Posts Categorized: In The News

Posted by & filed under In The News.


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."


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.



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


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.



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.


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.


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.”



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.


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.”



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.


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.


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.”


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.


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.


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


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.


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.


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.


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.




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


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."


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.



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!



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.


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.


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.


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.


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.


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.


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.


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.



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.


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.


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."



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.



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.


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.


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.


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.


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.



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

Sesame Workshop is cutting 20 per cent of its workforce…



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.



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.”


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.


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.



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.


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.



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.


Jim Sinclair’s Commentary

Pakistan according to its neighbour.

Ex-Indian general: Pakistan nuclear weapons prevent India from retaliatory attacks twice 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.


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

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.



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.


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.



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.”



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.


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.


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.



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."


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.



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.



Jim Sinclair’s Commentary

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

New Fears as Credit Markets Tighten Up

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.


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.


Posted by & filed under In The News.

Dear CIGAs,

$9.5 trillion of bailout money is enough to pay off every mortgage in the USA or write a check to every person on the planet for $1400.

Where did it go? The Fed keeps it secret. The Fed therefore has bigger secret accounts than Switzerland ever dreamed of.

One in 8 U.S. homeowners late paying or in foreclosure
Thu Mar 5, 2009 5:18pm EST
By Lynn Adler

NEW YORK (Reuters) – About one in eight U.S. homeowners with mortgages, a record share, ended 2008 behind on their loan payments or in the foreclosure process as job losses intensified a housing crisis spawned by lax lending practices, the Mortgage Bankers Association said on Thursday.

With unemployment at a 16-1/2-year high and expected to continue rising until mid- to late 2010, more borrowers will pay late or fall into foreclosure this year, said the group’s chief economist.

"While California, Florida, Nevada, Arizona and Michigan continue to dominate the delinquency numbers, some of the sharpest increases we saw last quarter in loans 90 days or more delinquent were in Louisiana, New York, Georgia, Texas and Mississippi, signs of the spreading impact of the recession," said Jay Brinkmann.

Duress is no longer isolated to borrowers with lower credit quality. As joblessness grew, so did late payments on prime fixed-rate loans that represent two-thirds of mortgages.

U.S. President Barack Obama’s $275 billion housing stimulus program will standardize modifications for distressed loans and pave the way for more refinancing.


Jim Sinclair’s Commentary

Economic changes are processes, not singular events. The following is part of the hyperinflation process.

Because nothing done has targeted OTC derivatives as the villain in all this, there is nothing that can stop the ongoing process towards it final end. That end is not an event but a condition – hyperinflation.

American banking system insolvent, says US economist

6 Mar 2009, 2124 hrs IST, PTI

NEW DELHI: The American banking system has become insolvent following the global financial crisis which is likely to be deep and prolonged hitting the economies of the developing and developed world, said a US-based economist.

"In our assessment, the US banking system is insolvent… they are below the water level", said Nouriel Roubini, professor of the US-based Stern School of Business, while addressing a session on the global meltdown at the India Today Conclave 2009 here on Friday.

According to research, he said, the losses of the US banking system are a mammoth $ 3.6 trillion, with banks accounting for $ 1.8 trillion and pension funds, hedge funds and other shadow banking institutions, the remaining portion.

Pitching for nationalisation of crisis-ridden banks by the American government, the US-based economist said, "they (banks) could be handed over to the private sector after cleaning up".

Suggesting ways for tackling the global crisis, Roubini said it was time for the governments of developed and developing countries to act in concert to prevent further deepening of the global recession.


Jim Sinclair’s Commentary

The Seven Story Mountain seeking the Real Story.

1. All of this, without exception, was an OTC derivative failure, even motors.
2. To a financial institution, every failure was an OTC derivative process.
3. There is not a sound bank in America.
4. There is no major financial institution that can be accurately described as sound.
5. For every loss there is a gain in transaction.
6. The gain can be in cash, position, fees or a mix of all three.
7. Now if everybody lost in the USA and on the planet, who won?

Corporate America’s Icons Crumbling Under Global Recession
By Steven Mufson
Washington Post Staff Writer
Friday, March 6, 2009; Page A01

The truisms have been familiar to generations of Americans: As General Motors goes, so goes the nation; Citigroup is too big to fail; General Electric, one of the 12 original companies in the Dow Jones industrial average in 1896, brings good things to life.

But the giants that only recently seemed like the unshakable foundations of the economy are faltering one after another. The girth that once seemed a source of strength now appears to be undermining them.

A share of Citigroup, worth $55.12 less than two years ago, yesterday cost about half of an ATM fee, finishing the day at $1.02 after briefly breaking below the buck-a-share level. The once-mighty financial conglomerate, valued at more than $300 billion in March 2007, was worth just $5.6 billion yesterday.

General Electric, whose mix of financial services, consumer products and industrial goods was once considered a sturdy pillar of the U.S. economy, closed yesterday at its lowest level since 1992, barely a 10th of its peak level. The price of a GE share, $6.66, was less than the cost of single compact fluorescent flood light bulb.

And battered GM shares slid yesterday yet another 15 percent to $1.86, not quite enough to buy a gallon of gasoline, after news that GM auditors warned the company might not remain a going concern without massive additional assistance from the U.S. government. While GM’s fate might indeed mirror the nation’s for now, the company could perish before an economic recovery arrives.


Jim Sinclair’s Commentary

This type of talk, if it persists and gets heard in public, would begin the process of legislative weakening of the Federal Reserve.

AIG Update: Senators Doubt Fed Could Regulate Systemic Risk
By Emily Flitter, American BankerMarch 6, 2009

As the House Financial Services Committee met Thursday to discuss the creation of a systemic risk regulator, Senate Banking Committee members were questioning the mettle of the main candidate for the job, the Federal Reserve Board.

Senators openly doubted whether American International Group Inc., which has received four government bailouts so far, ever poised a systemic risk to the economy, and they asked if the central bank made a mistake in providing the company with assistance.

