Posts Categorized: In The News

Posted by & filed under In The News.

Dear CIGAs,

Fred has lost his sight and ability to walk without arthritis pain, but as a good CIGA he will get the best of care.

He arrives at the office ready to do his arrival (woof) alert work.

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Jim Sinclair’s Commentary

What do you think the implication of Milan’s actions would be, if sustained, on the Federal Reserve’s Balance Sheet? Not one penny of taxpayer’s funds have been lost by the Fed purchases. Do you really think so? How about the impact on cartoon valuations at the BIS?

Milan is treating this as alleged FRAUD of the instruments themselves. If it sticks, the OTC derivative instrument’s entire tower of babel, spin and fabrications falls on itself.

This is the most severe test these financial OTC derivative WMDs have faced yet.

Milan Police Seize UBS, JPMorgan, Deutsche Bank Funds
By Elisa Martinuzzi

April 28 (Bloomberg) — Milan’s financial police seized 476 million euros ($620 million) of assets belonging to UBS AG, Deutsche Bank AG, JPMorgan Chase & Co. and Depfa Bank Plc amid a probe into alleged fraud linked to the sale of derivatives.

The police froze the banks’ stakes in Italian companies, real estate assets and accounts, the financial police said in a statement today. The assets seized yesterday also include those of an ex-municipality official and a consultant, the police said.

The City of Milan is suing the four banks after it lost money on derivatives it bought from the lenders in 2005. The securities swapped a fixed rate of interest on 1.7 billion euros of bonds for a variable rate that was losing the city 298 million euros as of June. Milan is among about 600 Italian municipalities that took out 1,000 derivatives contracts worth 35.5 billion euros in all, the Treasury said.

“Milan is an important case because it can be used as an example by others,” said Alfonso Scarano, who is heading a study into the trades by AIAF, a group representing Italian financial analysts. “This is a unique time for borrowers to shed light on their potential losses and renegotiate contracts” to take advantage of interest rates that have fallen to record lows. AIAF will next week testify before the Italian Senate’s inquiry into the cities’ use of derivatives contracts.

Officials at all four banks declined to comment. In January, JPMorgan filed a lawsuit against the city in London. The bank is seeking to have dispute heard in the U.K., according to two people familiar with the claims.

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Jim Sinclair’s Commentary

Two important but brief notes:

1. With China having just emerged as a major gold holding central bank from practically no gold at all, the inviting question is if the Central Bank of China still holds mega dollar instruments. I suspect not, at least by the value of the gold as bought, but maybe much more.

The Chinese are determined to follow their financial plan to be the most powerful economic entity on the planet. They will not permit the dollar to alter this.

The Chinese know exactly where the dollar is headed. Yes they also know where the price of gold is going as well.

2. When is enough, enough? When will people say no, this is enough, stop. Today evil is a virtue, and virtue is stupid according to modern thinking, acting and reporting. When will those that deal in this evil push the wrong person too hard? Maybe it has already happened.

One such person is CIGA Marie. She has dug in, had enough and is doing something quite significant about it. Her actions have such a dynamic potential to level the evildoers that you will have to ask her what it is.

Marie McDonnell
Truth In Lending Audit & Recovery Services, LLC
Mortgage Fraud and Forensic Analysts
Marie.McDonnell@truthinlending.net

Jim Sinclair’s Commentary

STAY FOCUSED.

This is indicative of what is coming in a crash of Federal Income Revenues that leads to a ballistic rise in the Federal Budget Deficit. This has significant implications for the US dolalr and thence for gold, believe it or not!

UPDATE 1-NYC personal income tax revenues plunge in April
Mon Apr 27, 2009 8:19pm BST
By Joan Gralla

NEW YORK, April 27 (Reuters) – New York City’s net personal income tax revenues plunged 51 percent in the first 24 days of April, compared with the same period a year ago, the city comptroller’s office said on Monday.

New York City’s economy has been hurt by the devastation of Wall Street, its largest hometown industry, following the collapse last September of Lehman Brothers Holdings and a series of bank mergers amid the credit crisis. In the month of March alone, for instance, Wall Street shed 3,100 employees, according to the state’s Department of Labor. For more, see [ID:nN16285952]

U.S. states and cities, just like the federal government, usually see tax revenues surge in April because the month includes the April 15th annual tax deadline.

New York City often pays out more in refunds than it collects in taxes during April.

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Jim Sinclair’s Commentary

The following was sent in by CIGA JB Slear:

"Since late 2006 342 major U.S. lending operations have "imploded""
http://ml-implode.com/

Nesbitt Burns Investors Guide to Avian Flu Pandemic Aug2005.pdf

BMO Nesbitt Burns Research published An Investor’s Guide to Avian Flu in August 2005. The authors, Sherry Cooper, PhD and Donald Coxe provide one of the first carefully thought out assessment of the effect a pandemic would have on financial investments. What distinguishes their report was its being based upon a scenario for the pandemic that allowed for the authors to use economic modeling to make economic projections for the macroeconomy that could then be assessed from a sector-by-sector viewpoint.

From Page 30 of the report:
Flight to safety in financial markets would be a knee-jerk reaction. Initially gold, the U.S. dollar and U.S. Treasuries would benefit. Gold prices would rise and remain high for sometime, despite potential jewelry liquidation. We saw gold prices pop immediately after 9/11, and declined only after the immediate crisis abated. People would be concerned that the Treasury market would subsequently be vulnerable to massive selling by Asian central banks whose holdings, particularly in China and Japan, are enormous. These sales might arise as government coffers are drained in these regions and more money is needed for assistance and prevention. Interest rates, however, would ultimately fall sharply, as in the Depression, as deflationary forces take hold, economic activity would slow and credit demand would plummet. Credit risk premia would rise sharply, taking the spread between corporate and government bonds up meaningfully. Many who are now over-extended with debt would lose their homes and their businesses. The surging supply of houses and rental properties (as tenants and homeowners die or can no longer afford them) would burst the housing bubble.

Link to full report…

Jim Sinclair’s Commentary

An interesting article for a day when Gold is being disregarded because people foolishly associate hyperinflation with booming business conditions – a total error without economic, currency or historical support.

But hey, let’s not allow facts to get in the way of a good story.

How Does $9000 Gold Sound?
by: Marc Chandler April 26, 2009

In recent days the Canadian and Swedish central banks have joined the majority of other G10 central banks by indicating that they too may engage in quantitative easing now that the interest rates have been reduced to 25 and 50 basis points respectively. The ECB is wrestling with ways to extend its own form of quantitative easing and an announcement is likely at its next meeting on May 7th.

While some observers have focused on the potential debasement of the US dollar by the aggressive monetary and fiscal policies of both the Bush and Obama Administrations, many investors are worried about the viability of the whole universe of paper money.

As Gillian Tett, award-winning journalist at the Financial Times, put it earlier this month, there has been a four-decade long experiment with fiat currencies not backed by gold or silver. This crisis is so profound that increasingly it appears to have shaken confidence in the experiment. At the same time, the crisis looks to have widened the range of possibilities.

