Posts Categorized: In The News

Posted by & filed under In The News.

Dear CIGAs,

Here are this morning’s news highlights:

1. There is no inflation. Oh yeah? There is $9.5 trillion in inflation that will transmit to prices for which there is no practical cure.

2. Not to worry, the Fed will drain as inflation starts. Oh yeah? The Fed is going to drain trillions from the world economy? That is total non-sense. There is no tool in the Fed’s power to pull off that miracle without causing a second disaster.

3. The mark to market rule of FASB 157 appear as if it is going to be modified so that value will be computer modeled according to assumptions of lines of income to maturity of SIVs, OTC derivatives. As a product of this value cartoon, no balance sheet for anyone from GE to the financials can be relied upon as factual. Who knows, maybe the world wants to be lied to.

4. Talk is ramping up as a PR campaign concerning the benefits of the US Fed buying tons of US Treasuries to hold rates. I might add as international demand for Treasuries falls that will threaten rates as that would force the borrowing to inland demand.

5. Housing starts are up which simply means that there will be more apartments and condos in inventory. Sales are in the trash can as building increases means more inventory. If builders have or can get building loans they would build them regardless of what the potential to sell is. Builders live off the building loan.

The COMEX gang was on gold the instant the PPI came out but that will continue until more deliveries are taken out of the COMEX warehouse.

 

Jim Sinclair’s Commentary

This has caused short term weakness, however it is a confirmation of the longer term uptrend.

Hyperinflation cannot be avoided and would sustain Alf’s objectives. There is no comparison here at all to what a top in the gold price looks like.

There is an axiom that if a market lets you out easily, you should stay. If a market offers you a ragged exit only, you should get out.

If Mr. Hulbert needs to find a person quite positive on gold he only needs to speak to me.

Where have all the gold bugs gone?
Commentary: Huge shift among gold timers from bull to bear
By Mark Hulbert, MarketWatch
Last update: 12:01 a.m. EDT March 17, 2009

ANNANDALE, Va. (MarketWatch) — Call it the retreat of the gold bugs.

Over the past three weeks, the editor of the average gold timing newsletter I monitor has hastily jumped off the bullish bandwagon. And a not insignificant number have taken the occasion to furthermore jump onto the bearish bandwagon.

At least from the point of view of contrarian analysis, this is good news for gold.

Consider the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold market exposure among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. The HGNSI’s latest reading is minus 16.5%, which means that the editor of the average gold timing newsletter is recommending that his subscribers allocate 16.5% of their gold portfolios to shorting the market.

Three weeks ago, in contrast, the HGNSI stood at 60.9%. So in just 15 trading sessions, the average recommended gold market exposure has fallen by more than 77 percentage points.

What sins did gold bullion commit to elicit this huge of a reaction? Failing to rise convincingly above the psychologically important $1,000 barrier, apparently: Spot gold in the futures market was able to close above that level for just one day (Feb. 20), and only barely at that ($1,001.70). And it then dropped.

Still, gold didn’t fall off a cliff. It’s currently just 8% below its Feb. 20 close, after all. Declines of that magnitude typically do not lead to such marked shifts in sentiment from bulls to bears.

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Jim Sinclair’s Commentary

Well UBS? At least it makes for some good reading.

UBS Investment Research
Q-Series®: Gold

What is next for gold?

Where could prices go?
We believe that the current environment is one which can best be characterised as having a ‘low margin of error’ for central bankers; with the prospects for deflation/inflation as becoming more extreme. The high potential for policy error is generating considerable interest in certain assets which are perceived as ‘stores of value’ including gold.

Our econometric model indicates upside risk
Using a proprietary econometric model we have generated a probability cone for the future possible price path for gold. Using different environments for the level of inflation volatility, US dollar and absolute level of inflation we have determined that future returns on gold are likely to be positively asymmetric, with potential upside to US$2,500/oz.

Exposure to gold recommended
Our asset allocation team has moved gold to overweight from neutral. Given the broad uncertainties in the current macro climate we believe that investors should look to gold given its historic tendency to act as a hedge against these risks.

Equity performance
Our assessment of equity performance from 1900 suggests that gold equities are strong performers versus the market during periods of financial risk. During the 1929 crash, for example, Homestake Mining strongly outperformed the S&P. Preferred gold mining equities include Goldcorp, Anglogold and Lihir.

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Jim Sinclair’s Commentary

AIG is not the only entity that will not repay one penny of the trillion the Treasury and Fed have provided (of course at no risk to the Treasury or Fed). What that means is you, I and our grandchildren are going to pay it back. Keep in mind the funds have not disappeared into a black hole somewhere. All that money has gone to the winners of the OTC derivatives. Yes, all that money.

AIG likely won’t be able to pay taxpayers back
The Associated Press
8:06 PM EST March 16, 2009

Pressure is mounting on the government to revise its bailout of AIG to ensure that taxpayers are repaid as much as possible of the $170 billion lent to the troubled insurer.

Experts warn we shouldn’t expect to get much back.

The problem stems from AIG’s obligations to its trading partners. So far, the hobbled insurance giant has honored in full its contracts with U.S. and foreign banks. It’s paid out more than $90 billion in taxpayer money to keep some of the biggest names in finance from losing money on bad bets linked to subprime mortgages and other risky assets.

As the cost of the rescue swells, experts says it’s becoming harder to envision a scenario in which the government could recoup its full investment. Even though the AIG payouts to major banks have angered critics of the bailout, it might be legally impossible to claw back any of the billions already doled out.

"A contract is a contract," said Russell Walker, a risk management professor at Northwestern University. "That money all went to people who bought protection from AIG."

The government agreed to uphold those contracts when it seized control of American International Group in September. It argued that failing to repay the debts of the globally interconnected company could cause catastrophic losses at big international banks, potentially toppling the financial system.

Scrutiny of AIG’s dealings with its trading partners comes after revelations over the weekend that the insurer plans to pay out tens of millions in executive bonuses. President Barack Obama on Monday accused AIG of "recklessness and greed." He pledged to try to block it from handing out the bonuses, which AIG insists it’s contractually obligated to pay.

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Jim Sinclair’s Commentary

This is only one of the problems but it is one that can have the most significant impact on non Wall Streeters. It is a significant risk to the social order.

Many of these people are not sheep and will walk to the slaughter obediently, subserviently and quietly.

Hidden Pension Fiasco May Foment Another $1 Trillion Bailout
By David Evans

March 3 (Bloomberg) — The Chicago Transit Authority retirement plan had a $1.5 billion hole in its stash of assets in 2007. At the height of a four-year bull market, it didn’t have enough cash on hand to pay its retirees through 2013, meaning it was underfunded to the tune of 62 percent.

The CTA, which manages the second-largest public transit system in the U.S., had to hope for a huge contribution from the Illinois state legislature. That wasn’t going to happen.

Then the authority found an answer.

“We’ve identified the problem and a solution,” said CTA Chairman Carole Brown on April 16, 2007. The agency decided to raise money from a bond sale.

A year later, it asked Illinois Auditor General William Holland to research its plan. The state hired an actuary, did a study and, on July 17, concluded that the sale of bonds would most likely result in a loss of taxpayers’ money.

Thirteen days after that, the CTA ignored the warning and issued $1.9 billion in bonds. Before the year ended, the pension fund was paying out more to bondholders than it was earning on its new influx of money. Instead of closing its funding gap, the CTA was falling further behind.

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Jim Sinclair’s Commentary

This is also securitized as OTC derivatives. It is another problem to add to the pile of items not going away.

U.S. credit card defaults rise to 20 year-high
Mon Mar 16, 2009 6:15pm EDT
By Juan Lagorio

NEW YORK, March 16 (Reuters) – U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co and Citigroup amid a deepening recession.

AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate — debts companies believe they will never be able to collect — rose to 8.70 percent in February from 8.30 percent in January.

The credit card company’s shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast.

In addition, Citigroup Inc — one of the largest issuers of MasterCard cards — disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.

"There is a continued deterioration. Trends in credit cards will get worse before they start getting better," said Walter Todd, a portfolio manager at Greenwood Capital Associates.

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Jim Sinclair’s Commentary

The Talking Heads, although somewhat cautious, are using the increased building of condos and apartments as an indicator of a bottom. They are forgetting the following.

Corporate meltdown leaves renters in limbo
Large apartment complexes abandoned to receivership and unruly weeds
By Kari Huus
updated 3:26 a.m. PT, Mon., March. 16, 2009

Nicholle Krause first noticed the weeds sprouting in the usually well-manicured grounds of her 320-unit apartment complex in Chandler, Ariz., in December. Soon, signs of neglect began multiplying: Garbage spilled over from the dumpsters, the water in the swimming pool turned a slimy pea green and the grounds were infested by swarms of bees — especially alarming because Krause is severely allergic to bee stings.

“I couldn’t even go outside to enjoy where I live,” said Krause, a 21-year-old office worker who pays $827 a month for a one-bedroom apartment with garage space. “I shouldn’t have to pay $800 a month to live in a … hole.”

It wasn’t until early March that Krause and other residents learned why the complex – the alluringly named Alante at the Islands — was rapidly going to seed. The property owner, Irvine, Calif.-based Bethany Holdings Group, had abandoned the complex and a dozen other large rental properties in the greater Phoenix area after defaulting on hundreds of millions of dollars in loans.

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Jim Sinclair’s Commentary

Seems the Greeks take financial misconduct, or plain stupidity, somewhat more seriously than New Yorkers.

Greek extremists threaten more bombings after Citibank attacks

ATHENS (AFP) — A Greek extremist group known for its violent attacks has threatened to carry out more bombings in the wake of two recent strikes targeting US banking group Citibank.

In an eight-page proclamation published in Greek weekly Pontiki, far-left group Revolutionary Struggle said its aim remained to foment "revolution" and use the global economic crisis against capitalism.

"We intend to continue timed (bomb) attacks," the proclamation said.

"We need to rid ourselves for good of all the scum of economic and political power so that humanity can free itself from these criminals.

"We must create (a mass movement) here and now so that the crisis can become the system’s tomb," it added.

Greece’s most dangerous far-left organisation earlier admitted responsibility for two attacks against Citibank targets in north Athens that caused no injuries.

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Jim Sinclair’s Commentary

This is hard to believe.

Should Geithner resign it would be critically bad for expectations of Obama’s ability to lead any business recovery.

Internationally, it would be an embarrassment to his administration that would be difficult if not impossible to overcome.

Geithner "Out Of The Loop," Resignation Talk Begins
Henry Blodget
Mar. 17, 2009, 2:25 PM

A week ago, we lost patience with Tim Geithner and called for him to be fired. He won’t be fired, of course–throwing him under the bus only a month or so into his tenure would embarrass the Obama administration–but we have now heard the first public discussion of a possible resignation.

Why might Tim Geithner resign?

· He still has no coherent plan to fix the banking system

· He has convinced no one that he’s the right man to lead us out of this.

· He helped design the past administration’s failed bailouts

· He was the architect of the original AIG bailout

· He tacitly helped cover up the AIG "counterparty" bailout beneficiaries for 6 months

· He approved the latest round of AIG bonuses last week (according to AIG)

At the very least, Geithner needs to answer for his role in the original AIG bailout, which has been a disaster, as well as the counterparty cover-up.

In September, Geithner and Hank Paulson engineered an AIG bailout in which Paulson’s firm (and one of Geithner’s patrons on the New York Fed) secretly received $13 billion of taxpayer money that no taxpayer was told about. Now that taxpayers have found out about it, they are justifiably pissed.

In any event, Republicans have been emboldened by Geithner’s stumbles, and they’re getting closer to calling for his head:

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Jim Sinclair’s Commentary

Take your pick. There are so many black holes out there that our financial leadership has hit the panic button (SDRs). This speaks quite poorly for the grand hope that this new administration can save the USA (or world) from anything.