It seems as if the Fed led the government to make a "large blunder — the largest in modern history," according to Sen. Bob Corker, R-Tenn.

"I have a hard time understanding the systemic risk issue," Corker said at a hearing on the AIG bailouts.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., said regulators would have to do a better job explaining how and why they rescued AIG.

"Public confidence in what we’re doing is at stake," he said.


Jim Sinclair’s Commentary

Mullah Omar makes for today’s Pakistan:

Mullah Omar Calls for a Taliban Surge

March 6, 2009, 8:26 AM

The Pakistani newspaper Dawn reports that on Thursday, “the mausoleum of renowned Pashto mystic poet Abdur Rehman Baba was bombed by unidentified miscreants,” outside Peshawar, in Pakistan’s North West Frontier Province. Dawn calls the bombing of the shrine to “a 17th century poet, revered for his message of love and peace” part of an “attack on Sufism.”

As the BBC notes, suspicion has turned to the Taliban, “who represent a more purist form of Islam and are opposed to Sufism, preventing people from visiting shrines of Sufi saints in areas they control.” The BBC also says that “No casualties are reported but the poet Rahman Baba’s grave has been destroyed and the shrine building badly damaged.”

According to Dawn:

The shrine’s watchman had received a threat from suspected militants on his cell phone three days ago. He told police that the attack took place to crack down on the tradition of women making pilgrimages to the site.

In spirit, the attack on the Pashtun poet’s shrine in Pakistan seems to echo one of the Afghan Taliban’s most infamous acts of cultural cleansing: the destruction of the Great Buddhas of Bamiyan in 2001. But, surprisingly, the Taliban leader who ordered the attack on the “idols” at Bamiyan, Mullah Muhammad Omar, might not approve of this bombing in Pakistan, or, for that matter, the attack on the Sri Lankan cricket team and its Pakistani police escort in Lahore.


Jim Sinclair’s Commentary

"Eric the Gold" speaks about what might well be another difficult situation; a situation that many of your retirement plans are involved in.

As Safe As Gold
Sprott Asset Management
February 2009
Eric Sprott 
Sasha Solunac

What are phrases that connote safety? Two that come to mind are: “Like money in the bank” or “As safe as houses”. Given events of the past year, these two phrases no longer seem to hit the mark, do they? These days, the one word that signifies safety is “gold”, being far safer than both cash and houses. It therefore stands to reason that a more accurate phraseology would be “Like gold in the safe!” or “As safe as gold!” Yes, the barbarous relic is back… and with a vengeance.

As our readers may have already surmised, we like gold around here, and evidence suggests the world is beginning to like it more and more too. We therefore hope our readers can forgive us for harping on the same theme over and over. For the past seven articles including this one, the subject of gold has been a dominant theme, if not the prevailing theme in four of these articles; namely, “The Phony Express” (August 2008), “Cash or Gold” (October 2008), “Surviving the Depression” (December 2008), and now “As Safe as Gold”. Although we may seem obsessed, there is a method to our madness.

Not coincidentally, the past seven months have also coincided with the worst financial crisis the vast majority of us have ever seen in our lifetimes, as well as the worst global economic contraction the world has seen since the Great Depression. As we wrote in our previous article, “So You Think 2008 Was Bad? Welcome to 2009”, the world is currently in an environment where weakness only begets more weakness, and furthermore, the olden days of economic prosperity through endless credit creation are likely never coming back. That’s right; we believe there has been, and will continue to be, a paradigm shift in the way financial markets function going forward. We believe this last point is a very important distinction to make – one that fundamentally distinguishes the current environment from a run-of-the-mill recession. The implication is that current government policies, which are all focusing on bringing the olden days back (this time through endless government credit/debt creation) are in fact ruinous strategies that will have dire implications for financial stability and investment portfolios going forward.

If one believes the above (indeed, it seems increasingly difficult not to), then it should go without saying that, from an investment perspective, these are extremely challenging times. It has become very difficult to preserve wealth, let alone create it. Just like a rising tide lifts all ships, a receding tide tends to ground them one and all. You could have bought almost anything in 2003-2007 and made money (provided, of course, you got out by the beginning of 2008!) Likewise, right now you can buy almost anything and lose money. Those who have been “bargain hunting” on the way down have been taken to the cleaners. There was a time not that long ago when big bank stocks were considered conservative and ‘safe’ investments. Today this notion seems laughable. Bank stocks are now the biggest dogs on the planet – the common equity of which, in its current form, will be shown to be completely worthless in our opinion. Thus, buying bank stocks remains a sucker’s game – at any price. But there isn’t much solace to be found elsewhere. The direction for almost everything, in any industry, remains down. You show us an investment and we’ll tell you why it’ll lose money.


Jim Sinclair’s Commentary

Some subjects seem to evade CNN.

BUDGET BACKLASH: Thousands Rally At City Hall
Taxpayers Furious With Budget Cuts Take Frustration To Streets Of NYC
Organizers Say 50,000 On Hand For ‘Rally For New York’

NEW YORK (CBS) ― A massive budget backlash came to lower Manhattan on Thursday. Tens of thousands of New Yorkers marched on City Hall, rallying to stop proposed funding cuts.

The rally cries of labor unions, community groups and families outside City Hall could be heard throughout lower Manhattan. Desperation for an economic lifeline brought out more than 50,000 people along several blocks of Broadway in a self-described "Rally For New York."

Their message for Gov. David Paterson came in the form of booming chants:

"No more cuts! No more cuts!"

Everyday New Yorkers had their own personal messages for the governor as well.

"Governor Paterson, I wish you could have an open heart that we are going to suffer if this budget cut goes through," said China Lankford of Jamaica.


Posted by & filed under In The News.

Dear President Obama,

You think you have problems now?

Present challenges, economic or political, are nothing compared to when this one lands on your desk; the implications of which are generational in nature.

