Posts Categorized: In The News

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.

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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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Posted by & filed under In The News.

Dear CIGAs,

As goes Motors, so goes the USA.

GM to close down 1,700 dealerships by June 1st
tryme submitted on 4/16/2009 Official AutoSpies Timestamp: 7:06:28 AM

GM has accelerated its restructuring as the impending June 1 deadline approaches along with Chapter 11 speculations.http://tenzing.fmpub.net/?t=z&n=227&fleur_de_sel=1414059436523748

The carmaker has informed its dealers that it will expedite the close down of about 1,700 dealerships, an insider has said. At present, there are around 200 dealers that were shut down in this year’s first quarter.

Although the closure of such large numbers of dealers was not confirmed by GM officially, a spokesman did confirm GM-dealers meetings. The insider refused to comment on what happened behind the closed doors of the meeting. General Motors is counting on either the demise or sale of Saturn and Hummer. If GM succeeds in getting rid of these liabilities, the dealerships for these brands will also follow. GM can get rid half of the 1,700 dealerships it intends to close from the Saturn and Hummer brands alone. This will mean that there will be no buy-outs for the respective dealers together with those which GM will deem to be underperformers, whose franchise will ends by the first of June. Dealership closures will take place, whether GM goes bankrupt or not. One of the suggestions offered for the survival of the dealers is for them to acquire Saturn.

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Posted by & filed under In The News, Uncategorized.

Jim Sinclair’s Commentary

This weekend I assured you that “Pay to Play” was key to the majority of pension fund money now decimated by the players.

The failure of pension funds and the misdeeds to get the money under management is going to drive pensioners and all those that planned some day to retire right out of their minds.

In State Pension Inquiry, a Scandal Snowballs
By DANNY HAKIM and MARY WILLIAMS WALSH
Published: April 17, 2009

The inquiry into corruption at the New York State pension fund started simply enough. Alan G. Hevesi, the former comptroller, was accused of using state workers as chauffeurs for his ailing wife.

But by the time Mr. Hevesi resigned his office in late 2006, investigators for the Albany County district attorney’s office were examining a more troubling problem: allegations that Mr. Hevesi’s associates had sold access to the state’s $122 billion pension fund, using one of the world’s largest pools of assets to reward friends, pay back political favors and reap millions of dollars in cash rewards for themselves.

“We knew this was not going to be a case we could handle ourselves in Albany County,” recalled P. David Soares, the Albany County district attorney.

In 2007, Attorney General Andrew M. Cuomo’s office and then the Securities and Exchange Commission took over the inquiry, which has ballooned into a sprawling investigation involving some of the most prominent players in New York’s political and financial worlds.

Hundreds of investment firms have been subpoenaed. Three people have been criminally charged and another has pleaded guilty to a felony. And the scandal has grabbed the attention of Wall Street, as members of the investment establishment’s top tier now face scrutiny.

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Jim Sinclair’s Commentary

Maybe you can fool some of the people some of the time and that time has worn itself out. To call mark to market a gimmick was a top in foolishness.

Criticism of U.S. accounting changes mounts
IASB said the rationale for watering down fair value is “crazy”
Duncan Mavin
Published: Monday, April 20, 2009

Wall Street lobbyists and U.S. politicians are damaging the credibility of corporate reporting and hurting the interests of investors around the world by pulling-back on fair value accounting, a top international accountant said.

The comments from Tom Jones, vice-chair of the International Accounting Standards Board, come after U.S. standard-setters unilaterally decided to dilute the controversial accounting rule earlier this month.

In an interview with the Financial Post, Mr. Jones warned of “a loss of credibility” and said the rationale for watering down fair value is “crazy.” He also cited concerns about political interference that could undermine the independence of accounting rule setters, a fear that was echoed by other senior accountants Monday.

In early April, the U.S. Financial Accounting Standards Board pledged to backtrack on fair value accounting under intense pressure from Wall Street and demands from Congress. U.S. lawmakers had even threatened to take the matter into their own hands rather than leave it to the accountants. The resulting FASB rule changes released on Friday allow banks to use judgment rather than market prices, to value financial instruments.