The Special Drawing Rights that the Chinese and others have suggested to eventually replace the dollar does not get beyond paper money. The SDR is a basket of fiat currencies. It is not and cannot be a serious alternative to the US dollar.

Consider that 44% of an SDR is the dollar. The IMF’s figures show that roughly two-thirds of the world’s reserves are in dollars. If countries’ reserves were allocated according to the SDR, the dollar’s share of reserves would fall by about a third. While the euro would pick up some slack the big winners would be the yen and sterling, whose share of the SDR is 11% a piece, two to three times larger than their reserve allocation.

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Jim Sinclair’s Commentary

Look where we are going. This is not the stuff of strong currencies and freedom.

U.S. Tries to Broker Sale Of Chrysler’s Loan Arm
Takeover by GMAC Is Meeting Resistance
By David Cho, Binyamin Appelbaum and Peter Whoriskey
Washington Post Staff Writers
Tuesday, April 28, 2009

The Treasury Department is racing to engineer the sale of Chrysler’s financing arm in a move the administration deems vital to saving the troubled automaker, but other federal agencies have not given their support, sources familiar with the matter said.

The Obama administration wants the nation’s largest auto-financing company, GMAC, to buy Chrysler Financial, which is the primary source of lending for Chrysler dealerships and car buyers, industry officials said. But GMAC needs a new round of backing to buy its longtime rival, sources said.

Treasury officials have not yet obtained the agreement of the Federal Deposit Insurance Corp. and the Federal Reserve, sources said. The FDIC, created to backstop the banking industry, is balking out of concern that its resources would be drained in support of an auto manufacturer. And the Fed, which regulates banks, would need to grant a waiver from a long-standing rule that separates banking and commerce.

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GM’s New Road Map: Partial Nationalization
Automaker to Shed Brands and Workers; Future Hinges on Deal With Bondholders
By Steven Mufson
Washington Post Staff Writer 
Tuesday, April 28, 2009

Once a symbol of capitalist might and U.S. industrial prowess, General Motors would be half owned by the Treasury under a new sweeping plan that would also shut down GM’s Pontiac operations, lay off 21,000 workers and impose harsh terms on the company’s bondholders.

The partial nationalization proposal ? a last-ditch effort developed by GM and the Obama administration’s auto task force to keep the leading U.S. carmaker out of bankruptcy ? raised hackles in Congress and ratcheted up the game of brinksmanship with the company’s bondholders, who have until May 8 to accept or to try to negotiate better terms.

If the bondholders reject the terms, GM would probably declare bankruptcy, chief executive Fritz Henderson said, potentially raising uncertainties for suppliers, workers and customers. That possibility loomed large Monday after bondholders called the offer "neither reasonable nor adequate."

If the plan goes forward, it would mean a leaner and less indebted GM, formally controlled by the federal government. As it is, the government has been playing a large role at the company, asking for the resignation of the previous chief executive, G. Richard Wagoner Jr., and ordering that the company’s board be reconstituted. The move would represent one of the largest ownership stakes the U.S. government has ever taken in an American manufacturer.

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Jim Sinclair’s Commentary

The following is a small note that was buried deep in copy released late yesterday:

"Although it’s called swine flu, this new strain is not infecting pigs and has never been seen in pigs. The threat is person to person transmission."

Vials of swine flu virus explode on train
April 28, 2009 – 9:50 AM

Vials of innocuous swine flu virus have exploded on an intercity train, prompting police to stop passengers before they arrived in Lausanne.

A laboratory technician from a Geneva hospital had been transporting the vials on Monday evening from a veterinary institute in Zurich. The Federal Health Office had called for the development of a diagnostic test for the illness that has killed as many as 150 people worldwide.

Near Fribourg the technician heard a muffled pop. Built-up gas from dry ice surrounding the vials had caused the package to explode.

The carriage in which the technician was travelling held 61 passengers at the time. The Federal Railways did not learn of the incident until 40 minutes later after the train had already passed through Fribourg. Police then stopped the train near Lausanne, inspected passengers and wrote down their names as a precaution.

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Jim Sinclair’s Commentary

Surprise, surprise!

Bank of America, Citigroup may need more capital
Apr 28, 8:05 AM (ET)

WASHINGTON (AP) – Bank of America Corp. (BAC) (BAC) and Citigroup Inc. (C) (C), which have each received $45 billion in government bailout funds, have been told by regulators that "stress test" results show they may need to raise additional capital, The Wall Street Journal said Tuesday.

Charlotte, N.C.-based Bank of America is looking at a shortfall in the billions of dollars, the paper said, citing people familiar with the situation. Both banks plan to rebut the preliminary findings, according to the paper, with Bank of America expected to respond Tuesday ahead of its shareholder meeting Wednesday.

Citigroup declined to comment; Bank of America officials weren’t immediately available to comment.

As executives of the nation’s largest banks review their stress-test results, even the top performers are lobbying regulators to raise their scores before the numbers are finalized Friday.

Fed officials told reporters Friday that all 19 banks that took its "stress tests" will be required to keep an extra buffer of capital reserves beyond what is required now in case losses continue to mount. That would mean some banks will likely have to raise additional cash. But the Fed stressed in a statement that a bank’s need for more capital reserves to meet the requirements should not be considered a measure of the "current solvency or viability of the firm."

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Jim Sinclair’s Commentary

There are mixed opinions at the ECB regarding gold. Now the question is what is the real level of US Treasuries held by China?

ECB’s Wellink welcomes China gold purchases
AFX UK Focus) 2009-04-28 10:50

AMSTERDAM, April 28 (Reuters) – European Central Bank Governing Council member Nout Wellink welcomed China’s move to buy gold, but said the ECB plans to renew a central bank agreement that limits its gold sales to the open market.

China revealed on Friday it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying.

"That China has bought gold doesn’t surprise me," Wellink said on Tuesday. "This is a positive development and I appreciate the move."

Asked whether the ECB had been approached for sales of gold to China, Wellink said the ECB plans to renew for a five-year period its commitment to the Central Bank Gold Agreement (CBGA), under which European central banks agree to limit their gold sales onto the open market.

(Reporting by Reed Stevenson, writing by Aaron Gray-Block)

Posted by & filed under In The News.

Dear CIGAs,

A recent huge gold buyer flexes their muscle. He who has the gold makes the rules? Sounds like a modernized and revitalized Federal Reserve Gold Certificate Ratio would do nicely.

China calls for reform of global monetary system

WASHINGTON (AFP) — China called Sunday for reform of the global currency system, dominated by the dollar, which it said is the root cause of the global financial crisis.

"We should attach great importance to reform of the international monetary system," Chinese Vice Finance Minister Li Yong told the spring IMF/World Bank Development Committee meeting in Washington.

A "flawed international monetary system is the institutional root cause of the crisis and a major defect in the current international economic governance structure," Li said, according to a statement.

"Accordingly, we should improve the regulatory mechanism for reserve currency issuance, maintain the relative stability of exchange rates of major reserve currencies and promote a diverse and sound international currency system."

As the world’s main reserve currency, US dollars account for most governments’ foreign exchange reserves and are used to set international market prices for oil, gold and other currencies.

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Jim Sinclair’s Commentary

This world is getting stranger every day.