Respectfully yours,

Pakistan ‘bigger problem’ than Afghanistan: US diplomat

LONDON (AFP) — The top US diplomat in Kabul warned that Pakistan posed a bigger security problem for the rest of the world than Afghanistan, in a newspaper interview published Thursday.

Christopher Dell spoke after Tuesday’s attack on Sri Lanka’s cricket team as they travelled to a Test match in Lahore which left eight people dead, and has raised doubts about the government’s ability to tackle Islamic militancy.

"From where I sit (Pakistan) sure looks like it’s going to be a bigger problem," Dell told the Guardian newspaper.

"It is certainly one of those nuclear armed countries the instability of which is a bigger problem for the globe.

"Pakistan is a bigger place, has a larger population, it’s nuclear-armed.

"It has certainly made radical Islam a part of its political life, and it now seems to be a deeply ingrained element of its political culture. It makes things there very hard," he told the British daily.

Pakistan, a key US power in the "war on terror", is battling Taliban and Al-Qaeda militants along its rugged and lawless border with Afghanistan in the northwest.

More than 1,600 people have died in attacks in Pakistan in the last 22 months and analysts say its security agencies are failing to provide adequate security against militants, who could challenge the rule of President Asif Ali Zardari.


Fundamentalist Islamic law expands in Pakistan
Pakistani officials agree to 17 steps as part of a peace deal with extremists, alarming human-rights groups and others. Also, a bomb exploded at a Peshawar mausoleum where women came to pray.
By Mark Magnier 
8:06 AM PST, March 5, 2009

Reporting from Lahore, Pakistan — In an apparent expansion of Islamic fundamentalists’ authority in the picturesque Swat Valley, local Pakistani officials have agreed to close shops at prayer times and crack down on prostitution and drug dealing as part of a proposed peace deal, according to media reports today.

The steps were among 17 points that emerged following a Wednesday meeting involving provincial government officials and supporters of a pro-Taliban cleric mediating the talks, according to the Associated Press.

Although Sharia, or Islamic law, has been in practice in many parts of Pakistan’s North-West Frontier Province and its tribal areas, its official expansion into a region less than 100 miles from Islamabad, the capital, last month has unnerved secular groups, human-rights activists and Western officials.

In a separate development underscoring the debate in Pakistan over religious extremism, a bomb exploded today at the mausoleum of a 17th century Sufi poet in the northwestern city of Peshawar after its management received a letter complaining that women were coming to pray there.

The predawn blast damaged a corner of the monument commemorating Sufi poet Rehman Baba, but no one was injured. The bomb appeared aimed at practitioners of the mystical Sufi form of Islam opposed by more hard-line Muslims



Jim Sinclair’s Commentary

Here is another statement on the condition of government affairs.

Scandal at Treasury: Official Quits Amidst Fraud Scandal
Darrel Dochow Allowed IndyMac Bank to Cook Its Books, Investigators Say
March 5, 2009

The man at the center of a fraud scandal at the Treasury Department has been allowed to quietly quit and retire from his job as a government regulator, despite allegations that he allowed a bank to falsify financial records and amidst outcries from investigators who say the case shows how cozy government regulators have become with the banks and savings and loans they are supposed to be checking on.

  Darrel Dochow, the West Coast regional director at the Office of Thrift Supervision who investigators say allowed IndyMac to backdate its deposits to hide its ill health, quit last Friday. Prior to his leaving, Dochow was removed from his position but remained on the government payroll while the Inspector General’s Office investigates the allegations against him.


Jim Sinclair’s Commentary

Not very long if you are a legislator whose pension fund is run by a subsidiary of AIG.

Pension Plans: How Long Can We Sweep the Problems Under the Rug?
March 05, 2009

Despite the influx of fiscal stimulus money, the governor of Arizona is appearing Thursday afternoon before a joint session of the legislature to lay out the sobering facts about the fiscal condition of the state. The stimulus money only plugged the current hole. It does nothing to address the systemic hole that Arizona has dug for itself.

According to the Goldwater Institute, the state faces a $4 billion funding shortfall for its proposed $10.5 billion fiscal year 2010 budget. To put that another way, in fiscal year 2004 the state’s spending was $6.5 billion and the budget was largely in balance. Arizona is now generating revenues at 2004 levels thus the challenge is to get expenditures right-sized.

Not an easy task and one that most likely is not going to be accomplished by cutting programs exclusively. A tax increase is sure to be on the table. A dire situation but there is probably one item that won’t be discussed this evening even though it may represent the biggest time bomb of all. The state’s pension funds.

The dirtiest little secret in government finance has to be the sorry state of the state and municipal pension plans. Leaving aside the promises of rich retirement benefits that were from inception mathematically impossible to deliver the schemes and deception that the various governments are employing to delay the day of reckoning are stunning.

An article in Bloomberg a couple of days ago shined a much needed light on them.



Jim Sinclair’s Commentary

As long as you do not see the reinstitution of the uptick rule in the USA and the USA and Canada do not enforce the up tick rule, there is no criminal fraud indictment of naked short sellers. The inviting conclusion is that the equity disaster is wanted, desired and engineered. Citi as a penny stock is a disgrace to the USA, its Administration and regulators.

This disaster now exceeds 1929.

Japan to extend curbs on short-selling – Nikkei
Thu Mar 5, 2009 1:54pm EST

NEW YORK, March 5 (Reuters) – Japan’s Financial Services Agency plans will retain restrictions on selling stocks short because the market remains unsettled, financial daily Nikkei said in its Friday edition.

The curbs include a ban on naked short-selling, or shorting a stock without first borrowing the shares, and call for reporting requirements for large short positions, the paper said. Short-sellers with positions of 0.25 percent of a company’s outstanding shares or more must file reports.

The regulations had gone into effect in October, as the global financial crisis deepened, and have been due to expire at the end of March. U.S. measures similar to Japan’s are scheduled to last through July, and Europe also has short- selling restrictions in place.

