Posts Categorized: In The News

Posted by & filed under In The News.

Dear Friends,

Pressure is picking up in the demand for the Fed to outline what they have done with the trillions put into play and to disclose what their inventory of "assets" is. It is very bad for the Fed to refuse. Cooperation might actually cause a major embarrassment to the US dollar, and soon.

Respectfully,
Jim

 

Jim Sinclair’s Commentary

If I was anyone involved in these distributions that might have even the smallest possibility of being a crime, I would fess up, get sentenced, and be pardoned by the outgoing Administration. That should be basic logic on the subject of “saving your ass.” “The Democrats are coming, the Democrats are coming – run for your money.” Sorry, I mean life.

Washington’s $5 Trillion Tab
Elizabeth Moyer, 11.12.08, 05:15 PM EST

Fighting the financial crisis has put the U.S. on the hook for some $5 trillion a report says. So far.

For all the fury over Treasury Secretary Henry Paulson’s $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government’s response to the credit crisis.

According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system.

The estimate includes many of the various solutions cooked up by Paulson and his counterparts Ben Bernanke at the Federal Reserve and Sheila Bair at the Federal Deposit Insurance Corp., as the credit crisis continues to plague banks and the broader markets.

The Fed has taken on much of that total, including lending a cumulative $1 trillion in overnight or short-term loans since March to primary dealers through its emergency discount window and making a cumulative $1.8 trillion available through its term auction facility, a series of short-term transactions it began making available twice a month in January. It should be noted that a portion of the funds lent in these programs has been repaid and that the totals represent what has been made available.

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Jim Sinclair’s Commentary

Here comes the "Everybody for Themselves" syndrome while China tells Washington to stuff it. Absolutely nothing is coming out of the New Bretton Woods farce but a spin statement while all the boys duke it out.

Europe and U.S. Clash on Financial Reform

When world leaders come together in Washington this weekend to discuss reforming the global financial system, there may be little consensus

The faucets dripped, the windows couldn’t be opened and rain and snow came in through the roof and dripped down the walls. The Mount Washington Hotel in the small New Hampshire town of Bretton Woods was not in great shape when it served as the site of a conference on a new world economic order for 700 international financial experts shortly before the end of World War II. The 1944 meeting went on for three weeks in what one guest dubbed the "madhouse." Still, despite the sub-optimal conditions, by the time it had ended, the conference had agreed on the rules and institutions that would shape the international financial system for decades to come.

Now, more than six decades later, another world financial summit is set to take place this weekend. The world’s 20 most important government leaders will meet on Friday in Washington D.C. to discuss a new fundamental reform of the financial system. In the wake of the crash in the credit markets, the billions in bailout packages put in place around the world and last week’s warnings of a global recession, many governments have high hopes for sharper regulations in the global financial markets.

German Chancellor Angela Merkel called for "more transparency" and a "better set of rules." French President Nicolas Sarkozy proposed a significantly stronger role for the International Monetary Fund (IMF), currently headed by French politician Dominique Strauss-Kahn. A "new Bretton Woods," the French president said, must "lead to a new founding of capitalism."

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Jim Sinclair’s Commentary

This is effectively a downgrade of the US dollar. You think that is bullish for the dollar? Hell NO.

Financial Big Shots Now Speaking Of U.S. Government Bankruptcy

The United States may be on course to lose its ‘AAA’ credit rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.

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Dear Friends,

I ask that you spend at least half of your time on why you are right in gold rather than spending all of your time scouring the planet to find ways and means of moving yourselves closer to your financial demise.

The phone calls I receive are mostly asking the same questions over and over again. Please stop that negativity. First read JSMineset as many times all of your questions have already been answered.

A person who spends all their time looking for why they are wrong, even if they are right, will find a way not to benefit. That is guaranteed.

Respectfully yours,
Jim

 

Jim Sinclair’s Commentary

Today’s new news (seriously):

TARP = Trouble Asset Relief Program (now closed).
QE = Quantitative Easing. (now opened).
CRAP = Consumer Relief Asset Program.
The lower Yen was the product of QE in the early 2000s.
A lower dollar will be a product of QE and CRAP.
Finally it will be remembered as CRAPpy QE.

Jim Sinclair’s Commentary
Here Paulson tells those with ears that the shift now is a major acceleration of monetary stimulus because Quantitative Easing is infinitely more powerful that buying all that junk from the near and dear globally. Globally is because there is a back door.