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Posted by & filed under In The News.

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Dear CIGAs,

1. The real number is in excess of US $1.4 quadrillion notional value. The method of valuation was changed to hold to maturity, a cartoon.

2. Notional value becomes full value upon bankruptcy.

3. It is already melting down.

4. The chances of this happening soon are reasonably good as the real why of this ongoing disaster is coming into focus.

Derivatives: A $700+ Trillion Bubble Waiting to Burst
April 19, 2009
J. S. Kim

In the past three years, while banks all over the world and Wall Street were imploding, while some $40-$50 trillion of capital was being destroyed in global stock markets, one financial market kept growing. That market is the financial derivatives market.

According to the Bank for International Settlements [BIS], the global Over the Counter [OTC] derivatives market has grown almost 65% from $414.8 trillion in December, 2006 to $683.7 trillion in June of 2008. On the BIS’s own website, there are no updated figures for the notional derivatives market since June 2008, so we can likely assume, with some margin of safety, that this market has now grown to more than $700 trillion. Comparatively speaking, the total market cap of all major global stock markets is approximately $30 trillion.

Before I discuss how financial products could grow more than 65% during a time period when financial companies were imploding all over the world, let’s review the definition of a derivative, because this will explain how this market of financial products keeps becoming more valuable at a time when the value of many capital assets are sinking like a rock in an ocean.

According to Wikipedia:

Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else (known as the underlying). The underlying value on which a derivative is based can be an asset (e.g., commodities, equities (stocks), residential mortgages, commercial real estate, loans, bonds), an index (e.g., interest rates, exchange rates, stock market indices, consumer price index [CPI] — see inflation derivatives), weather conditions, or other items. Credit derivatives are based on loans, bonds or other forms of credit. The main types of derivatives are forwards, futures, options, and swaps.

Because the value of a derivative is contingent on the value of the underlying, the notional value of derivatives is recorded off the balance sheet of an institution, although the market value of derivatives is recorded on the balance sheet. Over-the-counter [OTC] derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. The OTC derivative market is the largest market for derivatives, and is largely unregulated with respect to disclosure of information between the parties, since the OTC market is made up of banks and other highly sophisticated parties, such as hedge funds…Because OTC derivatives are not traded on an exchange, there is no central counterparty. Therefore, they are subject to counterparty risk, like an ordinary contract, since each counterparty relies on the other to perform.

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Jim Sinclair’s Commentary

This period in history will be titled “The Death of the Dollar.”

With that the power of Asia rises.

China seeks oversight of reserve currency issuers
China sovereign wealth fund plans more investments in Europe: report
By Lisa Twaronite, MarketWatch
Last update: 5:28 p.m. EDT April 18, 2009

SAN FRANCISCO (MarketWatch) — Chinese Premier Wen Jiabao called for more surveillance of countries that issue major reserve currencies, according to published reports Saturday.

Wen did not specify the United States in his remarks at the Boao Forum for Asia in China’s Hainan Province. But Chinese officials have recently expressed their concern about their country’s investments in dollar-denominated assets.

“We should advance reform of the international financial system, increase the representation and voice of emerging markets and developing countries, strengthen surveillance of the macro-economic policies of major reserve currency issuing economies, and develop a more diversified international monetary system,” Wen said, according to China’s official Xinhua news agency.

Wen told the conference that China’s economy was faring “better than expected.” China said last week that its economy grew at an annual rate of 6.1% in the first quarter, a slowdown from 6.8% in the fourth quarter of 2008.

Wen said China would seek to expand currency swap agreements that are seen as a step toward eventually making the yuan more of a global reserve asset.

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Jim Sinclair’s Commentary

Bloomberg’s revealing of the tenuous position of the $USD is attention catching.

The Money Bunnies would faint stone cold if that came from Bloomberg TV.

There is no way dollar support will survive 2009. It simply will NOT!

China wants control over the economic monetary acts of a reserve currency nation (posted for you today). This is a direct dollar challenge if you have the experience to hear.