White House official apologizes for N.Y. plane incident

April 27th, 2009
Posted: 06:36 PM ET
NEW YORK (CNN) — A White House official apologized Monday after a low-flying Boeing 747 spotted above the Manhattan skyline frightened workers and residents into evacuating buildings.

The aircraft was a White House plane taking part in a classified, government-sanctioned photo shoot, the Federal Aviation Administration told CNN.

“Last week, I approved a mission over New York. I take responsibility for that decision,” said Louis Caldera, director of the White House Military Office. “While federal authorities took the proper steps to notify state and local authorities in New York and New Jersey, it’s clear that the mission created confusion and disruption.”

Witnesses reported seeing the plane circle over the Upper New York Bay near the Statue of Liberty before flying up the Hudson River. It was accompanied by two F-16s.

The incident outraged many New Yorkers, including Mayor Michael Bloomberg.

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Jim Sinclair’s Commentary

Fear of Pandemics puts pressure on commodities, lifts the dollar and bonds.

Please pardon me, but it is the most market convenient Pandemic disaster in human history should it spread virulently.

Shadow statistics reports:
– "Adverse" Stress Test Assumptions Close to Standard CBO Projections
– Economy Is Not in Recovery
– More than Half of Existing Home Sales Are "Distressed"

Shadowstats.com is by subscription and is a bargain for what you get!
http://www.shadowstats.com/article/437

Posted by & filed under In The News.

Dear CIGAs,

The following is a collection of information in PDF format regarding the Swine Flu outbreak.

Antiviral Recommendations for Patients with Confirmed or Suspected Swine Influenza A H1N1 Virus Infection and Close Contacts
Antiviral Agents for Seasonal Influenza Side Effects and Adverse Reactions
CDC Briefing on Public Health Investigation of Human Cases of Swine Influenza
CDC Health Advisory – Swine Flu
Human Swine Influenza Investigation 26APR09
Interim Guidance for Swine influenza A H1N1 – Taking Care of a Sick Person in Your Home 25APR09
Interim Guidance on Case Definitions to be Used For Investigations of Swine Influenza A H1N1 Cases 26APR09
Media Availability on CDC Investigation of Human Cases of Swine Influenza 25APR09
Prevention and Control of Influenza recommendations of acip 2008
Swine Flu Q&As
Dosage of Seasonal Influenza Antiviral Medications for Treatment and Chemoprophylaxis for the 2008 09 Season United States

Google Maps Plot of the Swine Flu (H1N1) Outbreak (Click to enlarge)

SwineOutbreakMap

Jim Sinclair’s Commentary

This is one way to really wreck your weekend.

Obama is greeted by an archaeologist upon his visit to Mexico. The archaeologist dies next day from the flu.

Mexico’s Calderon Declares Emergency Amid Swine Flu Outbreak
By Thomas Black

April 25 (Bloomberg) — Mexican President Felipe Calderon declared an emergency in his country’s swine flu outbreak, giving him powers to order quarantines and suspend public events.

Authorities have canceled school at all levels in Mexico City and the state of Mexico until further notice, and the government has shut most public and government activities in the area. The emergency decree, published today in the state gazette, gives the president authority to take more action.

“The federal government under my charge will not hesitate a moment to take all, all the measures necessary to respond with efficiency and opportunity to this respiratory epidemic,” Calderon said today during a speech to inaugurate a hospital in the southern state of Oaxaca.

At least 20 deaths in Mexico from the disease are confirmed, Health Minister Jose Cordova said yesterday. The strain is a variant of H1N1 swine influenza that has also sickened at least eight people in California and Texas. As many as 68 deaths may be attributed to the virus in Mexico, and about 1,000 people in the Mexico City area are showing symptoms of the illness, Cordoba said.

More…

Swine Flu Prompts U.S. to Declare Public Health Emergency
By KEITH BRADSHER and JACK HEALY
Published: April 26, 2009

American health officials on Sunday declared a public health emergency over increasing cases of swine flu, saying that they had confirmed 20 cases of the disease in the United States and expected to see more as investigators track down the path of the outbreak.

“We are seeing more cases of swine flu,” Dr. Richard Besser, acting director of the Centers for Disease Control, said in a news conference in Washington. “We expect to see more cases of swine flu. As we continue to look for cases, I expect we’re going to find them.”

“This is moving fast,” Dr. Besser said, “but we want you to understand that we view this more as a marathon.”

Although officials said most of the cases have been mild and urged Americans not to panic, the emergency declaration intensifies the government’s response to the infections, freeing resources to be used toward diagnosing or preventing additional cases and releasing money for more antiviral drugs.

Homeland Security Secretary Janet Napolitano, speaking at the same news conference called the emergency declaration “standard operating procedure,” and said it should be considered a “declaration of emergency preparedness.”

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Jim Sinclair’s Commentary

Now here is a new wrinkle. Thank goodness we can depend on government organizations to keep us properly and completely informed.

WHO is well known for its prose.

WHO Fukuda: No Evidence Swine Flu Is Bioterrorism Attack

ZURICH -(Dow Jones)- The World Health Organization said Sunday there is no evidence an outbreak of swine flu in Mexico represents an act of bioterrorism.

"There are no signs we are dealing with purposeful actions," Dr. Keiji Fukuda, the WHO’s temporary assistant director-general for Health Security and the Environment, said on a media call.

Fukuda was responding to a question about U.S. President Barack Obama’s recent visit to Mexico, where at least 81 people have died from severe pneumonia caused by the flu-like illness in Mexico, according to the WHO.

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Jim Sinclair’s Commentary

Do you remember signing up for this? Who monitors the monitors? This is from 2005 but is still relevant today.

Scientists Resurrect Deadly Flu Virus
By William Hathaway
As published in The Hartford Courant, October 6, 2005.

Scientists have resurrected one of the world’s great killers in the laboratory, hoping that the genetic secrets within the 1918 influenza virus will help them predict and combat the next major microbial threat to mankind.

In a contained laboratory at the federal Centers for Disease Control and Prevention in Atlanta, scientists used reverse genetics to re-create the 1918 flu virus that killed 20 million to 50 million people, according to studies released Wednesday. Scientists say that although the 1918 strain probably does not represent a significant human health threat today, it can provide insight into dangerous types of contemporary influenza, such as the highly lethal avian strain now circulating among birds, which some scientists fear could evolve into the next catastrophic pandemic.

"This is truly a spectacular event," Dr. John Shanley, professor of medicine and director of infectious diseases at the University of Connecticut Health Center, said of the studies published in the journals Nature and Science. "To resurrect a virus and gain useful scientific information from it is remarkable."

An analysis of the genetic structure of the 1918 strain, also known as Spanish flu, reveals that it was an avian influenza, like the current H5N1 strain that has infected poultry and migratory birds in Asia and caused scores of human deaths.

The 1918 virus’s jump from birds to humans, perhaps through intermediary animals such as pigs, was different from the two other outbreaks of pandemic influenza that occurred in the 20th century. Those pandemic strains in 1957 and 1968 occurred when novel influenza genes mixed with existing human influenzas.

