Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.

Dear Friends,

Like it or not, double dip or not, a long term depression is upon us. The Brits may well need what they are asking for, as may you.

Dear Jim,

I read the following accounts and could not help ponder how we may be headed there very soon and how people made due. The news sounds a lot like things now, especially the bank failures and layoffs!

Best,
CIGA Big T

"I Remember . . ." – Reminiscences of the Great Depression

"I remember…"
(Reminiscences of the Great Depression)

Everyone has a story to tell about the past.

During the Great Depression of the 1930s, some Michiganians bartered and traded for food, clothes, shelter and services. Sharing and "making do" became a way of life. People who lived during the Depression have interesting stories to share about how they coped with hard times.

The following reminiscences were published in Michigan History Magazine, January-February, 1982 (Vol. 66, No. 1). The last reminiscence is from an oral history of Richard Waskin.

Marie Beyne Gillis Tubbs Remembers Her Father’s Music

The business of my father (Theodore J. Beyne) was at a standstill. Since his hobby was playing the violin in the newly formed Grand Rapids Symphony Orchestra, he had time to search within himself for things to do. He began to compose beautiful music–three symphonies, quartettes, violin, piano and cello concertos and other piano music.

My first memory of hearing his music played was at the beginning of the Depression at the band shell at the city’s John Ball Park. His orchestral arrangement of Hoagy Carmichael’s "Star Dust" was performed by the WPA orchestra, which had been formed to provide employment for out-of-work musicians. How clearly I remember, out of the depths of dark feelings springing from closed banks and no work, the wonderful sensation that comes from something more than "bread alone." And I remember his pleased reaction (he was overwhelmed) at the audience’s appreciation shown with lots of applause. "Depression go hang for the moment."

More…

Posted by & filed under Jim's Mailbox.

Dear Jim,

Although this article has been written a few weeks ago, I think it is important to share it with you and the other CIGAs.

Robert Kiyosaki, author of "Rich Dad Poor Dad", believes that the most important asset is our brain and urges everyone to get a financial education to help them do their homework instead of blindly following so called financial experts. He gives some interesting insight on how we got into this mess and how people must act to protect themselves.

Like you, he thinks the world power is pyramidal and this crisis is the result of a "wider struggle for power and domination".

He obviously favors Gold as protection.

While he was in South Africa, he interviewed 3 couples from Zimbabwe about:

1. How fast did the economy turn?
2. When did you know that you were in financial trouble?
3. When did you finally decide to leave Zimbabwe?
4. If you could do things differently, what would you have done?

It´s very interesting to see how different the reaction of each couple were and how they were almost all taken by surprise, except for one.

Regards,
CIGA Christopher

How the Financial Crisis Was Built Into the System
by Robert Kiyosaki
Posted on Monday, November 24, 2008, 12:00AM

How did we get into the current financial mess? Great question.

Turmoil in the Making
In 1910, seven men held a secret meeting on Jekyll Island off the coast of Georgia. It’s estimated that those seven men represented one-sixth of the world’s wealth. Six were Americans representing J.P. Morgan, John D. Rockefeller, and the U.S. government. One was a European representing the Rothschilds and Warburgs.

In 1913, the U.S. Federal Reserve Bank was created as a direct result of that secret meeting. Interestingly, the U.S. Federal Reserve Bank isn’t federal, there are no reserves, and it’s not a bank. Those seven men, some American and some European, created this new entity, commonly referred to as the Fed, to take control of the banking system and the money supply of the United States.

In 1944, a meeting in Bretton Woods, N.H., led to the creation of the International Monetary Fund and the World Bank. While the stated purposes for the two new organizations initially sounded admirable, the IMF and the World Bank were created to do to the world what the Federal Reserve Bank does to the United States.

In 1971, President Richard Nixon signed an executive order declaring that the United States no longer had to redeem its paper dollars for gold. With that, the first phase of the takeover of the world banking system and money supply was complete.