Freddie Mac: The Government’s Next Black Hole?
By STEPHEN GANDEL
Tuesday, Mar. 17, 2009

AIG is to date the most expensive corporate bailout in American history, requiring $180 billion in government funds. But it may soon have competition. Last week mortgage giant Freddie Mac said it had lost $50 billion in 2008 alone. A look at the company’s books suggests the government will have to spend at least triple that much to save the financial firm from collapse. If the housing market worsens, the tab could be even larger.

"Freddie’s portfolio of [mortgage] insurance is more risky than the market was led to believe," says Paul Miller, an analyst at FBR Capital Markets. Sister company Fannie Mae lost even more last year, with $58.7 billion of red ink. But Fannie was better capitalized than Freddie going into the credit crunch. So even though Freddie by many measures is smaller than Fannie, the problems at Freddie will probably end up costing more.

Citigroup and other banks have also lost money and will need more capital to survive. But in those cases it’s not clear who will take the hit — shareholders, bondholders or the government. In the cases of AIG, Freddie Mac and Fannie Mae, however, there is no question where the money will come from. Freddie and Fannie were taken over by the government and put into conservatorship last fall. AIG is currently 80% owned by the government. The losses at those companies are now taxpayer losses.

And like AIG, Freddie has had to go back to the government a number of times with cup in hand. The mortgage giant has already received $14 billion in government aid. After a fourth-quarter loss of $24 billion, the company said it needed an additional $31 billion from the government to keep the lights on.

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Posted by & filed under In The News.

A Word of Caution:

Some writers are attempting to take Armstrong’s cycle work and interpolate that to gold using a standard 8.6 year approach.

There is nothing standard about what is out there today.

I would suggest that we should listen to the man himself.

Armstrong looks to June as a very important period for gold. Should that period be a key time for gold the following high would be in the area of $4000.

Barrick settles lawsuit over misleading investors
Joe Schneider, Bloomberg
Published: Monday, March 16, 2009

Barrick Gold Corp., the world’s biggest gold producer, agreed to settle a lawsuit alleging it misled investors by claiming that its hedging program wouldn’t hurt profits as gold prices rose.

Terms of the settlement haven’t been released because Toronto-based Barrick must conclude talks with its insurers before signing the accord, David Brower, a lawyer for investors who sued, said Monday in a letter to U.S. District Judge Richard Berman in New York. Judge Berman postponed a settlement hearing, scheduled for Tuesday, until March 31.

Barrick hedged production by entering into contracts to sell some gold before it was mined to protect against a drop in bullion prices. Shareholders alleged in the lawsuit filed in 2003 that the program was "speculative" and "risky," resulting in a drop in the share price as gold prices rose.

Judge Berman allowed that part of the suit to proceed in a ruling on Jan. 31, 2006, when he threw out claims that Barrick was involved in anticompetitive conduct.

Former Barrick chief executive Randall Oliphant, chief financial officer Jamie Sokalsky and former chief operating officer John Carrington were named in the suit.

Mr. Oliphant was fired in February 2003, after Barrick’s stock fell 17% in the previous year as the price of gold surged to a six-year high. Mr. Oliphant’s successor, Greg Wilkins, abandoned the hedging program.

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In Downturn, China Exploits Path to Growth
By KEITH BRADSHER
Published: March 16, 2009

GUANGZHOU, China — The global economic downturn, and efforts to reverse it, will probably make China an even stronger economic competitor than it was before the crisis.

China, the world’s third-largest economy behind the United States and Japan, had already become more assertive; now it is exploiting its unusual position as a country with piles of cash and a strong banking system, at a time when many countries have neither, to acquire natural resources and make new friends.

Last week, China’s prime minister, Wen Jiabao, even reminded Washington that as one of the United States’ biggest creditors, China expects Washington to safeguard its investment.

China’s leaders are turning economic crisis to competitive advantage, said economic analysts.

The country is using its nearly $600 billion economic stimulus package to make its companies better able to compete in markets at home and abroad, to retrain migrant workers on an immense scale and to rapidly expand subsidies for research and development. Construction has already begun on new highways and rail lines that are likely to permanently reduce transportation costs.

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Jim Sinclair’s Commentary

Don’t be fooled, these are not the counter parties. These are the brokers for the counter parties. This article is more convoluted fabrications.

A.I.G. Reveals Its Biggest Counterparties
March 15, 2009, 5:16 pm
Update | 6:23 p.m.

The American International Group on Sunday released the names of financial institutions that benefited last fall when the Federal Reserve saved it from collapse with an $85 billion rescue loan and then 3 subsequent bailouts.

The disclosure included counterparties to both its credit default swap operations and its securities lending businesses, both of which contributed heavily to A.I.G.’s troubles, as well as to muncipalities who participated in certain investment programs. All told, Sunday’s statement detailed payments of more than $78 billion, all made using government loans. (Read the disclosure by A.I.G. after the jump.)

Many critics of the company have demanded the names of A.I.G.’s counterparties as the insurer received government money totaling $170 billion. A.I.G. said in a statement that it made the disclosure in consultation with the Federal Reserve.

“Our decision to disclose these transactions was made following conversations with the counterparties and the recognition of the extraordinary nature of these transactions,” Edward M. Liddy, A.I.G.’s government-appointed chief executive, said in a statement.

Time and again, the rationale given for bailout out A.I.G. was that its credit default swap agreements — essentially insurance contracts on mortgage-backed securities — were so interwoven into the global financial web that to let the insurer fail would create chaos.

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Posted by & filed under In The News.

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Jim Sinclair’s Commentary

After the advertisement, the statement of the G-20 is meaningless for an economic recovery, but does contain a commitment to hyperinflation. Whatever is required in what amount required should be done. Even Geithner looked amazed. The G-20 statement is directed to the US Treasury and Fed that WILL via swaps provided what is needed, thereby extending the FUBAR.

You think Geitner’s facial expression betrays his knowledge of what is coming at his and the Fed’s hand? Of course he knows!

There is no difference between what is being done by the US Treasury and the Fed from what the IMF and World Bank lectured all the developing nations not to do because of the hyper-inflationary implications IMPLICIT therein.

The USA is headed for the financial condition of a Banana Republic and is already if the truth was to be known. All of this is delivered to you and I by the manufacturers and distributors of OTC derivatives now at the truthful notional value number of one quadrillion, one thousand, one hundred and forty four trillion US dollars. That is cement shoes on the Western Economy.

Just How Much Is $1 Trillion?

President Obama says his Administration’s stimulus plan could cost more than $1 trillion, and this has many people throwing that number around rather casually.

That got us to thinking about just how much $1 trillion represents.

· $1 trillion is almost enough to buy a controlling interest in all 30 of the companies in the Dow Jones Industrial Average.

· $1 trillion is more than the combined state tax revenue of all 50 states.

· $1 trillion would be enough to buy all of the single-family and multi-family residences in the state of Texas.

· $1 trillion in 2008 dollars would cover the entire U.S. federal budget from George Washington’s inauguration to the end of World War I.

· A stack of 200 $100 bills is roughly an inch thick. If these stacks were set up on end like dominoes, $1 trillion would be the distance from New York City to Chicago.

–From the US Global Investor Alert

Jim Sinclair’s Commentary

Now Obama is talking about the Economic Stimulation requiring $1 trillion:

A quadrillion

Number of zeros

   

3

thousand

 

6

million

 

9

billion

 

12

trillion

 

15

quadrillion

 

     

Now think about how the real number for the total outstanding OTC derivatives, the absolute root of the disaster, is one quadrillion,  one hundred and forty four trillion dollars.

Hyperinflation is assured by this historically unprecedented infusion of endless capital into the world’s monetary system and many private pockets.

Jim Sinclair’s Commentary

This weekend’s drama. Let’s see if AIG gets the bonuses down from $165 million to $160 million.

Treasury pressure leads to AIG scaling back bonuses
updated 1:31 a.m. EDT, Sun March 15, 2009

NEW YORK (CNN) — Under pressure from the Treasury Department, insurance giant AIG plans to scale back bonuses and compensation for some of its top-earning employees.

CNN obtained a letter Saturday from AIG Chairman and CEO Edward Liddy to Treasury Secretary Timothy Geithner, in which Liddy pledges in the letter to reduce 2009 bonus payments, which AIG refers to as "retention payments," by at least 30 percent.

Liddy also addresses steps to limit compensation in AIG Financial Products, the London-based unit responsible for issuing the risky credit default swaps, which on several occasions has brought the company to the brink of collapse.

In the letter, Liddy says the unit’s 25 highest-paid contract employees will reduce their salaries to $1 this year and all other officers in the unit will reduce their salaries by 10 percent. Other "non-cash compensation" will be reduced or eliminated.

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Jim Sinclair’s Commentary

Expect the Federal Reserve to discuss a program of buying its own 10 year treasuries.

It is hard for me to believe that the Federal Reserve will monetize its own debt. That out bananas the most egregious of Banana Republic economics. how can any sane commentator discuss this as a reasonable approach to running monetary policy?

It is certainly a program the Chinese would love to participate in.

All artificial efforts to control interest rates fail. That is a market axiom.

Expect more of the following:

Bernanke talks up debt monetization as printing presses go into even higher gear
Tue, Dec 2 2008, 07:36 GMT
by John Hardy

The US dollar got an extra boost to start the month yesterday when the Chinese authorities fixed the renminbi at its weakest level versus the greenback since this spring, and the ‘trading range’ for the day was larger than the range for the past 4-5 months. The timing of the move was significant considering that Paulson is meeting with his Chinese counterparts at the fifth round of the US-China Strategic Economic Dialog talks on Thursday and Friday. There is intense speculation that the Chinese may want the renminbi to weaken to support growth. Any decided effort by the Chinese to keep their currency weak would certainly support the greenback’s rally. The currency has been effectively pegged to the USD for months, so the Chinese have seen their currency gain sharply on most other currencies around the world. This is a key story to watch this week.

Paulson and Bernanke are making it clear that they will do everything in their power to keep yields on the long end of the yield curve as low as possible in an effort to shore up the US housing market. Bernanke was out directly talking up the idea of debt monetization. So far, these scary plans to buy money with money straight from the printing presses is being taken in stride and long yields continue to fall precipitously (macro players are also getting flushed out of the formerly popular bets on the yield curve steepening – the 2-10 spread has collapsed from a near record 260+ bps in mid-November to 180 bps at present.) Are we on the way to deflation or hyperinflation or both…? It’s tough to say, but the Fed has lost control of credit markets by having to resort to these desperate measures. Lenders in the real market for loans are paying record wide spreads to benchmarks if they can get any credit at all, and consumers are also feeling the pinch on their credit cards, where credit limits are being slashed and interest rates jacked up to ridiculous levels – often 30% or more. So despite effectively zero interest rates, quantitative easing, and now signs of debt monetization, the average lender is experiencing a steadily tightening noose on their credit.

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Jim Sinclair’s Commentary

Comic relief has brought up serious questions concerning the equity cheerleaders that call themselves interviewers on financial TV.

Jon Stewart puts spotlight on CNBC and meltdown
By DAVID BAUDER

(AP:NEW YORK) The feud between Jon Stewart and CNBC’s Jim Cramer has been good for laughs _ and ratings _ but has also raised the serious question of whether the experts at TV’s No. 1 financial news network should have seen the meltdown coming and warned the public.

Over the past two weeks, Stewart’s "Daily Show" on Comedy Central has ridiculed CNBC personalities, including Cramer, the manic host of "Mad Money," by airing video clips of them making exuberantly bullish statements about the market and various investment banks shortly before they collapsed.

Stewart has charged that people at CNBC knew what was going on behind the scenes on Wall Street but didn’t tell the public. He has accused CNBC anchors and pundits of abandoning their journalistic duties and acting like cheerleaders for the market.

"In a tremendous boom period, they covered the boom and people wanted to believe in the boom," said Andrew Leckey, a former CNBC anchor and now president of the Donald W. Reynolds National Center for Business Journalism at Arizona State University. "They didn’t uncover the lies that were told to them. Nobody did. But they should be held to a higher responsibility."

But Don Hodges, chairman of Hodges Capital Management in Dallas, said he doesn’t fault CNBC for not seeing the bust coming.