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Mexico flu: Your experiences

Readers in Mexico have been emailing the BBC describing the sense of fear gripping the country as a result of a flu virus outbreak, which has so far claimed more than 80 lives.

The World Health Organization says the virus has the potential to become a pandemic.

Read a selection of BBC readers’ comments below.

I’m a specialist doctor in respiratory diseases and intensive care at the Mexican National Institute of Health. There is a severe emergency over the swine flu here. More and more patients are being admitted to the intensive care unit. Despite the heroic efforts of all staff (doctors, nurses, specialists, etc) patients continue to inevitably die. The truth is that anti-viral treatments and vaccines are not expected to have any effect, even at high doses. It is a great fear among the staff. The infection risk is very high among the doctors and health staff.

There is a sense of chaos in the other hospitals and we do not know what to do. Staff are starting to leave and many are opting to retire or apply for holidays. The truth is that mortality is even higher than what is being reported by the authorities, at least in the hospital where I work it. It is killing three to four patients daily, and it has been going on for more than three weeks. It is a shame and there is great fear here. Increasingly younger patients aged 20 to 30 years are dying before our helpless eyes and there is great sadness among health professionals here.

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Jim Sinclair’s Commentary

The Secretary of the US Treasury had some luck taking the equity rally up, so why not Summers? An uptick rule with teeth will come when talks fail. Two more months is too long to wait as a hard break down is the stuff that kills rallies.

Summers says U.S. economy’s freefall has ended
Sun Apr 26, 2009 12:19pm EDT
By Donna Smith and Will Dunham

WASHINGTON (Reuters) – The sense of "unremitting freefall" in the U.S. economy has ended and the picture is no longer completely negative, but rather mixed, President Barack Obama’s economic adviser Lawrence Summers said on Sunday.

Speaking on the "Fox News Sunday" program, Summers also said the "vast majority" of U.S. banks are well capitalized and expressed hope that the auto negotiations between Chrysler and Italian carmaker Fiat SpA would work out.

"Six or eight weeks ago, there were no positive statistics to be found anywhere. The economy felt like it was falling vertically. Today, the picture is much more mixed," Summers said.

"There are some negative indicators, to be sure. There are also some positive indicators. And no one knows what the next turn will be," he said. "But I think that sense of unremitting freefall that we had a month or two ago is not present today. And that’s something we can take some encouragement from."

The U.S. economy, now in its 16th month of recession, shrank at a 6.3 percent annual rate in the fourth quarter of 2008, the steepest quarterly plunge in more than 26 years. Economists expect a report on Wednesday to show it slipped a further 5 percent in the first three months of this year.

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Jim Sinclair’s Commentary

No problem. Central banks will simply create more capital. The magic trick has a fancy name, Quantitative Easing, which was formerly known as monetizing new debt.

The capital well is running dry and some economies will wither
The world is running out of capital. We cannot take it for granted that the global bond markets will prove deep enough to fund the $6 trillion or so needed for the Obama fiscal package, US-European bank bail-outs, and ballooning deficits almost everywhere.
By Ambrose Evans-Pritchard

Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.

Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.

Commerzbank said every European bond auction is turning into an "event risk". Britain too finds itself some way down the AAA pecking order as it tries to sell £220bn of Gilts this year to irascible investors, astonished by 5pc deficits into the middle of the next decade.

US hedge fund Hayman Advisers is betting on the biggest wave of state bankruptcies and restructurings since 1934. The worst profiles are almost all in Europe – the epicentre of leverage, and denial. As the IMF said last week, Europe’s banks have written down 17pc of their losses – American banks have swallowed half.

"We have spent a good part of six months combing through the world’s sovereign balance sheets to understand how much leverage we are dealing with. The results are shocking," said Hayman’s Kyle Bass.

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Jim Sinclair’s Commentary

Therefore the West will do what, and when?

Clinton Says Pakistan Cannot Let Atomic Arsenal Fall to Taliban
By Indira A.R. Lakshmanan

April 26 (Bloomberg) — Secretary of State Hillary Clinton says the U.S. is worried about the “unthinkable” in Pakistan – – that the Taliban and al-Qaeda could topple the government, giving them “the keys to the nuclear arsenal.”

Clinton, in an interview with Fox News last night in Baghdad, said the U.S. cannot “let this go on any further, which is why we’re pushing so hard for the Pakistanis to come together around a strategy to take their country back.”

After failing to vanquish Taliban forces in Pakistan’s Swat Valley, the government in Islamabad signed a peace accord in February permitting the imposition of Islamic law in the region, 100 miles (161 kilometer) from the capital. The Taliban has taken advantage of the truce to challenge government authority in adjacent districts closer to Islamabad.

Last Friday, Prime Minister Yousuf Raza Gilani insisted his country will fight back. The extremists threaten “Pakistan’s very existence,” U.S. Army General David Petraeus told a House of Representatives subcommittee in Washington the same day.

Clinton told Fox that “we can’t even contemplate” the consequences if the Taliban were permitted to overrun nuclear- armed Pakistan because of the failure of the government “to beat them back.”

More…

Posted by & filed under In The News.

Dear CIGAs,

Here is another important calendar period for the Gold Community. The third week of October 2009. Write it down

Jim Sinclair’s Commentary

Never say never has proved quite true when it comes to China taking action to protect itself against the US bred OTC derivative meltdown actions by the US Fed and Treasury.

Currency traders eye China for clues
By William L. Watts, MarketWatch
Last update: 4:30 a.m. EDT April 24, 2009

LONDON (MarketWatch) – While foreign exchange is unlikely to be the subject of bold public pronouncements when the world’s most powerful finance ministers and central bankers meet Friday in Washington, China’s call for the replacement of the U.S. dollar as the world’s leading reserve currency is likely to be a hot topic behind closed doors, currency strategists said.

Namely, foreign-exchange traders will be looking for any clues to discussions with Chinese officials as policy makers around the world attempt to piece together the implications of remarks by China central bank governor Zhou Xiauchuan in March for the eventual replacement of the U.S. dollar as the world’s main currency with special drawing rights, the quasi-currency issued by the International Monetary fund.

The implication of such a policy would be a weaker dollar, as central banks move to diversify away from the world’s largest reserve currency. And that’s something that makes a number of policy makers, including officials from the 16-nation euro zone, nervous, analysts said.

The prospect of a substantially weaker dollar is unwelcome to policy makers in the euro zone, Japan or other countries worried about their own exports.

The main thrust of China’s message is that it wants to diversify holdings of foreign exchange reserves in a way that more closely mimics the make-up of SDRs, said Simon Derrick, currency strategist at Bank of New York Mellon.

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Jim Sinclair’s Commentary

1. Pakistan goes Taliban.
2. Israel makes a miscalculation.
3. Turkey is a Victim.

Turkey defends its pro-Iran stance in Geneva
Thu, 23 Apr 2009 22:29:51 GMT

Turkey has defended its delegation’s decision not to leave the Geneva conference during a speech by Iran’s President, Mahmoud Ahmadinejad.

Ahmadinejad in the UN’s Durban Review Conference in Geneva Monday slammed Israeli atrocities in Palestine and called Israel ‘a cruel and repressive racist regime’.

During his speech, many Western delegations left the conference venue in a move to protest his comments.

