Posted at 9:43 PM (CST) by & filed under In The News.

Men acquire a particular quality by constantly acting a particular way… you become just by performing just actions, temperate by performing temperate actions, brave by performing brave actions.
–Aristotle

 

Dear Friends,

Of all the charts concerning the Weimar Experience, one needs your clear understanding as it may seem to be a great contradiction. That chart is of the Weimar Equity Market during a period that could be similar in many ways to that which is coming in the future of the US dollar.

Should the uptick rule be reinstated internationally and forcefully applied in Canada (the front door of naked short sellers to the world) as the US dollar meets its fundamental destiny, then equities could put on and out do the 1930 rally before a total collapse (as occurred in the Weimar Equity Market experience).

Respectfully yours,
Jim

Click chart for more…

weimar_stocks

 

Jim Sinclair’s Commentary

The US dollar and US dollar proxies all top in the form of up-trending neckline head and shoulders.

$USD - SharpCharts from StockCharts_Page_1

 

Jim Sinclair’s Commentary

All that I have warned you about in the timeframe of reference (2000 to 2011) will come to the forefront. Here is the reason that no politician on this amoral planet has the stomach for.

The selection between many Kent State executions or hyperinflation will end up with hyperinflation. That is fact.

WTO chief warns of looming political unrest

BERLIN (AFP) – The global economic crisis could trigger political unrest equal to that seen during the 1930s, the head of the World Trade Organization (WTO) said in a German newspaper interview Saturday.

"The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time," Pascal Lamy told the Die Welt newspaper.

Questioned about the risks of political instability, Lamy — who wraps up his four-year term as WTO director-general in September — responded that that was "the main danger".

"This crisis weighs heavily on politics and puts peace in danger," he said.

"Some democracies are old and sufficiently stable to overcome such problems, (but) others are going to be confronted by unrest and inter-religious and inter-ethnic conflicts."

He went on to warn against protectionism, saying it would be "wrongly easy" for nations to throw up trade barriers in response to the economic and financial downturn.

More…

 

Jim Sinclair’s Commentary

Damned if you do and double damned if you do not!

Stimulus will lead to ‘disaster,’ Republican warns

 

WASHINGTON (CNN) — Leading Republicans warned Sunday that the Obama administration’s $800 billion-plus economic stimulus effort will lead to what one called a "financial disaster."

"Everybody on the street in America understands that," said Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. "This is not the right road to go. We’ll pay dearly."

Shelby, of Alabama, told CNN’s "State of the Union" that the package and efforts to shore up the struggling banking system will put the United States on "a road to financial disaster."

But Lawrence Summers, the head of the administration’s National Economic Council, said Republicans have lost their credibility on the issue.

"Those who presided over the last eight years — the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that’s collapsing more rapidly than at any time in the last 50 years — don’t seem to me in a strong position to lecture about the lessons of history," Summers told ABC’s "This Week."

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Jim Sinclair’s Commentary

The future of the dollar is poor to none.

Recent dollar strength is no different from any of the manias we have experienced in the past eight years. 30 year bonds at 147 is the most recent moment of market madness.

The Fed balance sheet qualifies it as the USA’s own "Bad Bank." That condemns the US dollar to monetary hell once the foolishness of the dollar as a "Safe Haven" is spent.

Dan Norcini’s Commentary

The following article goes to emphasize what Jim has stated repeatedly since the bailouts began in earnest, namely that the Fed has become the largest hedge fund of them all.

Also, when that former Fed governor let slip a while back in that video clip that played widely on YouTube that the Fed could always upwardly revalue the official gold holdings from its current value down near $42. Only the gold community caught the significance of that Freudian “slip” of the tongue.

They have no way out of this man-made disaster except to upwardly revalue gold which is simply another way of saying devalue the dollar. Unless that occurs, the monetary system in its current form will not survive and a Bretton Woods II will be needed. I see no way to ever make good on the sheer size of indebtedness that has been created without a currency devaluation – if one could ever call such an occurrence, “making good”. Good for the issuer of the debt but certainly not for the owner.

The Insolvency of the Fed
Daily Article by Philipp Bagus and Markus H. Schiml | Posted on 2/5/2009 12:00:00 AM

Since August 15, 1971 the US dollar has been an irredeemable paper currency. Every irredeemable paper currency in history has failed. Yet, the experiment of the US dollar and the rest of the fiat paper world continues.

During the current crisis, however, financial systems all over the world are increasingly struggling, and the end of the experiment seems closer. In fact, the Federal Reserve System has used up much of its "ammunition" for monetary interventions in an attempt to keep the experiment going, lowering its target interest rate almost to zero. Other central banks are also quickly approaching the "zero limit" for interest rates.

Figure1

During these inflationary decades, economic structures have developed that can only survive with falling interest rates. As the world approaches a zero interest rate, it appears that finally there might be a full adaptation of the structure of production to the demands of consumers, and the experiment might come to an end.