The Guardian gives you a totally accurate definition of Quantitative Easing. This time Helicopter Ben takes off to drop trillions globally.

Gold will trade at $1000, $1250, and $1650.

Paulson Shifts Bailout Focus to Borrowers and Non-Banks

Treasury Secretary Henry M. Paulson Jr. said that the $700 billion financial bailout program would not be used to buy troubled mortgage-backed assets, as originally intended.

Instead, capital would be provided directly to nonbank companies as well as banks and financial institutions, and that more would be done to prevent home foreclosures.

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Quantitative easing
Tuesday October 14 2008 12.10 BST

Quantitative easing is what non-economists call ‘turning on the printing press’.

In extreme circumstances, governments flood the financial system with money, easing pressure on banks by giving them extra capital.

Ben Bernanke, the chairman of the Fed, won the nickname ‘helicopter Ben’ when he floated just such an idea earlier this decade. US economist Milton Friedman had originally said it would be theoretically possible for governments to drop large amounts of cash out of helicopters for the public to pick up and spend.

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Jim Sinclair’s Commentary

You expected anything different?

Lobbyists Swarm the Treasury for Piece of Bailout Pie
By MARK LANDLER and DAVID D. KIRKPATRICK
November 12, 2008

WASHINGTON — When the government said it would spend $700 billion to rescue the nation’s financial industry, it seemed to be an ocean of money. But after one of the biggest lobbying free-for-alls in memory, it suddenly looks like a dwindling pool.

Many new supplicants are lining up for an infusion of capital as billions of dollars are channeled to other beneficiaries like the American International Group, and possibly soon American Express.

Of the initial $350 billion that Congress freed up, out of the $700 billion in bailout money contained in the law that passed last month, the Treasury Department has committed all but $60 billion. The shrinking pie — and the growing uncertainty over who qualifies — has thrown Washington’s legal and lobbying establishment into a mad scramble.

The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.

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Jim Sinclair’s Commentary

The dollar will not protect your pension – gold will.

U.S. Companies Ask Congress to Suspend Rule on Pension Payments

By Brian Faler

Nov. 12 (Bloomberg) — Almost 300 companies are asking Congress, as part of any economic stimulus legislation, to suspend a requirement that they pay more into their pension funds, saying it may force them to cut jobs.

Pfizer Inc., Boeing Co., Chrysler LLC, Verizon Communications Inc., Kraft Foods Inc. and Cigna Corp. are among the companies that signed a letter to lawmakers saying the economic slowdown has slashed the value of their pension assets, forcing them to make potentially “huge” contributions to the pension plans to meet requirements imposed by Congress in 2006.

“When companies desperately need cash to keep their businesses afloat, the new funding rules will require huge, countercyclical contributions to their pension plans,” said the letter, to be sent today. “Consequently many companies will divert cash needed for current job retention, job creation and needed business investments.”

Congressional Democrats are urging President George W. Bush to back an economic stimulus package that would provide federal aid to state governments while boosting spending on unemployment assistance, food stamps and infrastructure projects. House Speaker Nancy Pelosi said yesterday she also wants to provide aid to troubled U.S. automakers.

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Jim Sinclair’s Commentary

If the nature of these assets was made public, the weakness now in the Federal Reserve Balance Sheet would be immediately obvious. The dollar would implode immediately and treasury instruments would have to be downgraded. It also would reveal those entities who are the near and dear of the Fed.

Fed Defies Transparency Aim in Refusal to Disclose
By Mark Pittman, Bob Ivry and Alison Fitzgerald

Nov. 10 (Bloomberg) — The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

“The collateral is not being adequately disclosed, and that’s a big problem,” said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. “In a liquid market, this wouldn’t matter, but we’re not. The market is very nervous and very thin.”

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

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Jim Sinclair’s Commentary

Before all this is over you will see continuing and major bullion purchases by central banks. To hell with standing agreements.

ECB-Gold reserves rise by 1 mln euros in week
Tue, Nov 11 2008, 14:27 GMT

FRANKFURT, Nov 11 (Reuters) – Gold and gold receivables held by euro zone central banks rose by 1 million euros to 220.193 billion euros in the week ending Nov. 7, the European Central Bank said on Tuesday.

Net foreign exchange reserves in the Eurosystem of central banks rose by 22.8 billion euros to 361.1 billion euros, the ECB said in its regular weekly consolidated financial statement.

