Posted at 9:24 PM (CST) by & filed under General Editorial.

Dear Friends,

This may be a first, but you haven’t seen anything yet.

As the income of the USA collapses and the outrageous prejudice of the rescue of the ultra rich continues, the Federal Budget Deficit rises geometrically, not arithmetically.

Economics is in motion. It is not a life form of still photos. Therein is the killer error of almost every economist on the planet.

The premise of the Formula is motion. This winter is the death of the US dollar.

Please protect yourself.

Respectfully yours,
Jim

U.S. Govnt Receipts Collapse

Black swan: as every American knows, April is tax time in the U.S. of A, and accordingly April receipts normally vastly exceeds outlays. Not this year, for the first time in living memory, receipts are lower than outlays in April, a whooping 34% lower than last year.
The accumulated deficit for the first seven of the year is almost double the entire total for last year.

Monthly Treasury Statement: Summary of Receipts, Outlays, and the Deficit/Surplus of the U.S. Government, Fiscal Years 2008 and 2009, by Month

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Posted at 6:21 PM (CST) by & filed under In The News.

Dear CIGAs,

The Social Security Fund has been Washington’s piggy bank for everything from pork bellies to war.

Payback time starts in 2014, but what if the pay back is just more IOUs?

Hyperinflation is the only way out for Washington’s inability to pay back the Social Security Fund debt. Hyperinflation is the only way out of most entitlements.

Sounds like a plan to me.

Medicare, Social Security Funds Worsen in Recession
By Alison Fitzgerald

May 12 (Bloomberg) — The financial health of Social Security and Medicare, the two main safety nets for American retirees and the elderly, is declining as the recession cuts payroll-tax contributions just as the baby-boom generation begins to retire.

The Social Security trust fund will run out of assets in 2037, four years sooner than previously forecast, the trustees said today. Spending on Medicare, the health insurance plan for the elderly, will reach a legal limit by 2014, the same year predicted in 2008, the trustees’ report said.

The deteriorating position of the two funds puts pressure on Congress and President Barack Obama to come up with ways to cut costs and boost revenue for both. Obama yesterday said fixing the nation’s health-care system is an “imperative for America’s economic future.”

“After we have passed health-care reform that puts our nation on a path to lower growth in health-care costs and expanded affordable coverage, this president will work to build a bipartisan consensus to ensure the long-term solvency of Social Security,” Treasury Secretary Timothy Geithner said today in a statement.

The trustees’ annual report also estimated that Medicare’s hospital fund will be exhausted by 2017, two years earlier than predicted a year ago.

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Jim Sinclair’s Commentary

Should any bondholder insist on their contractual rights in court, the bankruptcy of the motor companies will be a greater catalyst for disaster than Lehman already has been.

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Jim Sinclair’s Commentary

It started with housing in California and moved East. Municipal bankruptcy will do the same. Think about all the insured guaranteed municipal bonds in which the guarantee and insurance is not worth the OTC derivative it is written on. This is chapter two of the disaster where the black hole appears. L.A. is kaput.

Mayor Villaraigosa wants council to declare emergency and calls for layoffs
1:36 PM | May 12, 2009

Citing a $529-million budget deficit, Mayor Antonio Villaraigosa urged the City Council on Tuesday to declare a fiscal emergency and called for mandatory work furloughs and layoffs targeting 1,000 city employees.

"The gravity of the fiscal emergency that we face is enormous," Villaraigosa said. "Unless we act with urgency, the city will face a cash flow crisis, raising the prospect of running out of cash between November and February. "

The mayor said the city should commence layoffs of 1,000 city employees beginning July 1 but warned that thousands more could be phased in during the upcoming fiscal year. He said the layoffs would include management as well as regular staff.

Meanwhile, the mayor said he plans to implement the work furlough plan within 30 days. He said he has invited a labor representative to discuss the impact of the plan, which would require up to 26 furlough days for civilian city employees next fiscal year.

He said he would also be working with the City Council and labor officials to develop a buyout program to permanently reduce the city’s civilian workforce.

The mayor said that the city’s budget deficit could exceed $1 billion in fiscal year 2010-2011 if it doesn’t act now.