Yet, has the Fed really "run out of ammunition"? First of all: what is the Fed shooting at? It is trying to artificially stimulate the economy with its monetary policy, thereby it is also unwittingly shooting at the value of the currency. Through its monetary policy, the Fed is trying to bail out an insolvent and illiquid banking system to maintain an unsustainable structure of production. As long as the currency is not totally destroyed, the Fed will never run out of ammunition. In order to assess the ammunition left, one should have a look at the balance sheet of the Federal Reserve — especially at the assets the Fed can still obtain. The Fed’s balance sheet also gives insights on the condition or quality of the dollar.

More…

 

Jim Sinclair’s Commentary

This was the great US Balance of Trade "plus" tool that now is heading in the deficit way.

Boeing jet orders: Minus 13
More ’09 cancellations may cut production
By JAMES WALLACE
P-I AEROSPACE REPORTER

With the cancellation of another 16 orders for its 787 Dreamliner, which is two years late, The Boeing Co. has started out 2009 losing more orders than it has won.

Number of canceled orders in 2009

Boeing has won 18 orders and lost 31 through cancellations. A Russian airline backed away from its order for 15 Dreamliners a week ago. The latest 787 order cancellation came from a Dubai leasing company.

Underscoring just how difficult the current industry downturn will be, Boeing Chief Financial Officer James Bell told an industry conference Thursday that Boeing might have to lower production rates in 2010. Bell did not say so, but if fewer planes are built the company could trim or reassign some of the people who assemble its jets in Renton and in Everett.

Boeing recently announced it will reduce its work force by about 10,000 jobs this year — about half of those jobs in the Puget Sound area. The cuts are a result of the global recession and economic crisis. Airlines are cutting capacity as traffic falls. But so far, Boeing has said that most of the job losses will not be related to production because it wants to keep building jets at current rates, given a record backlog of planes.

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Jim Sinclair’s Commentary

A safe haven? Only a moron attaches that to the US dollar.

U.S. Debt Default, Dollar Collapse Altogether Likely
February 03, 2009

The prospect of the United States defaulting on its debt is not just likely. It’s inevitable, and imminent.

The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end – the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index.

Is 2009 the year that the United States formally defaults? And with that, will the dollar collapse be rolled back ten for one or more?

There are a lot of reasons to support that theory. To Wall Street economists, such an event is heresy and therefore unthinkable. Yet Wall Street is the very La-la-land that bred the idea of a perpetually indebted nation in the first place.

Number one among the indicators favoring this scenario is what is happening in the U.S. Treasuries auction market.

Last Thursday, an $30 billion auction in five-year notes failed to stir the interest of traditional primary dealers. The auction itself was saved by an anonymous “indirect” bid.

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Jim Sinclair’s Commentary

Are you looking for the money you have lost in your IRA’s at the hand of the predatory beings of the hedgie’s world? I can tell you where a lot of it has been spent.

Ex-Madam says clients paid with corporate credit cards
07 February 2009 00:54 AM

NEW YORK (Reuters) – A former madam of a high-priced New York prostitution ring alleges in a U.S. television interview to be aired on Friday that investment bankers, Wall Street lawyers, CEOs and media executives often paid for her services using corporate credit cards.

The former madam, Kristin Davis, said her clients included investment bankers from JPMorgan, Goldman Sachs, Merrill Lynch, Lehman Brothers and Deutsche Bank, according to an article about the interview posted on ABCNews.com.

The banks either declined comment or did not immediately respond to a request for comment from Reuters.

ABC news said that Davis’ client list also included a vice president of a major media company, the part owner of a Major League Baseball team, the CEO of one of the country’s largest private equity firms and a major New York real estate developer.

"Some of these guys I was invoicing on corporate credit cards," Davis told ABC’s "20/20" news magazine, according to the station’s website.

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Jim Sinclair’s Commentary

1. Israel makes a major error in judgement.
2. Pakistan goes nuclear into the wrong hands.
3. Turkey is a victim.
4. January 14th 2011

Obama’s biggest foreign policy challenge? It’s Pakistan
By JONATHAN S. LANDAY AND SAEED SHAH
McClatchy Newspapers

A nearly completed U.S. military study is expected to say that nuclear-armed Pakistan, not Iraq, Afghanistan or Iran, is the most urgent foreign policy challenge facing President Barack Obama.

Pakistan – convulsed by a growing al-Qaida-backed insurgency, hamstrung by a ruinous economy and run by an unpopular government that’s paralyzed by infighting and indecision – is critical to U.S. efforts to stabilize Afghanistan, thwart the spread of nuclear weapons and prevent tensions with neighboring India from escalating into a nuclear showdown.

The U.S. Central Command review is assessing the situation in the Middle East and South Asia as the Obama administration plans to draw down U.S. forces in Iraq and double the 30,000-strong American military presence in Afghanistan, several people involved in the study told McClatchy Newspapers. They spoke on condition of anonymity because the study is still underway and they weren’t authorized to discuss it publicly.

The assessment, they said, is expected to recommend major changes in the U.S. approach to the volatile region, including major increases in U.S. aid to Pakistan in areas such as public education, health care and good governance, in a bid to stem the poverty and illiteracy that help fuel the country’s Islamic insurgency.