Turkey’s Minister for EU Affairs Egemen Bagis who is in Paris for an official visit, highlighted the importance of ties between Turkey and its neighboring Iran, IRNA reported on Thursday.

In a news conference Thursday, when Bagis was asked why the Turkish delegation did not leave the conference venue during Ahmadinejad’s speech, he replied, "Turkey and Iran have historical ties and vital economic relations."

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Jim Sinclair’s Commentary

Please read and act:

Martin Armstrong is looking quite good with his insistence that April 19th would figure extremely high on the calendar of the gold community. June is the next important period. His chart of market sentiment gave you the equity rally spot on for both sides.

I point out to you talent, now you need to download his entire library and study it.

All of our incarcerated genius – Armstrong:

http://www.scribd.com/people/documents/6120543/folder/82090

Use Martin Armstrong for TIMING and Alf for PRICE as I stand on the wall regardless of what is incoming to be your WATCHMAN.

All of this requests nothing from you but a bit of respect.

Jim Sinclair’s Commentary

For your information.

Possible Swine Flu Outbreak At NYC Prep School
Department Of Health Officials Testing 75 Students At St. Francis Preparatory School In Queens

As many as 75 students at St. Francis Preparatory School in Queens got sick on Thursday. More got sick on Friday. What health officials want to know is was it swine flu or something more benign.

There are mounting fears about a deadly swine flu virus that is reported to have killed as many as 60 people in Mexico, one that health officials fear has already seeped into the United States.

St. Francis Prep was ordered to cancel an evening program Friday night because the New York City Department of Health isn’t sure what made students sick Thursday and Friday with flu-like symptoms.

"I just saw lot a lot of kids lined up along the wall near the nurse’s office," sophomore Kelsey Dittmeir said.

If it’s the flu, the question is what kind of flu? And could it be the unique strain suspected in 20 recent deaths?

Tests are underway.

"It could be a strain we’ve seen before. It could be the regular flu," Dr. Ross Weiss said. "It could be flu B that happens late in the year. It could be any of those so we really can’t speculate at this point. That’s why we were very anxious to get samples to the lab and get them tested so we can find out what we are dealing with."

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Jim Sinclair’s Commentary

The USA is quite concerned, but when it comes to markets it is so far from TARP or Stress Tests to factor in. There is no more important situation on the planet than Pakistan willingly going Taliban.

U.S. ‘extremely concerned’ about Taliban movements in Pakistan – CNN.com
updated 9:02 p.m. EDT, Fri April 24, 2009

WASHINGTON (CNN) — The United States is keeping a close eye on Pakistan after this week’s Taliban surge into the Buner district brought them just 60 miles from the capital, Islamabad.

A Pakistani government official said Friday that the insurgents had completely withdrawn from the district by the end of the week, but a human rights group said people in Buner were reporting that local Taliban remained in the district.

And senior U.S. officials cautioned that any withdrawal by the Taliban was likely meaningless and that the fundamentalist group now holds large areas of the country with the government seemingly unable to stop them.

"We’re certainly moving closer to the tipping point," Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff said on NBC’s "Today" show Friday.

In the interview from Afghanistan, Mullen said he was "extremely concerned" about indications the Taliban is moving closer to Pakistan’s capital of Islamabad.

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Jim Sinclair’s Commentary

Markets are totally devoid of geopolitical concerns while geopolitical concerns move absolute center stage.

Petraeus: Afghanistan could be harder than Iraq
updated 1:52 p.m. EDT, Fri April 24, 2009

(CNN) — Defeating extremists and stabilizing Afghanistan and Pakistan will require a "sustained, substantial commitment," Gen. David Petraeus, the chief of U.S. Central Command, said Friday.

Afghanistan and Pakistan contain "the most pressing transnational extremist threat in the world," he told a House appropriations subcommittee, while expressing confidence that President Obama’s strategy constitutes the type of commitment that is needed.

Obama last month announced a new plan for the region, calling for more U.S. troops, greater economic assistance, improved Afghan troop training and added civilian expertise.

Petraeus said Friday that although more military forces are clearly necessary, "they will not by themselves, be sufficient to achieve our objective."

"It is equally important that the civilian requirements for Afghanistan and Pakistan be fully met. To that end, it is essential that the respective civilian elements be provided the resources necessary to implement this strategy," he said, urging Congress to fully fund the State Department, the United States Agency for International Development and the U.S. Interagency Civilian Response Corps.

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Posted by & filed under In The News.

Dear CIGAs,

This argument is interesting, but more so is the inevitability of hyperinflation, the reality of energy as a currency hedge and the scariest of all, Pakistan.

Each equate to a higher oil price, potentially much higher when least anticipated and less understood.

"The certain cure for low oil prices is low oil prices."

Jim Sinclair’s Commentary

The key to exit is the ability of any country to handle it own affairs.

Iraq bomb blasts send death toll to 140 in 24 hours
April 24, 2009

A double suicide bombing at Baghdad’s most revered Shia shrine has left at least 60 people dead, the latest in a bombing blitz that has killed and maimed up to 140 people in just 24 hours.

The attack on Friday prayers at the golden-domed Qaddumiyah mosque in northern Baghdad came a day after security forces claimed to have captured one of the leading al-Qaeda figures in Iraq. The two kamikaze attackers blew themselves up in a crowded market just outside the shrine, one of the holiest in Shia Islam.

At least 20 pilgrims from neighbouring Iran were killed in the back-to-back blasts after thronging to Iraq’s Shia holy places. The Qaddumiyah shrine was also attacked by a suicide bomber in Spring 2004, killing scores of people.

Iranian pilgrims made up the vast majority of the 56 victims of a suicide bombing at a restaurant just north of the capital yesterday, which itself came hard on the heels of another attack inside Baghdad that slaughtered almost 28 internally displaced people as they gathered to collect food aid from police officers.

The onslaught has recalled some of the worst days of Iraq’s sectarian bombings, when al-Qaeda sought to ignite civil war by blowing up Shia shrines and market places, killing thousands of people.

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Jim Sinclair’s Commentary

For your information.

New, deadly swine flu hits Mexico, may spread
Fri Apr 24, 2009 6:13pm BST
By Noel Randewich and Armando Tovar

MEXICO CITY (Reuters) – A deadly strain of swine flu never seen before has broken out in Mexico, killing as many as 60 people and raising fears it is spreading across North America.

The World Health Organization said it was concerned about what it called 800 "influenza-like" cases in Mexico, and also about a confirmed outbreak of a new strain of swine flu in the United States. It said about 60 people had died in Mexico.

Mexico’s government said it had confirmed that at least 16 people had died of the swine flu in central Mexico and that there could be another 45 fatal victims.

The government canceled classes for millions of children in its sprawling capital city and surrounding areas on Friday after it noticed a higher number of deaths involving flu-like illness than normal in recent weeks.

"It is a virus that mutated from pigs and then at some point was transmitted to humans," Health Minister Jose Angel Cordova told the Televisa network.