Washington in general could be dense and egotistic enough not to know what is coming down the pike.

“Geithner’s climb-down from the manipulator charge is about pragmatism. He is aware of the fragility of international support for the dollar.”

Geithner’s Biggest Problem Is Dollar, Not China: William Pesek
Commentary by William Pesek

April 17 (Bloomberg) — It’s a bit rich for U.S. politicians to berate Treasury Secretary Timothy Geithner for not labeling China as a currency manipulator.

Perhaps Senator Lindsey Graham, a South Carolina Republican, hasn’t seen a newspaper in the last 12 months. With near-zero interest rates, the likely issuance of trillions of dollars of government debt and massive taxpayer-funded bailouts, the U.S. will soon make China look like a manipulation piker.

Memo to Graham and his ilk: Your economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra- loose monetary and fiscal policies. And it will.

Sure, China manipulates the yuan. Everyone knows that, including Geithner; he said so during his January confirmation hearing. It’s also widely recognized that a stable yuan is propping up the U.S. financial system. Its $2 trillion of reserves are a direct result of China manipulating the yuan.

Geithner’s climb-down from the manipulator charge is about pragmatism. He is aware of the fragility of international support for the dollar.

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Jim Sinclair’s Commentary

Of all our international problems this is the most serious.

It holds the potential of upsetting the social order as every worker depends on their retirement funds, many of whom have been taken down by the OTC derivative massacre.

Having read the warning letters required to be sent to the pension fund contributors, I can assure you they do not bare the facts.

Potential pensioners are clueless.

Are pensions just a waste of money? In a word: yes
The Observer, Sunday 19 April 2009

Having paid into a private pension for the last 10 years, my answer to your question (Are pensions a waste of money?, Cash, last week) is yes.

The value of my fund is about 30% less than the amount I’ve paid in over the years. I’m also paying into an occupational pension, though only because my employer adds 6%, but, like the private pension, this has plummeted in value.

Forget about the tax-free capital gains claimed by Tom McPhail – the stockmarket has gone nowhere for 10 years. Only the prospect of dividends has given any hope to pension savers. But Gordon Brown has been taxing these since 1997.

Only fund managers make money out of pensions. They take annual fees regardless of performance. This also means you have to keep paying into a pension just to stand still – stop and its value falls each year thanks to charges.

Phil Gooch, by email

Are pensions a waste of money? In my opinion, they are. The big advantage for a man, let’s call him Mr B, investing in an Isa instead is that it is then his money to do with as he pleases. If Mr B dies at 80 there could be money remaining that could be left to his partner or children.

It is possible to take a quarter of a pension pot as a lump sum , but the rest has to be given away to strangers in a pension company. If you pay tax at 40%, do not wish to leave an inheritance, and plan to retire early, then maybe a pension is for you. But not for me.

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Jim Sinclair’s Commentary

If you think this is unusual then you never heard the term, “Pay to Play,” common in the financial industry.

As pension funds financially implode watch the fall out of “Pay to Play.”

In State Pension Inquiry, a Scandal Snowballs
By DANNY HAKIM and MARY WILLIAMS WALSH
Published: April 17, 2009

The inquiry into corruption at the New York State pension fund started simply enough. Alan G. Hevesi, the former comptroller, was accused of using state workers as chauffeurs for his ailing wife.

But by the time Mr. Hevesi resigned his office in late 2006, investigators for the Albany County district attorney’s office were examining a more troubling problem: allegations that Mr. Hevesi’s associates had sold access to the state’s $122 billion pension fund, using one of the world’s largest pools of assets to reward friends, pay back political favors and reap millions of dollars in cash rewards for themselves.

“We knew this was not going to be a case we could handle ourselves in Albany County,” recalled P. David Soares, the Albany County district attorney.

In 2007, Attorney General Andrew M. Cuomo’s office and then the Securities and Exchange Commission took over the inquiry, which has ballooned into a sprawling investigation involving some of the most prominent players in New York’s political and financial worlds.