Stepped up non-military aid also could ease popular anger at the government and its chief ally, the United States, which many Pakistanis accuse of stoking the insurgency by relying primarily on military offensives and missile strikes that have claimed numerous civilian lives, the officials said.

More…

Pakistan heads toward crisis as coalition flounders
U.S. looks on with alarm as key Western ally’s inability to deal with jihadist menace threatens to destabilize region
SAEED SHAH
Special to The Globe and Mail
February 7, 2009

ISLAMABAD — Almost a year after elections were held in Pakistan, which restored democracy after more than eight years of military rule, growing Islamist violence, a crisis of governance and an economy in a tailspin threatens this key Western ally with collapse.

The new U.S. administration of President Barack Obama has made Pakistan one of its foreign policy priorities. Aides say that the U.S. President is "scared" by what he sees in Pakistan, a country that is crucial to meeting his goals of stabilizing Afghanistan and routing al-Qaeda. Next week, Richard Holbrooke, the special envoy just appointed to handle Afghanistan and Pakistan, arrives in Islamabad on a fact-finding mission, which is expected to be followed by swift action by Washington.

Critics say the Pakistani government is gripped with paralysis, as patronage, not policy, occupies Islamabad under President Asif Zardari. Some see echoes of the last period of civilian rule in Pakistan, between 1988 and 1999, when a series of floundering governments were repeatedly toppled by the army amid allegations of massive corruption and misrule.

Already the military and civilians are privately blaming each other for inaction as jihadists push ever deeper into the country from the northwest, with a de facto extremist mini-state now existing in Swat, a valley just 160 kilometres from the capital, Islamabad. Along the border with Afghanistan, Taliban and al-Qaeda enjoy a safe haven, undermining the international coalition’s fight against insurgents in Afghanistan.

More…

What kind of ally is Pakistan?
Saturday, February 7, 2009

It could be an episode of "24." A rogue bombmaker peddles nuclear weapon technology to Iran, North Korea and Libya. He’s caught but then set free in the seething, violent politics of his home country.

This isn’t a Hollywood script. It’s the real-life story of A.Q. Khan, the father of Pakistan’s nuclear program. On Friday he was freed from house arrest in the country’s capital in a move that drew sharp criticism from Washington.

Pakistani leaders served up the awkward news as a hands-off legal matter and the end of a lengthy court case that began when Khan was arrested in 2004. But it carries another meaning – a very troubling one – for Pakistan’s neighbors and allies.

Quite simply, the nation isn’t a reliable force for peace or stability in a central front of the terrorism fight. Khan was accorded the status of a populist hero, a scientist who gave his country a mighty weapon to hold far-bigger India at bay. When he set up a black market network to sell nuclear supplies to three of the worst countries imaginable, he was given wrist-slap treatment and protected from international investigators.

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Posted at 9:34 PM (CST) by & filed under Jim's Mailbox.

Jim’s Formula:
September 1, 2006

  1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.
  2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella – Goldilocks situations.
  3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.
  4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.
  5. Lower profits leads to lower Federal Tax revenues.
  6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.
  7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.
  8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).
  9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.
  10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.
  11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.
  12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.

I heard all this “slow business” as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.

Jim,

You might have already seen this but wanted to sure you had.  It only reveals what your formula has told us was coming.

Report to the Secretary of the Treasury
from the Treasury Borrowing Advisory Committee
of the Securities Industry and Financial Markets Association

February 4, 2009

Dear Mr. Secretary:

Since the Committee last convened in early November, the contraction in economic activity has deepened and broadened, while financial markets have remained under duress. The unprecedented volatility present in capital markets when the Committee last met has diminished somewhat but conditions still are exceptionally challenging. Policy efforts have begun to unlock credit for select high-quality borrowers. But the magnitude of wealth destruction, the still heightened cost of economy-wide capital and the impaired system of financial intermediation continue to cast a dark cloud over the economic outlook.

Monetary and fiscal policy action now being implemented will help to prevent an even more serious downturn than otherwise would be the case. Policymakers’ efforts to restore the flow of credit to households and businesses, backstop critical financial intermediaries through capital injections and loan guarantees, and stimulate economic activity via lower interest rates, tax cuts and government spending are positives. Nonetheless, the necessary deleveraging of both the financial and household sector is considerable and has further to run.

More…

Posted at 12:19 AM (CST) by & filed under Jim's Mailbox.

Jim,

This is what Merrill sent us today.

Respectfully yours,
Monty Guild
www.GuildInvestment.com

David Rosenberg over the ML Squawk box this AM

Why we think gold and commodities too are a no brainer: The protectionist trend is fully intact — see the front page of the WSJ ("Nations Rush To Establish New Barriers To Trade"): The WTO is gathering on Monday to discuss stemming the "wave of barriers to world commerce".  Russia has raised trade barriers to such an extent that EU officials are headed to Moscow to meet the country’s trade officials. Egypt just raised duties on sugar.  The USA is planning retaliatory action against Italian water and French cheese — and levying new tariffs on Chinese-made goods too. This may not exactly be Smoot-Hawley, but this is starting to look more like the 1930s than many are willing to admit. Also have a look at "Free-Traders Conspicuously Quiet on Buy American" on page 2 of the FT.