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Jim Sinclair’s Commentary

Pakistan

Israel: Pakistan’s nukes could fall to Taliban | International …
Defense official: If Taliban gets bomb, it will be &quota nightmare for the West and will also affect us."
JPost International – http://www.jpost.com/

Jihad Watch: Pakistan: Karachi churches vandalized with "Long live …
By Marisol 
More signs of escalation as Pakistan continues its deterioration into a failed state — a failed state with nuclear weapons. "Taliban attack Christians in Karachi," by Qaiser Felix for AsiaNews, April 23: Karachi (AsiaNews) – Armed men …
Jihad Watch – http://www.jihadwatch.org/

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BBC News

Key talks on Pakistan Sharia deal
BBC News – UK
Officials in North West Frontier Province in Pakistan are meeting to discuss a peace deal with the Taleban that has sparked deep US concern. …
See all stories on this topic

Taliban Advance, Pakistan’s Wavering Worry Obama Team
Washington Post – United States
By Karen DeYoung The Obama administration reacted with increasing alarm yesterday to ongoing Taliban advances in Pakistan, warning the Pakistani government …
See all stories on this topic

Faced with mortal threat, Pakistan chooses denial
USA Today – USA
Nuclear-armed Pakistan is unraveling at a frightening pace. Equally alarming,Pakistan’s leaders appear far less concerned than their American counterparts. …
See all stories on this topic

Clinton warns of Pakistan nuke risk
Washington Times – Washington,DC,USA
By Nicholas Kralev (Contact) and Barbara Slavin | Friday, April 24, 2009 Secretary of State Hillary Rodham Clinton warned Thursday that Pakistan has …
See all stories on this topic

Pakistan – Taliban Nuclear Nightmare : Homeland Security News
By national 
Pakistan Taliban Nuclear Nightmare. Nuclear-armed Pakistan is unraveling at a frightening pace. Equally alarming, Pakistan’s leaders appear far less concerned than their American counterparts. You have to wonder what they’re thinking in …
Homeland Security News – http://www.nationalterroralert.com/

 

Epoch Times – Obama’s Afghanistan-Pakistan Quandary
By By Ashley J. Tellis 
If success in Afghanistan is to be achieved, Washington will have no choice but to erect an effective Afghan state.
Epoch Times | All headlines – http://www.theepochtimes.com/

Posted by & filed under In The News.

Dear CIGAs,

We have to give credit to Martin Armstrong. April 19th certainly did have merit as a cycle point. Now let us see what June provides. Use Alf for "Price" and "Martin" for Time.

Jim Sinclair’s Commentary

As goes Motors (GM) so goes the USA

U.S. Is Said to Prepare Bankruptcy Filing for Chrysler
By MICHELINE MAYNARD and MICHAEL J. de la MERCED
Published: April 23, 2009

DETROIT — The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that could come as soon as next week, people with direct knowledge of the action said Thursday.

The Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing, said these people, who asked for anonymity because they were not authorized to discuss the case.

Moreover, Fiat of Italy would complete its alliance with Chrysler while the company is under bankruptcy protection.

The only major question that remains unresolved is what happens to Chrysler’s lenders, who hold $6.9 billion in company debt. The government’s most recent offer, presented Wednesday, would give the company’s lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler. Earlier this week, a steering committee of the lenders proposed that they receive 65 cents on the dollar, or $4.5 billion, and a 40 percent equity stake.

Officials at Chrysler and the Treasury were not immediately available for comment.

A bankruptcy filing by Chrysler would be the first among Detroit’s troubled automakers, who have been mired in a devastating sales slump since last fall. Treasury is also working with General Motors to prepare a possible bankruptcy case, and the terms of a Chrysler filing might offer a glimpse into the shape of G.M.’s own filing.

Some analysts questioned whether the Treasury’s steps to prepare a bankruptcy case were an effort to put more pressure on lenders, with which it has exchanged proposals meant to reduce Chrysler’s debt. Chrysler faces an April 30 deadline from the Treasury, while G.M. faces a June 1 deadline in its own efforts to draft a new restructuring plan.

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Jim Sinclair’s Commentary

Gold is a lifeline to more than just finances

The Power of Gold
April 23, 2009

"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. – As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”

–John Maynard Keynes

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Jim Sinclair’s Commentary

The Stress Test will report exactly what it is structured to report.

Banks May Need $1 Trillion After U.S. Tests, KBW Says
By Andrew Frye

April 23 (Bloomberg) — U.S. banks may need another $1 trillion in capital to cushion losses as unemployment rises and borrowers fall behind on payments, KBW Inc. analysts led by Frederick Cannon said today.

The estimate is based on the analysts’ own “stress test” of the strength of top U.S. lenders, Cannon wrote. The government is also evaluating the ability of banks to withstand a deepening recession. Bank of America Corp., the largest U.S. lender by assets, may be forced by the government to accept additional aid by converting preferred shares into common stock, Cannon said.

Bankers may get their first look tomorrow at results of the tests, which are being conducted on 19 of the biggest U.S. financial companies. The examinations will compel lenders to raise more capital by selling shares, converting government stakes to common stock or by seeking more taxpayer funds, according to a person familiar with the matter.

Investors and analyst have been debating which lenders will need the help without knowing exactly how the institutions will be judged. The Federal Reserve is scheduled to release the methods used to calculate the exams tomorrow.

Bank of America will likely pass the test, Cannon said. Still, the Charlotte, North Carolina-based bank may be forced by the government to convert $15 billion to $20 billion of preferred shares into common to bolster the balance sheet, he said.

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Jim Sinclair’s Commentary

The Secretary of State of the USA has called the Pakistan situation; "A Mortal Threat to the World." Think about that. Even Iraq did not earn that title before the pre-emptive strike took place.

A Mortal Threat to the World… Ruminate on that for a few moments and then ask yourself what a "Mortal Threat to the World" means to markets when it is a fact that has been accomplished, which it will be on or before January 11th 2010.

Militants burn NATO fuel tankers in Pakistan
By MUNIR AHMAD – 12 hours ago

ISLAMABAD (AP) — Dozens of militants armed with guns and gasoline bombs attacked a truck terminal in northwestern Pakistan on Thursday and burned five tanker trucks carrying fuel to NATO troops in Afghanistan, police said.

NATO and U.S. commanders are seeking alternative transport routes into landlocked Afghanistan amid mounting assaults on the critical main supply line through Pakistan.

Militants attacked the truck depot near the city of Peshawar before dawn, hurling gasoline bombs which set fire to the five tankers, said Abdul Khan, a local police official.

Security guards fled and the assailants made their escape before police arrived, Khan said. Several truckers drove their vehicles out of the terminal to save them from the flames, which were later doused by firefighters, he said.

NATO and the U.S. military insist that their losses on the transport route remain minimal and have had no impact on their expanding operations in Afghanistan. Most of the fuel for U.S. troops in Afghanistan comes from Central Asia.

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Jim Sinclair’s Commentary

Somebody just discovered the long term direction of gold production is down!

DJ Gold Mine Output May Decline In 09 On Base Metal Closures-WGC

LONDON (Dow Jones)–Global gold mine production may decline further in 2009 with production lost due to industrial mine closures, the World Gold Council said Thursday.