Gold holdings rose mainly as a result of purchases by 1 euro zone central banks, and this was consistent with the 2004 Central Bank Gold Agreement, the ECB said.

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Jim Sinclair’s Commentary

Thank God for those that stand on the wall while we sleep and who risk their lives in order to protect us. Their only reward is a white star on a black wall with a year as the header but no name. Thank you and rest well.

Two alleged U.S. spies killed in Pakistan`s tribal region
Posted: 2008/11/10

Suspected militants have killed men accused of spying for the United States in Pakistan’s tribal region of North Waziristan, local tribesmen said Saturday.

Two bullet-ridden bodies of Afghan nationals were found at Dargah Mandai area near the border area in North Waziristan on Saturday, they said.

A note in the native Pashto language found near the body of the slain men, said that they were spying for the United States and Afghan government.

The note warned that anyone spying for the U.S. or Afghanistan would face the same situation.

Militants are blamed for attacking people suspected of spying for the U.S. or Pakistani authorities in the region, which borders Afghanistan, and where al Qaeda- and Taliban-linked militants operate.

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Jim Sinclair’s Commentary

The complex OTC derivative situation is now becoming something akin to the Japanese sci-fi of the 1970s titled "The Green Blob that Ate the Earth." No wonder her Majesty is inquiring with legal authority. As Queen, she still might have the power to order, "off with their heads!" Since her present wealth is primarily in real estate and that is what she got hit for, is it possible for a Queen to be homeless?

Sweden seizes Carnegie in first bank bail-out
Sweden’s government is to seize control of Carnegie after the 200-year-old investment bank took "exceptional risks" with client money and breached trading rules.
By Ambrose Evans-Pritchard
Last Updated: 7:15PM GMT 10 Nov 2008

Mats Odell, the financial markets minister, said the state had opted to save Carnegie by providing a 5bn Kronor (£450m) state loan rather than let it go bankrupt in order prevent a fire-sale of assets and to shore up the financial system at a delicate moment.

"Carnegie is important: there could be significant problems for households and companies if we jeopardise the stability of the financial system," he said.

It is the first Swedish bank to require a bail-out since the credit crisis began, but there are mounting concerns over the health of Swedbank, SEB, and other lenders with heavy exposure to the Baltic states. Swedish banks have lent the equivalent of 25pc of the country’s GDP to Eastern Europe.

The debt office said it had revoked Carnegie’s trading licence and ousted the entire board,

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Jim Sinclair’s Commentary

Here is the news that counts. Here is where your focus should be.

The Fed is dragging its feet hard to keep the type and kind of SIVs they have taken as collateral from bankrupt institutions secret. The reason is simple. If they are total junk (and they probably are) the balance sheet of the Fed would be creamed. This would make Treasury instruments anything but totally creditworthy. It would make it much harder to borrow money, would break the 30 year bond and cream the dollar. It is coming one way or another.

U.S. to Borrow Record This Quarter to Finance Deficit
November 03, 2008

Nov. 3 (Bloomberg) — The U.S. Treasury more than tripled its planned debt sales for this quarter to help finance a 2009 budget deficit that bond dealers advising the department estimate may swell to almost $1 trillion.

Borrowing needs are expected to rise to $550 billion in the three months to Dec. 31, compared with the $142 billion predicted in July, the Treasury said in a statement in Washington. That follows a $530 billion record in the July-September quarter.

The worsening credit crisis and sluggish economy are straining the country’s finances and will leave the winner of tomorrow’s U.S. presidential election facing the worst budget shortfall on record next year. The Treasury is scheduled to announce in two days plans to expand debt sales to fund the gap.

“The U.S. Treasury faces an unprecedented financing need,” said Goldman Sachs analyst Ed McKelvey, echoing a similar comment last week by Anthony Ryan, the Treasury’s acting undersecretary for domestic finance.

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Jim Sinclair’s Commentary

Judging from the G-20 meeting, I would assume the new Bretton Woods conference will discuss fiscal stimulation and how to pump more funds into the system.