Dear Jim,

What do you think of the equity market here?

Regards,
CIGA Green Hornet

Dear Green Hornet,

Short and sweet.

If the uptick rule is reinstated as Cox (ex SEC caretaker) advised going out the door of the SEC offices then a 1930 rally has a 70% chance of occurring. I think it would.

If the lobby of the hedgies is rich enough then the uptick rule will not be reinstated and the equity market rally will be short and lacking of any noteworthy character.

It is business as usual as the Big Money game of Hedgie Lobbyists own versions of pork.

The Hedgies are the short side of all markets.

See you in Toronto.

All the best,
Jim

Posted at 5:43 PM (CST) by & filed under In The News.

Dear Friends,

1. The position of Volcker as Chairman of the Economic Advisory Board is a window dressing presently to placate conservatives.
2. Chairman Volcker is there, but on his own agenda, no one else’s.
3. Chairman Volcker, assuming he is blessed with eight more years of life, will once again perform as Master of the Financial Universe, saving whatever then is left of the USD.
4. All you need to do is review Chairman Volcker’s previous and present words to understand that agenda.
5. Yesterday, Chairman Volcker said it would cost trillions more, not billions, to paste together the tattered economy.
6. Chairman Volcker historically has defined the economic condition we are in as the Mother of Financial Crises. MOTHER OF ALL.
7. Chairman Volcker historically has said that the US dollar will decline as long as no policies are put in place with the proven capacity to change deficits towards surpluses.
8. Chairman Volcker had the total backing of the then sitting Administration when he bankrupted the USSR in the early 1980s.
9. Chairman Volcker will act when conditions get so terrible that the sitting Administration applies to him for his help. There will be a price for that help.
10. The Federal Reserve Gold Certificate Ratio, modernized and revitalized, will be adopted as I have outlined to you multiple times.
11. The Chairman will require that policies be put in place that have historical precedent to cause deficits to move towards surpluses, untenable now.
12. That mark to the low is a pummelled dollar below .5100 USDX.
13. This will mark the time for long term investment in companies leading the technology and biomedical fields of that time.
14. As a result of the "FRGCR" the price of gold will go up and remain up. This will effectively defeat 99.9% of the present gold writer’s outlooks for the metal.
15. I believe the most successful owners of gold will be the Carlyle corporation.
16. I believe the consolidator of the gold industry, assuming they rise to Russian and Chinese competition, will be Barrick. This has also been outlined to you multiple times.

Respectfully yours,
Jim

Obama names outside economic advisory panel

Published: Friday February 6, 2009

President Barack Obama on Friday charged a new Economic Recovery Advisory Board to provide him with independent advice on pulling the United States out of recession.

The president signed an executive order formally creating the board which will hold regular briefings for Obama and Vice President Joe Biden and will be under the chairmanship of former Federal Reserve chief Paul Volcker.

The board will be modelled on the Foreign Intelligence Advisory Board that offers the president an independent viewpoint on intelligence issues, the White House said.

Volcker, 81, played a prominent role during Obama’s election campaign, providing him with economic advice and gravitas as the US meltdown developed.

The announcement came on a day when new government data showed unemployment surging to 7.6 percent — the highest since 1992, as 598,000 jobs were cut.

Among other business figures on the new board were Obama supporter Penny Pritzker, chairman of the Pritzker Realty Group and former Obama campaign finance chair, Charles Phillips, President of the Oracle Corporation and Laura D’Andrea Tyson, a former Clinton administration economic official.

More…

 

Jim Sinclair’s Commentary

Every bank has its own Patsy.

You know those trillion dollar deals don’t really stand out too well. Quadrillion dollar deals must be totally invisible.

Ever heard the words Compliance, Ethics and Oversight?

More major BS in a spin it all world.

Deutsche Bank Fallen Trader Left Behind $1.8 Billion Hole
By SCOTT PATTERSON and SERENA NG

The fall of Boaz Weinstein, once one of Wall Street’s hottest traders, speaks volumes about why financial firms still are reeling from the shattered global markets.

As a chess master, poker and blackjack devotee and top trader at Deutsche Bank AG, Mr. Weinstein made big bets using complex financial instruments, generating large returns for the bank and about $40 million in annual pay for himself. But in 2008 the group he ran saddled the bank with $1.8 billion in losses, erasing more than two years of trading gains.

On Thursday, the German banking giant reported a 2008 loss of $5 billion (€3.9 billion), its first one-year loss in over five decades and a reminder that financial firms are not out of the woods. In an earnings conference call, Chairman Josef Ackermann described the market environment as a "series of earthquakes with constantly changing epicenters."

The losses are the latest reminder of the challenges faced in the new financial order. Wall Street firms long relied for much of their profit on massive risk-taking by aggressive traders deploying the firms’ own money; with that game over, firms are struggling to find fresh sources of revenue.