In 2008, the world is in economic turmoil. The rich are getting richer, but most people are becoming poorer. Much of this turmoil is directly related to those meetings that took place decades ago. In other words, much of this turmoil is by design.

Power and Domination
Some people say these events are part of a grand conspiracy, and that might well be. Some people say they represent the struggle between capitalists, communists and socialists, and that might be, too.

I personally don’t participate in the debate over a possible global conspiracy; it’s a waste of time. To me, the wider struggle is for power and domination. And while this struggle has done a lot of good — and a lot of bad — I just want to know how to avoid becoming its victim. I see no reason to be a mouse trying to stop a herd of elephants from fighting.

Currently, many people are suffering due to high oil price, the slowdown in the economy, loss of jobs, declines in home values, increased bankruptcies and businesses closings, savings being wiped out, the plummeting stock market, and rising inflation. These realities are all direct results of this financial power struggle, and millions of people are its victims today.

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Dear Little Tatanka,

Glad you are back and hope you are feeling better. That is a long flight(s)!

This makes no sense. Germany last year was still a net exporter of goods. The Bundesbank is the heart of the Euro and with Germany being the European powerhouse, one wonders, if they can’t finance operations it is only a matter of time before ALL bonds are rejected en masse.

The ECB even has a higher interest rate than the Fed, so it seems to me very soon the USA will hit a brick wall at 1000 mph! (as you have said, in the second half of 2009). As you have said, to trade your insurance is insanity!)

Best,
CIGA BT

German bond sale’s fate signals trouble ahead
By David Oakley in London
Published: January 7 2009 13:30 | Last updated: January 7 2009 20:45

A German sovereign bond auction failed on Wednesday as investors shunned one of the most liquid and safe assets in the world in a warning for governments seeking to raise record amounts of debt to stimulate slowing economies.

The fate of the first eurozone bond auction of 2009 signals trouble ahead as governments around the world hope to issue an estimated $3,000bn in debt this year, three times more than in 2008.

The 10-year bonds failed to attract enough bids to reach the €6bn the German government wanted. Bids of €5.24bn, a cover of only 87 per cent, amounted to the second worst auction on record in terms of demand.

Such developments were rare before the credit crisis. Before the seven German bond auctions that failed last year, the last German bond auction to fail was in July 2000 after the dotcom crash.

More…

Dear Big Tatanka,

The Weimar Experience is a failure of a singular currency. A planetary Weimar experience is a failure of all currencies in terms of gold. Gold is the certain winner. All else will be relative to each other. I will write more on what this means to currencies as soon as I complete an intensive review of every major nation’s new addiction to bailouts in terms of GDP on a percentage momentum basis.

Respectfully yours,
Jim

Posted by & filed under Guild Investment, Jim's Mailbox.

Dear Jim,

To say that this rating agency is peopled by ignoramuses is way too kind. That goes for the other rating agencies as well. They are either completely ignorant, they are suffering from a huge conflict of interest, or both.

Respectfully yours,
Monty Guild
www.GuildInvestment.com

"Moody’s Investors Service announced today that it has revised and updated certain key assumptions that it uses to rate and monitor corporate synthetic CDOs. Moody’s will immediately start reassessing all of its outstanding corporate synthetic CDO ratings across 900 transactions in the U.S., Europe and Asia using these updated assumptions. Based on initial assessment, Moody’s expects to lower the ratings of a large majority of corporate synthetic CDO tranches by three to seven notches on average. The actual magnitude of the downgrades will depend on transaction specific characteristics such as tranche subordination, vintage and portfolio composition…Moody’s is increasing its default probability assumptions for financial and non-financial corporate credits in the reference pools of synthetic CDOs by a factor of 30% across all rating categories…POSTBANK…hrx…deutsche…etc"

Posted by & filed under Jim's Mailbox.

Dear Jim,

Yikes! Why is S&P picking on Spain with these numbers coming out of the US?

Best regards,
CIGA Richard B.