Short-selling, or betting that stocks will go down, has been blamed for deepening drops in stock prices.
(Reporting by Gerald E. McCormick; Editing by Andre Grenon)

Jim Sinclair’s Commentary

"As Goes Motors So Goes the USA"
–Bert Seligman (1958)

‘Going-concern warning’ raises spectre of GM bankruptcy filing
Kevin Krolicki, Reuters Published: Thursday, March 05, 2009

General Motors Corp on Thursday said its auditors had raised "substantial doubt" about its ability to survive outside bankruptcy if it fails to stem its losses and stop burning cash.

The "going concern" warning from the struggling U.S. automaker had been expected, but underscored the stakes for GM as it seeks up to $30 billion in U.S. government aid to restructure outside a court-supervised bankruptcy process.

GM had warned late last month that it expected its auditors would question its viability at the same time that it reported a loss of nearly $31 billion for 2008.

The automaker faces an end of March deadline to complete concession talks with the United Auto Workers and bondholders to reduce its debt load as part of a bid to convince the autos task force assembled by U.S. President Barack Obama that it can be made viable with a new round of government help.


Jim Sinclair’s Commentary

We shall suffer from the sins of our Financial Fathers.

This is so bad!

Fed Refuses to Release Bank Lending Data, Insists on Secrecy
By Mark Pittman

March 5 (Bloomberg) — The Federal Reserve Board of Governors receives daily reports on loans to banks and securities firms, the institution said in response to a Freedom of Information Act lawsuit filed by Bloomberg News.

The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.

The bank provides “select members and staff of the Board of Governors with daily and weekly reports” on Primary Dealer Credit Facility borrowing, said Susan E. McLaughlin, a senior vice president in the markets group of the Federal Reserve Bank of New York in a deposition for the Fed. The documents “include the names of the primary dealers that have borrowed from the PDCF, individual loan amounts, composition of securities pledged and rates for specific loans.”

The Board of Governors contends that it’s separate from its member banks, including the Federal Reserve Bank of New York which runs the lending programs. Most documents relevant to the Bloomberg suit are at the Federal Reserve Bank of New York, which the Fed contends isn’t subject to FOIA law. The Board of Governors has 231 pages of documents, which it is denying access to under an exemption under trade secrets.

“I would assume that information would be shared by the Fed and the New York Fed,” said U.S. Representative Scott Garrett, a New Jersey Republican. “At some point, the demand for transparency is paramount to any demand that they have for secrecy.”


Jim Sinclair’s Commentary

For Your Information, VALIC are subsidiaries of American International Group (AIG).

AIG VALIC Expands Independent Advice Platform to Serve Participants in Retirement.

HOUSTON — AIG VALIC, a national leading provider of retirement plan services to for-profit and not-for-profit education, healthcare and government organizations, today announced that Guided Portfolio Services(SM) (GPS), its independent advice and managed-account platform offered through VALIC VALIC Variable Annuity Life Insurance Company  Financial Advisors, Inc., has been expanded to offer comprehensive capabilities to clients entering the income distribution phase of retirement.

Launched in January 2003, GPS delivers comprehensive investment advice and discretionary managed accounts services to individual participants in employer-sponsored defined contribution retirement plans – principally in the accumulation and transition phases of retirement planning. Entering 2007, GPS has been expanded to service clients entering the distribution phase of retirement by providing personal wealth forecasts, comprehensive portfolio construction and ongoing portfolio optimization.

AIG VALIC is one of the leading retirement plan services providers in the United States. For more than half a century, it has specialized in providing retirement programs and related investment, recordkeeping and administrative services to a variety of employer types, including for-profit and not-for-profit elementary and secondary education institutions, hospitals and healthcare organizations, higher education institutions and governmental entities. VALIC serves 28,000 client groups and more than two million participants. AIG VALIC is the marketing name for the group of companies comprising VALIC Financial Advisors, Inc.; VALIC Retirement Services Company; and The Variable AnnuityVariable Annuity

An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio.


Fed’s Kohn Says Risks of Not Rescuing AIG ‘Unacceptably Large’
By Scott Lanman and Hugh Son

March 5 (Bloomberg) — Federal Reserve Board Vice Chairman Donald Kohn said that while the decisions to rescue American International Group Inc. have been “difficult,” the costs of withholding aid to the insurer would be “unacceptably large.”

“The disorderly failure of systemically important financial institutions during this period of severe economic stress would only deepen the current economic recession,” Kohn said today in remarks prepared for a hearing of the Senate Banking Committee. “We have been and will continue to work alongside the Treasury and other government agencies to avoid this outcome.”

Kohn’s comments, building on remarks this week from Fed Chairman Ben S. Bernanke, indicate the government may commit more funds to avoid an AIG failure. Bernanke told another Senate panel on March 3 that AIG’s collapse “would be devastating to the stability of the world financial system” and jeopardize taxpayer investment in the firm, now totaling $163 billion.

The government provided a revised rescue this week, adding a $30 billion line of capital, as the New York-based company reported a $61.7 billion fourth-quarter loss. The Fed warned that AIG may need more aid if markets don’t recover.

“Extreme financial and economic conditions have greatly complicated the plans for divestiture of significant parts of the company in order to repay the U.S. government for its previous support,” Kohn said. The new plan will “provide longer-term stability to AIG” while “maximizing likelihood of repayment to the U.S. government,” Kohn said.


Jim Sinclair’s Commentary

Destruction (negative basis crime) is the moving principle of the dollar demons in today’s markets.

Someday they will hurt the wrong people.

They cannot remain immune to their damages of life and fortune.

Darth Wall Street Thwarting Debtors With Credit Swaps
By Caroline Salas and Shannon D. Harrington

March 5 (Bloomberg) — Amusement-park operator Six Flags Inc. and automaker Ford Motor Co. may be pushed toward bankruptcy by bondholders trying to profit from credit-default swaps that protect against losses on their high-yield debt.