But first they must stabilize their institutions after the holes dug by former Masters of the Universe. Last month, Deutsche Bank shut down Mr. Weinstein’s operation and wound down many of his positions. He left the bank this week, with plans to start a hedge fund.

More…

 

Jim Sinclair’s Commentary

Today in Pakistan.

India: Official Accuses Pakistan in Mumbai Attacks
By REUTERS
Published: February 6, 2009

India has for the first time directly accused Pakistan’s Inter-Services Intelligence spy agency of links to the planners of the terrorist attacks in Mumbai in November. “The perpetrators planned, trained and launched their attacks from Pakistan, and the organizers were and remain clients and creations of the ISI,” Shivshankar Menon, India’s foreign minister, said in a speech in Paris. Mr. Menon accused Pakistan of “prevarication” in investigating the attacks, which killed more than 160 people. The speech, delivered Wednesday, was released to the news media on Thursday. Pakistan said Indian officials should avoid making such statements at a time when Islamabad was in the process of investigating the matter.

More… 

Pakistan nuclear scientist ‘free’

A court in Pakistan has freed disgraced nuclear scientist Abdul Qadeer Khan from house arrest.

Dr Khan, who has been under tight restrictions since 2004, can now leave home and receive visitors.

Dr Khan welcomed the ruling and said he was not bothered what the international community thought of his release.

Dr Khan admitted transferring nuclear secrets to other countries in 2004 but was later pardoned by former Pakistani President Pervez Musharraf.

The US has repeatedly said it wants to question Dr Khan but Pakistan has always refused access.

More…

Reflecting upon Pakistan and Its Nuclear Weapons
February 6, 2009 – 12:00am
By Luis de Lencquesaing

The centrality of Pakistan was first revealed to me two summers ago. I was visiting Cornell friends in Islamabad and Lahore. During a dinner conversation I had with the Turkish ambassador — a diplomat who impressed me by his particularly refined vision of the global dynamics — the topic of Pakistan’s role in the world came up. The ambassador emphasized the strategic role of Pakistan, which sits at the juncture of the broader Middle-East and South Asia.

Is Pakistan not parted in two by the Indus River, on the banks of which Alexander the Great died, and which academics often define as the border between these two universes? This duality is not only geographic, but also cultural. Whether walking down the streets of Lahore, or crossing through villages in the Kashmiri mountains, I was struck by the contrast between the joyful women in their blue or pink Punjabi Shalwar Kamiz with a veil negligently passed over their heads, and the women in black Burkas, with only their mysterious eyes visible. The relaxed Islam of South Asia coexists with Saudi Wahhabism. Pakistan belongs to both worlds. Although Vice President Biden probably was not thinking about the Pakistani women when he visited the country a few weeks ago — I guess you have to be French and 20 for that — he certainly was signaling that in the crucial regions of the Middle East and South Asia, Pakistan is the key actor. For that reason alone, it is the center of the world.

Dryden Road. Jan. 28, 2009. 7:30 a.m. I peek out the window from under my covers, see a snow storm, and wonder why I am not studying in California.

I get to the Statler for a working breakfast organized by the Cornell International Affairs Review on nuclear weapons in Pakistan. Gaurav Kampani, a graduate student in the government department who works on the politics of nuclear proliferation gave us a pessimistic presentation. In the midst of such a “wave of hope,” this talk reminded us that President Obama’s magic may not be enough to solve all the problems of the world between now and Slope Day.

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Jim Sinclair’s Commentary

Hedge funds at the dock.

Market Rap – Bernard Madoff, the Mafia, and the Friends of Michael …
In 2005, Patrick Byrne, the CEO of Overstock.com (OSTK) and future Deep Capture investigative reporter, began a public crusade against illegal naked short selling (hedge funds and brokers creating phantom stock to manipulate stock … It is a common misperception that Boesky’s testimony led to the 98-count indictment of Michael Milken. Considering the scope of business the two criminals did together, Boesky actually provided very little information to the government. …
Recent Articles – http://www.marketrap.com/article/selected_articles

Judge Orders Accused NY Lawyer Freed on Bail – Funds and ETFs * US…
A U.S. grand jury indicted Dreier on Jan. 30, accusing him of securities fraud, conspiracy and wire fraud for lying to hedge funds and investment funds that he was selling notes on behalf of a New York developer and a pension fund in …
CNBC Top News and Analysis – http://www.cnbc.com/

New York investment fraud lawyer Marc Dreier bailed out! | Press …
By heather 
As reported by Reuters, Dreier, a high profile New York attorney for 30 years, wasindicted by a US federal grand jury for securities fraud, conspiracy, wire fraud, misrepresenting hedge funds and investment funds in New York and …
JusticeNewsFlash.com | Legal… – http://www.justicenewsflash.com/

[Updates] Riveting Testimony by a Great American, Harry Markopolos …
By Larry Doyle 
When Mr. Markopolos remarks that FINRA is in bed with the industry, is he referencing that they are invested in hedge funds, fund of funds, and private equity? Our new SEC chair, former FINRA chair Mary Schapiro, ….. Many of these people shouldn’t be appointed, they should be indicted. I guess honest and decent people like Harry Markopoulos don’t have a place in today’s governments. Obama promised change, but he has filled his administration with corrupt and incompetent …
NO QUARTER – http://www.noquarterusa.net/blog/