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Jim Sinclair’s Commentary

The inviting conclusion is that these two events have a common relationship, if not intentional certain serendipity.

US warships head for South China Sea after standoff
Tim Reid in Washington
March 14, 2009

A potential conflict was brewing last night in the South China Sea after President Obama dispatched heavily armed American destroyers to the scene of a naval standoff between the US and China at the weekend.

Mr Obama’s decision to send an armed escort for US surveillance ships in the area follows the aggressive and co-ordinated manoeuvres of five Chinese boats on Sunday. They harassed and nearly collided with an unarmed American vessel.

Washington accused the Chinese ships of moving directly in front of the US Navy surveillance ship Impeccable, forcing its crew to take emergency action, and to deploy a high-pressure water hose to deter the Chinese ships. Formal protests were lodged with Beijing after the incident.

On a day that Mr Obama and his senior officials met the Chinese Foreign Minister, Yang Jiechi, in Washington, Beijing showed no sign of backing down. Its military chiefs accused the unarmed US Navy ship of being on a spying mission.

The US keeps a close eye on China’s arsenal, including its expanding fleet of submarines in the area. Washington says that the confrontation occurred in international waters, but Beijing claims nearly all the South China Sea as its own, putting it in conflict with five other nations that have claims over different parts of the waters.

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China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries
By MICHAEL WINES, KEITH BRADSHER and MARK LANDLER
Published: March 13, 2009

BEIJING — The Chinese prime minister, Wen Jiabao, spoke in unusually blunt terms on Friday about the “safety” of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to offer assurances that the securities would maintain their value.

Speaking ahead of a meeting of finance ministers and bankers this weekend near London to lay the groundwork for next month’s Group of 20 summit meeting of the nations with the 20 largest economies, Mr. Wen said that he was “worried” about China’s holdings of United States Treasury bonds and other debt, and that China was watching economic developments in the United States closely.

As the financial crisis has unfolded, China has become increasingly vocal about what it perceives as Washington’s mismanagement of the global economy and financial system, joining a chorus of foreign critics of unbridled American capitalism. On Thursday, for example, France and Germany rebuffed American calls to coordinate a global stimulus packageat the G-20 meeting, saying financial regulation should come first.

In January, Mr. Wen gave a speech criticizing what he called an “unsustainable model of development characterized by prolonged low savings and high consumption.” There was little doubt that he was referring to the United States.

Mr. Wen sounded similar themes in his remarks on Friday, which came in response to questions at a news conference at the end of the Chinese Parliament’s annual session. While refraining from direct criticism of the Obama administration’s economic policies, he reminded Washington of China’s status as its largest creditor. With budget deficits mounting rapidly, the United States needs China if it is to finance all that new debt at low interest rates.

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Jim Sinclair’s Commentary

My gawd, you and I take risks working long and hard to succeed.

These guys deal in unlisted, unfunded, unregulated, fraudulent, non-transparent paper, screw up, go begging, get our money, and receive huge bonuses for total failure, total dereliction of human duty, and in that public ignoble failure cause extreme pain and potentially life long suffering to others.

Rather than huge cash presents they deserve public flogging, if not life imprisonment at Attica.

What the hell is the world thinking? Where is your total outrage?

A.I.G. Planning Huge Bonuses After $170 Billion Bailout
By EDMUND L. ANDREWS and PETER BAKER

Published: March 14, 2009

WASHINGTON — The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

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Jim Sinclair’s Commentary

The US threatens China on the sea so Russia threatens the US with bombers stationed a good stone’s throw away from Florida.

Putin will do what he says and that is quite dangerous.

Russian strategic bombers could use Cuba airfields
Sat March 14, 2009

MOSCOW, Russia (CNN) — Russia expressed interest in using Cuban airfields during patrol missions of its strategic bombers, Russia’s Interfax news agency reported

"There are four or five airfields in Cuba with 4,000-meter-long runways, which absolutely suit us," Maj. Gen. Anatoly Zhikharev told Interfax.

Zhikharev, who is the chief of staff of the Russian Air Force’s long-range aviation, said, "If the two chiefs of state display such a political will, we are ready to fly there."

Zhikharev also told Interfax that Venezuelan President Hugo Chavez has offered a military airfield on La Orchila island as a temporary base for Russian strategic bombers.

"If a relevant political decision is made, this is possible," he said, according to Interfax. Zhikharev said he visited La Orchila in 2008 and can confirm that with minor reconstruction, the airfield owned by a local naval base can accept fully-loaded Russian strategic bombers

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Jim Sinclair’s Commentary

Does anybody believe this bombastic bull? How much money are they wasting on wine and cuisine for bureaucrats that can’t find their way out of a paper bag?

G20 make pledge to restore growth

Finance ministers from the G20 group of rich and emerging nations have pledged to make a "sustained effort" to pull the world economy out of recession.

"We are committed to deliver the scale of sustained effort necessary to restore growth," they said in a joint statement after their talks in the UK.

UK Chancellor Alistair Darling said they agreed the International Monetary Fund (IMF) should be given more money.

The talks were held amid reports of rifts over the best way forward.

BBC economics editor Stephanie Flanders said that the outline agreements represented "cheap talk", and differences remain.

The outline agreements will now provide the basis for more concrete pledges at next month’s meeting of G20 leaders in London.

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Jim Sinclair’s Commentary

Do not confuse UBS with Switzerland. They are both different lands. One has serious, long standing cultural traditions unlikely to fold, and the other is OTC derivative central in la-la land.

Switzerland eases banking secrecy

Switzerland, the world’s largest offshore financial centre, has agreed to accept concessions on bank secrecy.

However, while it will now abide by international rules on bank data sharing, it said it would only respond to "concrete and justified" requests.

The government added that it would still protect banking customers from "unjustified watching from abroad".

Switzerland’s announcement comes after it had risked being added to a global blacklist of uncooperative tax havens.

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Jim Sinclair’s Commentary

Bloomberg, are you listening?

TheStreet.com shakes up the corner office
Commentary: Stability is required in a period of tumult

By MarketWatch

NEW YORK (MarketWatch) — Jim Cramer’s week from hell just got even worse on Friday.

Fresh from being dressed down on "The Daily Show" on Thursday night, Cramer had to answer for more bad news when Thomas Clarke resigned as CEO of The Street.com Inc. (TSCM)

TheStreet.com, Inc, the online financial news site co-founded by Cramer. Board member Darryl Otte will be the interim CEO.

Cramer, who took the reins as chairman last October, is synonymous with the fortunes of The Street as one of the Web site’s signature columnists. The company’s share price stood at $2 on Friday morning, underscoring its woes and struggle for survival.

TheStreet made big bets on its commentators, and it counted on a bull market to maintain the public’s interest. Problem is, TheStreet’s columnists often come across as being shrill and dogmatic. They seem to care more about speaking to one another than informing their readers.

TheStreet somehow got away from the central mission of every business: serve your customers.

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Jim Sinclair’s Commentary

You will now be hearing often about a new chapter in this disaster. It is known as Chapter 9. Guaranteed Municipal are now a joke in terms of guarantee.

Ch 9 Primer
Municipal Bankruptcy.

Get ready or get buried. Please note the following passage:

The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts and obligations. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of debt principal or interest, or refinancing the debt by obtaining a new loan.

• extending debt maturities
• reducing the amount of debt principal
• reducing the amount of interest
• refinancing
Got that? There is no authority for new taxes. Good news but unfortunately the only good news. Reading further:

Different types of bonds receive different treatment in municipal bankruptcy cases. General obligation bonds are treated as general debt in the chapter 9 case. The municipality is not required to make payments of either debt principal or interest on account of such bonds during the case. The obligations created by general obligation bonds are subject to negotiation and possible restructuring under the plan of adjustment.

Special revenue bonds, by contrast, will continue to be secured and serviced during the pendency of the chapter 9 case through continuing application and payment of ongoing special revenues.

GO (General Obligation) debt is worthless. Municipal pensioners stand in line with all the other debtors. Special revenue bonds are only protected to the limits of revenue received.

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Jim Sinclair’s Commentary

This is a greater problem than Iraq and Afghanistan together.

A pre-emptive act is probable.

Pakistan teeters on the brink of chaos
By Jonathan Manthorpe, Vancouver SunMarch 13, 2009

Washington and London are leaning heavily on Pakistan’s squabbling political leaders as the nuclear-armed nation totters on the brink of chaos.

Britain’s foreign secretary David Miliband, U.S. ambassador to Islamabad Anne Patterson and Washington’s regional point man Richard Holbrooke are all expressing concern to Pakistani leaders that a mass anti-government march due to arrive in the capital on Monday threatens to topple the year-old and insecure administration of president Asif Ali Zardari.

The sense of impending doom is heightened by the increasing authority over large areas of Pakistan of the Taliban, whose fighters are waging a guerrilla war against North Atlantic Treaty Organization forces, including Canadians, across the border in Afghanistan.

Riot police arrested hundreds of demonstrators in the southern commercial centre Karachi on Thursday as opponents of the government of Zardari and his Pakistan People’s Party (PPP) attempted to set out on a so-called "long march" in buses and cars to the capital Islamabad.

The Zardari government has issued a two-week ban on gatherings of more than four people in an attempt to head off the march by supporters of former prime minister Nawaz Sharif and his opposition Muslim League.

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Jim Sinclair’s Commentary

Another Taliban picnic.

Militants torch NATO trucks in Pakistan: police

PESHAWAR, Pakistan (AFP) — Taliban militants in northwestern Pakistan torched eight trucks carrying supplies for NATO forces in neighbouring Afghanistan in a pre-dawn attack on Sunday, police said.

A dozen more trucks and trailers were damaged when the militants, armed with automatic weapons and rockets, attacked a terminal on the outskirts of Peshawar city.

"Taliban militants fired four rockets on a truck terminal on the ring road on the city’s outskirts and destroyed eight trucks completely," local police official Gohar Khan told AFP.

"The militants also torched 12 more trucks and trailers."

Khan said police arrived during the attack, in which the two truck drivers were shot and injured, but the militants fled to the neighbouring tribal area.

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Posted by & filed under In The News.

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Dear CIGAs,

Let’s not write off the Swiss too fast!

Swiss Gold

Jim Sinclair’s Commentary

The following is a lesson in socialistic thinking.

It is also a lesson in how governments will run nationalized businesses by vetting the CEOs.

Citi get ready!

"In these current economic crises, we are sorry but we see no other alternative but to reduce our staff.

We have to lay off André."

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Jim Sinclair’s Commentary

Can you imagine if they had to mark to market what these pensions would be worth?

Florida’s public employee pension fund plummets
By Sydney P. Freedberg, Times Staff Writer
In Print: Friday, March 13, 2009

Florida’s giant public employee pension fund needs a bailout.

Hit by the stock market crash and losses in risky investments, the pension plan faces a big funding gap, according to a study presented Thursday.

That means that the Legislature likely will have to ask financially strapped state and local governments to pony up additional cash to meet their pension promises.

Almost 1 million public employees and retirees — from teachers and firefighters to social workers and police officers — participate in Florida’s plan.

Because of the funding hole, their employers could see their pension costs roughly double from 10 to 20 percent of their payrolls in six years, according to the study.

The more local governments put in the fund, the more they will have to compensate by hiking property taxes or reducing services. All Floridians, not just those in the pension plan, could be affected.

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Jim Sinclair’s Commentary

Now here is a total contradiction in terms. The US ambassador is going to defuse this?

Note the cane swinging in the lower right corner. Now there is diplomacy in action by the Pakistan police.

American Envoys Try to Defuse a Political Crisis in Pakistan

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RAIWIND, Pakistan — In an effort to defuse the Pakistani political crisis, the American ambassador, Anne W. Patterson, traveled to see the opposition leader Nawaz Sharif to urge him to reconcile with Pakistan’s president, Mr. Sharif said.

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Jim Sinclair’s Commentary

You have the ability to stop the Comex manipulators but they know you will not.