By employing a so-called negative-basis trade, investors could buy Six Flags bonds at 20.5 cents on the dollar and credit- default swaps at 71 cents. If the New York-based chain defaults, the creditors would receive the face value of the debt, minus costs. In a Feb. 27 note, Citigroup Inc.’s high-yield strategists put that profit at 6 percentage points, or $600,000 on a $10 million purchase.

Investors who bet on the collapse of a company are pitting themselves against traditional debt holders at a time when Moody’s Investors Service projects defaults will more than triple this year and exceed the level during the Great Depression. The clash may stall restructuring efforts to prevent bankruptcies, as basis traders may be less inclined to participate in distressed debt exchanges, said Matthew Eagan, an investment manager at Boston-based Loomis Sayles & Co., with $7 billion in high-yield assets.

“Before, you really had to worry mostly about where you were in the” company’s capital structure, he said. “Now, you have to consider the possibility that you might have this large holder of CDS incentivized to see it go into bankruptcy. It’s something that’s going to come up more and more.”

Six Flags Debt

Six Flags debt is rated Caa3 by Moody’s and CCC+ by Standard & Poor’s, three and five levels above default. Both rankings were put on “negative outlook” last year. Sandra Daniels, a spokeswoman for the New York-based company, didn’t return a phone call seeking comment.


Jim Sinclair’s Commentary

This could give some naked shorts a new rear end. You have to beat them to death by spectacular successes.

China’s spending spree likely to include Canadian companies
Duncan Mavin, Financial Post Published: Wednesday, March 04, 2009

HONG KONG – Asia’s dealmakers say a Chinese resource spending spree will accelerate throughout the next 12 months, with Canadian mining and energy companies likely on the shopping list.

Chinese buyers have already scooped up US$70-billion worth of global resource assets so far this year, as Beijing looks to secure its energy and resource future by spending some of its US$2-trillion in foreign exchange reserves.

The overseas buying trend will pick up steam in the months ahead, according to China and Hong Kong-based corporate dealmakers, investment bankers and private equity players surveyed by Royal Bank of Scotland and Mergermarket.

The report comes as expectations soar Beijing will deliver another stimulus package on Wednesday to add to the 4-trilion yuan (US$586-billion) in spending announced late last year. Further stimulus measures will be announced at the National People’s Congress – the climax of the country’s political calendar that features 3,000 delegates from across the country – according to government officials quoted in Chinese state media. Reuters reported, citing an unidentified official at the country’s top economic planning agency, that China will spend more on infrastructure and to boost manufacturing in addition to the stimulus package announced in November.

Details of Beijing’s previously announced spending plans are still sketchy although much of it is directed toward resource-intensive infrastructure projects in the transport and energy sectors.


Jim Sinclair’s Commentary

Pakistan is over. It is a process, not a specific event. The Taliban are in control of this process.

Pak facing six critical threats to its survival

Islamabad/London, Mar.4 (ANI): The militant assault on cricket tourists in Lahore puts sharp focus on a fragile democracy that is at risk of disintegration and international isolation in Pakistan.

Whole provinces run beyond the writ of the state.

According to The Guardian, security is not the only problem of a country that the United States now considers a greater threat than neighboring Afghanistan.

With the economy teetering, political tumult building and social conditions ripe for extremists, nuclear-armed Pakistan faces six critical threats to the rule of law and governance of the state.

The current violence started in summer 2007, when security forces routed armed militants at the Red Mosque in Islamabad.

That event turned militant groups that were focused on India or Afghanistan inwards, to Pakistan itself.


Posted by & filed under In The News.

Advice to the EFTs:

Real versus counterfeit Gold test:

Different companies melt down the gold to analyze if it is real or not.

Many jewellers use an acid test to identify it. You can also check its purity by using face powder. First you need to put a small amount of powder on your hand and rub the gold in that powder. If it leaves a black mark then it is real and if it not then it is fake. It will happen because pure gold forms a chemical reaction with many makeup products. Molecules of pure gold are packed tightly together and make it heavy.

There is one more way to check the purity of gold and that is by seeing if it will sink into water speedily. Fake gold will sink more slowly. This is a bit harder for the untrained eye.

If it is paper gold then that should be apparent. Light a match and apply.

Jim Sinclair’s Commentary

This can put a Big Prick in the Dollar Bubble.

China’s Torpedo Play: Yuan Set to Replace Dollar in Asia
Posted by slowsmile February 10, 2009

The Yuan will soon replace the dollar as the new Asian regional reserve currency. This also confirms that China now will probably dump a large amount of her trillions of reserve dollars and Treasury Bills – a horrific prospect for America with dangerous economic and dollar impacts.

Whilst stumbling over the internet in search of some news I came across a detailed article on the Asia News website headed "Chinese Yuan Set to Replace Dollar". I was somewhat stunned at this headline. This article describes that Beijing is introducing a serious currency experiment – because of the dollar’s volatility and unreliability – to aid in the stability of the Asian economy. But in the Asian News article, it is fairly clear what China’s intentions are – which is to completely decouple both China and Asia from the American dollar and introduce the yuan as the regional reserve currency. My guess is that other Asian governments will fall over themselves to join with this new reserve currency. This will be horrific news for America and all Americans, since it is now apparent that China(and eventually all Asia) will have little further use for the sick US dollar in this heavyweight economic region. This implementation of the yuan as the regional currency of Asia is also entirely legal – ever since Nixon trashed Breton Woods by decoupling gold from the dollar in 1971(And this is what initiated the US government’s Treasury Bill/Debt exchange standard for the world). So, soon Asian members of this new reserve currency will be able to buy raw materials and commodities like Food and Oil for yuan in Asia. Ouch!! That’s really going to hurt the greenback…

With the likelihood of China, Russia, Korea, Taiwan and Japan all eventually joining and also dumping large quantities of their reserve dollars in favour of the yuan currency, which will severely weaken dollar demand and therefore weaken its value, the outlook seems pretty grim for the future of the American economy. And with all those trillions of dollars coming home to roost in America, there is now nothing that the US government will be able to do to avoid inflation, or – much more likely – hyperinflation.



