ex-Owners Turning Aggressive in Efforts to Resist Leaving
By Derek Kravitz
Sunday, May 3, 2009

One former homeowner rigged his front door with coffeepots filled with boiling water. Another left piles of ferret feces. Hidden compartments have been used as living spaces, with people hiding in attics, tool sheds and garages to elude police.

In the D.C. suburbs, a new class of squatter has emerged, as people illegally remain in homes after they have lost them to the bank. Some have become aggressive in their efforts to stay, setting booby traps to ward off police.

"People got in over their heads, and they don’t want to leave," said Loudoun County sheriff’s Capt. Chuck Wyant, who oversees the department’s five-person eviction unit.

The problem seems especially acute outside the Capital Beltway. Initially viewed as an unusual symptom of the economic downturn, squatting has grown into something closer to an epidemic in Loudoun. Court-ordered evictions in the county have more than doubled over the past three years, and a six-month backlog of cases at the Loudoun courthouse is a dire reminder that things might only get worse, Wyant said. A docket at the courthouse has been created for the approximately 2,300 in the county facing evictions.

"It’s hit us hard, worse than other counties, because we grew so quickly," he said.

More…

Jim Sinclair’s Commentary

The Crimex makes a phony paper gold price while the physical market is tight.

A shift from the physical market by mints and other consumers of physical gold to making their purchases on the COMEX will transmute the COMEX to a cash exchange. This will extinguish the gold bank’s ability to make the gold price.

It is so easy to see that the Commercial Dealers are not yet prepared to run gold higher as their short position still needs more balancing between options, physical and reduction.

When that occurs gold will be off to a penetration of the $1000 level and a visit at $1224.

It is only time, and the time is short.

U.K.’s Royal Mint Uses 75% More Gold as Investor Demand Expands
By Thomas Biesheuvel and Nicholas Larkin

May 7 (Bloomberg) — The Royal Mint, established in the 13th century, used 75 percent more gold in the first quarter amid a surge in demand for bullion to diversify investments.

The U.K. mint made 28,496 ounces of gold coins in the quarter, compared with 16,317 ounces a year earlier, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production last year rose 30 percent to 53,089 ounces, the data show.

Demand for gold and exchange-traded funds linked to the metal accelerated as equities collapsed and governments spent trillions of dollars to combat recessions. The Austrian mint, Muenze Oesterreich AG, sold a record 1.5 million ounces of gold last year, while the U.S. Mint’s sales of 1-ounce American Eagle gold coins more than quadrupled in January to 92,000.

“People are worried about their savings and banks, and a lot of people realize it’s a safe-haven asset,” said Mark O’Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. “Very few people are selling.”

Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, has expanded to 1,104.45 metric tons, overtaking Switzerland as the world’s sixth-largest gold holding. Gold has advanced for eight consecutive years, the longest winning streak since at least 1948, according to data compiled by Bloomberg.

The Royal Mint is now based in Llantrisant, Wales. Its 2009 Gold Proof Sovereign coin, made from 22-carat gold and weighing 7.99 grams (0.26 ounce) sells for 299 pounds ($450), according to the government agency’s Web site. Gold for immediate delivery averaged $904.18 an ounce this year, compared with $872.25 an ounce last year.

More…

Jim Sinclair’s Commentary

Expectations of a Fortress Europe are not farfetched as blame for the financial disaster sticks to Washington and the US Banksters. This has negative implications for the US dollar.

Sarkozy plans a fortress Europe à la française

Nicolas Sarkozy has just done a favour to British Conservatives and other sceptics who like to see the European Union as a plot for putting a French face on Europe.

Super Sarko used his second anniversary in office to sketch a vision for the Union which fell somewhere between that of the late Charles de Gaulle and the pro-European French leaders of the 1970s and 80s. If Europe follows his recipe, it will be able to pull out of the "deep intellectual and moral crisis" from which it is suffering, he said.

Sarkozy wants a Union with a new "economic government" — run by the member states not the supranational Brussels Commission. He wants a centralised industrial policy, new tight financial regulations, a closed door to "predators from the world at large". He wants a curb on the free market laws that are policed by Brussels.  He also reaffirmed his pledge to stop Turkey ever joining the Union.

Sarko was speaking in Nîmes to kick off the campaign for next month’s European Parliament elections but the assembly — the other supranational pillar of the Union — got barely a mention in his manifesto for a continent run by the Council of member governments.  He shares ground with the British sceptics on that front, but not on much else.

More…