Posted at 10:00 AM (CST) by & filed under Guild Investment.

Dear Friends,

This article is a sign of victory for right thinking finance. It is a sign that all derivatives will eventually move to exchanges and their prices will be ruled by market forces. This is a huge victory, and one that Jim Sinclair, Guild Investment Management, and other right thinking minds have long sought.

Hopefully, the days of irresponsible derivative creation are behind us, and the fact that this is being floated just before the Group of 20 meeting is significant.

N.Y. Fed to Push Banks to Open Credit-Swaps Clearing to Clients
By Shannon D. Harrington and Matthew Leising

March 31 (Bloomberg) — Federal Reserve Bank of New York officials will tomorrow urge Wall Street banks to offer hedge funds and other clients access to clearinghouses that protect against losses in the $28 trillion credit-default swaps market.

JPMorgan Chase & Co., Deutsche Bank AG and Goldman Sachs Group Inc. are among nine banks that this month began using Intercontinental Exchange Inc.’s New York-based clearinghouse for the credit derivatives. Representatives from the banks meet tomorrow in New York with Fed officials to discuss the timing of expanded market access, according to a person familiar with the agenda.

Since March 13, $50 billion of the contracts have been cleared by Intercontinental in a system that is open only to nine banks. Credit-default swap clearinghouses created by Intercontinental competitors CME Group Inc. and NYSE Euronext haven’t attracted any customers from the banks.

More…

 

Additionally, below is an article in the financial times about how the people who created the problems are occupying their time these days…

Warm Regards,

Monty Guild and Tony Danaher
www.GuildInvestment.com

Bankers find new focus amid rubble of the crisis
FINANCIAL TIMES
March 30 2009

It would be easy to think that life for all those “financial engineers”, the bankers focused on default probabilities and credit ratings arbitrage who were crucial to the boom in mortgage bonds and other structured niceties, was over – professionally at least.

However, for some the job is busier than ever – and their work is a big part of the bump in first-quarter revenues in the debt businesses of their investment bank employers.

Many of them are now engaged in financial restructuring, which involves dealing with toxic assets and freeing up or protecting capital. But they will not get fanfares in earnings reports because the work they are doing – and have in some cases been doing for more than a year – is very hush-hush.

Their work often began in shoring up their own employers’ balance sheets, but has increasingly become a client business.

This is one reason for keeping the work quiet. There is huge sensitivity over anything leaking into what remains a highly tetchy market for bank securities of all kinds, still beset by the fear of panics.

Even the simple fact that an investment bank has been engaged to work with another bank or company could be enough to spook some investors, it is feared. Specialists at only two banks were prepared to be identified at all in this piece.

More…

Posted at 9:44 PM (CST) by & filed under In The News.

Dear CIGAs,

For anyone that thinks the mortgage reset problem is over, a review of the following from Credit Suisse is mandatory. First the average guys get killed then the leveraged big boys go down hard.

 

Jim Sinclair’s Commentary

The growth business of 2009 – 2012 is prison-run Organized Crime, symbol PROC, now estimated at 150,000 trained and dedicated staff.

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Jim Sinclair’s Commentary

Reliance on the US dollar is in an intact downtrend that is unlikely to change. The dollar is dead as a reserve currency. Dollars held will be kept and diversified away from in creative ways such as China buying THE MINING WORLD.
China and Argentina in currency swap
By Jude Webber in Santiago
Published: March 31 2009 01:25 | Last updated: March 31 2009 01:25

China, which is pushing to end the dominance of the dollar as a worldwide reserve, has agreed a Rmb70bn ($10.24bn, £7.18bn, €7.76bn) currency swap with Argentina that will allow it to receive renminbi instead of dollars for its exports to the Latin American country.

Xinhua, the official Chinese news agency, said the deal was signed on Sunday by Zhou Xiaochuan, governor of the People’s Bank of China, and Martín Redrado, Argentine central bank president, in Medellín, Colombia, where they are attending a meeting of the Inter-American Development Bank.

An Argentine official confirmed a deal had been discussed and said the fine print was being worked out and negotiations were “very advanced”.

Beijing has signed Rmb650bn ($95bn, €72bn, £67bn) of deals since December with Malaysia, South Korea, Hong Kong, Belarus, Indonesia and, now, Argentina in an attempt to unblock trade financing that has been severely curtailed by the crisis.

More…

Jim Sinclair’s Commentary

The Pakistani Taliban are threatening a massive attack on the White House. (Click image to play video).