Hundreds of investment firms have been subpoenaed. Three people have been criminally charged and another has pleaded guilty to a felony. And the scandal has grabbed the attention of Wall Street, as members of the investment establishment’s top tier now face scrutiny.

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Jim Sinclair’s Commentary

We spoke of Jim’s Formula as a key to the dollar.

Here is your confirmation that the 2006 Formula did give you an outline of what lays ahead, how it would occur and how it would eventually take the dollar down.

The Formula will play out as the most significant of all criterion for this chapter that history will define as “The Death of the Dollar.”

Just think if someone had listened to my warnings from 2000 to the present on OTC derivatives.

Just think if people had given the Formula the credit it deserves.

Even now evil spirited people would rather deride than be advised.

They could still have gotten pig rich without destroying the world in the process.

The destruction has been done. Now even Taleb cannot help them.

You can protect yourself. You must protect yourself from perpetual spin.

Study the lessons below, please.

GEAB N°34 is available! Summer 2009: The international monetary system’s breakdown is underway

In this issue of the GEAB, our researchers anticipate the different forms a US default will take at the end of summer 2009, a US default which can no longer be concealed concealable from this April (most taxes are collected in April in the US) onward (10). The perspective of a US default this summer is becoming clearer as public debt is now completely out of control with skyrocketing expenses (+41%) and collapsing tax revenues (-28%), as LEAP/E2020 anticipated more than a year ago. In March 2009 alone, the federal deficit has nearly reached USD 200-billion (way above the most pessimistic forecasts), i.e. a little less than half of the deficit recorded for the entire year 2008 (a record high year) (11). The same trend can be observed at every level of the country’s public organization: federal state, federated states (12), counties, towns (13), everywhere tax revenues are vanishing, suffocating the whole country with spiraling debts that no one can control anymore (not even Washington).

The next stage of the crisis will result from a Chinese dream. Indeed, what on earth can China be dreaming of, caught – if we listen to Washington – in the “dollar trap” of its 1,400-billion worth of USD-denominated debt (1)? If we believe US leaders and their scores of media experts, China is only dreaming of remaining a prisoner, and even of intensifying the severity of its prison conditions by buying always more US T-Bonds and Dollars (2).

In fact, everyone knows what prisoners dream of? They dream of escaping of course, of getting out of prison. LEAP/E2020 has therefore no doubt that Beijing is now (3) constantly striving to find the means of disposing of, as early as possible, the mountain of « toxic » assets which US Treasuries and Dollars have become, keeping the wealth of 1,300 billion Chinese citizens (4) prisoner. In this issue of the GEAB (N°34), our team describes the “tunnels and galleries” Beijing has secretively begun to dig in the global financial and economic system in order to escape the « dollar trap » by the end of summer 2009. Once the US has defaulted on its debt, it will be time for the « everyman for himself » rule to prevail in the international system, in line with the final statement of the London G20 Summit which reads as a « chronicle of a geopolitical dislocation », as explained by LEAP/E2020 in this issue of the Global Europe Anticipation Bulletin.

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Jim Sinclair’s Commentary

This is coming fast and NOW!

Markets are in total denial.

Pakistan in great danger, says Musharraf

Islamabad: The former Pakistani President, Pervez Musharraf, said on Sunday “The country is in great danger,” and added that the people should not get bogged down by minor issues and focus on bigger challenges.

“Pervez Musharraf said that the country was in great danger and advised all to shun looking into the past,” the News International reported.

Before leaving for Saudi Arabia, General (retired) Musharraf urged upon the nation to focus on the current myriad challenges. The people, instead of bogging down in minor issues, should think about the future of Pakistan, Pakistan News quoted him as saying.

Talking to mediapersons at Islamabad airport, General Musharraf said the people playing with the Lal Masjid issue were enemies of the country.

“Only 94 persons were killed in Lal Masjid, who were terrorists. If any action is initiated against me, I will respond to it,” he said.