World mints report soaring demand for gold coins
Fri Mar 13, 2009 8:36am EDT
7:07am EDT

LONDON (Reuters) – Mints around the world say demand for gold coins has risen sharply as interest in the precious metal soars on the back of financial instability and concerns over the inflation outlook.

The Royal Canadian Mint, which produces Maple Leaf bullion coins, said it quadrupled its production capacity late last year as demand for gold and silver bullion products leapt.

Gold was one of the few commodities to rise last year as turmoil in the financial sector sharpened investors’ appetite for assets seen as a safe store of value, such as bullion.

Spot gold rallied to an 11-month high of $1,005.40 on February 20 as a slide in equity markets increased interest in the precious metal. Demand for physical gold products such as coins and bars has been particularly strong, traders say.

The United States Mint said sales of its one-ounce American Eagle gold bullion coins rocketed to 710,000 ounces in 2008, from 140,000 ounces a year before.

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Jim Sinclair’s Commentary

Sounds quite correct to me!

Stewart slings barbs face-to-face with Cramer

NEW YORK (CNN) — After a week of pointed verbal barbs, host Jon Stewart sat face-to-face with financial analyst Jim Cramer on Comedy Central’s "The Daily Show" and continued the assault Thursday. Stewart blamed Cramer and cable network CNBC for being irresponsible cheerleaders in the lead-up to the stock market meltdown.

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Jim Sinclair’s Commentary

Now here is one way to negotiate with your bankers. How dare they want guarantees (not reassurance as today’s morning spin says) on already full faith and credit guarantees that Treasury instruments carry.

China condemns US warship deployment as tensions mount
March 13, 2009
Jane Macartney in Beijing and Tim Reid in Washington

Chinese Navy officers reacted with annoyance today when it emerged that the United States had sent a destroyer to back up a surveillance vessel in the South China Sea after it was harassed by People’s Liberation Army (PLA) sailors.

The decision by President Obama to send an armed escort for US surveillance ships in the area follows the aggressive and co-ordinated manoeuvres of five Chinese boats on Sunday. The vessels harassed and nearly collided with the unarmed USNS Impecccable.

One unidentified officer quoted in the China Daily newspaper said that the decision was disproportionate. While China’s Foreign Ministry has so far kept tight-lipped on the latest development, the decision to run such a comment so swiftly in the state-run English-language newspaper was a signal of Beijing’s concerns.

One naval source said the PLA had taken note of the latest US move and was watching developments closely

Another described the deployment of the USS Chung-Hoon, armed with torpedoes and missiles, as a signal of the Pentagon’s intention to “keep on pressing” China in the South China Sea.

He added: “The timing and the extent have gone beyond what you could call proportionate.”

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Jim Sinclair’s Commentary

Face it. Armstrong is right, Alf is right, and the Western world is stone cold broke!

"Think again, however, if you believe you’ve found quiet refuge among the growing ranks of play-it-safe types who have nearly $3.9 trillion stashed in these investments."

Shakeout from money fund’s collapse just starting
AP Online via NewsEdge :

BOSTON_It’s not the sexiest investment around, but the money-market mutual fund has become a high-demand safe haven for those who can no longer stomach the stock market.

Think again, however, if you believe you’ve found quiet refuge among the growing ranks of play-it-safe types who have nearly $3.9 trillion stashed in these investments.

Money funds are generally safe places to park cash because they invest in the safest types of debt. Many buy government bonds such as Treasury bills, while so-called prime funds seek slightly higher yields but accept marginal risk by venturing into short-term corporate bonds.

The downside of such risk hit home last fall when a soured investment in Lehman Brothers debt spooked investors who suddenly pulled cash out of the Reserve Primary Fund. While that run was triggered by the fund’s institutional clients, individual investors could end up losing roughly 8 cents on each dollar invested. The fund’s collapse marked just the second instance that money fund investors have been exposed to losses in the nearly four decades money funds have been around.

To prevent another such debacle, the industry and government regulators are weighing fundamental changes in how money funds operate. Their moves could make money funds even safer, but trim their already tiny yields.

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Jim Sinclair’s Commentary

They have the ability to stop the short side manipulators by taking delivery out of the Comex warehouse, but don’t hold your breath until they do.

Third Point Goes For The Gold
March 13, 2009

Another prominent hedge fund is turning to gold to weather tough times.

Third Point has told investors that it has moved a substantial amount of its assets into the precious metal, following the lead of another activist hedge fund shop, Greenlight Capital. Gold is now the single largest holding in Third Point’s fund, the Financial Times reports.

Third Point founder Daniel Loeb, famous for his poison pen, offered a self-critical take in the letter, acknowledging that “mistakes were made” last year. Were they ever: Third Point plunged 38% in 2008, although it has recovered somewhat this year, returning 1.8% so far.

Loeb paints a grim picture of the global economy, calling attention to the “issue of global insolvency which can be addressed only by massive corporate and sovereign restructuring.” He also played up the issue of corporate pension plans.

“I recently read the 10-K for a major steel company based in the U.S. whose pension liability went from a surplus of $200 million at the end of 2007 to a deficit of approximately $2 billion at the end of 2008,” he wrote. “To add insult to injury, in addition to its pension liability, this company’s healthcare plan is underfunded by $3 billion.”

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Jim Sinclair’s Commentary

Will China be reassured when they wish to be guaranteed?

Do you really believe that a statement that the budget deficit now headed into the TRILLIONs will be cut in half in four years is sound comfort for a debt holder?

Did you ever imagine that this would be the subject of a public exchange of statements?

Obama Aides Try to Reassure China on Treasury Debt
By Rebecca Christie and Kim Chipman

March 13 (Bloomberg) — The Obama administration sought to ease Chinese Premier Wen Jiabao’s concern about the security of his country’s investments in U.S. government debt, reiterating pledges to cut the budget deficit in half in four years.

“There’s no safer investment in the world than in the United States,” White House Press Secretary Robert Gibbs said today.

Wen earlier said that China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets,” he said at a press briefing in Beijing.

President Barack Obama is relying on China to sustain buying of Treasuries amid record amounts of U.S. debt sales to fund a $787 billion stimulus package and a deficit this year forecast to reach $1.5 trillion. Investors abroad own almost half of all U.S. debt outstanding, and China last year overtook Japan as the biggest foreign buyer.

Wen’s words contributed to a decline in Treasuries, before the losses were recouped. Yields on benchmark 10-year notes rose as high as 2.96 percent, from 2.85 percent late yesterday, and were at 2.89 percent at 4:14 p.m. in New York.

White House National Economic Council Director Lawrence Summers, asked today about Wen’s remarks, said overseas “confidence” in Treasuries would be hurt without the administration’s steps to end the economy’s decline.

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Posted by & filed under In The News.

Jim Sinclair’s Commentary

This entire destruction is a product of our dear friends, the OTC derivative manufacturers and distributors.

We are getting the destruction reports piece by piece.

Piece by piece it will all be bailed out.

Hyperinflation as the major consequence cannot be avoided by any means short of Divine.

Those financially in charge are the antithesis of Divine.

Are you ready?

45 percent of world’s wealth destroyed: Blackstone CEO
Wed Mar 11, 2009 3:10am EDT
By Megan Davies and Walden Siew

NEW YORK (Reuters) – Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world’s wealth has been destroyed by the global credit crisis.

"Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."

But the U.S. government is committed to the preservation of financial institutions, he said, and will do whatever it takes to restart the economy.

U.S. Treasury Secretary Timothy Geithner plans to unfreeze credit markets through a new program that will combine public and private capital in a fund that would buy bank toxic assets of up to $1 trillion.

"In all likelihood, that will have the private sector buy troubled assets to clean the banks out in terms of providing leverage … so that we can get more money back into the banking system," Schwarzman said.

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Jim Sinclair’s Commentary

Since US Treasury instruments carry the full faith and implicit guarantee by the US government, what is China saying here? Do they want gold as a guarantee as the only other guarantee might be a mortgage on the White House.

Whenever a statement is issued by a high placed representative in China it is serious and well considered. It is not an offhand remark.

It sounds like "keep the G20 off our currency or we will hammer you!"

Jiabao ‘Worried’ About Safety of U.S. Investments, Wen Says
By Eugene Tang

March 13 (Bloomberg) — China wants the U.S. government to “ensure the safety” of its investments in the world’s largest economy, Premier Wen Jiabao said.

“We have lent a huge amount of money to the United States,” Wen said today at a press conference in Beijing that marked the closure of the annual National People’s Congress meeting. “Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried.”

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Jim Sinclair’s Commentary

This is starting to mirror the 1970s. I told you it would happen!

Banks were January net buyers of 1.1 million oz of gold: CPM
New York (Platts)–10Mar2009

Central banks, which have been net sellers of gold in recent years, were net buyers of an estimated 1.1 million oz in January, according to the latest Market Alert by the CPM Group, the New York-based metals consultancy. The world’s central banks were both buyers and sellers, but the quantity bought outstripped what was sold.

Ecuador is estimated to have purchased 920,000 oz of gold in January, Venezuela bought 240,000 oz and Russia purchased 130,000 oz, after having bought 310,000 oz in December.

"Ecuador’s government has run into severe political and economic problems, and has a dollarized economy, using the US dollar as its currency and thus not having many monetary tools, such as being able to issue money that other central banks possess," CPM noted. France was the largest seller of gold in January by 40,000 oz and 10,000 oz, respectively.

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What is an Earmark?

Earmarks are funds provided by the Congress for projects or programs where the congressional direction (in bill or report language) circumvents the merit-based or competitive allocation process, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to properly manage funds. Congress includes earmarks in appropriation bills – the annual spending bills that Congress enacts to allocate discretionary spending – and also in authorization bills.

http://earmarks.omb.gov/

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My Dear Friends,

What do you wish your estate to look like, a bag of paper or gold?

Gold is going to $1224 and $1650 on its way to Alf’s numbers.

I made my decision and it was carried in the Forbes article of 2001 found here.

I have not changed one cubit from 2001 – I have only added to it. I challenge anyone out there to do better trading.

Success comes from making a plan and working a plan within a bull market. Failure comes from the egomania that says you, the newbie, can out trade the seasoned pro of 25 years or more. This is total and complete madness.

As the song the Gambler sings goes, the best you can hope for is the break even. Listen to the Gambler and learn a great lesson.

Today the US dollar declared its intention of retesting and failing at .7200

Regards,
Jim

Jim Sinclair’s Commentary

You know this is a product of the many Fed dollar swaps done to camouflage the bailout of non US banks in Switzerland and elsewhere. That is why those that predict the imminent collapse of Switzerland are smoking something.

Today’s action in the Swiss franc could have been a gift from the Swiss national bank to the massive shorts in the non-euro European currency raid that has taken place as another price for the Fed bailing out UBS and many others.

I have seen this kind of game played before. What a world we live in.

I would say if you have not cheated uncle, you need not worry. Remember my advice to play straight.

Liechtenstein eases bank secrecy amid crackdown
Thu Mar 12, 2009 8:34am EDT
By Jason Rhodes

VADUZ, Liechtenstein, March 12 (Reuters) – Liechtenstein agreed to ease its strict bank secrecy by committing to international tax and data standards, increasing pressure for similar concessions from other tax havens.

The move comes as finance ministers from the G20 group of rich nations and emerging powers prepare to meet in Britain from Friday ahead of a summit in London on April 2 that is expected to seek ways to fight tax evasion through offshore centres.

The tiny principality, a financial centre wedged between Switzerland and Austria, is seeking to be removed from a blacklist of tax havens and will now offer bilateral tax deals for cooperating in cases of tax fraud and tax evasion.

"Today’s declaration was very important in the run-up to the G20 meeting, so that Liechtenstein’s strategy is recognised," Prime Minister Otmar Hasler told a news conference.

Liechtenstein, whose banks have suffered big withdrawals since Germany launched a probe last year into 1,000 citizens suspected of dodging tax by parking money there, said its move could serve as an example to other nations under pressure.

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Jim Sinclair’s Commentary

Defuse Pakistan? You have to be kidding!