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Fannie and Freddie Will Need Almost $100 Billion in 2010
Posted May 12, 2009 12:42pm EDT by John Carney
From The Business Insider, May 12, 2009:

The Office of Management and Budget released a report yesterday on the budgets and proposed overhauls of Fannie Mae and Freddie Mac that included the possibility of liquidating their assets. But don’t get your hopes up.

The two government run mortgage finance companies have been scandalously costly for tax-payers, costing Americans far more in bailout money than they ever saved in cheaper mortgages. The OMB says that the two companies will need at least $92.2 billion more in fiscal 2010. This is on top of the $78.2 billion in aid they’ve received since they were taken over by the government in September.

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Jim Sinclair’s Commentary

Remember the time-honored Middle Eastern battle strategy:

1. Here comes the Surge.
2. All fall down and bury your weapons.
3. Put on street clothes and join the march of 500,000 refugees.
4. After the Surge photos are over, quietly dig up your weapons, bury your street clothes and bleed the big guy to death.

The Pakistan Surge is the best recruiting plan for the Taliban. When will the West learn?

Pakistan’s Swat offensive risks wider backlash
Tue May 12, 2009 1:46pm BST
By Luke Baker – Analysis

LONDON (Reuters) – Pakistan’s heavy-handed offensive against the Taliban in northwest Pakistan is misguided and risks further destabilizing the country, western military and intelligence experts argue.

By throwing up to 15,000 troops and heavy weaponry against an estimated 5,000 Taliban in Swat, a valley northwest of Islamabad, the Pakistan army may make short-term gains, but it increases the likelihood of terror-style attacks on targets in more stable areas of eastern Pakistan in the longer-term.

While the army essentially had no choice but to go on the offensive after the Taliban broke a peace accord and the U.S. administration piled on pressure for action, the broader strategy needs overhauling, the analysts say.

"On this occasion, the Pakistan army has accepted that the breach of the Swat agreement by the Taliban did in fact represent a threat which it couldn’t overlook or fail to respond to," said Nigel Inkster, an expert on transnational threats at London’s International Institute for Strategic Studies and a former director in Britain’s secret intelligence service.

"That said, the techniques that are being deployed go against all accepted best-practice in dealing with a counter-insurgency, particularly the use of heavy fire power.

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Jim Sinclair’s Commentary

The US dollar rally may end? The rally ended exactly where Dean Harry Schultz said it would at .8900 USDX.

Mr Rogers makes much too much of IMF gold. Where was he in the 70s? IMF gold will be sucked out of the IMF by other central banks, therein allowing them to get rid of the wilting US dollar.

There is no IMF gold. It is the members of the IMF’s gold. They must agree on all aspects.

IMF gold sales are a huge crock of BS the bears make a big deal of. It sound like a silver long and gold short spread talking its own case. That is my take.

Dollar Rally Will End, Rogers Says; May Short Stocks (Update2)
By Chen Shiyin and Haslinda Amin

May 12 (Bloomberg) — The dollar’s rally is set to end in a “currency crisis,” investor Jim Rogers said, adding that he may bet on a slide in equities after nine weeks of gains.

The advance in the U.S. currency has been driven by investors covering their short sales, Rogers, 66, said in an interview with Bloomberg Television in Singapore. He may consider adding to his holdings of the yen and prefers the euro to the dollar or the pound, the investor added.

“We’re going to have a currency crisis, probably this fall or the fall of 2010,” Rogers said. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”

The dollar has climbed against all of the so-called Group of 10 currencies except the yen over the past 12 months, according to data compiled by Bloomberg. The U.S. currency was at $1.3592 per euro today from $1.3582.

Rogers joins “Black Swan” author Nassim Nicholas Taleb in avoiding the U.S. currency. Taleb told a May 7 conference in Singapore he preferred gold and copper to the dollar and the euro as the global economy faces a “big deflation.”

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Jim Sinclair’s Commentary

This dollar is so Zombie! Once it looks in a mirror it will be under .82 for starters.

US to borrow 46 cents for every dollar spent
By ANDREW TAYLOR, Associated Press Writer
Monday, May 11, 2009

The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates. Budget office figures released Monday would add $89 billion to the 2009 red ink — increasing it to more than four times last year’s all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.

The unprecedented deficit figures flow from the deep recession, the Wall Street bailout and the cost of President Barack Obama’s economic stimulus bill — as well as a seemingly embedded structural imbalance between what the government spends and what it takes in.

As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.