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Islamist Leader in Pakistan Reveals Troubling Plans
By Pamela Constable
Washington Post Foreign Service
Sunday, April 19, 2009; 4:52 PM

ISLAMABAD, April 19 — A potentially troubling era dawned Sunday in Pakistan’s Swat Valley, where a top Islamist militant leader, emboldened by a peace agreement with the federal government, laid out an ambitious plan to bring a “complete Islamic system” to the surrounding northwest region and the entire country.

Speaking to thousands of followers in an address aired live from Swat on national news channels, cleric Sufi Mohammed bluntly defied the constitution and federal judiciary, saying he would not allow any appeals to state courts under the Islamic Sharia law system that will now prevail there as a result of the peace accord signed by the president Tuesday.

“The Koran says that supporting an infidel system is a great sin,” Mohammed said, referring to Pakistan’s modern democratic institutions. He declared that in Swat, home to 1.5 million people, all “un-Islamic laws and customs will be abolished,” and he suggested that the official imprimatur on the agreement would now pave the way for Sharia to be installed in other areas.

Mohammed’s dramatic speech echoed a rousing sermon in Islamabad Friday by another radical cleric, Maulana Abdul Aziz, who appeared at the Red Mosque in the capital after nearly two years in detention and urged several thousand chanting followers to launch a crusade for Sharia law nationwide.

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Jim Sinclair’s Commentary

This is the World’s biggest problem and a major point of upset for markets.

It has gone hot and is getting critical. Money cannot stop this.

Diplomacy equates to money and cannot stop this.

Fears for Pakistan grow as Taliban make gains
Sun Apr 19, 2009 8:38am BST
By Robert Birsel – Analysis

ISLAMABAD (Reuters) – Pakistan has repeatedly vowed action to stop militants but analysts say denial and dithering and a seething resentment of the United States among the Pakistani people have stymied effective policy.

Escalating violence by militants and the consolidation of their grip in some places, and infiltration into others, have raised fears about the spread of Taliban influence.

Nuclear-armed Pakistan falling under the sway of al Qaeda-linked militants is a nightmare scenario for the United States and Pakistan’s neighbors, and would doom U.S. efforts to stabilize Afghanistan.

“There’s a great sense of angst, a sense of unraveling,” said Adil Najam, professor of international relations at Boston University.

“It seems that everyone has lost control, including the military, of where things are going. I don’t think they’ve given up the fight, it’s just they don’t seem to know what they can do,” he said.

President Asif Ali Zardari secured more than $5 billion in aid last Friday after telling allies and aid donors in Tokyo he would step up the fight against militants.

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Posted by & filed under In The News.

Dear CIGAs,

For those who understand, when under attack emulate the courage, dedication, determination and willpower of Jean de La Valette.

Then you welcome the great opportunity to perform for those who depend on you.

Jim Sinclair’s Commentary

The FASB boost spoken about today’s financials was an earnings impact of $500 million that would show up in trading profits as a result of mark ups of OTC derivatives permanently and temporarily impaired (whatever that means).

Jim Sinclair’s Commentary

This is an interlude, not a bottom. Please keep your guard up.

Bernanke Says Crisis Damage Likely to Be Long-Lasting
By Craig Torres

April 17 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said the collapse of U.S. lending will probably cause “long-lasting” damage to home prices, household wealth and borrowers’ credit scores.

“One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be,” the Fed chairman said today in a speech at the central bank’s community affairs conference in Washington. “The damage from this turn in the credit cycle — in terms of lost wealth, lost homes, and blemished credit histories — is likely to be long-lasting.”

The U.S. central bank has cut the benchmark lending rate to as low as zero and taken unprecedented steps to stem the credit crisis through direct support of consumer finance and mortgage lending. The Fed plans to purchase as much as $1.25 trillion in agency mortgage-backed securities this year to support the housing market and is providing financing for securities backed by loans to consumers and small businesses.

Bernanke and the Federal Reserve Board approved rules last July to toughen restrictions on mortgages, banning high-cost loans to borrowers with no verified income or assets and curbing penalties for repaying a loan early. The action came after members of Congress and other regulators urged the Fed to use its authority to prevent abusive lending.