TABLE-Key facts about G20 members
11.10.08, 10:31 AM ET

Argentina – Nov 10 (Reuters) – Following are some key details about the G20 countries plus Spain, a membership aspirant:

COUNTRY POPULATION GDP FOREX RESERVES

(mln, 2007) ($bln, 2007) ($ bln, latest)
———————————————————-

* Argentina: 39.5 262.33 47.1
* Australia: 21.01 821.72 27.6
* Brazil: 191.6 1,314.17 205.1
* Canada: 32.98 1,326.38 41.1
* China: 1,319.98 3,280.05 1,808.8
* France: 61.71 2,562.29 144.8
* Germany: 82.27 3,297.23 153.0
* India: 1,123.32 1,170.97 295.3
* Indonesia: 225.63 432.82 54.5
* Italy: 59.37 2,107.48 104.5
* Japan: 127.77 4,376.70 996.7
* Mexico: 105.28 893.36 77.1
* Russia: 141.64 1,291.01 582.2
* Saudi Arabia 24.20 381.68 34.1
* South Africa 47.59 277.58 243.3
* South Korea 48.53 969.79 240.3
* Spain 44.88 1,429.23 13.8
* Turkey 73.89 657.09 79.1
* United Kingdom 61.03 2,727.81 72.1
* United States 301.62 13,811.20 72.5

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Jim Sinclair’s Commentary

This is madness unless you want a planetary Weimar with the only difference being whose currency hits the deck first. Fellows, it is not bad business causing derivatives problems. It is bad derivatives extending a normal business contraction into an unprecedented disaster. Aim at the cause, not at the symptoms.

G-20 Says Its Ready to Urgently Boost Growth, Stimulus Needed
By Ben Sills and Shamim Adam

Nov. 10 (Bloomberg) — The Group of 20 nations is prepared to act “urgently” to bolster growth and called on governments to cut interest rates and raise spending as the world’s leading industrialized economies battle the threat of a recession.

“We stand ready to urgently take forward work and actions agreed by our leaders to restore and maintain financial stability and support global growth,” the group said in a statement released yesterday following a meeting in Sao Paulo. “Countries must use all their policy flexibility, consistent with their circumstances, to support sustainable growth.”

Those measures include “monetary and fiscal policy,” it said.

China, the world’s largest developing economy, announced an economic stimulus package worth almost a fifth of its output to sustain domestic demand as the credit crunch drags down growth from New York to Tokyo. Officials in the U.S. and Europe already have slashed borrowing costs and boosted spending in a bid to contain the effects of the slump.

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Jim Sinclair’s Commentary

I never thought I would ever see this.

If Bloomberg is successful, you will not be able to believe how the US Federal Reserve has sold the US citizens straight down the pooper.

Bloomberg Sues Fed to Force Disclosure of Collateral (Update1)
By Mark Pittman

Nov. 7 (Bloomberg) — Bloomberg News asked a U.S. court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.

The lawsuit is based on the U.S. Freedom of Information Act, which requires federal agencies to make government documents available to the press and the public, according to the complaint. The suit, filed in New York, doesn’t seek money damages.

“The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry,” said Matthew Winkler, the editor-in-chief of Bloomberg News, a unit of New York-based Bloomberg LP, in an e-mail.

The Fed has lent $1.5 trillion to banks, including Citigroup Inc. and Goldman Sachs Group Inc., through programs such as its discount window, the Primary Dealer Credit Facility and the Term Securities Lending Facility. Collateral is an asset pledged to a lender in the event that a loan payment isn’t made.

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Jim Sinclair’s Commentary

25 billion will do nothing to keep automakers making autos that they cannot sell. 25 today, 50 tomorrow and 100 next week.

Emanuel Says Auto Industry Essential to U.S. Economy (Update1)
By Todd Shields

Nov. 9 (Bloomberg) — Rahm Emanuel, President-elect Barack Obama’s chief of staff, called the auto industry an “essential” part of U.S. manufacturing, while stopping short of endorsing a proposal to use some of the $700 billion financial-rescue fund to aid automakers.

“The auto industry is an essential part of our economy,” Emanuel said on ABC’s “This Week.” Lawmakers should speed up the availability of $25 billion in government loans for the development of fuel-efficient cars, he said.

In addition, there are “other authorities” the administration can use immediately and Obama “has asked his economic team to look at different options of what it takes to help bridge the auto industry so they are a part of not only a revived economy, but part of an energy policy going forward.”

Emanuel didn’t directly respond to whether Obama endorses a proposal by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to use some of the $700 billion approved to stabilize the financial services industry to aid automakers.

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Jim Sinclair’s Commentary

Did I hear someone say that prices cannot rise in a deflationary business condition?

That is not true when the currency of that country implodes.