Just a few days ago, Obama touted an administration plan to cut $17 billion in wasteful or duplicative programs from the budget next year. The erosion in the deficit announced Monday is five times the size of those savings.

For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration’s plan. In 2010, it would borrow 35 cents for every dollar spent.

"The deficits … are driven in large part by the economic crisis inherited by this administration," budget director Peter Orszag wrote in a blog entry on Monday.

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Jim Sinclair’s Commentary

As Banks sell homes on foreclosure, the statistic of home sales increase. Keep this in mind, please.

Falling home prices and increasing home sales is not good news economically. It is stinking news regardless of the upcoming glee of the money bunnies or dancing, horn honking clowns.

This would be classified as a Green Shoot, another silly piece of spin.

Home Prices in U.S. Fall 14% as Banks Sell Foreclosed Houses
By Kathleen M. Howley

May 12 (Bloomberg) — The median U.S. home price dropped 14 percent in the first quarter from a year earlier as banks sold repossessed homes.

Prices fell in 134 of 152 metropolitan areas, the Chicago- based National Association of Realtors said today in a news release. The national median existing home price declined to $169,000 and distressed properties typically sold for 20 percent less than other homes on the market.

Distressed sales are increasing transactions in some markets as speculators and first-time homebuyers buy bank-owned properties. The inventory of previously owned homes on the market dropped to 3.7 million in March from 3.8 million a month earlier, according to NAR data. The number of new homes for sale fell to 311,000, the lowest since January 2002, according to the Commerce Department.

Total existing home sales fell 6.8 percent from a year earlier to a seasonally adjusted annual rate of 4.59 million units, the Realtors group said. Sales were down 3.2 percent from the fourth quarter. The figures include single family homes and condominiums and co-ops.

Seventeen states had sales increases from the fourth quarter and six states were higher than a year ago.

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Jim Sinclair’s Commentary

Pure creation of money out of thin air.

Fed buys $3.51 billion in Treasurys
By Deborah Levine
May 11, 2009, 11:05 a.m. EST

NEW YORK (Marketwatch) — The Federal Reserve Bank of New York bought $3.51 billion in Treasurys maturing between 2026 and 2039 on Monday. The buyback is part of the central bank’s program to keep borrowing costs lower and spur economic activity. Dealers offered $10.426 billion to be purchased. Ten-year note yields /quotes/comstock/31*!ust10y (UST10Y 3.17, -0.12, -3.50%) , which move inversely to prices, remained lower by 8 basis points to 3.21%. U.S. debt was supported by the Fed purchases and declining stock markets.

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Posted at 11:38 AM (CST) by & filed under Jim's Mailbox.

Jim,

Updated 04/09

"The Formula"

US Fiscal Balance vs. US Dollar: Federal Government Budget As A % of GDP, 12 Month Moving Average:

The Federal budget, or total receipts less total outlays, divided by GDP defines “The Formula.” The Federal budget is normalized or divided by GDP to remove the effects dollar devaluation and smoothed to provide unbiased historical comparisons. For example, -5% Formula reading in 1992 is largely comparable to the -5% Formula reading in 2008.

As stated previous on www.jsmineset.com, an economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. Falling business activity manifests itself is a falling “Formula” values. Think of the Formula, Trade and Current Account Deficits as a speedometer of money flows in/out of the US. A negative speedometer in the "Formula" reading implies outflows. Ultimately, persistent outflows will send interest higher and devalue the dollar. For a detailed review of how the formula works: http://jsmineset.com/index.php/2009/02/08/jims-mailbox-74/

http://www.facebook.com/photo.php?pid=1635050&l=58993fca16&id=557304509

"Leading Formula"

Federal Taxes Withheld (TW) Less Total Government Outlays (TO) As A % of GDP, 12 Month Moving Average.

The leading formula is nothing more than a slight modification of the “Formula.” Tax withheld less outlays, divided by GDP defines the “Leading Formula.” Taxes withheld, a sub sector of total receipts, is more sensitive to marginal changes in business activity. This sensitivity of provides leading characteristic within the Formula calculation.