That is the same as trying to make Mullah Omar a Christian. Impossible and stupid.

US and British diplomats scramble to defuse Pakistan crisis
Zahid Hussain in Islamabad and Jeremy Page in Lahore

US and British diplomats were scrambling to broker a truce between Pakistan’s feuding political leaders tonight as thousands of black-suited lawyers defied a government ban to launch a mass protest across the country.

Richard Holbrooke, the new US special envoy for Pakistan and Afghanistan, telephoned Asif Ali Zardari, Pakistan’s President, to discuss the unrest, which has raised fears that the army could take power once again.

“Mr Holbrooke conveyed the anxiety of the US Administration over the worsening political crisis and asked the president to find ways to end the strife,” a senior Pakistani official told The Times.

David Miliband, the Foreign Secretary, also spoke to Mr Zardari as lawyers and opposition activists clashed with police at the start of a “long march” from major cities towards Islamabad, the capital. Organisers hope that hundreds of thousands will join the march, due to end with a rally in front of the national parliament on Monday, to demand that the government reinstate judges deposed under Pervez Musharraf, the former president.

Nawaz Sharif, the former Prime Minister whose party quit the government last year over the same issue, has urged Pakistanis to join the march and to rise up against their weak civilian government.

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Jim Sinclair’s Commentary

This the end of the beginning and now the plot is the beginning of the end of the present Pakistan government.

The buggers (present Paki government) were suckered into doing just what they should not have done.

Pakistan police swarm into major anti-government demonstration
By Mark Magnier 
11:56 AM PDT, March 12, 2009

Reporting from Islamabad, Pakistan — Police overwhelmed anti-government protesters today in Karachi, Pakistan’s largest city, arresting opposition leaders and preventing several hundred lawyers and activists from leaving for a planned demonstration in Islamabad.

Over the past 24 hours, the government of President Asif Ali Zardari has detained hundreds of people critical of its policies, arguing that public gatherings could serve as a focal point for terrorists and otherwise endanger property and lives.

Authorities also banned public assembly in two key provinces and blocked major roads leading into Islamabad, the capital, with barriers and paramilitary vehicles.

"The government has resorted to raiding the houses of the leaders of political parties," said Farooq Tariq, an official with the Pakistan Labor Party. "I’ve been underground for the last three days."

Lawyers were at the forefront of demonstrations against the former government of President Pervez Musharraf, who incurred their wrath in part by firing dozens of senior judges in 2007 in an apparent bid to head off legal challenges to his rule. The attorneys have continued to press Zardari to reinstate key judges.

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Hundreds seized as panicky Asif Ali Zardari struggles to keep grip on power
March 12, 2009

Pakistan rounded up hundreds of lawyers, activists and political opponents yesterday before protests that threatened to loosen the Government’s increasingly shaky grip on power.

Raja Zafarul Haq, a senior opposition leader, was placed under house arrest and police were hunting for Imran Khan, the former cricketer-turned-politician, after he escaped a police raid on his house in the middle of the night.

Clashes broke out in many cities in the eastern province of Punjab, where protesters took to the streets defying the government ban on public gatherings.

The crackdown, the most severe since the US-allied Government came to power a year ago, will damage the democratic credentials of President Zardari further. His administration is already rocking from a growing Islamic insurgency that culminated last week in a deadly attack on the touring Sri Lanka cricket team. The army, which has repeatedly seized power in Pakistan from civilan governments, was placed on high alert as tension mounted. Most of those detained belonged to the opposition Pakistan Muslim League (N) led by Nawaz Sharif, the former Prime Minister, and Imran Khan’s Tehreek-e-Insaf. Scores of others who evaded the morning raids have gone into hiding.

Police and paramilitary troops sealed off the capital, Islamabad, where opposition parties and lawyers planned to stage a sit-in outside the parliament building.

“My house was raided at 3 in the morning but I managed to escape,” Imran Khan told The Times on the telephone.

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Jim Sinclair’s Commentary

The following is from JB Slear, famous to us and infamous to our evil Comex brothers.

Pretending to be a Mutual Fund manager after losing ¾’s of their clients liquidity, or just a princess. Your pick

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Jim Sinclair’s Commentary

OTC derivative plus the market is the correct reason.

Note the underfunded amount. This also does not include January 1 to present!

I would make a guess they would be $400 to 500 billion down if accounted for today.

Largest U.S. pension plans’ assets fall $217 billion short
By Sandra Block and Sue Kirchhoff, USA TODAY

Last year’s stock market collapse left the nation’s largest private pension plans with a deficit of more than $200 billion, a study released Wednesday said, which could force companies to invest more money in their plans when they can least afford it.

The nation’s 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008, holding only 79% of the assets needed to cover estimated long-term liabilities. That compares with an $86 billion surplus — 109% of estimated liabilities — at the end of 2007, according to Watson Wyatt, a human resources consulting firm.

Pension plans’ assets fell 26% last year, primarily because of investment losses, the study said. A separate study released Wednesday by Milliman said the nation’s largest plans lost an additional $54 billion in February.

It’s not unusual for companies to have underfunded pension plans, and the deficit typically doesn’t affect payouts to near-term retirees. But to avoid future problems, companies with underfunded pensions are required to increase contributions.

Companies are also facing stricter federal funding requirements for pensions, says David Speier, senior retirement consultant at Watson Wyatt. "This combination will require employers to make staggering pension contributions over the next couple of years, at a time when they can least afford them."

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JB Slear’s Commentary

That’s it!! Time to protest in the streets.

Chocolate tax call in obesity fight

Chocolate should be taxed in a bid to control the obesity epidemic, a medical conference will hear.

A doctor called to tax chocolate to fight obesity

Family doctor David Walker believes that chocolate is a "major player" in the problem of the country’s expanding waistlines.

Taxing the treat would raise its profile as an unhealthy food which can contribute to weight-related conditions including diabetes, high blood pressure and back pain, the Lanarkshire GP will tell doctors at a conference in Clydebank.

He said people are often eating more than half a day’s worth of calories when they polish off a bag of chocolates in front of the television.

Dr Walker, based at Airdrie Health Centre, said: "I believe that chocolate is a major player in obesity and obesity-related conditions.

"What I’m trying to get across is that chocolate is sneaking under the radar of unhealthy foods.

"More than one person has said to me, ‘oh, but isn’t chocolate good for you?’ but any benefits are more than outweighed by the detrimental effect of obesity.

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Jim Sinclair’s Commentary

I am appalled that a major source of World Economic data can just adopt a new computer model and no one questions it.

The following, as I have told you, was what the Bank for International Settlement stated prior to adopting a new computer model to reduce it by 50%.

Where is the outrage? Nowhere I imagine in a world populated by sheep.

Global Derivatives Market Now Valued at $1.14 Quadrillion!
By: Jutia Group   Thursday, July 24, 2008 1:40 PM

The Bank of International Settlements, which seems to be the only institution that tracks the derivatives market, has recently reported that global outstanding derivatives have reached 1.14 quadrillion dollars: $548 Trillion in listed credit derivatives plus $596 trillion in notional/OTC derivatives.

Yes, that is Quadrillion. One and 15 zeroes!

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Jim Sinclair’s Commentary

This (corporate losses of the too big to fail) is not ending. Bailouts (every dime and more) are not ending.

Therefore the prediction by the Super Bears of a further implosion in business activity after a dead cat bounce guarantees hyperinflation and gold at Alf’s levels.

Take that you mal-informed deflationists that do not know the definition of deflation.

Freddie Mac reports massive loss

US mortgage giant Freddie Mac has revealed a loss of $50.1bn (£36.1bn) for 2008, and said it plans to ask the government for another $31bn of aid.

The company had already received $13.8bn in federal aid last year.

Freddie said the last quarter had been particularly bad, reporting a loss of $23.9bn for the three months to the end of December.

Last month, fellow mortgage company Fannie Mae reported an annual loss of nearly $59bn due to the housing crisis.

It also said it needed $15.2bn in government aid.

The huge losses made by the companies led to the government bailout.

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Jim Sinclair’s Commentary

The Whopper Award of the century goes to Alan Greenspan

Greenspan again finds the Fed blameless in housing bubble
10:35 PM, March 11, 2009

Alan Greenspan just cannot bring himself to say, "I’m sorry."

The former Federal Reserve chairman wrote an op-ed piece for the Wall Street Journal on Wednesday that repeated his favorite refrain: The Fed’s easy-money stance of 2002-2004 didn’t cause the housing bubble.

It wasn’t the rock-bottom short-term interest rates of that period, as dictated by Fed policy, that fueled the housing mania, Greenspan says.

Rather, he blames "the decline in long-term interest rates across a wide spectrum of countries" from 2000 through 2005.

Long-term interest rates, Greenspan wrote, became "disconnected" from Fed policy in that period as rising wealth in China and other foreign countries was plowed into Treasury bonds and other long-term fixed-income securities — pushing long-term rates down, including on 30-year mortgages.

In other words, the housing bubble was "all the fault of those pesky foreigners," says Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, N.Y.

More…

Posted by & filed under In The News.

In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress. 
–John Adams

Dear CIGA Frustrated,

You voiced your concern of why participants in the gold and dollar market do what they do in modern times with all the information available to them.

The following video will clear up all your doubts. The music is the Comex band of jolly short of gold manipulators.

The people are of course the gold gang.

Sincerely,
Jim

Jim Sinclair’s Commentary

The madness continues. Consequences will not be avoided.

Freddie asks Treasury for $30.8 bln after big quarterly loss
By Alistair Barr
Last update: 4:38 p.m. EDT March 11, 2009

SAN FRANCISCO (MarketWatch) — Freddie Mac (FRE)asked the government for billions of dollars in extra support late Wednesday after reporting a fourth-quarter net loss of $23.9 billion, or $7.37 a share. That was a slight improvement from the third quarter of last year, when the mortgage giant suffered a net loss of $25.3 billion, or $19.44 a share. The Federal Housing Finance Agency, which oversees Freddie, has asked the Treasury Department for $30.8 billion and the company said it expects to receive that money in March.

More… http://www.marketwatch.com/news/story/Freddie-asks-Treasury-308-bln/story.aspx?guid={218D6426-B7C9-43CC-A568-4D89BB173C78}


Jim Sinclair’s Commentary

Please refer back to the illustration posted yesterday showing what a trillion dollar looks like in 100 dollar bills.

Now consider that before the BIS changed their figures to Shiller’s BS computer cartoon value to maturity, the number they reported was ONE QUADRILLION ONE THOUSAND ONE HUNDRED and 44 TRILLION

Now there is one major pile of toilet paper.

Regards,
Jim

Jim Sinclair’s Commentary

It is not AIG that is being fed. The funds go in the front and out the back to the winners of the derivative which are not the brokerage firms someday to be named.

For every loss there is a gain. Note that the AIG monster is sitting on top of the OTC derivatives winners.

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Jim Sinclair’s Commentary

I love this. At the Mesa, AZ, KFYI Radio and TV listeners brought signs telling Santa Obama that they wanted fair treatment equal to the fat cat bailouts of the Wall Street pigs.

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Jim Sinclair’s Commentary

Until the uptick short sale rule is reinstated and where it still exists is enforced, along with criminal charges for naked and pool short selling occurs, no equity rally will have good legs.

Tick-tock, the uptick rule is about to expire
Commentary: Implementation won’t save market, but it will help
By MarketWatch

NEW YORK (MarketWatch) — As if it weren’t bad enough for hedge funds, now there’s credible talk that the uptick rule, which curbs some short selling, could be on its way back in a matter of mere weeks.

House Financial Services Committee Chairman Barney Frank, D-Mass., told reporters at a press conference Tuesday with House Speaker Nancy Pelosi that he expects the Securities and Exchange Commission to introduce a draft rule to reinstate the uptick rule next month.

Critics of short sellers, including Charles Schwab and the head of the New York Stock Exchange, Duncan Niederauer, have argued that the rule’s elimination has contributed to the economic downturn or is harmful to issuers.