Jim Sinclair’s Commentary

Now the right questions are being asked. Who now has the $9.5 trillion?

Making good on OTC derivative trades gone bad. Making good to whom?

Solvent Insurer / Insolvent Insurer
By Barry Ritholtz – March 4th, 2009, 7:30AM

Forget the good bank/bad bank, I have an even bigger beef with this INSANE absurdity: Why are the taxpayers making good on hedge fund trades gone bad?

I cannot figure that one out.

When AIG first faltered, there were two companies jammed under one roof. One was a highly regulated, state supervised, life insurance company. In fact, the biggest such firm in the world.

The other firm was an unregulated structured finance firm, specializing in credit default swaps and other derivatives.

The first firm was Triple AAA rated. They had a long history of steady growth, profitability, excellent management. They made money (as the commercial goes) the old fashioned way: They earned it.

This half of the company held the most important insurance in many families’ financial lives: Their life insurance.  When an AIG policy holder passed away, the company paid off the policy, providing monies that get used to pay off mortgages, kids’ colleges, and surviving spouse’s life time living expenses. Given the importance of this payment, one can see why it is crucial to make sure there are sufficient reserves to make good on the promise of the life insurance policies. The actuarial tables used are conservative, the accounting transparent. The policy payoffs rock solid, utterly reliable.

AIG, this insurance company, was well run. It made a steady income, provided a valuable service to its clients.

It was also very solvent.


Jim Sinclair’s Commentary

The major and internationally respected publication "The Hindu" in India published the following.

My answer is "Fat Chance."

When Jinnah initiated the march of Muslin fundamentalists to form Pakistan, destroying Ghandi’s plan for India, this end was set in cement.

Pakistan has already gone Taliban. Whomever runs the intelligence service of a country, runs the country, that is an axiom.

The world is yet to realize the obvious. The question is who will Dr. Doom and his team work for. The inviting answer is whomever will pay and is Pakistani. Sounds like whomever runs the country to me.

Wake up, stop supporting jehadis: British media to Pakistan

London (IANS): British newspapers Wednesday described Pakistan as a "failing state" and said it was time its politicians and generals stopped supporting jehadis, a day after a terror attack in Lahore killed eight people and wounded six Sri Lankan cricketers.

The Times described as "absurd" the initial claim by a Pakistani minister that the terrorists involved in Tuesday’s attack were Indians.

"President (Asif Ali) Zardari’s principal enemy is within and, until he and his ministers understand this, there is little chance that they will find the will and means to deal with the terrorist threat. India’s assertion that Pakistan has done next to nothing to pursue the masterminds of the Mumbai attacks has proven all too true.

"No real effort has been made to disband Lashker-e-Taiba, the extremist organisation implicated in Islamist terrorism. Pakistan’s initial denials of knowledge or responsibility have been grudgingly followed by a few token arrests – and, on past form, those held will be quietly released in a few months.

"The truth is that the army, the compromised Inter-Services Intelligence (ISI) agency and the political establishment have shown no serious interest in confronting the Islamists. They have too many sympathisers in their own ranks to risk a crackdown and too many fifth columnists ready to tip off the terrorists."




Jim Sinclair’s Commentary

The most intriguing story on AIG is a strong rumor that AIG manages a high placed politicos Federal Retirement Program. I am looking for confirmation but do not yet have it. Have you?

Two thing are for sure:

1. This entire disaster never needed to happen if it were not for the sociopaths who made their living through OTC derivative manufacturing and distribution.

2. Bailout money goes in the front door or the OTC derivative loser and out the back door to the OTC winner. Who are they?

Is it any wonder now why $9.5 trillion has not done one thing for unemployment and housing?

Other interesting items:

U.S. to Take Over AIG in $85 Billion Bailout; Central Banks Inject Cash as Credit Dries Up
SEPTEMBER 16, 2008

…Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake

…It puts the government in control of a private insurer — a historic development, particularly considering that AIG isn’t directly regulated by the federal government.


Pressure to reveal major AIG counterparties grows
Some suggest fees for firms that got billions of dollars from insurer’s bailout
By Alistair Barr & Greg Robb, MarketWatch
Last update: 6:35 p.m. EST March 3, 2009

….The insurer’s portfolio of credit default swaps was still notionally worth $302.2 billion at the end of 2008, despite government-supported efforts to aggressively unwind it during the fourth quarter.


AIG reports $5.29 billion quarterly net loss
Insurance giant takes $11.12 billion charge from credit derivatives
By Alistair Barr, MarketWatch
Last update: 7:08 p.m. EST Feb. 28, 2008

…. The unit’s portfolio of credit derivatives had a net notional exposure of $505 billion at the end of September.



Jim Sinclair’s Commentary

This bailout will come as we also bailout the pensions funds.

Hyperinflation is guaranteed.

Alf predictions are herein guaranteed.

FDIC’s Bair Says Insurance Fund Could Be Insolvent This Year
By Alison Vekshin

March 4 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the deposit insurance fund could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.

“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.

“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”

The FDIC last week approved a one-time “emergency” fee and other assessment increases on the industry to rebuild a fund to repay customers for deposits of as much as $250,000 when a bank fails. The fees, opposed by the industry, may generate $27 billion this year after the fund fell to $18.9 billion in the fourth quarter from $34.6 billion in the previous period, the FDIC said. The fund was drained by 25 bank failures last year.

Smaller banks are outraged over the one-time fee, which could wipe out 50 percent to 100 percent of a bank’s 2009 earnings, Camden Fine, president of the Independent Community Bankers of America, said yesterday in a telephone interview.


Jim Sinclair’s Commentary

Ah yes, life in the country is looking better every day.

Brzezinski warns of riots in US
Sat, 21 Feb 2009 15:34:12 GMT

Zbigniew Brzezinski, a former national security advisor, has warned that the US could witness riots if economy continues its downward spiral.

"There’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!" said Brzezinski, President Jimmy Carter’s national security advisor, in a recent interview with NBC.