‘Onerous’ Restrictions

“We should not attempt to impose restrictions on credit providers so onerous that they prevent the development of new products and services in the future,” Bernanke said. Regulations should ensure “innovations are sufficiently transparent and understandable to allow consumer choice to drive good market outcomes.”

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Jim Sinclair’s Commentary

I am sure you heeded warnings here concerning your credit union.

Economic heat encroaching, credit unions seek U.S. help
By Mike Freeman (Contact) Union-Tribune Staff Writer
2:00 a.m. April 17, 2009

Through much of the ongoing financial crisis, credit unions have sidestepped the turmoil swamping the banking industry by sticking to their knitting of making mortgage, auto, consumer and some business loans at good rates to members.

Credit union trade groups like to call the industry a “movement” rather than a business. They can’t raise funds selling stock. They grow capital by keeping the earnings from the loans they make. They’re loath to take on too much risk.

“They’re set up as cooperatives, so they don’t have the pressure from shareholders for returns like you might have with a bank,” said David Ely, a banking professor at San Diego State University. “There is a mission to serve their members and do right by them in setting loan rates and deposit rates.”

But as the recession has deepened and layoffs have mounted, even conservative credit unions have been unable to emerge unscathed.

Amid stiff economic head winds from the housing collapse and mounting job losses that have buffeted financial institutions nationwide, only three of the 11 largest credit unions in San Diego County – Mission Federal, Pacific Marine and San Diego County Credit Union – made money in 2008.

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Jim Sinclair’s Commentary

Please consider what this means in the big picture.

It is totally ignored in market terms.

I believe that Pakistan’s transition to a Taliban State has the potential to be the market driver from 2010-2012.

Warning that Pakistan is in danger of collapse within months
Paul McGeough
April 13, 2009

PAKISTAN could collapse within months, one of the more influential counter-insurgency voices in Washington says.

The warning comes as the US scrambles to redeploy its military forces and diplomats in an attempt to stem rising violence and anarchy in Afghanistan and Pakistan.

“We have to face the fact that if Pakistan collapses it will dwarf anything we have seen so far in whatever we’re calling the war on terror now,” said David Kilcullen, a former Australian Army officer who was a specialist adviser for the Bush administration and is now a consultant to the Obama White House.

“You just can’t say that you’re not going to worry about al-Qaeda taking control of Pakistan and its nukes,” he said.

As the US implements a new strategy in Central Asia so comprehensive that some analysts now dub the cross-border conflict “Obama’s war”, Dr Kilcullen said time was running out for international efforts to pull both countries back from the brink.

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Pakistan in danger of fracturing into Islamist fiefdom’: report
Updated at: 1240 PST,  Friday, April 17, 2009
WASHINGTON: With extremist elements gaining ground every passing day, Pakistan is in an imminent danger of disintegrating into a fiefdom controlled by Islamist warlords, having “disastrous” implications, a media report has said.

“It’s a disaster in the making on the scale of the Iranian revolution,” an unnamed intelligence official with long experience in Pakistan was quoted as saying by the newspaper.

There is little hope to prevent nuclear-armed Pakistan from disintegrating into a fiefdom controlled by Islamist warlords and terrorists, who would then pose a far greater threat to the US than those in Afghanistan, intelligence officials keeping a close watch on the situation in the region, told the paper.

They said Pakistan’s government is in the danger of being overrun by Islamic militants and the development of such a situation could be dangerous not only for the US but also for the entire region.

“Pakistan has 173 million people and 100 nuclear weapons, an army which is bigger than American army, and the headquarters of al-Qaida sitting in two-thirds of the country which the government does not control,” David Kilcullen, a counterinsurgency consultant to the Obama administration was quoted as saying.

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Taliban Exploit Class Rifts in Pakistan
By JANE PERLEZ and PIR ZUBAIR SHAH
Published: April 16, 2009

clip_image001

Naveed Ali/Associated Press
Around 3,000 people gathered for a rally in the Swat Valley of Pakistan on April 10 in support of the bill paving way for the implementation of Islamic law there.