Under the uptick rule, eliminated in 2007, short sellers were allowed to make their bets only when the price of a stock moves up. That would create a hurdle, but not a roadblock, for short sellers who in recent years have become a bigger part of the trading marketplace.

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Jim Sinclair’s Commentary

In terms of hyperinflation, certain to occur, this article is valid.

DB Advisors Says Commodity ‘Bull Market’ Still Intact (Update1)
By Millie Munshi

March 10 (Bloomberg) — A “secular bull market” in commodities remains intact and prices of oil and copper will rebound in the second half, according to Theresa Gusman, the head of equity research for Deutsche Bank AG’s DB Advisors unit.

Government spending in China and the U.S. will boost infrastructure construction and spur gains in demand for industrial commodities, Gusman said today. Increasing cash injections will accelerate inflation and bring gains in gold prices, she said. Limited supplies and declines in exploration budgets will also help underpin raw materials, she said.

“Policy makers are hell-bent on stabilizing the financial system,” Gusman, who manages $215 billion, said at a meeting with reporters in New York. “This will bring greater demand for commodities and make prices go higher.”

Commodities have plunged in the past eight months as the global recession eroded demand. The Reuters/Jefferies CRB Index of 19 raw materials sank 56 percent from a record on July 3 before today. The declines began after the gauge posted 29 percent jump in the first half of 2008.

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Jim Sinclair’s Commentary

Here is another problem certain the blow its lid.

The rise & rise of Pakistan’s Taliban
11 Mar 2009, 0155 hrs IST, Subodh Varma, TNN

In the spring of 1994, a new military force appeared in Afghanistan, the graveyard of empires. Legend has it that its first public action was in Kandahar. A local warlord had abducted two girls for serving his troops. One night, a group of young, bearded Pashtuns, wearing black turbans emerged from the darkness, stormed the base, rescued the girls and hanged the warlord from the turret of a tank.

They were called the Taliban, and soon they stormed Kabul and established one of the most brutal regimes in the world, based on a narrow fundamentalist interpretation of Islam.

Their origins lay in the western border areas of Pakistan, where thousands of Afghans, mainly Pashtuns, had fled during the decade-long jihad against the Soviet army. A whole generation of boys grew up in refugee camps in tribal areas, learning the ideology of hate and revenge. The camps and seminaries were organised by the Pakistani government, with funds received covertly from the US (for fighting communism) and openly from Saudi Arabian armchair jihadists who wanted to spread Islam. Because of their origins in madrassas, these fighters were called the "Taliban", or students.

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Jim Sinclair’s Commentary

Our CIGA Gold Delivery Man, JB Slear, is famous!

Where can private investors buy the cheapest gold?
By Rob Mackinlay

"Unlike futures-backed investment products which never actually take delivery of gold and silver, but continuously renew their investments in the paper markets, sophisticated investors wanting to get their hands on the real thing, buy the contract in the deliverable month and wait for it to expire.

JB Slear, a gold and silver broker based in Arizona specialises in helping high net worth clients take delivery of gold and silver futures contracts. He said that overseas buyers could face particular problems: "We’re finding more restrictions being applied to overseas buyers, seems one of the four warehouses will not allow overseas deliveries. We have just been told this by one of the Comex warehouses today. I don’t know if this is a lack of communication or not so, for the sake of all, we need to consider this a rumour till we have more people claiming the same problem."

Slear tells his clients that they may have to wait more than two weeks to take delivery as delays and complications in the process have become increasingly commonplace more so now than during the Christmas season. In some cases this has fuelled concern that stockpiles are running out. Slear is not convinced by this explanation and blames skeleton warehouse staffing for most of the delays.

But he said that the level of interest in this method of buying gold and silver had increased significantly between November and December.

The reason for the interest is obvious. Slear said: "I know of no other place in this country that offers a price equal to the Comex exchange, nothing comes close. Even with my Premium Delivery Service added, it’s far more reasonable to buy from Comex."

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Jim Sinclair’s Commentary

More on the miscreants:

The Most Dangerous Neighborhood in the United States

"Be careful."
"Keep your wallet safe."
"Don’t get your money stolen."
"Stay out of dangerous neighborhoods."

My parents used to say that to me when I was first going out on my own. I never got the definition of what a "dangerous neighborhood" was – you were just supposed to know. It was a place where people preyed on you. Predators, like jackals circling, waiting to pounce, ready to take your hard earned money from you. That’s what happens in dangerous neighborhoods. That’s why you should stay away from places like that.

As I got older, I wondered what exactly is a "dangerous neighborhood"? Most of us grew up assuming it was an area where poor people lived, people who didn’t dress well, didn’t have nice homes, didn’t have nice cars, didn’t have any interest in working for a living. People who just take and assume they’ll never get caught or even worse, don’t care if they do. However, that is a highly subjective criteria. How does one quantify that and determine the kind of place where you will most likely be separated from your money?

The Federal Bureau of Investigation provides statistics that may help us gain insight into where and how you are most likely to have your money stolen.

The FBI defines robbery as the taking of anything of value from a person by force or threat of violence. Robberies cost victims an estimated $588 million in 2007.

The FBI defines larceny-theft as the stealing of any property or article that is not taken by force or by fraud. In 2007 there were an estimated 6.6 million larceny-thefts, costing victims an estimated $5.8 billion dollars.

Securities fraud refers to deceptive practices in the stock and commodity markets including Ponzi schemes, high yield investment and hedge fund fraud and just about any way it is possible to lie about the promise of big returns on a variety of investment instruments. In 2006, the most recent year a total was listed, the FBI estimated losses at $40 billion.

More…

 

Jim Sinclair’s Commentary

In times past crowds dragged bankers out of their offices on Wall Street and hung them from lamp posts.

CORRECTED-Protesters target U.S. foreclosed-homes auctioneer
Tue Mar 10, 2009 6:19pm EDT

In March 8 story "Protesters target U.S. foreclosed-homes auctioneer," corrects story to include company’s response to protest in paragraphs 6 and 9.

NEW YORK, March 8 (Reuters) – An auction of foreclosed homes in New York City on Sunday drew protesters who blamed banks for an epidemic of home losses and called for a moratorium on evictions and foreclosures.

Two dozen people marched outside a Manhattan convention center where Real Estate Disposition Corp was auctioning off several hundred foreclosed homes, chanting and carrying signs reading "Banks get bailed out, people get thrown out."

The protesters said their argument was not with would-be homebuyers, who streamed into the auction without taking much notice, but with banks that had reaped benefits of government bailout funds after years of irresponsible lending practices.

"We’re not angry at the people who are looking for a cheaper home," said Larry Holmes, a spokesman for the Bail Out the People Movement, which staged the demonstration.

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Jim Sinclair’s Commentary

They predict inflation. I guarantee you hyperinflation.

Pimco Predicts Inflation, Joining Buffett, Marc Faber (Update3)
By Wes Goodman

March 11 (Bloomberg) — Pacific Investment Management Co. which runs the world’s biggest bond fund, joined investors Warren Buffett and Marc Faberin saying inflation will quicken, sounding a warning for Treasury investors.

U.S. government and Federal Reserve efforts to snap the recession will increase costs for goods and services as soon as 2010, Pimco said in a report today on its Web site by Chris Caltagirone and Bob Greer. Commodity producers are also delaying projects, which may limit supply and lead to higher prices when global growth resumes, according to Pimco.

“Inflation will rise,” Pimco said. Treasury securities that give investors protection against higher prices in the economy are “attractive now.”

Pimco is among a growing list of investors who are warning that programs to counter the U.S. slump will increase consumer prices as the economy starts to revive. Investor Jim Rogers, author of the books “Hot Commodities” and “Adventure Capitalist,” said this week U.S. policies will hurt conventional Treasuries, those that don’t offer inflation protection.

President Barack Obama is asking Congress to pass a budget that will result in a record $1.75 trillion deficit. He has already signed into law a $787 billion package of tax cuts and government spending.

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Jim Sinclair’s Commentary

Every day for the past few weeks the most consistent green figure has been the Libor Rate.

Libor’s Creep Shows Credit Markets at Risk of Seizure
By Gabrielle Coppola and Liz Capo McCormick

March 11 (Bloomberg) — The cost of borrowing in dollars is rising as the global recession deepens and central bank efforts to prop up the financial system fail to prevent a growing number of banks from requiring government bailouts.

The London interbank offered rate, orLibor, that banks say they charge each other for three-month loans stayed at 1.33 percent today, near the highest level since Jan. 8 and up from this year’s low of 1.08 percent on Jan. 14, the British Bankers’ Association said. The Libor-OIS spread, a gauge of bank reluctance to lend, widened to the most since Jan. 9.

Short-term borrowing costs are increasing as banks hoard cash and governments struggle to thaw credit markets after finance companies reported almost $1.2 trillion of writedowns and losses since the start of 2007. Banco Popolare SC yesterday became Italy’s first lender to seek state aid. Lloyds Banking Group Plc, the U.K.’s largest mortgage provider, ceded control to the government March 7. U.S. regulators seized 17 failing banks so far this year.

“The market is beginning to think that the solution is either not politically possible, or we can’t afford it, or maybe there isn’t a solution,” said Bob Baur, chief global economist at Des Moines, Iowa-based Principal Global Investors, which manages $198 billion of assets. Libor’s rise “is just another indication of that concern,” he said.

More…

Jim Sinclair’s Commentary

IMF sales in the 70s proved the most bullish thing for gold as it allowed major buyers in a singular prices.

Central bank gold sales never see the marketplace. This time they will provide an excellent vehicle for central banks wishing to diversify out of the US dollar.

This is no factor to the price of gold.

European Central Banks May Announce Gold Sales Accord, UBS Says 
By Claudia Carpenter

March 10 (Bloomberg) — European central bankers may extend their so-called Washington Agreement, capping gold sales, with an announcement as early as this month, according to UBS AG.

The accord that caps sales at 500 metric tons a year through September 2009 was announced in March 2004 at a meeting of the Group of 10 nations. A new agreement would most likely keep that 500-ton limit, according to John Reade, UBS analyst.

“If it doesn’t happen this month it could lead to a bit of uncertainty” in the gold market, Reade said by phone today.

Banks sold 358 tons of gold in the fourth year of the agreement through September last year, and another 48 tons through Jan. 7, according to the World Gold Council. There are 17 banks in the agreement, with the Central Bank of Cyprus the latest to join in January, according to the European Central Bank, itself a member.

More…

UPDATE 1-Singapore’s GIC sees more distress in markets
Tue Mar 10, 2009 2:35am EDT
By Kevin Lim and Saeed Azhar

SINGAPORE, March 10 (Reuters) – An official from the Government of Singapore Investment Corp (GIC) said he expects more weakness in financial markets in the next 12-18 months, and recommended investors hold gold and other safe assets such as government bonds.

GIC, one of the world’s largest sovereign funds with an estimated $200 billion-plus in assets, has invested aggressively in troubled global lenders, picking up multi-billion dollar stakes in Citigroup (C.N) and UBS (UBSN.VX) in late 2007 and early 2008.

There is "systemic capital inadequacy globally", and the world will probably see "three years of a very vicious downcycle," GIC’s director of economics and strategy, Yeoh Lam Keong, told the Investment Management Association of Singapore conference on Tuesday

"This is a very destructive process for assets."

Yeoh, who said he was speaking in his personal capacity, showed a slide prepared by GIC that indicated global writedowns in the financial sector could reach $3.8 trillion by 2013 and that only about 30 percent of the losses had been booked so far.

More…

 

Bad news on Sesame Street
Posted by Tracy Alloway on Mar 11 16:54

Sesame Workshop is cutting 20 per cent of its workforce…

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More…

Posted by & filed under In The News.

“When you see that trading is done, not by consent, but by compulsion — when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see money flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.”
–Ayn Rand, Atlas Shrugged (1957)

Dear CIGAs,

Here is an interesting question concerning the mark to market requirement for financial organization’s valuation of their so called assets.

"If you remove the requirement for mark to market of financial assets, can you calculate asset valuation selectively such as only up valuation but not down valuation?"