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Pakistani Taliban Leader Threatens Attack on Washington
By Pamela Constable
Washington Post Foreign Service
Tuesday, March 31, 2009; 4:13 PM

KABUL, March 31 — The reclusive commander of the Pakistani Taliban claimed Tuesday that his fighters had carried out Monday’s bold assault on a police academy in eastern Pakistan and boasted that he was planning a terrorist attack in Washington that would astonish the world.

Beitullah Mehsud, an Islamist leader from the South Waziristan tribal area in northwest Pakistan, called several international news agencies in Pakistan to assert responsibility for the armed occupation of the police training compound that ended with 11 people dead.

He also told reporters that he was planning to attack targets in the U.S. capital in retaliation for more than 30 strikes by unmanned U.S. drones that have targeted suspected al-Qaeda and Taliban sanctuaries in northwest Pakistan near the border with Afghanistan.

More…

 

Jim Sinclair’s Commentary

There are no greater COWARDS than financial guys. Today they are useless beings with no redeeming human values.

G20: Dozens of banks to shut branches in London in fear of summit protesters
Banks are planning to board up branches in central London and run their operations with a skeleton staff because of the fear of violence around the G20 summit.
By Christopher Hope, Whitehall Editor
Last Updated: 10:16AM BST 31 Mar 2009

The news comes after protesters circulated a map which identifies more than 125 targets across the City, including dozens of international corporations, banks, and oil companies.

More than 50 financial institutions are pinpointed, including some of those – like Royal Bank of Scotland, Lloyds TSB – blamed for precipitating the current economic crisis. The map urged potential demonstrators to vent their anger at the “carpeted, warmed and well-lighted offices” of corporate capitalism, quoting the writer CS Lewis’s attack on the “managerial age”.

None of the main banks would comment. However senior banking figures told telegraph.co.uk that they were taking the security threat seriously, and admitted that they were concerned about the possibility of trouble.

One banking source said: “Everyone is taking precautions in the Square Mile. Many branches will be closed. It will be essential staff only who travel into work in those two days.

“Lets hope that it goes off peacefully. We cannot guarantee that but we hope it will be the case.”

More…

Jim Sinclair’s Commentary

The script of the Formula continues to play out.

Budget experts predict no Social Security cost-of-living increases for 3 years
STEPHEN OHLEMACHER | Associated Press Writer
5:16 PM EDT, March 31, 2009

WASHINGTON (AP) — The recession is projected to wipe out annual cost-of-living increases for 50 million Social Security beneficiaries for the next three years, something that hasn’t happened since automatic adjustments were adopted in 1975.

The Congressional Budget Office says in its latest budget estimates that inflation will dip so low that Social Security recipients will not qualify for annual increases in 2010, or for two years after that. In 2013 through 2019 — when projections are less reliable — CBO estimates annual increases of 2 percent each year, which would be among the lowest.

David Certner, director of legislative policy for the AARP, said many recipients rely on those increases to help pay for rising health care costs, which tend to outpace inflation. Many older Americans have also seen the values of their homes and savings decrease because of the nation’s financial crisis.

More…

Posted at 3:21 PM (CST) by & filed under General Editorial.

Dear CIGAs,

1. The change is not abrupt. It has been cooking for years.

2. Yesterday the change was set in cement as completed.

3. GM is only the first.

4. From now on rather than public corporate management looking to stockholders, their vision will be towards Washington from whom they will take their clues to act.

5. Finance, having taken over government, now has taken over public industry.

6. It does not matter how you define this in terms of ism.

7. The American Dream is dead.

8. The US dollar is dead.

9. Gold is your only lifeline because investments are over (see Monty’s comments on volatility). I means lifeline in its most literal interpretation.

Note:

Having lived in India for a significant time, I am used to seeing pictures of living people with air brushed or light induced figures of halos over or beside their heads in their public pictures. Please see the front page IBD photo of the US President today.

Posted at 3:11 PM (CST) by & filed under Jim's Mailbox.

Jim,

This is very disturbing. You may have seen this already but it is a tutorial that explains how the toxic assets are taken off of the bank’s books and given to the American citizen via the FDIC guarantee. The real kicker is the banks can do all this by purchasing the toxic assets from themselves.

CIGA, Eddie Hoff

Jim,

This plan, if undertaken globally, will undermine or completely derail any US dollar swaps (with IMF – surely a topic that is going to be discussed at G-20) with Nations that are undergoing dollar squeezes. These Chinese are smart and it looks like their "sales force" is just getting ramped up.

CIGA Danny S.