Treasury: deficit hits new record in just 3 months
Treasury: federal deficit already totals record $485 billion in first 3 months of budget year
Martin Crutsinger, AP Economics Writer
Tuesday January 13, 2009, 5:11 pm EST

WASHINGTON (AP) — The federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year. And economists say the imbalance for the full year could easily top $1 trillion, pushed to that eye-popping level by the spending the government is likely to do to combat the recession and the most severe financial crisis in generations.

The Treasury Department reported Tuesday that the deficit for December totaled $83.6 billion, a sharp deterioration from a year ago when the government managed a surplus of $48.3 billion.

All the red ink comes from the massive spending out of the financial rescue program — $247 billion out of $700 billion spent so far — and a prolonged recession that has depressed tax revenues.

The overall deficit from October through December is the highest on record for a first quarter and surpasses the mark for a full budget year of $454.8 billion set last year.

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Dear Richard,

1. Because rating agencies now predate prostitution as the oldest occupation in human history.
2. Because if they down-rated the dollar they would have to close shop the next day.

Take your pick. I know you can add more.
Jim

Jim,

Another sickening example of the pre-hyperinflationary symptom of restricting bank data from the view of the people. Pass the Weimar baton.

CIGA Ken

BoE secret money printing
[Monday, January 12, 2009 | 0 comments ]

Billionmark comment

Weimar style policy is now global. With nothing backing paper currencies except other currencies disaster awaits. As Marc Faber says "citizens, who are not dumb, realize that the Central Banks are engaged in a contest to print the most money, to keep the cost labor low, the employment high and to erase the Nationial debts. This will destroy the currencies, confidence and create instability……I expect there maybe a panic into Gold and a scramble into physical gold"

from the UK Telegraph

The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy.

The Government is set to throw out the 165-year-old law that obliges the Bank to publish a weekly account of its balance sheet — a move that will allow it theoretically to embark covertly on so-called quantitative easing. The Banking Bill, which is currently passing through Parliament, abolishes a key section of the law laid down by Robert Peel’s Government in 1844 that originally granted the Bank the sole right to print UK money.

The ostensible reason for the reform, which means the Bank will not have to print details of its own accounts and the amount of notes and coins flowing through the UK economy, is to allow the Bank more power to overhaul troubled financial institutions in the future, under its Special Resolution Authority.

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Posted by & filed under Jim's Mailbox.

Jim,

The rate of acceleration of the downtrend is historic. This is carnage. This is dangerous to the US dollar. Not much else to say.

Regards,
CIGA Eric

Formul1

Dear Jim,

Here is a well done summary of the virtual insanity of those who have priced bonds as if they deserved almost no return for taking a big risk in US paper. PT Barnum’s quote was correct when it comes to US Treasury paper. His quote was "There is a sucker born every minute.”

Your pal,
Monty

The bond bubble is an accident waiting to happen
The bond vigilantes slumber. As the greatest sovereign bond bubble of all time rolls into 2009, investors are clinging to an implausible assumption that China and Japan will provide enough capital to keep the happy game going for ever.
Ambrose Evans-Pritchard
Last Updated: 12:22PM GMT 12 Jan 2009

They are betting too that debt deflation will overwhelm the effects of near-zero interest rates across the G10 and nullify a £2,000bn fiscal blast in the US, China, Japan, Britain, and Europe.

Above all, they are betting that the Federal Reserve chief Ben Bernanke will fail to print enough banknotes to inflate the US money supply, despite his avowed intent to do so.

Yields on 10-year US Treasuries have fallen to 2.4pc – a level that was unseen even in the Great Depression. This is "return-free risk", said bond guru Jim Grant.

It is much the same story across the world. Yields are 1.3pc in Japan, 3.02pc in Germany, 3.13pc in Britain, 3.26pc in Chile, 3.47pc in France, and 5.56pc in Brazil.

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Jim,

Here are the corrections from yesterday (I should know better you told me to let the break tell me when).

I let the curve tell me when (if by chance this is the right fit) so my mistake for saying the end of 2012

Regards,
CIGA Alex

image002 - 20090113_035118

Dear Alex,

You ask about the high 2012 potential, not 2010.