As stated previously on www.jsmineset.com, an economy is either rising at a rising rate or business activity is falling at an increasing rate. This is economic law 101. Falling business activity manifests itself is a falling “Formula” values. Think of the Formula, Trade and Current Account Deficits as a speedometer of money flows in/out of the US. A negative speedometer in the "Formula" reading implies outflows. Ultimately, persistent outflows will send interest higher and devalue the dollar. For a detailed review of how the formula works: http://jsmineset.com/index.php/2009/02/08/jims-mailbox-74/

http://www.facebook.com/photo.php?pid=1635049&l=60615d7db9&id=557304509

Federal Taxes Withheld 12-Month Moving Average (TW12MA) AND Federal taxes Withheld 12-Month Moving Average Year-over-Year Change (TW12MA12LN)

http://www.facebook.com/photo.php?pid=1635048&l=8cc7a60eb5&id=557304509

CIGA Eric

Dear Jim,

A burning question I hope you may be able to address for all CIGAs is:

Can the dollar hold at .52 or do you see it falling to 10c or even 1c Zimbabwe-style?

Blessings,
Golden Light J.

Dear Golden Light,

The dollar can hold .5200 if the Federal Reserve Gold Certificate Ratio is adopted as I have outlined along with Volcker’s long standing program that has so far been ignored to all but forgotten degrees.

However, what Bankster (who own all of Washington) has done anything beneficial for people in your recollection?

Jim

Hello Jim,

I have just viewed the video from the compendium.

What a delight! It was a privilege to allow us into your home for your presentation.

There is a honorable approach to your teachings… you take the "teach a man to fish" approach.

Please make this an annual event.

Kind regards,

CIGA Chris
Melbourne, Australia

Dear Chris,

Why should we wait a year?

My feeling is if there are changes or acceleration of trends, we will again meet at my place via video.

Protect yourself, please.

Respectfully,
Jim

Posted at 5:43 PM (CST) by & filed under General Editorial.

Sinclair4

My Dear Friends,

Under USDX .8200 the wheels of hyperinflation start turning.

Under USDX .7200 the impact of hyperinflation is visible to anyone who can see.

Under USDX .6200 the Quantitative Easing madness hits the fan

Under USDX .5200 Zimbabwe economics now being practiced become a US dollar condition moniker.

PROTECT YOURSELF PLEASE!

Respectfully yours,
Jim

Posted at 4:25 PM (CST) by & filed under Jim's Mailbox.

Jim,

U.S. Dollar Index and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

A breach of the relative swing high suggests the formation of another 1 formation. This is consistent with controlling the dollar’s descent. Lower dollar equals higher gold prices. Sooner rather than later, the money flows in the gold market will have to reflect the developments in the U.S. dollar Index market.

CIGA Eric

COT F&O USD CS

 

Jim,

The deficit would be 12.9 percent of GDP this year, the biggest since World War II.

US red ink rising even higher, to $1.8T
By ANDREW TAYLOR, Associated Press Writer Andrew Taylor, Associated Press Writer

WASHINGTON – The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates. Budget office figures released Monday would add $89 billion to the 2009 red ink — increasing it to more than four times last year’s all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.

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Just as a comparison, the German government forecasts the deficit at about 3.9 percent of GDP this year (above the European budget deficit ceiling of 3% of GDP).

Bundesbank sees German budget deficit about 6 pct in 2010
11-MAY-2009 13:15

FRANKFURT, May 11 (Reuters) – Germany’s budget deficit will soar to around 6 percent of gross domestic product (GDP) next year and could spark disciplinary action from the European Commission, the Bundesbank said on Monday.

The German central bank said the country’s public debt ratio could rise to about 80 percent in the next two years as a result of lower revenues and higher spending to combat the recession.

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Regards,
CIGA Christopher

Dear Jim,

This screams of your "Formula" again in spades!

Best,

CIGA BT

US red ink rising even higher, to $1.8T
By ANDREW TAYLOR 
Associated Press Writer

WASHINGTON (AP) — The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates.

Budget office figures released Monday would add $89 billion to the 2009 red ink – increasing it to more than four times last year’s all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.

The unprecedented deficit figures flow from the deep recession, the Wall Street bailout and the cost of President Barack Obama’s economic stimulus bill – as well as a seemingly embedded structural imbalance between what the government spends and what it takes in.

More…

Dear BT,

You haven’t seen anything yet. Unemployment is arithmetic but the impact on the deficit is geometric.

God help us all if this new flu is as serious as some say. The deficit could go as high a $7 trillion. Do the math.

Jim

Posted at 3:59 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

You think something is out of whack here?