The Divagator: Considerations of Huntington
By The Divagator 
2008 Was Lean Year for New Hedge Funds – Raising money to start any new venture was tough last year, but especially so if you were a hedge fund. Assets for new hedge-fund launches declined 35 perc… 23 minutes ago. Volokh Conspiracy …Germans Probe Report Of Nazi Doctor’s Death – German TV network says concentration-camp doctor Aribert Heim died in Cairo in 1992. He was indicted in Germany in absentia in 1979 on hundreds of counts o… 2 hours ago …
The Divagator – http://divagator.blogspot.com/

 

Jim Sinclair’s Commentary

Pension funds are broke and those anticipating retirement are going to get a royal screwing. This is another problem akin the 1950’s Japanese SciFi wherein the unstoppable green blob ate the earth. Recognition that practically all major retirement fund are broke is the one that fires social unrest and hyper inflation. The green blob is the present economic rescue plan and the seven to follow.

Ford May Add $4 Billion to Pensions, Spurring Aid Bid (Update2)
By Keith Naughton

Feb. 6 (Bloomberg) — Ford Motor Co. may have to contribute $4 billion to its pension plan after a 2008 shortfall, a cash drain that risks dragging the second-largest U.S. automaker closer to a federal bailout.

The collapsing stock market left the fund with a $4.1 billion deficit for its projected obligations, after 2007’s $3 billion surplus, Ford said in its fourth-quarter financial results. That may force an infusion of money starting next year, according to the viability plan filed with Congress in December.

Such spending would add to the strain on the only Detroit automaker not relying on government aid. With U.S. auto sales at their lowest since the early 1980s, Ford said Jan. 29 it lost a record $14.6 billion last year and tapped its entire $10.1 billion credit line while the money was still available.

“The pension is another demand on cash at a time when Ford cannot really afford it,” said Pete Hastings, a fixed-income analyst with Morgan Keegan Inc. in Memphis, Tennessee.

Ford is working to pare costs through steps such as closing plants and is trying to raise money by selling its Volvo unit. The Dearborn, Michigan-based automaker is in early talks with China’s Geely Automobile Holdings Ltd., people familiar with the matter have said.

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Jim Sinclair’s Commentary

8th in 2009 and counting.

California’s Alliance Bank marks eighth failure of the year
By John Letzing
Last update: 7:42 p.m. EST Feb. 6, 2009

SAN FRANCISCO (MarketWatch) — Culver City, Calif.-based Alliance Bank was closed by regulators Friday, marking the eighth bank failure of the year amid the ongoing credit crisis, the Federal Deposit Insurance Corporation said. San Diego-based California Bank & Trust has agreed to assume the failed bank’s deposits, the FDIC said. Alliance Bank had $1.14 billion in assets and $951 million in total deposits as of Dec. 31, the FDIC said.

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Jim Sinclair’s Commentary

This is not capable of correcting the economic malaise as it does not even address the real problem.

It is quite capable of initiating the inflationary potential of monetary stimulation without any historical precedent.

The adventure begins now, which will culminate in an inflation of such dimension that it also lacks historical precedent.

Reinstate the uptick rule guys if you want a hand from an equity rally of some duration.

Senators Reach Accord on Stimulus Plan as Jobs Vanish
By CARL HULSE and DAVID M. HERSZENHORN

Published: February 6, 2009

WASHINGTON — Spurred by a dismal unemployment report for January and prodded by President Obama, senators reached an accord on Friday evening on an economic stimulus program of some $780 billion.

Democrats succeeded, after a long day of private negotiations and intense public debate, in winning the support of enough Republicans to move the package toward a final Senate vote, where Democrats are confident of passage, given the support announced by several Republicans. Exact outlines of the accord, which is somewhat smaller than the amount originally sought by President Obama, were not immediately available, but the senators agreed to cut some spending and strip out some business tax cuts to gain enough Republican support.

Senator Harry Reid of Nevada, the Democratic majority leader, hailed the agreement. “This is a very critical juncture for our great country,” he said on the Senate floor.

The timing of the Senate vote was not clear, but Mr. Reid signaled that action could take place over the weekend. Once it the package is approved, differences between the Senate legislation and a considerably different version passed recently by the House will have to be reconciled. President Obama has said he hopes all that can be accomplished in time for him to sign the measure within 10 days.

Three centrist Republicans, Arlen Specter of Pennsylvania and Olympia J. Snowe and Susan Collins, both of Maine, were among the senators wooed by Democrats, whose efforts were bolstered by Rahm Emanuel, the president’s chief of staff, who is a former Congressman from Illinois.

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Posted at 3:19 PM (CST) by & filed under General Editorial.

Dear CIGAs,

The following is making the rounds on the internet. Enjoy.

Sometime this year, taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format:

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers..