China and Argentina in currency swap
By Jude Webber in Santiago
Published: March 31 2009 01:25 | Last updated: March 31 2009 01:25

China, which is pushing to end the dominance of the dollar as a worldwide reserve, has agreed a Rmb70bn ($10.24bn, £7.18bn, €7.76bn) currency swap with Argentina that will allow it to receive renminbi instead of dollars for its exports to the Latin American country.

Xinhua, the official Chinese news agency, said the deal was signed on Sunday by Zhou Xiaochuan, governor of the People’s Bank of China, and Martín Redrado, Argentine central bank president, in Medellín, Colombia, where they are attending a meeting of the Inter-American Development Bank.

An Argentine official confirmed a deal had been discussed and said the fine print was being worked out and negotiations were “very advanced”.
More…

Dear Danny,

Quietly and without fanfare the mechanisms gather at the sequential death of the US dollar. Gold is the only lifeline as what is below is a long term form of expansion of one’s monetary policy.

Respectfully yours,
Jim

Hello Mr. Sinclair,

As has been mentioned before, commercial real estate is one of the next shoes to drop. Here is an example of Boston’s tallest building that sold for 50% less than the original purchase price.

Kindest regards,
CIGA Jeff

Hancock Tower has new owner
By Thomas Grillo
Tuesday, March 31, 2009

NEW YORK CITY – The Hub’s John Hancock Tower, New England’s tallest skyscraper, sold at auction this morning for $660.6 million, about half what it sold for nearly two years ago.

Normandy Real Estate Partners, which owns two buildings on Summer Street in Boston, and Five Mile Capital Partners combined to make the winning bid for the Back Bay trophy property.

The companies agreed to pay $20.1 million for the mezzanine debt on the 60-story building and assume the mortgage of $640.5 million, according to a statement issued at the auction.

More…

Posted at 3:00 PM (CST) by & filed under Guild Investment.

THINGS ARE A LOT MORE COMPLICATED THAN THEY SEEM

One of the purposes of these pages is to give information in an understandable way to those who are not burdened with a PhD in economics or financial engineering.  Those benighted souls will have to deal with their disabilities on their own.  We try to make complex facts, concepts and ideas simple and reasonably understandable.

There is a great deal of depth we could provide on the subjects about which we write.  In our view, few would be willing to wade through the verbiage, even if they had the interest in understanding the details, hence our interest in simplicity and brevity.

A FEW QUICK POINTS

A great deal of the worldwide stock market declines from October 2007 to March 2009 occurred due to the existence of financially engineered products (derivatives) and the removal of mechanisms that used to make short selling more difficult in the U.S.  Many of the financially engineered products aided in short selling (making bets on lower markets), by removing some of the complexity and restrictions of traditional short sales.  Financially engineered products were also created to make speculation on the long side (bullish speculation) easier.  Additionally, these derivatives allowed for tremendous leverage to be employed.

We first warned about derivatives and the inherent counterparty risk in our Clients and Friends memo dated May 22, 2003, and we have warned about them repeatedly since that time.

In effect, derivatives amplify volatility, thus making up and down moves more pronounced.  This increase in volatility is a characteristic of an investment process that has changed dramatically in the last ten years, and which will continue to be with us in the foreseeable future.  In our March 22, 2004 commentary, we wrote "It is not difficult to see the havoc that a meltdown or partial meltdown in derivatives would do to the world financial system."  Clearly, that has come true at least as badly as we had feared. 

What are the outcomes? 

1. A decrease in the effectiveness of the buy and hold strategy of investing.  Massive volatility will create more volatile and larger declines, which are terrifying to traditional buy and hold investors.
2. An increase in short term trading of stocks.
3. More volatile fluctuations in currencies will lead more astute investors to seek out investment alternatives such as bonds in foreign currencies.
4. The collapse or destruction of many currencies due to the banking systems’ commitment to derivatives.
5. The rise of gold as the only truly reliable global store of value and currency.

 

THE MAIN POINT

The obvious main point is that derivatives have created a financial disaster, and investors must avoid the many toxic assets (derivatives) are floating around the world financial system.  As governments move to restructure their banking system, they will devalue their currencies, thus increasing the attractiveness of gold and other hard assets (platinum, silver, and real estate), but also of stocks in good companies and industries, which can grow through a period of currency depreciation.

China insists on financial system overhaul
From AFP, MEDELLIN, Colombia

March 29, 2009-Chinese Central Bank Governor Zhou Xiaochuan again urged for international financial reform in the face of the global economic crisis.

Speaking at an Inter-American Development Bank meeting in the northwestern Colombian city of Medellin, Zhou said that current fiscal and monetary measures were useless if the international financial system is not overhauled.