Gold mine production could fall by up to 10% in 2009 as a result of cuts in industrial metal mines, WGC managing director Marcus Grubb told an audience at an ETF securities seminar in London.

Many industrial metal producers also produce gold as a by-product. Due to declining demand as a result of the global economic crisis, many mines have closed operations or scaled back output and that has cut gold produced at those mines, Grubb said.

Furthermore, output problems in South Africa continue due to power shortages, he said. South Africa used to be the largest gold producer, but now China is the largest producer.

"Because the decline in mine production has not been offset by an increase in other elements of supply, total gold supply continues to decline," the World Gold Council said. "This situation seems unlikely to change anytime soon."

Jim Sinclair’s Commentary

Today in Pakistan:

Taliban Advance: Is Pakistan Nearing Collapse?
By ARYN BAKER/ISLAMABAD
Thursday, Apr. 23, 2009

The move by Taliban-backed militants into the Buner district of northwestern Pakistan, closer than ever to Pakistan’s capital of Islamabad, have prompted concerns both within the country and abroad that the nuclear-armed nation of 165 million is on the verge of inexorable collapse.

On Wednesday a local Taliban militia crossed from the Swat Valley — where a February cease-fire allowed the implementation of strict Islamic, or Shari’a, law — into the neighboring Buner district, which is just a few hours drive from Islamabad (65 miles, separated by a mountain range, as the crow flies).

Residents streaming from Buner, home to nearly a million people, told local newspapers that armed militants are patrolling the streets. Pakistani television stations aired footage of Taliban soldiers looting government offices and capturing vehicles belonging to aid organizations and development projects. The police, say residents, are nowhere to be seen. The shrine of a local Muslim saint, venerated across the country, was closed. The Taliban, which adheres to a stricter version of Islam than is practiced in most of Pakistan, hold that worship at such shrines goes against the teachings of Islam.

Meanwhile courts throughout the Malakand division, of which Swat and Buner are a part, have closed in deference to the new agreement calling for the implementation Shari’a, law. "If the Taliban continue to move at this pace they will soon be knocking at the doors of Islamabad," Maulana Fazlur Rehman, head of one of the country’s Islamic political parties, warned in Parliament Wednesday. Rehman said the Margalla Hills, a small mountain range north of the capital that separates it from Buner, appears to be "the only hurdle in their march toward the federal capital," The only solution, he said, was for the entire nation to accept Shari’a law in order to deprive the Taliban of their principal cause.

More…

Pak, Afghan Biggest Threat For Israel: Israeli F.M.
4/23/2009 5:39 AM  ET

(RTTNews) -  The threat perception of Iran’s nuclear program to Israel has been relegated to the second position with Pakistan and Afghanistan being identified as the biggest threat to the Jewish nation, according to the new Israeli foreign minister.

In his first interview to a Russian daily after taking charge, Israel’s hardliner Foreign Minister Avigdor Lieberman has said that since he began warning against the nuclear threat from Iran, nuclear threats have become more prevalent. However, he said, a more serious problem has developed in Pakistan and Afghanistan.

With an unstable nuclear-armed Pakistan faced with a potential Taliban takeover and Afghanistan facing a resurgent Taliban and Al-Qaida, the combination formed a contiguous area of radicalism ruled in the spirit of Bin Laden, he said.

"I do not think that this makes anyone in China, Russia or the United States happy… these countries (Pakistan and Afghanistan) are a threat not only to Israel, but also to the global order as a whole," he added.

Iran was not Israel’s greatest strategic threat, rather Afghanistan and Pakistan were, he emphasized, while stating that the strategic threat coming from Iraq was ranked as the third most important issue of concern for his country.

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Jim Sinclair’s Commentary

The following cartoon is from the 1934 Chicago Tribune. Sound familiar?

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Jim Sinclair’s Commentary

Transparency and credibility are ingredients of confidence that the value of currencies have always stood upon. No one puts credence in the statement of the Central Management Committee of government, but degrees of credibility still count.

Wall Street Journal: Bank of America CEO Lewis testifies to NY AG that Bernanke, Paulson wanted Merrill losses kept quiet

WSJ: BofA CEO says was told to be quiet on Merrill
WSJ: BofA CEO Lewis testifies to NY AG that Bernanke, Paulson wanted Merrill losses kept quiet
Thursday April 23, 2009, 10:33 am EDT

NEW YORK (AP) — Bank of America Chief Executive Kenneth Lewis told the New York attorney general he believed former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke wanted him to keep quiet about the worsening terms of the bank’s acquisition of Merrill Lynch, according to testimony reviewed by The Wall Street Journal.

The New York AG’s office plans to release the testimony on Thursday to federal regulators and overseers of bailout funds and banks, the newspaper reported after reviewing a transcript.

"We believe we acted legally and appropriately with regard to the Merrill Lynch transaction," Bank of America spokesman Scott Silvestri told The Associated Press Thursday.

He declined further comment about the report.

Lewis testified in February to New York Attorney General Andrew Cuomo’s office, which has been trying to determine if Merrill and Charlotte, N.C.-based Bank of America failed to provide adequate disclosures to shareholders about the more than $15 billion in losses Merrill incurred in the 2008 fourth quarter and hefty bonus payments. Had they had that information, BofA shareholders might have voted down the deal.

The Journal said in Thursday’s edition that Lewis doesn’t say in the transcript that he was told specifically to remain silent about Merrill’s burgeoning losses. But the paper quotes Lewis as testifying that disclosing that information "wasn’t up to me," and that he was warned by Paulson and Bernanke that failing to complete Merrill’s takeover would "impose a big risk to the financial system."

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Jim Sinclair’s Commentary

This article has drawn significant interest.

The range I see for the price of gold is exactly:

1. $1521
2. $1600
3. $1681
4. $1764

The time for this occurrence is on or before January 14th 1011.

Gold price could hit $1,500
The aggressive monetary policy of central banks around the world is playing havoc with the structure of the bullion market, creating a chronic shortage of gold that may soon push the metal to fresh records above $1,500 an ounce.
By Ambrose Evans-Pritchard
Last Updated: 12:11PM BST 20 Apr 2009

Charles Gibson, a gold expert at Edison Investment Research, argues in a new report that negative real interest rates (below inflation) in the US and beyond has upset the "leasing" machinery in the gold industry and led to a sustained market squeeze.

This is what occurred in the late 1970s, driving gold prices to $850 and ounce – roughly $1,560 in today’s terms. Gold finished last week at $870.

Mr Gibson said the powerful dynamic could lead to a second leg of this gold bull market, even though the metal has already enjoyed a torrid run over the last eight years.

In normal times, gold mining companies sell – or "hedge" – a chunk of their output in advance through bullion banks. These banks cover their positions by leasing gold from central banks. This bread-and-butter trade created excess supply of 500 tonnes each year until the start of this decade.

Low real interest rates have caused the process to reverse, creating a shortfall of about 500 tonnes. The process accelerates as rates turn negative, leading to a scramble by market players to find physical gold.

There are already reports that gold bars are becoming scarce, partly due to fears that futures contracts and other forms of paper gold may not prove reliable if there is a serious break-down in the global financial system. Pure metal — whether Krugerrands, Maple Leaf coins, or the "five tael biscuit" favoured by the Chinese – entail no counterparty risk.