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Dear CIGAs,

The US T Car is to be introduced as the 2009.7. Note the steering wheel is on the British side but can be simply handed to the passenger and is therefore marketable anywhere.

The rear is held up by spin and hot air. All payments with be hedged by an OTC derivative issued by AIG. Every vehicle will be stress tested before issue. These vehicles will not be permitted in Greenwich, CT for obvious reasons.

 

Jim Sinclair’s Commentary

Add to this that the recent Pakistan surge has displaced half a million Pakistan people. They see American tanks, armored vehicles and helicopters on the move while the Taliban sell the message that at Washington’s behest Muslims are killing Muslims. There has to be a better way as this way has failed repeatedly.

Texas Straight Talk
On Af-Pak: Stop "Helping"

While much of the country’s attention is on other issues, a serious situation is developing in Pakistan that threatens to plunge us into another fruitless and bloody war.  It is very frustrating to see that many who were so vehemently against the wars of the last administration have suddenly lost interest in foreign policy simply because we were promised change.

Those still paying attention know that nothing could be further from the truth.  Very little has changed, except perhaps rhetoric, but what does that matter when the bombing missions are only getting deadlier?  Rather than drawing down violent military interventions into the affairs of other countries, the new administration is escalating the foreign policy of the previous administration.

In Pakistan that entails the continuation and even escalation of military interventionism just across the border with Afghanistan.  The targets are believed to be enclaves of Taliban militants, however, many innocent civilians have been caught in the deadly crossfire, severely damaging our image in the region.  Many ordinary Afghanis and Pakistanis that never had cause to take up arms against us are being provided with motivation as family and friends are killed and maimed by our clumsy and indiscriminate bombs.  Is it worth it for us to be involved in this way at such a high cost of blood, treasure and goodwill?  Is there anything to be gained by this policy?

We are helping the Taliban and other enemies to actually gain numbers and strength, while driving them down from the mountains in the border regions deeper into Pakistan, where they have been making a menace of themselves.  As our bombings follow them, beleaguered villagers have little choice but to leave their homes and join the swelling numbers of refugees or take up arms and join the fight against us.  

Nonetheless, instead of recognizing the cascading unintended consequences of trying to deal with Pakistan’s problems, all signs in Washington point to further escalation.  Both the House and Senate have newly introduced bills to triple foreign aid to Pakistan, from $500 million to $1.5 billion, with every indication that the leadership in Pakistan is taking advantage of the situation with the Taliban to milk more aid from the US taxpayer.  We are broke.  This is money we don’t have, and it is an insult to the American people to run up the national credit card for this type of military adventurism after many Americans thought they were voting for peace.

The bottom line is our involvement in Pakistan’s internal problems is not making us safer.  In fact, we are adding to the numbers of our enemies and increasing the threats to our security here at home.  We are inciting the very terrorism and extremism we are trying to stop.  Every dollar we send, even if it is for humanitarian purposes, frees up resources to make war and potentially prop up unpopular leaders.  The factions and politics of the Middle East are irrational and dangerous.  We play with fire when we meddle in their affairs, and we isolate ourselves diplomatically by making more enemies than friends.  We need to bring our troops home, end all foreign aid, and maintain a neutral stance on the world stage.  It, in fact, is the only foreign policy we can afford right now, and it would gain us more friends and trading partners than our bombs ever could.  Besides, that’s what the Constitution permits and our founders strongly advised.

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Jim Sinclair’s Commentary

Remember the Chairman making a great deal about the Inspector General’s review of the Fed when asked if the Fed’s

actions were audited by any significant oversight body?

Please take time to see the depth and breadth of this significant expert body oversight who clearly knows all there is know about every transaction entered into at the Fed.

This should shut you up about the lack of transparency and audits.

Jim Sinclair’s Commentary

Around and around it constantly goes and where it stops, nobody knows.

Official: U.S. To Replace Top General In Afghanistan.

Pentagon replaced its top general in Afghanistan Monday as President Obama tries to turn around a stalemated war.

Defense Secretary Robert Gates said he asked for the resignation of Gen. David McKiernan. Gates said new leadership is needed as the Obama administration launches its strategy in the seven-year-old campaign.

The change is aimed at "getting fresh thinking, fresh eyes on the problem," Gates told a Pentagon news conference.