"In 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets," he added.

At least 3.6 million jobs have been wiped out throughout the US since the recession began in December 2007. The jobless rate officially reached a 16-year high of 7.6% (11.6 million people) last month.

Earlier this week, a new Federal Reserve report said that US unemployment could increase to 8.8%, causing the economy to contract for a full calendar year for the first time since 1991, when a contraction of 0.2% was registered.


Jim Sinclair’s Commentary

Here is another item that speaks nasty to the US dollar.

Financial TV seems to be uninterested in this most interesting development.

Chinese yuan set to replace dollar
by Maurizio d’Orlando
01/03/2009 17:55

Milan (AsiaNews) – While the comments of economic observers have focused on what is happening to U.S. public debt and to financial markets overseas, the news media rarely mention what is happening in Asia, almost as if there were not a strong correlation between the two phenomena. But it is logical that a substantial accumulation of foreign exchange reserves in China, Japan and throughout Asia corresponds to an unprecedented supply of dollars, the global reserve currency.

But Asia now understands that the increase of money supply decreases the intrinsic value of a currency. That is why China is seeking a possible and rational attempt to decouple Asian currencies from the dollar, as recent news stories report [1].

In practice, China is trying to make its currency convertible and give it a role as a reserve currency. The first experiment is limited to transactions between Hong Kong and the neighboring provinces. It is also proposed that the yuan renminbi be used in 8 neighboring countries, including Russia. With these countries, agreements have already been signed for the settlement of contracts in the Chinese currency. Perhaps it is no coincidence that the news was released on Christmas Day, when Western markets are closed, reducing the impact on the dollar. In addition, the first weeks of January are usually fairly quiet. This means that although for now the trial is limited, China is preparing to establish full convertibility of its currency to all other currencies. Many in China have spoken out directly or indirectly in this regard: for example, Wu Xiaoling, former vice governor of the central bank, and Zhao Xijun, a professor of finance at Renmin University of China. The current governor of China’s central bank, Zhou Xiaochuan, in early December in Hong Kong had indicated that if the value of the dollar fluctuated drastically, its use as a settlement currency (for commercial transactions) would cause problems. It is clear that Chinese exporters, behind the scenes, are asking the government for permission to charge in yuan instead of dollars, which are losing value. Other warnings came in the middle of last December: the increase in purchases of U.S. Treasury bonds should not lead to the supposition that the U.S. can borrow its way out of the financial crisis [2]. Finally, on January 1, a well-known Chinese economist, Wu Jinglian, wrote that China must change its development model [3], with reference to the paradigm of economic growth driven by exports. We note, incidentally, that even the pope, who obviously has mainly pastoral responsibilities, has said the world must change its model of development [4] ("Are we are prepared to conduct together an in-depth review of the dominant development model, to correct it in a comprehensive and forward-looking way?" Benedict XVI asked).


Jim Sinclair’s Commentary

Disinformation to the extreme:

Money goes in the front door of AIG who is in trouble over OTC derivatives. Then the money goes out the back door to the OTC derivative counter-party. This is no black hole, it is a very green hole enriching the unidentified and unknown new trillionaires.

The Feds’ Bailout Black Hole
Bailouts Are Hard To End – One Reason Not to Start Them, Says Declan McCullagh
March 4, 2009 | by Declan McCullagh

(CBS) If it wasn’t already obvious, this week’s$30 billion check that the U.S. Treasury handed to insurer American International Group should demonstrate the folly of propping up crippled companies.

This is the fourth bailout to AIG, which already has put over $170 billion in government funds at risk, and it won’t be the last. AIG lost $62 billion in the last three months of 2008.

Call it the Feds’ Bailout Black Hole. Once taxpayer funds cross its event horizon, they seem to disappear forever.

It’s not just AIG, of course. General Motors has received $13.4 billion from the Feds so far, and said last month that it will need another $16.6 billion.

That request will almost certainly be granted, even though GM reported last week that it lost $31 billion in 2008, or $3,700 on every vehicle sold. With sales off a stunning 53 percent from a year before, and a gale-force economic storm building, expect GM executives to show up in Washington to request a third or fourth or fifth round as well.


Jim Sinclair’s Commentary

Now do you understand why $9.5 trillion has yet to save one home or produce one job?

U.S. private sector cuts 697,000 jobs in February
Wednesday March 4, 2009, 9:23 am EST
By Burton Frierson

NEW YORK (Reuters) – U.S. private sector job losses accelerated in February, according to a report by ADP Employer Services that suggests hefty employment declines are on the way in the government’s payrolls report due on Friday.

ADP said on Wednesday that private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.

It was the biggest job loss since the report’s launch in 2001 and showed the misery of declining employment spreading broadly and evenly throughout the economy.

The service sector, which often resists the grip of recession longer than other areas, accounted for more than half of the total losses, reflecting the rapid deterioration of the economy in recent months.

"None really escaped the sword here," Joel Prakken, chairman of Macroeconomic Advisers, whose firm jointly developed the ADP report, said about the service sector.


Jim Sinclair’s Commentary

As long as you see no return to the short sale uptick rule and no action taken against naked and pool short sellers, no 1930s type rally will occur and GE will be driven into bankruptcy along with motors and all major US industries.

Since these people are far from stupid, logic suggests the disaster is engineered. What comes next is not socialism, it is socially disguised fascism.

Short-Sale Rule Undermined as Bernanke Backs Review
By Edgar Ortega

March 4 (Bloomberg) — The revival of Securities and Exchange Commission rules aimed at curbing speculators who seek to drive down stocks may be hindered by a report from the agency’s own economists.

Daniel Aromi and Cecilia Caglio, economists at the SEC in Washington, said in a December report to former Chairman Christopher Cox that the so-called uptick rule was less effective when needed most, during panics that drive prices down and volatility up. Even with delays imposed by the curb, short sellers in a simulation executed trades 25 percent faster on average when stocks plunged than when prices were steady, according to the study.