This will be the dollar situation as we move to “Quantitive Unsterilized Stimulation” along with fiscal stimulus to heed the needs of the voting constituency as politically expedient.

Stunned Icelanders Struggle After Economy’s Fall

“This country, as modern and sophisticated as it is geographically isolated, still seems to be in shock. But if the events of last month – the failure of Iceland’s banks; the plummeting of its currency; the first wave of layoffs; the loss of reputation abroad – felt like a bad dream, Iceland has now awakened to find that it is all coming true.

Overnight, people lost their savings. Prices are soaring. Once-crowded restaurants are almost empty. Banks are rationing foreign currency, and companies are finding it dauntingly difficult to do business abroad. Inflation is at 16 percent and rising. People have stopped traveling overseas. The local currency, the krona, was 65 to the dollar a year ago; now it is 130. Companies are slashing salaries, reducing workers’ hours and, in some instances, embarking on mass layoffs.”

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Jim Sinclair’s Commentary

As bailout financial needs and a negative TIC appear, the mechanism to take down the 35-year bull market on the 30 year Treasuries are in place.

U.S. to Borrow Record This Quarter to Finance Deficit
November 03, 2008

Nov. 3 (Bloomberg) — The U.S. Treasury more than tripled its planned debt sales for this quarter to help finance a 2009 budget deficit that bond dealers advising the department estimate may swell to almost $1 trillion.

Borrowing needs are expected to rise to $550 billion in the three months to Dec. 31, compared with the $142 billion predicted in July, the Treasury said in a statement in Washington. That follows a $530 billion record in the July-September quarter.

The worsening credit crisis and sluggish economy are straining the country’s finances and will leave the winner of tomorrow’s U.S. presidential election facing the worst budget shortfall on record next year. The Treasury is scheduled to announce in two days plans to expand debt sales to fund the gap.

“The U.S. Treasury faces an unprecedented financing need,” said Goldman Sachs analyst Ed McKelvey, echoing a similar comment last week by Anthony Ryan, the Treasury’s acting undersecretary for domestic finance.

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Jim Sinclair’s Commentary

No kidding. Our friends across the border look more like Pirate Pete and Blackbeard than brokerages.

Regulation ‘failures’ show need for new market watchdog: Flaherty
November 04, 2008

Failures of regulation have undermined Canada’s relatively stable financial system during the course of the global credit crisis and underlined the need for a new market watchdog, according to Jim Flaherty.

The Minister of Finance served notice on his provincial counterparts Monday that the Conservatives are determined to create a national securities regulator with the power to supervise obscure corners of capital markets where systemic risks can mount quickly.

The drive to tighten Ottawa’s grip on market supervision comes amid a push by European leaders for improved international co-operation after a string of bank collapses that appeared to push the global financial system to the brink of collapse.

In such capitals as Paris and London, the opaque international system of complex credit instruments is viewed as having played a critical role in spreading contagion through the banking system and compelling governments to intervene on a massive scale.

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Jim Sinclair’s Commentary

Thousands of banks need money and are therefore in trouble. Did FDIC not give a number of slightly over 100 on their watch list?

Rescue Cash Lures Thousands of Banks
November 03, 2008

WASHINGTON — Treasury and banking regulators say as many as 1,800 publicly held institutions could apply for government investments in coming weeks, out of concern that failing to do so could make them losers in a banking sector reshaped by the Treasury’s $700 billion rescue plan.

Depending upon conditions still being crafted by Treasury, thousands more private banks could apply for government capital as well, a Treasury spokeswoman said Sunday.

Only days ago, many healthy banks were saying they didn’t need taxpayer money under the Troubled Asset Relief Program. These healthy banks said they worried that taking government investments could unfairly tar them as in need of a bailout. In the past week, that perception has been reversed, due in large part to efforts by Treasury, banking lobbyists and legal advisers to sell the TARP.

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Jim Sinclair’s Commentary

No kidding!

Obama Faces `Urgent’ Task in Replacing SEC’s Cox, Lawmakers Say
November 07, 2008

Nov. 7 (Bloomberg) — President-elect Barack Obama should act quickly to name a new leader for the Securities and Exchange Commission, an agency that has drawn fire for not doing enough to regulate markets and protect investors, lawmakers said.

“The new administration will have no more urgent priority, in my view, than putting a team of capable, experienced and qualified economic leaders swiftly in place, from the Treasury secretary, to the Federal Reserve and the Securities Exchange Commission,” Senate Banking Committee Chairman Christopher Dodd said yesterday at a Washington news conference.