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Jim Sinclair’s Commentary

Hyperinflation is a currency event, not an economic event. It is coming without any doubt.

Harvard’s Feldstein Sees U.S. Inflation Danger After 2010
By Vincent Del Giudice and Thomas R. Keene

April 23 (Bloomberg) — Harvard University economics Professor Martin Feldstein said inflation will emerge as a threat to the economy after a sustained recovery develops next year.

“In the next few years inflation is going to be the bigger problem” than deflation, or widespread declines in consumer prices, Feldstein said in an interview with Bloomberg Radio. He also said “we’re not going to see a sustained turnaround in the economy until next year.”

Feldstein, a former head of the National Bureau of Economic Research and adviser to President Ronald Reagan, warned that the Federal Reserve will have a challenge in heading off inflation because of how it’s conducted monetary policy during the crisis.

Instead of expanding the central bank’s balance sheet by purchasing easy-to-sell Treasuries, the Fed has snapped up mortgage securities that are likely to be tougher to use as a tool to soak up cash, Feldstein said.

In an earlier interview with Bloomberg Television, Feldstein said he didn’t anticipate a lending boom from banks judged to have passed U.S. regulators’ stress tests on their balance sheets. Results from the reviews are scheduled for release May 4.

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Jim Sinclair’s Commentary

This blog has credentials. The questions are reasonable.

Questions (and few answers) after Freddie CFO suicide
Posted by: Stephanie Ditta
April 22nd, 2009

David Kellermann, acting chief financial officer of troubled U.S. mortgage giant Freddie Mac, was found dead in his suburban Virginia home after apparently committing suicide.

Kellermann, 41, was named Freddie Mac’s acting CFO last September after the Treasury Department seized the company, and its sibling mortgage agency Fannie Mae, as the agencies faced deep losses on a crashing U.S. housing market that was rapidly engulfing other financial institutions.

The death of Freddie’s acting finance chief follows several high-profile suicides that have been linked to the global financial collapse. German billionaire businessman Adolf Merckle threw himself in front of a train in January after heavy losses on the stock market. In December, Frenchman Thierry Magon de la Villehuchet, 65, co-founder of money manager Access International, was found dead in a New York office building, reportedly distraught over losing up to $1.4 billion in client money to Bernard Madoff’s fraud.

Unanswered questions

In March, Freddie Mac said that it was cooperating with the Securities and Exchange Commission in an investigation and that employees have been interviewed by investigators.

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Posted by & filed under In The News.

Dear CIGAs,

Tore up $38.6 TRILLION in overlapping contracts?

That sound like an interesting financial transaction.

I think we need a tad more explanation of this massive disappearing act.

Credit Swaps Market Cut to $38 Trillion, ISDA Says
2009-04-22 07:59:13.968 GMT
By Katrina Nicholas and Abigail Moses

April 22 (Bloomberg) — Credit-default swap dealers cut the volume of outstanding trades to $38.6 trillion last year as they tore up overlapping contracts amid pressure from regulators to scale down the privately negotiated market and reduce risk.

Outstanding contracts fell 38 percent in 2008, the New York-based International Swaps and Derivatives Association said in a survey released in Beijing today. It’s the first annual decline, after the market increased 100-fold over the previous seven years as investors used the derivatives to protect against bond losses and speculate on creditworthiness.

Traders have been rushing to cancel redundant trades as federal authorities seek to impose regulations on the market for the first time since it was created a decade ago. After the collapse of Bear Stearns Cos. last year, 17 banks that handled about 90 percent of trading in default swaps agreed to initiatives including trade compression to help reduce day-to- day payments, bank staff paperwork and potential for error.

“In the current environment, firms are intensely focused on shrinking their balance sheets and allocating capital most productively,” said ISDA Chief Executive Robert Pickel, whose group represents dealers that control trading.

More than 2,000 banks, hedge funds and asset managers trading credit-default swaps agreed to a “Big Bang Protocol” this month that aims to improve transparency and confidence in credit-default swaps. It changes the way the swaps are traded so that it’s easier to eliminate offsetting trades and move them through a clearinghouse.

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Jim Sinclair’s Commentary

Prestidigitation increases home values in the last reporting month.

Stock rallies are breaking out of short term down trends.

Wall Street expresses surprise and glee.

Bottoms seen by AOs.

Housing bubble smackdown: Huge “shadow inventory” portends a bigger crash ahead

Mike Whitney
Wednesday, April 22, 2009

In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before–nearly perpendicular. Housing prices are not falling, they’re crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It’s a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?

600,000 “DISAPPEARED HOMES?”

Here’s a excerpt from the SF Gate explaining the mystery:

“Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

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Jim Sinclair’s Commentary

Keep an eye on this development.

If you catch one mouse in your house, how many do you have inside the walls?

Turkey: Police arrest Al-Qaeda suspects in raids

Istanbul, 21 April (AKI) – Turkish police on Tuesday arrested at least a dozen suspected members of Al-Qaeda in simultaneous raids across four provinces, Turkish media reported.

While the exact number of suspects was still to be confirmed, at least 12 suspects were arrested in raids in the southeastern provinces of Gaziantep and Sanliurfa, the central province of Konya and southern city of Adana, said Turkish daily Hurriyet.

Earlier this month, seven people were arrested on charges of links to the extremist network following simultaneous operations in the western province of Eskisehir.

A Turkish newspaper reported in March that Ankara had received US intelligence that Al-Qaeda militants could be plotting attacks on foreign targets in Turkey.

A Turkish Al-Qaeda cell was held responsible for truck bomb attacks against two synagogues, the British consulate and a British bank in Istanbul in 2003.

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Jim Sinclair’s Commentary

Whatever needs bailouts will be bailed out. Eventually the dollar will, by severe depreciation, bailout the bailout debt. REALLY!

‘Deeper’ recession ahead says IMF
By Steve Schifferes
Economics reporter, BBC News

The global economy is set to decline by 1.3% in 2009, in the first global recession since World War II, the International Monetary Fund (IMF) says.

In January, the IMF had predicted world output would increase by 0.5% in 2009.

It now projects that the UK will see its economy shrink by 4.1% in 2009, and by a further 0.4% in 2010.

But other major economies are predicted to shrink even more, with Germany declining by 5.6%, Japan by 6.2%, and Italy by 4.4% in 2009.

The prospects for the advanced economies are not much brighter in 2010, with an overall forecast of zero growth.

The IMF says this represents “by far the deepest post-World War II recession” with an actual decline in output in countries making up 75% of the world economy.

Currently, output is falling by an “unprecedented” 7.5% annual rate in the rich countries in the last quarter of 2008, and the IMF expects the same rate of decline in the first quarter of this year.

Only a recovery in developing and emerging market countries will propel the world economy back into positive growth in 2010, albeit at a relatively weak level of 1.9%.

The prospects for world trade are even gloomier, with the IMF now forecasting world trade volumes to decline by 11% in 2009, and barely grow at all in 2010.

After 60 years as the engine of world growth, the sharp fall in trade is now hitting many of the leading exporting nations, particularly in Asia.

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