Does extreme times require extreme lies? Do the ends really allow any means? Does the accomplishment of fake valuation really make the damage that will be done over coming decades worthwhile? You could not count on any balance sheet as truthfully communicating worth. No, the ends here do NOT justify the means.

 

Jim Sinclair’s Commentary

The following is a video of the Bernanke-Sanders exchange courtesy of CIGA Anthony.

Jim Sinclair’s Commentary

I believe I covered this in my answer to Greg Hunters question yesterday, however this article does cover his point in much more detail.

Number One Reason to Own Gold
By Patrick A. Heller, Market Update
March 10, 2009

What do the following industry-leading companies have in common?

Alcoa, AIG, AMBAC, American Express, AMR (American Airlines), Bank of America, Bear Stearns, CBS, Citigroup, Countrywide Credit, Delphi, Dow Chemical, Eastman Kodak, Fannie Mae, Ford, Freddie Mac, Gannett, General Electric, General Motors, Goodyear Tire, Harley-Davidson, The Hartford, International Paper, JDS Uniphase, Lear, Lehman Brothers, Liz Claiborne, Macy’s, MBIA, Merrill Lynch, MetLife, MGIC, MGM, Motorola, JC Penney, Prudential, Saks, Sears, SprintNextel, Tenet Healthcare, UAL (United Airlines), United States Steel, Wachovia Bank, Washington Mutual, Whirlpool, and Xerox.

The answer: Since the middle of 2007, all of these companies have seen their stock values decline by more than 80 percent.

At the close of markets on June 29, 2007, gold was at $648. Its price now is more than 40 percent higher than it was then. Gold has outperformed the stocks in these companies by at least seven-fold in the past 20 months.

This example is a perfect demonstration of the number one reason to own gold. The best purpose for owning gold is for insurance against calamities that may affect the values of paper assets. The concept of owning insurance is not to make a profit by collecting on it (no one wants to be in a car accident, have their house burn down, lose valuable possessions to burglars, and so forth), but to have some protection just in case bad things come to pass. Gold serves to preserve and protect wealth.

Gold provides a stable form of money to facilitate commerce. An ounce of gold may temporarily hold a particular exchange rate versus dollars, pounds, euros, pesos, yen, francs, etc., but the value of these fiat currencies can and do change, usually downward. So far in history, there has never been a paper currency that has not eventually failed. In contrast, an ounce of gold from six thousand years ago is still worth an ounce of gold today.

Physical gold in your immediate possession is an asset that is not anyone else’s liability, so it has no counterparty risk. While the value of gold can fluctuate as measured in paper currencies, it has never suffered as much as these stocks of the companies listed above.

More…

 

Jim Sinclair’s Commentary

Today in Pakistan.

Pakistan: has it reached the edge of the precipice?
Posted by: Myra MacDonald
March 10th, 2009

Maybe this always happens at times of national upheaval. But there is a surprising disconnect between the immediacy of the crisis facing Pakistan as expressed by Pakistani bloggers and the more slow-moving debate taking place in the outside world over the right strategy to adopt towards both Pakistan and Afghanistan.

Reading Pakistani blogs since confrontation between the country’s two main political parties explodedand comparing them to international commentaries is a bit like watching men shout that their house is on fire, and then panning over to the fire station where the folks in charge are debating which type of water hose works best.

With lawyers and supporters of opposition leader Nawaz Sharif vowing to blockade parliament later this week over the refusal of President Asif Ali Zardari to reinstate fired judges, the country is steeling itself for violent street protests, which in turn could provide easy targets for suicide bombers seeking to add to the mayhem. Sharif has talked about “a prelude to a revolution”, prompting the government to threaten him with charges of sedition.

Writing in Pak Tea House, a blogger who had insisted right up until February that Pakistan would turn out all right said this had been based on the assumption political parties would pull back from outright confrontation in the interests of the country. “I was wrong. And so faced with altered facts, I have changed my opinion. Pakistan is unraveling.”

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Jim Sinclair’s Commentary

Today there was a release of what was termed an internal memo at Citi saying things are going very well this quarter.

This internal memo is nothing more than a plausible denial PR campaign.

US Already Preparing Next Citigroup Bailout (C)
Joe Weisenthal|Mar. 10, 2009, 5:43 AM

Three bailouts later, and Citigroup (C) is still a $1 stock. Hence the government is already engaged in "contingency planning", says WSJ, on the off-off chance that thinks take a turn for the worse.

What would that turn for the worse be? An actual bank run. Already Citi’s CDS are trading at blowout spreads, an ominous sign given how much intervention there’s already been, but bank executives swear there have been no hints of a run. Really.

Again, it’s all contingency planning, and whoever leaked this story to the Journal says they don’t expect to have to go through with it.

More…

Jim Sinclair’s Commentary

People selling their insurance might just be a tad early.

Too big to fail? 5 biggest banks are ‘dead men walking’
By Greg Gordon and Kevin G. Hall, McClatchy Newspapers Greg Gordon And Kevin G. Hall, Mcclatchy Newspapers – Mon Mar 9, 5:19 pm ET

WASHINGTON — America’s five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.

The banks’ potentially huge losses, which could be contained if the economy quickly recovers, also shed new light on the hurdles that President Barack Obama’s economic team must overcome to save institutions it deems too big to fail.

More…

 

Jim Sinclair’s Commentary

Maybe this internal memo missed the media’s attention.

Regulatory reports show 5 biggest banks face huge losses
By Greg Gordon and Kevin G. Hall | McClatchy Newspapers

WASHINGTON — Five of America’s largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.

The banks’ potentially huge losses, which could be contained if the economy quickly recovers, also shed new light on the hurdles that President Barack Obama’s economic team must overcome to save institutions it deems too big to fail.

While the potential loss totals include risks reported by Wachovia Bank, which Wells Fargo agreed to acquire in October, they don’t reflect another Pandora’s Box: the impact of Bank of America’s Jan. 1 acquisition of tottering investment bank Merrill Lynch, a major derivatives dealer.

More…

Posted by & filed under In The News.

Dear CIGAs,

I have received advice from Computershare advising that the Direct Registration System (DRS) is now available to all registered shareholders Computershare manages. This includes Canadian residents.

Jim Sinclair’s Commentary

These guys will never stop writing these garbage credit default derivatives. They even have an index as if the underlying paper was functional.

Tracking big increases in counterparty credit risk
Previous peak came after September collapse of Lehman and AIG, CDR says
By Alistair Barr, MarketWatch
Last update: 2:00 p.m. EDT March 9, 2009

SAN FRANCISCO (MarketWatch) — Counterparty credit risk in the derivatives market surged to a new record Monday, reflecting concern that the U.S. financial system remains fragile in the midst of a long recession.

The CDR Counterparty Risk Index, which tracks credit default swaps on leading banks and brokerage firms, jumped more than 13 basis points to a record 300.9 during midday action.

The index, compiled by New York-based Credit Derivatives Research, has risen more than 53 basis points since last week. A basis point is one-hundredth of a percentage point.

Credit default swaps are a common type of derivative contract that, as the name implies, pay out in the event of default. When prices for credit default swaps rise, that suggests investors are willing to pay more to protect against defaults.

More…

 

Jim Sinclair’s Commentary

Statements from positioned people in China are not like the East, made off hand and without truthful purpose.

You know we have discussed this point on more than one occasion.

Above USDX .8900 there is no basis to the argument that increasing the supply of dollars by back hand means is self destructive to the Chinese Central Bank.

China can buy more gold, oil with forex -official
2009-03-09 05:52 (UTC)

BEIJING, March 9 (Reuters) – China should use part of its nearly $2 trillion in foreign exchange reserves to buy more gold, oil, uranium and other strategic commodities, the head of China’s energy bureau said in comments published on Monday.

The comments made by Zhang Guobao, head of the National Energy Administration, marked the latest call out of Beijing that the government should diversify the world’s largest stockpile of forex reserves.

Zhang’s proposals were published by the Beijing-based China Reform Daily, a newspaper run by China’s powerful economic planning agency, the National Development and Reform Commission.

Zhang said the State Administration of Foreign Exchange could directly buy more gold and other strategic materials.

He added that agencies such as China’s National Oil Reserves Centre should be allowed to issue foreign exchange bonds to obtain money from China’s forex reserves for overseas purchases.

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Jim Sinclair’s Commentary

Pakistan according to its neighbour.

Ex-Indian general: Pakistan nuclear weapons prevent India from retaliatory attacks twice
www.chinaview.cn 2009-03-09 17:45:49

NEW DELHI, March 9 (Xinhua) — Pakistan’s possession of nuclear weapons prevented India from attacking it twice, one after the Mumbai attacks last November and the 2001 terrorist attack on Indian Parliament, the semi-official Press Trust of India quoted a former Indian Army general as saying on Monday.

Former Indian Army chief Gen. Shankar Roychowdhury told a seminar in New Delhi that Pakistan’s nuclear weapons deterred India from attacking that country after the Mumbai strikes, according to the report.

He also told the seminar, entitled "Nuclear Risk Reduction and Conflict Resolve" that it was due to Pakistan’s possession of nuclear weapons that India stopped short of a military retaliation following the attack on Parliament in 2001, said the report.

The 2001 Indian Parliament attack was a high-profile attack by militants belonging to the Lashkar-e-Taiba and Jaish-e-Mohammed groups against the building housing the Parliament of India in New Delhi.

The attack led to the death of a dozen people, including five terrorists, six Indian policemen and one civilian. It also led to tensions between India and Pakistan and the 2001-2002 India-Pakistan standoff.

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Jim Sinclair’s Commentary

I am not sure Santelli made any mistakes when he went Ballistic on CNBC, but overlooking that small part of the video the rest is totally worth the few minutes it will take you to watch. Strange, none of my Bloomberg interviews were shown.

 

 

Jim Sinclair’s Commentary

Here comes another $500 billion! Remember the Lady head of the FDIC only requested $100 billion. What does she know?

FDIC Bill Dodges a New TARP Fight
By DAMIAN PALETTA

WASHINGTON — A three-page bill designed to bolster the Federal Deposit Insurance Corp. could let the Obama administration sidestep a huge political problem: securing more financial firepower without opening a debate over the Troubled Asset Relief Program.

The legislation, introduced late Thursday by Senate Banking Committee Chairman Christopher Dodd, would temporarily allow the FDIC to borrow $500 billion to replenish the fund it uses to guarantee bank deposits, if the Federal Reserve and Treasury Department concur. Those funds would be distinct from the contentious $700 billion financial-sector bailout, which lawmakers are loathe to expand.

The FDIC can presently only borrow $30 billion from Treasury. The bill would permanently raise that level to $100 billion, which the FDIC could tap without prior approval from the Fed and Treasury.

Mr. Dodd, a Connecticut Democrat, already has four Republican co-sponsors for the bill and it could quickly gain momentum, in part because of strong backing by community bankers.

More…

 

Jim Sinclair’s Commentary

You know the maniacs in Wall Street are still writing this crap.

Scholes Advises ‘Blow Up’ Over-the-Counter Contracts
By Christine Harper

March 6 (Bloomberg) — Myron Scholes, the Nobel prize- winning economist who helped invent a model for pricing options, said regulators need to “blow up or burn” over-the-counter derivative trading markets to help solve the financial crisis.

The markets have stopped functioning and are failing to provide pricing signals, Scholes, 67, said today at a panel discussion at New York University’s Stern School of Business. Participants need a way to exit transactions and get a “fresh start,” he said.

The “solution is really to blow up or burn the OTC market, the CDSs and swaps and structured products, and let us start over,” he said, referring to credit-default swaps and other complex securities that are traded off exchanges. “One way to do that, through the auspices of regulators or the banking commissioners, is to try to close all contracts at mid-market prices.”

Scholes also recommended moving the trading of credit- default swaps, asset-backed securities and mortgage-backed securities to exchanges to allow for “a correct repricing” of the assets. The securities are currently traded between banks and investors, without any price disclosure on exchanges.

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Jim Sinclair’s Commentary

Here comes a major confidence shaker.