SEC Chairman Christopher Cox, 56, has said he will step down at the end of the Bush administration. Potential successors include William Brodsky, chief executive officer of the Chicago Board Options Exchange; Mellody Hobson, president of Ariel Capital Management; and Gary Gensler, a former Treasury Department undersecretary and partner at Goldman Sachs Group Inc., congressional aides, SEC officials and lobbyists said.

“It’s part of the economic team that President-elect Obama” should assemble “quickly,” Senator Jack Reed, a Rhode Island Democrat, said in an interview yesterday. “You want someone, obviously, who’s knowledgeable of markets and has good judgment with strong investor protection being the key,” said Reed, who leads a banking subcommittee that oversees the SEC.

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Jim Sinclair’s Commentary

It is ok to naked short anything against anyone until it costs the Treasury money. This is the financial equivalent of “Let Them eat Cake.” Somebody is going to the guillotine for these “Fails to Deliver.” 

U.S. Treasury Opens Probe Seeking Improper Trading 
By Rebecca Christie and Vincent Del Giudice

Nov. 7 (Bloomberg) — The U.S. Treasury opened a probe to identify any improper trading in U.S. government securities by bond investors and dealers, following increases in trades that fail to settle.

The announcement today came after repeated warnings by the Treasury to bond dealers to fix settlement problems in the government securities market or face tougher regulation.

Treasury officials use such reviews, known as “large position reports,” to monitor trading and guard against market manipulation. The Treasury has conducted at least nine such reviews since 1997. 

Today’s Treasury statement asks for information on the 2 percent two-year-note maturing Sept. 30, 2010, and the 3 1/8 percent five-year note maturing Sept. 30, 2013.

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Jim Sinclair’s Commentary

Somehow I doubt this would be good for the new Administration because it speaks towards Social Fascism. Who says the government would do any better than the individual?

The Carolina Journal Exclusive does! Hmm!

Dems Target Private Retirement Accounts
Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs
By Karen McMahan
November 04, 2008

RALEIGH – Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts – including 401(k)s and IRAs – and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.

The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.

Rep. George Miller, D-Calif., chairman of the House Committee on Education and Labor, in prepared remarks for the hearing on “The Impact of the Financial Crisis on Workers’ Retirement Security,” blamed Wall Street for the financial crisis and said his committee will “strengthen and protect Americans’ 401(k)s, pensions, and other retirement plans” and the “Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.”

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Jim Sinclair’s Commentary

I am surprised that after President Elect Obama met with the CIA and heard about Pakistan, he did not resign ahead of time. He could beat the January 2011 rush.

U.S. Missile Kills 10 in Pakistan
By PIR ZUBAIR SHAH
November 8, 2008

ISLAMABAD, Pakistan – Missiles fired from a remotely-piloted United States aircraft slammed into a village in the North Waziristan region of Pakistan along the Afghan border on Friday and killed between 10 and 13 people, according to a local intelligence official, a Pakistani reporter and two Pakistani television channels.

State television put the death toll at 10 and other news reports said the dead included eight local people and five foreigners. . The deaths were the latest fatalities in a series of American missile attacks that have drawn increasingly irate protests from Pakistan to senior American officials, including the head of the United States Central Command, Gen. David H. Petraeus, and the American ambassador here, Anne Patterson.

The Pakistani president, Asif Ali Zardari, and the prime minister, Yousaf Raza Gilani, both condemned Friday’s attack.

Since an American commando raid on Pakistani soil in early September, there have been reports of more than 15 American strikes directed at militants hiding out in the tribally-ruled Waziristan region.

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Jim Sinclair’s Commentary

Sure this was an accident, however a bunch of Kurds were seen laughing as they ran away.

Blast hits Iraq-Turkey oil pipeline in southeast, causes large spill

An explosion ripped through a pipeline carrying oil from Iraq to southern Turkey late on Wednesday, causing a large spill, the Anatolian Agency (A.A.) reported. Officials said sabotage was not the cause of the explosion.

The blast occurred in a section of the pipeline in the southeastern province of Sanliurfa in Turkey, the Anatolian Agency said, adding initial findings blamed the incident on an abrupt change of pressure in the network.

“We can not talk about sabotage. Our examinations revealed that the pipeline was broken from the inside because of pressure,” Yusuf Yavascan, governor of the southeastern province of Sanliurfa, told the A.A.