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. No, they are borrowing it from China.  Your children are expected to repay the Chinese.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn’t that stimulating the economy of China?
A. Shut up."

Posted at 11:05 PM (CST) by & filed under In The News.

Dear Friends,

A society that promotes lies (make believe computer based asset valuation by fiduciaries) as truth (real value) for the profit of the few is NOT a society, but rather a group of animals destined for their own immediate destruction.

Most unfortunately these Wall Street Fat Cat few destroy the many common men in their manic pursuit of personal wealth and egocentric power.

A move like this certainly puts the second coming of our new leadership in question. It screams that the new administration is simply business as usual – fraud.

Millions of attendees at the inauguration prayed otherwise. What a sham if this rumor has any basis.

What a slap in the face for those millions attending the recent inauguration.

Accounting rule change hopes spur Wall St. rally (Reuters)

NEW YORK (Reuters) – Stocks rallied on Thursday on investor hopes that the government’s plan to shore up the financial system will include a change in accounting rules that would stem bank write-downs and spur lending.

Bank stocks reversed losses in late morning to lift the Dow off its lowest level since the bear market low of November 21.

Bank of America (BAC.N) finished up 3 percent, while JPMorgan (JPM.N) rose 2.1 percent and the S&P financial index (.GSPF) rose 1.4 percent. A solid January sales report from Wal-Mart (WMT.N), coupled with better-than-expected reports from a few other retailers added to the positive tone.

"Anything that helps the banks is helpful for the economy if they can start lending," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in Lisle, Illinois. "Wal-Mart news was good, so that also helped."

The Dow Jones industrial average (.DJI) rose 106.41 points, or 1.34 percent, to 8,063.07. The Standard & Poor’s 500 Index (.SPX) gained 13.62 points, or 1.64 percent, to 845.85. The Nasdaq Composite Index (.IXIC) climbed 31.19 points, or 2.06 percent, to 1,546.24.

The S&P 500 is now off 6.4 percent since the start of 2009, but has risen 12.4 percent since the bear market low hit in November.

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Jim Sinclair’s Commentary

Oh my god, where is the rage?

Bush SEC Holdovers Cite Executive Privilege, Refuse to Answer Questions at Madoff Hearing
By Susie Madrak Thursday Feb 05, 2009 3:01pm

David Sirota on yesterday’s hearing about Bernie Madoff:

At a contentious Financial Services Committee hearing today about the failure of the Securities and Exchange Commission to prevent the Bernie Madoff scandal, the SEC’s General Counsel cited executive privilege as reason that he and the SEC’s enforcement branch were refusing to answer congressional inquiries. You can watch the video here – the executive privilege issue comes at about 5 minutes and 15 seconds into the clip.

As you’ll see, SEC officials refuse to answer the committee’s basic questions about the Madoff scandal, and the agency’s acting general counsel, Andy Vollmer (a Bush holdover and maxed-out donor to John McCain’s presidential campaign) explicitly cites executive privilege as his legal rationale for refusing to provide basic information to federal lawmakers.

Congress has a constitutional obligation to engage in basic fact finding, both in order to legislate reforms at the SEC and to publicly expose how our economy was destroyed by sharks like Madoff. Now, Bush holdovers at the SEC are using executive powers – powers that are now President Obama’s – to prevent Democratic lawmakers from doing their job.

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Jim Sinclair’s Commentary

Today in Pakistan. Another challenge for President Obama.

Seven dead in Pakistan blast: hospital

MULTAN, Pakistan (AFP) — A bomb exploded near a Shiite mosque in the town of Dera Ghazi Khan in central Pakistan on Thursday, killing at least seven people, a hospital doctor said.

Police said the bomb was planted outside the mosque and exploded shortly before a religious gathering got under way.

"I have seen seven bodies," Doctor Pervez Haider, the head of the local hospital, told AFP by telephone.

"We have shifted 25 people to the local hospital, eight of them were in critical condition," local police chief Maqsoodul Hassan said.

The blast shattered windows in nearby buildings, local residents said.

The location of the explosion — close to a Shiite mosque — raised fears that the bombing could be the latest episode in a wave of sectarian violence to rock Pakistan, an overwhelmingly majority Sunni Muslim country.

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Indian Official Links Pakistan’s Spy Agency to Mumbai Attacks
By VOA News
05 February 2009

India’s foreign secretary says Pakistan’s spy agency is linked to planners of the Mumbai terrorist attacks that killed more than 170 people in November.

Shivshankar Menon says the organizers planned, trained and launched the attacks from Pakistan, and that they were and remain clients of the Inter-Services Intelligence, Pakistan’s spy agency.

Indian leaders have repeatedly said that Pakistan’s intelligence agencies have had some role in the Mumbai attacks.

Recently, Indian Prime Minister Manmohan Singh said the terrorists who carried out the Mumbai attacks "must have had the support of some official agencies in Pakistan."

Pakistan’s government rejected Mr. Singh’s remarks as little more than a "propaganda offensive."

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Jim Sinclair’s Commentary

Did you suspect anything different?