PESHAWAR, Pakistan — The Taliban have advanced deeper into Pakistan by engineering a class revolt that exploits profound fissures between a small group of wealthy landlords and their landless tenants, according to government officials and analysts here.

The strategy cleared a path to power for the Taliban in the Swat Valley, where the government allowed Islamic law to be imposed this week, and it carries broad dangers for the rest of Pakistan, particularly the militants’ main goal, the populous heartland of Punjab Province.

In Swat, accounts from those who have fled now make clear that the Taliban seized control by pushing out about four dozen landlords who held the most power.

To do so, the militants organized peasants into armed gangs that became their shock troops, the residents, government officials and analysts said.

The approach allowed the Taliban to offer economic spoils to people frustrated with lax and corrupt government even as the militants imposed a strict form of Islam through terror and intimidation.

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Jim Sinclair’s Commentary

Retirement fund for the present Pakistani government.

Donors pledge $5bn for Pakistan

International donors have pledged more than $5bn (£3bn) to help stabilise Pakistan, at an aid conference co-hosted by Japan and the World Bank.

Nearly 30 countries and international organisations met in Tokyo to offer financial support to enable Pakistan to fight off Islamic extremism.

The United States and Japan each pledged $1bn (£671m).

In return, President Asif Ali Zardari said Pakistan would do its utmost to defeat militants in its border areas.

Pakistan’s stability is being threatened by al-Qaeda and Taleban forces in the lawless northwestern areas neighbouring Afghanistan.

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Jim Sinclair’s Commentary

Where have these experts been for the past four years?

Experts predict Pakistan’s collapse
By JONATHAN S. LANDAY
McClatchy Newspapers

WASHINGTON | A growing number of U.S. intelligence, defense and diplomatic officials have concluded that there’s little hope of preventing nuclear-armed Pakistan from disintegrating into fiefdoms controlled by Islamist warlords and terrorists.

“It’s a disaster in the making on the scale of the Iranian revolution,” said a U.S. intelligence official with long experience in Pakistan who requested anonymity.

Pakistan’s fragmentation into warlord-run fiefdoms that host al-Qaida and other terrorist groups would have grave implications for the security of its nuclear arsenal; for the U.S.-led effort to pacify Afghanistan; and for the security of India, the nearby oil-rich Persian Gulf and Central Asia, the U.S. and its allies.

“Pakistan has 173 million people and 100 nuclear weapons, an army which is bigger than the American Army, and the headquarters of al-Qaida sitting in two-thirds of the country which the government does not control,” said David Kilcullen, a counterinsurgency consultant to the Obama administration.

“Pakistan isn’t Afghanistan, a backward, isolated, landlocked place that outsiders get interested in about once a century,” agreed the U.S. intelligence official. “It’s a developed state.”

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Jim Sinclair’s Commentary

Going forward derivatives can be written to trade on exchanges. Going backward no derivative, because there is no standards, can be listed on any exchange.

CDS dealer trade volumes steady vs year ago-Markit
04.17.09, 11:49 AM EDT
Thomson Reuters

LONDON, April 17 (Reuters) – Dealers in credit derivatives averaged about the same number of trades in March as they did a year ago, Markit data showed, even after months of upheaval forced some dealers and investors out of the market.

Average monthly credit defaults swap (CDS) transactions per dealer amounted to more than 25,000 in March 2009, versus slightly less than 25,000 in March 2008, according to graphs in a quarterly report published by Markit on its Web site on Friday.

The number of dealers, however, decreased to 16 from 18 in 2008 after Bear Stearns and Lehman Brothers(LEHMQ) went out of business. The adjusted volume, therefore, would be 12 percent lower in 2009 than the amounts shown on the charts, or around 22,000 deals per dealer.

The unadjusted figure reached a peak in November 2008 at around 30,000 transactions, which after being adjusted would be between 26,000 and 27,000, or about equal to a previous record in August 2007.

Meanwhile, the backlog in CDS trade confirmations aged over 30 days fell to a new low of between 0.1 and 0.2 business days outstanding in March, the chart showed.

That is down sharply from 1 business day in March 2008.

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