The twin pipeline, which runs from the northern Iraqi city of Kirkuk to Turkey’s Mediterranean port of Ceyhan and has a capacity to carry some 70 million tons of crude a year, was also bombed previously by the terrorist PKK organization. It carried about 40 million barrels of Iraqi oil to Ceyhan last year, according to Turkey’s state-run oil and gas company, BOTAS.

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Jim Sinclair’s Commentary

Sure the US financial system is founded in obscuration.

Credit Swap Disclosure Obscures True Financial Risk (Update3)
By Shannon D. Harrington and Abigail Moses

Nov. 6 (Bloomberg) — The most comprehensive report on unregulated credit-default swaps didn’t disclose bets in the section of the more than $47 trillion market that helped destroy American International Group Inc., once the world’s biggest insurer.

A report by the Depository Trust and Clearing Corp. doesn’t include privately negotiated credit-default swaps that insurers such as AIG, MBIA Inc. and Ambac Financial Group Inc. sold to guarantee securities known as collateralized debt obligations. It includes only a “small fraction” of contracts linked to mortgage securities, according to Andrea Cicione at BNP Paribas SA in London.

New York-based DTCC’s data, released on its Web site Nov. 4, showed a total $33.6 trillion of transactions on governments, companies and asset-backed securities worldwide, based on gross numbers. While designed to ease concerns about the amount of risk banks and investors amassed on borrowers from companies to homeowners, the report may have missed as much as 40 percent of the trades outstanding in the market, Cicione said.

The data are “likely to underestimate the amount of net CDS exposure,” Cicione, who correctly forecast in January that the cost of protecting European companies from default would rise, said in an interview. “A broadening of the coverage to the entire market is what investors really need.”

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Jim Sinclair’s Commentary

I believe that Mr. Hollan is being much too conservative.

Gold to reach $1,000 next year – and stay there: Gold Fields CEO
Gold Fields CEO, Nick Holland, reckons the gold price will hit $1,000 next year and stay there, but doesn’t look for significant appreciation above that level.
Author: Lawrence Williams
Posted: Thursday , 30 Oct 2008  

Interviewed on SAfm Radio in Johannesburg yesterday by Mineweb Editor in Chief, Alec Hogg, Gold Fields CEO, Nick Holland, gave some interesting views into his take on the gold price.  “I believe gold will go through $1000 and stay there during the course of 2009”, said Holland.

While to an extent this may be wishful thinking from someone whose company depends on gold for its income and on the gold price for its profitability, Holland’s reasons for his views are compelling.  He feels gold underperformed during the run-up in the oil price at the mid-year and that then, when oil came down in price, gold was dragged down with it without making earlier commensurate gains.  Thus gold hasn’t really performed in line with the overall situation – yet!

However Holland feels that with negative real interest rates around the world, contracting supplies and physical demand at almost record levels, the time is ripe for a re-evaluation of gold by the market.

When asked whether he felt the price would rise much beyond the $1,000 level, Holland wasn’t prepared to fuel speculative flames in this respect: “I wouldn’t say beyond $1,000” said Holland.  “Some people will say it should be much higher. I’d be very grateful with $1000 because right now the industry at $800 – or at $764 today, I think – doesn’t make any money after you take the all-in costs into account. So just to actually restore the margin and keep this industry going, we need something close to $1,000.”

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Jim Sinclair’s Commentary

The resources and reserves are in the hands of the juniors. As soon as some competition, say from Russia or China, make deals with a junior the majors cannot sit on the sidelines licking their lips.

To Anglo American, struggling rivals are acquisitions�
November 7, 2008
By Ron Derby and Antony Sguazzin

Johannesburg – Anglo American was considering acquisitions after seeing the share prices of rivals fall, chief executive Cynthia Carroll said yesterday.

Acquisitions might be preferable to developing new mines or expanding existing ones, she said in a speech at Sishen, the iron ore mine owned by the diversified mining company’s Kumba Iron Ore unit.

“We have an impressive project pipeline but the current economic environment challenges the pipeline’s viability,” Carroll said. 

“We are, therefore, in the process of actively reviewing the timing of our projects against the background of the difficulties of assessing capital and the prospect of attractive acquisition opportunities that could generate cash from day one,” she said.