Regulator Says Bailout Fund Overpaid Banks
By JACK HEALY
February 6, 2009

Add this to the list of complaints about the government’s Wall Street bailout: When Washington was buying pieces of banks last year, it may have overpaid, by as much as 30 percent.

A regulator overseeing the government’s $700 billion bailout testified Thursday that the Treasury Department paid $254 billion for $176 billion of assets — a shortfall of $76 billion.

“Treasury paid substantially more for the assets it purchased under the TARP than their then-current market value,” said Elizabeth Warren, chairwoman of the Congressional Oversight Panel examining the Troubled Asset Relief Program, or TARP. She cited a valuation study as evidence of the overpayment.

The figures were calculated by studying 10 transactions and then extrapolating their results to all of the TARP purchases in 2008, Ms. Warren said.

“There may be good policy reasons for overpaying,” Ms. Warren said. “But without a clearly delineated reason, we can’t know.”

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Jim Sinclair’s Commentary

Food for thought – is your local bank safe? Probably not.

Banks Sitting On An Inventory Time Bomb
Posted By: Diana Olick
Wednesday, 28 Jan 2009

An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.

Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I’m wondering why? Why are the banks sitting on all these properties instead of listing them for sale?

Okay, a couple of posibilities:

* The inventory of foreclosed properties has just exploded so rapidly and in such high volumes that the banks can’t process it all as fast as they would like to.

* In a lot of cases it’s taking longer to process the foreclosures themselves and the homes are getting trashed. Before the bank puts the house up for sale it has to do all the repair work, and now more repair work is needed.

Now here’s a possibility that is a bit more disturbing. Rick Sharga of RealtyTrac says he can’t get anyone to confirm it but he can’t get anyone to deny it either:

"The lenders are simply trying to defer the losses to a later date, because having to recognize the losses short term might pose severe risks to the banks in question."

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CIGA Christopher’s Commentary

It seems the honeymoon between Volcker and Summer is over.

That was predictable.

Volcker Chafes at Obama Panel Delay, Strains With Summers Rise
By Robert Schmidt and Julianna Goldman

Feb. 5 (Bloomberg) — Paul Volcker has grown increasingly frustrated over delays in setting up the economic advisory group President Barack Obama picked the former Federal Reserve chairman to lead, people familiar with the matter said.

Volcker, 81, blames Obama’s National Economic Council Director Lawrence Summers for slowing down the effort to organize the panel of outside advisers, the people said. Summers isn’t regularly inviting Volcker to White House meetings and hasn’t shown interest in collaborating on policy or sharing potential solutions to the economic crisis, they said.

While Summers, a former Treasury secretary, oversees the official White House economic policy apparatus, Obama tapped Volcker for a new Economic Recovery Advisory Board charged with injecting fresh, outside ideas into policy debates.

“When you have two strong, highly accomplished, driven people, it’s not unusual that there is going to be a battle over turf,” said James Cox, a professor at Duke University Law School in Durham, North Carolina. “I would hope that Obama doesn’t lose Volcker’s counsel. They need someone to help them think outside the box.”

The contretemps shows the difficulties Volcker, perhaps the world’s most respected economist, may encounter as an outside adviser charged with providing policy alternatives to the president, said William Silber, a finance professor at New York University’s business school.

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Posted at 8:41 PM (CST) by & filed under General Editorial.

Dear CIGAs,

While power remains a serious problem in the Republic of South Africa, Tanzania is expanding the delivery of power to the areas of the Tanzanian Greenstone Gold Belt and the Kabanga/Kagera Nickel Belt.

Attention to infrastructural needs of the extractive industries is the best of "open for business" signs.

DJ Tanzania Tanasco To Build 400-KV Pwr Line To Mining Region-Co
Last update: 10:24 a.m. EST Feb. 4, 2009

Feb 04, 2009 (Dow Jones Commodities News via Comtex) — DOW JONES NEWSWIRES

Tanzania’s state power utility, Tanzania Electric Supply Co., or Tanesco, is planning to build a 400-kilovolt power line to the country’s northwestern gold mining regions in a bid to guarantee reliable power supplies to the country’s gold mines, Tanesco said Wednesday.

In a statement, the utility said the new power line is expected to serve the northwestern mining centers of Buzwagi, Kabanga and Tuliwaka.

"The new backbone transmission line will improve power line capabilities for smooth power transfers and reduce technical system losses," said Idriss Rashid, Tanesco’s managing director.

Currently, most gold mines in Tanzania rely on thermal plants to run operations and providing the power line would minimize carbon dioxide emissions and shield gold mines from volatile global fuel prices, Rashid said.

Barrick Gold Corp. (ABX) is planning to start gold output at Buzwagi Gold Mine in the second quarter of this year. Other mines that are expected to benefit from the new power line include Barrick’s Tuliwaka Gold Mine and North Mara Gold Mine as well as the Kabanga Nickel project.

Tanasco says Tanzania’s current power distribution and generation facilities have been constrained by inadequate investments, vandalism as well as increased power demand. The power utility is expected to produce an additional 200 megawatts of power from gas plants by 2010 to meet rising power demand.

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