“The uptick rule is not going to slow down the market that much,” said Michael Pagano, a finance professor at Villanova University in Villanova, Pennsylvania, who read the report. “The time when you’d want to see the uptick rule become more binding is exactly when you have high volatility, and particularly when you have large negative returns.”

Regulators are considering restrictions on speculators after theStandard & Poor’s 500 Index fell 54 percent in the 20 months since the uptick rule was eliminated. Mary Schapiro, who succeeded Cox, said in January during her confirmation hearings that examining the rule is “one of the things that I would be committed to doing very quickly.” Federal Reserve Chairman Ben S. Bernanke told Congress last week that the measure, removed after 69 years on the books, should be revisited.


Jim Sinclair’s Commentary

This area of disintegration is more serious than either Iraq was and Iran is.

It will take the world by surprise and markets into total turmoil – more so than they are presently if that can be believed.

Has Pakistan become the central front?
Posted by: Myra MacDonald

In a report released late last month, the U.S. Atlantic Council think tank warned that the ramifications of state failure in Pakistan would be far graver than those in Afghanistan, with regional and global impact. “With nuclear weapons and a huge army, a population over five times that of Afghanistan and with an influential diaspora, Pakistan now seems less able, without outside help, to muddle through its challenges than at any time since its war with India in 1971.”

The report, co-sponsored by Senator John Kerry and urging greater U.S. aid, said time was running out to stabilise Pakistan, with action required within months. It’s not even been two weeks since that report was released, and already events in Pakistan have taken a dramatic turn for the worse – from the confrontation between President Asif Ali Zardari and former prime minister Nawaz Sharif to Tuesday’s attack on the Sri Lanka cricket team in Lahore.

“Pakistan’s disintegration, if that is what is now being witnessed, is a tragedy of Shakespearean dimensions, a riveting spectacle, and a clear and present danger to international security,” said a comment piece in Britain’s Guardian newspaper. ”But who in the world can stop it?”

The first question to ask is whether Pakistan has now become the central front in the battle against al Qaeda and its Islamist allies in the Taliban and other militant groups. During his election campaign, President Barack Obama said the central front was Afghanistan rather than Iraq. After he took office he shifted this to “Af/Pak” with the appointment of Richard Holbrooke as special envoy to Afghanistan and Pakistan. With turmoil now reaching Punjab, the heartland of Pakistan, he might need to shift his focus even further east.


Is Pakistan in a state of war?
Lee Glendinning, Wednesday 4 March 2009 09.37 GMT


Pakistan is in a state of war, the Independent declares on its front page today, following comments from the country’s interior minister after the attack on the Sri Lankan cricket team in Lahore yesterday, which killed six policemen and two bystanders, and injured seven players and officials.

The Guardian reports that Pakistani police had allegedly received specific warnings that militants were planning to ambush the Sri Lankan team, but were unable to prevent the attack because of the country’s political crisis.

The broadsheets examine the significance of the incident, with the Telegraph noting that the commando-style terrorist attack confirms Pakistan is one of the most dangerous places on earth.

"It is all the more dangerous for appearing so civilised, especially in cities such as Lahore, where fine gothic Victorian architecture, white colonial bungalows, and people’s passion for cricket, polo and tea conspire to make visitors feel safe,” the paper notes.

The tabloids focus on the role of former England cricketer Chris Broad, who shielded one colleague from gunfire, and is declared a "bloody hero" by the Mirror in its splash today.



American’s New Dream Car:


Detroit take notice!

Fiat Topolino
From Wikipedia, the free encyclopedia

The Topolino was the name given to an automobile model manufactured by Fiat from 1936 to 1955.

The Topolino (the Italian name for Mickey Mouse, meaning "little mouse") was the name given to the first Fiat 500 which was one of the smallest cars in the world at the time of its production. Launched in 1937, three models were produced until 1955, all with only minor mechanical and cosmetic changes. It was equipped with a 569 cc four-cylinder, side valve, water-cooled engine mounted in front of the front axle, and so was a full-scale car rather than a cyclecar. (The radiator was located behind the engine.)

Its top speed was about 53 mph (85 km/h), and it could achieve about 39.2 miles per US gallon (6.00 L/100 km; 47.1 mpg-). The Topolino sold for about 8,900 lire. Nearly 520,000 models of the Topolino were sold.

In 1955 the mid-size rear wheel drive Fiat 600 was launched by Fiat and that would become the design basis for the new Fiat 500, the 500 Nuova (often called bambino). The 500 Nuova is often thought, mistakenly, to be the only model 500 Fiat.


Jim Sinclair’s Commentary

As usual the Comex is having their way with you.

Since few who can take delivery are, one can only assume you enjoy the experience.

To all things there is a limit however, and surprisingly that means the Comex gold manipulators as well.

Demand for gold soared in 2008
Natalie Kenway

Demand for gold increased by 64% in 2008, with most investors preferring physical gold such as bars or coins, according to the World Gold Council (WGC).

A report released by Lipper Fund Market Information (FMI) says that European investors sought to diversify assets away from the collapsing financials sector and hedge against the threat of inflation, which may return because of quantitative easing.

“The most striking trend has been the reawakening of investor interest in holding physical gold, with demand for bars and coins rising 87% last year according to the WGC. The most dramatic surge was in Europe, where bar and coin demand increased from just nine tonnes in the fourth quarter of 2007 to 114 tonnes in same quarter in 2008, a 1,170% increase,” says the report.

Demand has also grown this year and the gold price broke the $1,000 an ounce mark in mid-February. Lipper says Citigroup has forecast it could reach $2,000 by the summer.

The report says: “Around 60% of gold is sold for jewellery, mainly in Asia, but when the gold price is high these sales diminish. Recently demand has been driven by investors. The price is being underpinned by weak supply, following a period since 2001 when mining output has declined due to lack of exploration. Unless a central bank starts offloading its gold, this situation is unlikely to change in the near future.”