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Jim Sinclair’s Commentary

The Federal Reserve AS LENDER OF LAST RESORT TO THE WORLD will bail out every country headed towards a Weimar Experience until the dollar flops. When that happens who will bail out the Fed’s Balance Sheet?

IMF approves USD 15.7 bn loan to Hungary

Washington, Nov 7 (PTI) The International Monetary Fund has approved a 15.7 billion-dollar loan for Hungary to shore up the country’s economy ravaged by financial turmoil.

Hungary becomes the second country after Ukraine to receive financial assistance from the IMF.

The multilateral lending agency would disburse 6.3 billion dollar immediately and the rest of the amount would be made available to Hungary in five installments, subject to quarterly reviews, IMF said in a statement on Thursday.

IMF said the stand-by arrangement would support the country’s longer-run economic goals by creating conditions necessary to facilitate appropriate reforms in government finances and banking sector.

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Jim Sinclair’s Commentary

The latest from Sprott Asset Management.

Cash Or Gold?

Allow us to preface this article by saying that we’ll be making no mention of the ‘manipulation’ of the price of gold. Let’s put that issue aside for now because, in the long run, it just won’t matter. We are in the midst of a financial crisis – not just any financial crisis mind you, but arguably the worst and most pervasive the world has seen in almost a century (second only to the Great Depression… thus far). In the sea of financial assets and currencies that are being decimated the world over, the one true safe haven continues to be gold.

During these times, it is understandable that the prevailing investor sentiment is fear. People are fearful of their savings, fearful of their jobs, and especially fearful of risk, having just witnessed how quickly a bear market can decimate portfolios. The other major factor currently affecting markets is deleveraging. As we all know by now, the 2002-2007 credit bubble was all about leverage. Leverage in housing and real estate. Leverage in the banking system. Leveraged hedge funds. As long as all asset classes continued to go up, then leverage was the winning formula. Although such a myopic strategy paid handsomely in the short run, the premise of the preceding sentence is, of course, false over the longer term. Thus, the winning strategy of yesteryear is now a ruinous one, leading to a vicious circle of deleveraging that is gutting the value of almost all assets. In this respect, gold is proving to be no exception. On the flip side of deleveraging is the frenetic buying of what was on the short side of the leveraged trade, namely, US dollars and Japanese yen. As currencies with low interest rates, they were borrowed to effect the leverage and are now benefiting from what is essentially short covering as leverage is unwound. This is another reason that the price of gold, in US dollar terms, is down over the past month – albeit, not nearly as much as other assets that were on the long side of the leveraged trade.

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Jim Sinclair’s Commentary

Too big to go broke? As goes GM so goes the US. The US is speeding towards technical insolvency and downgrades of US Treasury instruments.

GM Says It May Not Have Enough Cash to Operate This Year
By Jeff Green and Mike Ramsey

Nov. 7 (Bloomberg) — General Motors Corp., seeking federal aid to avoid collapse, said it used $6.9 billion in cash in the third quarter and may fall below the minimum it needs to operate before the end of this year.

GM said it will be near its minimum threshold for operating cash for the remainder of 2008 and will be “significantly short” of that level by the end of June without an improvement in market conditions, a major asset sale or access to new loans or cash support. GM has said it needs at least $11 billion in cash to pay its bills each month.

“GM is making a pretty direct plea for help,” said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. “The message is, `we’ve done all the things we can do, and we need help.’ And if we don’t get help, fill in the blank.”

Merger talks are being suspended, GM said. The company had been in discussions about a tie-up with Chrysler LLC, people familiar with the plans had said.

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Jim Sinclair’s Commentary

As goes GM so goes Ford and all other US car makers.

Ford: Massive loss, job cuts
Detroit under siege: Ford auto unit burns through $6.3 billion and cuts 2,600 hourly workers. GM to announce its results soon.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: November 7, 2008: 10:26 AM ET

NEW YORK (CNNMoney.com) — Ford Motor reported a $3 billion quarterly operating loss on Friday and said it would reduce staff and capital spending in order to preserve its dwindling cash.

Ford said it would cut salaried employment costs by 10% – reducing compensation of its white collar workers by eliminating merit pay, bonuses and the company’s matching contributions to their retirement accounts.

But even with those savings, the company said it’s likely to lay off more salaried staffers. It also said hourly staff – mostly factory workers covered by union contracts – would be reduced by an additional 2,600 through a voluntary buyout package.

The company, which earlier this year sold brands such as Jaguar and Land Rover, said it would continue to look to sell assets.

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