The move comes as more than 21,000 additional U.S. forces begin to arrive in Afghanistan, dispatched by Obama to confront the Taliban more forcefully this spring and summer.

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Jim Sinclair’s Commentary

Just to further strain whatever is left of our mental powers, Bloomberg just announced a really good thing. The money bunny was smiling from ear to ear.

Banks to help Zombie Borrowers

Now we have the Dance of the Zombies – Zombie banks to lend to Zombie borrowers.

Jim Sinclair’s Commentary

Pakistan to the USA: send $1.5 billion, it is chump change anyway. Stop asking questions!

Pakistan Won’t Disclose Location of Nuclear Weapons To US
May 10, 2009

Pakistani President Asif Ali Zardari said his country isn’t adding to its nuclear arsenal and doesn’t have to disclose the location of its weapons to the U.S.

Pakistan is “not adding to our stockpile as such,” Zardari said today on NBC’s “Meet the Press” program. “Why do we need more?”

Asked whether Pakistan would tell U.S. intelligence officials where all its nuclear weapons are located, to allow for a joint strategy to keep them secure, Zardari said Pakistan is a sovereign country.

“Why don’t you do the same with other countries yourself?” Zardari said in the interview taped May 7. “I think this is a sovereignty issue, and we have a right to our own sovereignty.”

President Barack Obama said last month that, while Pakistan’s civilian government is “very fragile,” he is confident that the country’s nuclear arsenal is secure. He also said that Pakistan’s military is taking the threat of internal enemies seriously and recognizes the hazard of nuclear weapons “falling into the wrong hands.”

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Jim Sinclair’s Commentary

Lahore? Now let me think. No, Lahore is not held by the Taliban.

Shaky Pakistan Is Seen as Target of Qaeda Plots
By MARK MAZZETTI and ERIC SCHMITT
Published: May 10, 2009

WASHINGTON — As Taliban militants push deeper into Pakistan’s settled areas, foreign operatives of Al Qaeda who had focused on plotting attacks against the West are seizing on the turmoil to sow chaos in Pakistan and strengthen the hand of the militant Islamist groups there, according to American and Pakistani intelligence officials.

One indication came April 19, when a truck parked inside a Qaeda compound in South Waziristan, in Pakistan’s tribal areas, erupted in a fireball when it was struck by a C.I.A.missile. American intelligence officials say that the truck had been loaded with high explosives, apparently to be used as a bomb, and that while its ultimate target remains unclear, the bomb would have been more devastating than the suicide bombing that killed more than 50 people at the Marriott Hotel in Islamabad in September.

Al Qaeda’s leaders — a predominantly Arab group of Egyptians, Saudis and Yemenis, as well as other nationalities like Uzbeks — for years have nurtured ties to Pakistani militant groups like the Taliban operating in the mountains of Pakistan. The foreign operatives have historically set their sights on targets loftier than those selected by the local militant groups, aiming for spectacular attacks against the West, but they may see new opportunity in the recent violence.

Intelligence officials say the Taliban advances in Swat and Buner, which are closer to Islamabad than to the tribal areas, have already helped Al Qaeda in its recruiting efforts. The officials say the group’s recruiting campaign is currently aimed at young fighters across the Middle East, North Africa and Central Asia who are less inclined to plan and carry out far-reaching global attacks and who have focused their energies on more immediate targets.

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Jim Sinclair’s Commentary

Unemployment’s real figures, considering the number of people who have used all the unemployment benefits, it touching 16%. Call it the next challenge only because the focus is not there now. It is another disaster already in progress.

Next challenge for banks: Credit card losses
Number usually tracks unemployment, but this time it may be worse
By Eric Dash and Andrew Martin
updated 4:40 p.m. MT, Sun., May 10, 2009

It used to be easy to guess how many Americans would have problems paying their credit card bills. Banks just looked at unemployment: Fewer jobs meant more trouble ahead.

The unemployment rate has long mirrored banks’ loss rates on card balances. But Eddie Ward, 32 and jobless, may be one more reason that rule of thumb no longer holds. For many lenders, losses are now outpacing layoffs.

Mr. Ward lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked if he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”

In the meantime, he said, “I’m just doing what I can.”

Even if Mr. Ward can pay off his debts, experts predict that tens of thousands of Americans will not be able to, leaving a gaping hole at ailing banks still trying to recover from the housing bust.

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