Pension system is cracking
New York needs to establish a more affordable benefits tier for its new public employees
March 8, 2009

In these days of imploding institutions, public pensions may well be next. They are outstripping private benefits at such a pace that governments cannot sustain them. New York should act now to create a slimmed-down category of benefits for new hires.

A few New York leaders who get the problem – Gov. David A. Paterson, Mayor Michael Bloomberg – are raising the need for reform. So far, the unions aren’t persuaded. But public pressure is building, from overwhelmed taxpayers who’ve witnessed their own pensions diminish or disappear, and from hard-pressed local governments and schools, which will be required to make dramatically higher payments into the funds.

Nassau County, which is struggling with a $130 million deficit, will see its $97 million annual contribution for county workers grow $40 million by 2011, predicts County Comptroller Howard Weitzman. Extrapolate that to Suffolk County and the rest of the schools, villages and towns on Long Island, and it’s a $320-million budget-buster.

At one time, pensions were considered essential to attract people into government service. But studies today show that, with benefits, public employees now make 42 percent more than private-sector workers in comparable jobs.

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Jim Sinclair’s Commentary

In the 70s it was not the gold gang that made the big dollars. It will not be this time either.

They, as a community, seek reasons why they are wrong and rarely why they are right.

Believe me, I know.

Hedge funds turn to gold
By Henny Sender in New York and Javier Blas in London
Published: March 8 2009 18:13 | Last updated: March 8 2009 18:13

Hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks.

The gold bulls include David Einhorn, founder of hedge fund Greenlight Capital, who last year came under the spotlight for his short selling of shares in Lehman Brothers, after arguing that the bank did not have enough capital to offset its exposure to falling property prices. Other funds looking at gold include Eton Park and TPG-Axon, investors said.

Their belief in bullion is being expressed even as gold prices have retreated from last month’s break above the $1,000 an ounce level. Spot gold in London closed last Friday at $939.10, after falling last week to $900.95 an ounce.

Investors such as Mr Einhorn are turning to gold because they are worried about the response of the US Federal Reserve and other central banks to the global economic crisis. A bet on gold is essentially a bet against all paper currencies.

“The size of the Fed’s balance sheet is exploding and the currency is being debased. Our guess is that if the chairman of the Fed is determined to debase the currency, he will succeed,” Mr Einhorn wrote in a recent letter to his investors. “Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself.”

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Jim Sinclair’s Commentary

Are we not all asking the same question?

Minnesota Bank Asks Why It Pays for Wall Street Greed
By Linda Shen

March 6 (Bloomberg) — TCF Financial Corp., the Wayzata, Minnesota-based bank that never made a subprime loan and hasn’t lost money since 1995, is asking why it should help clean up the mess made by Wall Street.

“I’m kind of bitter,” said William Cooper, chief executive officer of the 448-branch bank, adding that over the years TCF has invested about $1 billion in the Federal Deposit Insurance Corp.’s fund that guarantees bank deposits. “We pay for the excesses of our competitor over and over again.”

TCF is among more than 8,300 banks and lenders insured by the FDIC facing increased fees and a one-time “emergency” charge designed to raise $27 billion this year for the agency’s depleted coffers. Community banks may take a 10 percent to 20 percent hit to 2009 earnings even if the FDIC halves that charge, said Camden Fine, president of the Independent Community Bankers of America.

The ICBA and its 5,000 mostly locally owned member banks are rebelling against the costs, as well as curbs on pay and business practices imposed on recipients of U.S. capital after public outrage over bonuses and perks. Community banks rely more on deposit funding, so they suffer a “much heavier burden” as a result of deposit insurance proportionate to size than peers such as New York-based Citigroup Inc. and Wells Fargo & Co., with its headquarters in San Francisco, Fine said.

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Jim Sinclair’s Commentary

Hyperinflation will not and cannot be avoided. Protect yourself or suffer the loss of everything you have worked for!

Let sleeping shadow banking systems lie
By: James Saft

Rather than vainly trying to refloat the shadow banking system, the U.S. would be better off grappling with the inevitable ultimate solution — debt destruction and inflation.

The common denominator of policies like the Term Asset-Backed Loan Facility (TALF) that was detailed on Tuesday, is that they try to solve fundamental problems with indebtedness by attempting to float asset prices high enough that they are back in proportion with the debt.

Even more, they use the same structures that worked out so poorly — highly levered hedge fund like vehicles and securitisation — but this time substitute government funding and leaves the taxpayer as main bag-holder if the deals go bad.

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Jim Sinclair’s Commentary

I told you for a long time that for every loser there is a winner.

Therefore it is now reasonable to assume the absolute majority of the $9.5 trillion dollar bailout has been paid out to the winners.

Therefore tax and debt dollars have funded the yet unnamed winners.

Top U.S., European Banks Got $50 Billion in AIG Aid

The beneficiaries of the government’s bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany’s Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Societe Generale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.

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Jim Sinclair’s Commentary

Credit default derivatives and the Credit Default Index quoted daily on Financial TV are as described in this Guardian article, "Acts of Satan." They are. Then who are the agents of Satan?

"AIG had a sought-after selling point: a triple-A credit rating. For a fee, it would stand behind lesser institutions’ credit obligations. By lending its gilt-edged rating, it could give clients’ investments a higher value and make them easier to trade. Headquartered in Connecticut but largely run from London, the division transacted billions in credit default swaps (CDS) – instruments trading financial risk – which have been dubbed "acts of Satan" by a leading US credit analyst, Christopher Whalen.

Hedge fund hotel yields up secrets
Wheeler-dealing in UK led to US insurer’s record loss
‘Acts of Satan’ ripped black hole in financial system
Andrew Clark
Saturday March 7 2009
The Guardian

It is Mayfair’s house of financial horrors. Owned by the Abu Dhabi royal family, One Curzon Street is among London’s flashiest office blocks. But behind the elegant curves, polished white stone, sweeping windows and panoramic atrium lie billions of dollars in losses that have threatened the global financial system.

Popular with financial enterprises, the building is known as a hedge fund hotel. Its tenants include GLG Partners, one of the City’s star funds, which has fallen on hard times, and the struggling Swiss bank UBS, but on the fifth floor can be found the most notorious of the property’s troubled tenants – a formerly obscure financial products division of the sprawling American International Group (AIG).

It was in this London office of AIG that big-brained financial whiz-kids created a casino offshoot of the once-mighty insurer that spectacularly wrecked the company, racking up billions of dollars in losses on arcane derivatives, swaps and contracts. Fatally undermined by the unit’s wheeler-dealing culture, AIG crashed to the US’s biggest corporate loss of $61.7bn (£43bn) for the final quarter of 2008 and is limping along the brink of oblivion, saved from bankruptcy by an eye-watering $150bn of emergency aid from US taxpayers.

The Federal Reserve chairman, Ben Bernanke, wasted few words in condemning the division’s antics, telling Congress this week: "This was a hedge fund, basically, that was attached to a large and stable insurance company."

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Jim Sinclair’s Commentary

It is about time, wouldn’t you say?

Militant threat from Pakistan alarms U.S.
Officials see indication of presence within United States
By Josh Meyer | Washington Bureau
March 8, 2009

WASHINGTON — The Mumbai terrorist siege and other recent plots and attacks have stoked alarm among U.S. officials that the next strike on U.S. soil is less likely to come from traditional Al Qaeda operatives than from virtually unidentifiable Pakistani militants who enjoy easy access to the United States and already have a significant presence here.

But U.S. efforts to identify and thwart the growing threat posed by the Pakistani extremists—both inside the United States and against American interests overseas—are being undermined by the government of Pakistan, which has a long history of close ties to the militant organizations such as Lashkar-e-Taiba that are radicalizing, training and funding extremists, according to current and former U.S. and Western counterterrorism officials.

Even before the gunfire in Mumbai stopped last November, the FBI and other U.S. agencies went on red alert, searching for any evidence of plotters in the United States.

Although they did not find any direct connections, authorities did find troubling evidence of the group’s continued presence on U.S. soil, including fundraising and support cells that are well-hidden within the large numbers of the Pakistani diaspora.

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Jim Sinclair’s Commentary

Somebody Will.

Will US attack Pakistan to secure nuclear weapons? 
Speculation is rife that United States of America, increasingly worried by the expansion of fundamentalist and Jehadi forces in Pakistan, could attack that country to secure its nuclear arsenal. Such a move could suck many nations into the quagmire..
CJ: Akbar Majid ,

WILL THE attack on the Sri Lankan cricket team in the heart of Pakistan prove to be the last straw on the camel’s back? Has the belligerence shown by the Taliban and Lashkar-e-Taiba convinced the world that no business is possible with the Jehadis?

The answer to these questions cannot be a straight yes or no. However, if the grapevine is to be believed then the next few months could see a paradigm shift in the War Against Terror in so much so that there could be a possibility of a war staring South Asia.

Speculation is rife that United States of America, increasingly worried by the expansion of fundamentalist and Jehadi forces in Pakistan, could attack that country to secure its nuclear arsenal. US fears that terror groups, either forcibly or with the connivance of security official can manage to obtain a nuclear weapon, a situation which could be nothing less than catastrophe.

India, which is holding the elections next month could also be seriously affected, if the US seriously pursues the aggressive agenda and decides to divest Pakistan of nuclear weapons. Most probably the elections scheduled in April will have to be postponed in case of such an attack and an emergency like situation could be imposed here.

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Jim Sinclair’s Commentary

Libor has been green on the screens for the past three weeks!

New Fears as Credit Markets Tighten Up
By LIZ RAPPAPORT and SERENA NG

The credit markets are seizing up again amid new anxieties about the global financial system.

The fear and uncertainty that sent stocks to 12-year lows is now roiling the market for corporate bonds and loans, which have given back much of the gains they chalked up earlier in the year.

Short-term credit markets are still performing better than they did last year thanks to government programs to buy commercial paper and guarantee short-term debt. But some risk premiums are widening. The spread on junk bonds, for example, has climbed to 19 percentage points over that of comparable Treasury bonds, up from 16 percentage points in February. And Libor, the London interbank offered r ate, a common benchmark interest rate, has crept up over the past weeks, from 1.1% in mid-January to 1.3% on Friday, reflecting banks’ concerns about being paid back for even short-term loans. It is still well below its peak of 4.8% last October.

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Jim Sinclair’s Commentary

Be careful of how you protect yourself. Distance yourself from financial agents in everything, including gold.

More gold fraud likely as economy swoons: Agents
3/8/2009 8:0:2
Source ::: REUTERS

NEW YORK: Investigators expect to uncover more fraud involving gold in a recession that has already exposed several Ponzi schemes and other crimes, law enforcement officials with the US Postal Inspection Service said on Thursday. Agents with the federal agency have been working with the FBI, US prosecutors and other investigators on a series of scams from Ponzi schemes in financial investments and oil futures to gold coins all over the United States. “It’s the same scam but they are just selling different products,” Ronald Verrochio, Postal Inspector in Charge of the New York division of the U.S. Postal Inspection Service (USPIS), said in an interview. He spoke to Reuters at a seminar marking national consumer protection week to warn the public about being bilked by seemingly attractive investments.

“A lot of these scammers develop their scams following current economic trends and we’re bracing to see gold being used as a carrot,” USPIS spokesman Al Weissmann told the seminar, which was attended by government agents, prosecutors, attorneys and victims of fraud.

The price of gold hit an 11-month high above $1,000 an ounce on February 20, just below a record of $1,030.80 reached a year ago as investors sought a safe haven from financial market turmoil. Spot gold was trading at $927.90 on Thursday. New York division agents have helped uncover various scams involving selling unwitting investors gold coins, which turn out to be a fraction of their purported worth. Postal inspectors investigate mail fraud, enforcing more than 200 US federal laws that pertain to the mail. They investigate corporate and securities fraud cases when mail is suspected of being used to commit a crime. “It’s a very old adage but if it sounds too good to be true, it probably is,” said Verrochio, whose agency has been known as the “silent service” for its relatively low profile.

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