The answer is this chart maximizes along the upper trend line at Alf’s mark of:

Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
Major FOUR down from $3,500 to $2,500 (a 29% decline);
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE).

Jim

Dear Extended Family,

Trader Dan says it all:

"Don’t like the current psyche – stick around another week or so; next week it will probably be hyperinflation only to be followed by a return to the barter system the week after that, and then a round circle back to deflation once again. Don’t feel bad if you cannot understand what the markets are saying right now – the market itself has no idea what it is saying. Maybe it is attempting to get in touch with its inner child or some other sort of nonsense. Thank fund managers for clearing things up for us all."

Dear CIGA Browsers,

Let stay alert for the answer to last week’s request from Hedge Fund Association lobbyists to the Security Regulators of the USA, Great Britain and Australia seeking freedom from reporting Short Positions as part of the 13-F regulation interpretation.

Form 13F
What Does Form 13F Mean?
An SEC reporting form filed by institutional investment managers in accordance with the provisions of section 13(f) of the Securities and Exchange Act of 1934, which states that all institutional investment managers who are managing over $100 million on the last trading day of any month of the calendar year must disclose their holdings on a quarterly basis.
www.wikopedia.com

Posted by & filed under Jim's Mailbox.

Jim,

The problem with socialism is that you eventually run out of other people’s money.
–Margaret Thatcher

Regards,
CIGA JB Slear

Fort Wealth Trading Co. LLC
www.FortWealth.com
866-443-0868 ext 104

Dear Jim,

If the scale continued to the top of the Curve, is it possible by 2012 Gold would be in the 3,000 range?

If this is the right fit.. something interesting happens at the end of 2012

Regards,
CIGA Alex

gold_log_jan1109 - 20090112_091735 

Dear Alex,

Yes.

All the best,
Jim

Posted by & filed under Jim's Mailbox.

Hi Jim,

Maybe this has been answered on your website and I either missed it or didn’t understand it.

What needs to change in order to drive the dollar lower? We seem to have all of the ingredients in place for a weaker dollar yet that doesn’t seem to matter. When will it matter? When do the buyers of the dollar become sellers?

Again thanks for all you do. By the way I am 63 and also believe in your "burnout" before "rust-out" theory.

Regards,
CIGA Ron

Dear Ron,

I had lunch this afternoon in Joberg with a group of very well known personalities in African Mining. Rob S, a member of this assemblage, told a story that I believe prophetically answers your question.

The monetary parable was about a special variety of monitor lizard in Australia that lives off road kill (Hedge Funds, I imagine). The species, like the Komodo Dragon, kills by infecting its victim with a vicious saliva.

Fortunately for our Australian friends this lizard becomes terrified quite easily and runs for the nearest high point, usually a bush or tree, when confronted with terror like a human being or a bad dream.

The knee jerk reaction to fears of an imploding world economy, the fear that Obama produced calling for Tarp funds now indicated that crisis is here, up the tree goes the down-under lizard. The Tree is the dollar and long bonds. This awful, stinking, road kill eating, vile lizard is what is left of the hedge fund business after Madoff.

Your question is when does it end.

The answer is that Fiscal Stimulation will produce a degree of economic results that draws out a measure of inflation from Monetary Stimulation relative to the intensity of the new Administration’s degree of concern. Acting as president and calling for legislative action NOW to release TARP funds before you are the president is a demonstration not only of concern but total panic.

As inflation starts to work its way out of absolute monetary madness, .72 on the USDX comes directly into the market’s cross hairs. Three back to back closes below .72 and the dollar show is over. The dollar will plummet after the realization that the Fed will never be able to issue bonds on the crap they have been stuffed with and kills the idea of the Rentendollar coming out of the Fed’s inventory of SIVs backing massive future bond issues. The game is then over and the beginning of the concept of the Federal Reserve Gold Certificate Ratio, Modernized and Revitalized becomes the tool of choice starts.

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

Today you have been had by paper gold ONE MORE TIME.

Regards,
Jim