He said financial reform and measures for international development banks like the International Monetary Fund (IMF) and the World Bank would likely be discussed at the upcoming G20 summit of developing and industrialized nations on Thursday in London.

"Up to now we have participated in some working groups which focus on coordinating effort to overcome the negative impact of the financial crisis," Zhou said.

"The second (effort) is maybe financial sector reform, including regulatory reform, and I think we also expect there may be some reform agenda for international financial institutions, including the Fund, the Bank and other development banks."

Zhou stressed the importance of savings, saying China’s financial crisis had encouraged savings in Asian countries.

He also called for tougher regulation of international financial institutions. The issue of the world currency reserve is expected to be raised at the G20 summit.

The banking chief this week called for a replacement of the dollar, installed as the reserve currency after World War II, with a different standard run by the IMF.

Zhou suggested the IMF’s Special Drawing Rights, a currency basket comprising dollars, euros, sterling and yen, could serve as a super-sovereign reserve currency, saying it would not be easily influenced by the policies of individual countries.

IMF managing director Dominique Strauss-Kahn welcomed Zhou’s comments and said that talks on a new world reserve currency to replace the US dollar were "legitimate" and could take place "in the coming months."

But US Treasury Secretary Timothy Geithner defended the dollar as a key global reserve currency in Washington.

Chinese Vice-Premier Wang Qishan on Friday stressed the importance of reforming the IMF to give more weight to developing countries, and said this issue must be taken up at the G20 meeting.

Wang also said in an article in The Times that China would contribute more resources to the IMF as part of a wider effort to boost the fund’s lending power.

THE TALF PROGRAM IS A LITTLE BIT LIKE THE RESOLUTION TRUST CORPORATION (RTC), WHICH WORKED TO END THE SAVINGS AND LOAN CRISIS IN THE LATE 1980’S

This program has some hope of success, but only if large hedge funds and mutual funds are willing to stand in and buy…and the banks are willing to agree on the prices.  We think the hedge funds and mutual funds will step in, as the Congress appears to love them, and is handing them something close to a blank check.  The banks will sell in order to raise capital.  Remember, many of their losses have been supported by loans from taxpayers.

In the recent hearings, Congress has flamboyantly exhibited their disdain toward bonus recipients at AIG.  It seems to be a different story if you run a giant hedge fund.  Instead of making a $1 million bonus, a big hedge fund operator might make $100 million, or up to several billion dollars each year.  The large hedge funds will be allowed to get government money, to potentially make immense profits by buying toxic assets for a distressed price, from large banks (who are subsidized by taxpayers).  In other words, they will buy the assets from U.S. taxpayers, and later resell for profits.

Could this congressional largesse be partially due to the fact that the hedge fund uber-rich…is a strong group of donors to politicians, while the wage earners at the banks, even the big wage earners are not in a position to make the big political donations any more?  The truth is that much of the money going to politicians for their re-election coffers in the U.S. and other countries, has been from financial institutions.  Draw your own conclusions.

VOLKER’S PLAN VERSUS GEITHNER’S PLAN

In several past memos, we have pointed out how the ideas of Paul Volcker are being ignored, while Tim Geithner’s prescription for a solution in the U.S. is being adopted.  In our opinion, this is because Volcker’s plan does not benefit big financial institutions as much as the Geithner plan.

The political situation in the United States has in recent years become more similar to a third world country, where the banking interests have huge influence in government.  We pose a question.  Do you think that the third world countries have more, or less, financial crises than developed countries where banking interests have less power?  The answer is, of course, they have more.

We do not like to be so cynical.  Perhaps it is that we are from California, where our former Governor Jerry Brown once said while in office that he…"was against money grubbing congressmen…and every type of bought and paid for politician."  On this issue Jerry Brown shares the same view as more and more Americans.

SUMMARY

Obviously, we hold to our themes.  We plan to buy gold, oil, and agriculture related shares on dips; and remain wary of financial institutions.  China, which is proving to be more insulated from the world banking problems, also seems to be a good long term investment.

Thanks for listening.

Monty Guild and Tony Danaher
www.GuildInvestment.com

Posted at 2:46 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Mining equity bulls are finally showing some mettle in today’s session and seem to be attempting to dig in their heels after yesterday’s poor performance in the HUI and the XAU. Both indices are currently trading near session highs although the broader equity indices are also higher today in contrast to yesterday’s selloff. Trying to get a firm read on the mining shares has become problematic at times because it is difficult to say whether they are just moving in sync with the overall equity markets or are a leading indicator for the bullion price. If paper is moving higher and the mining shares higher it does not tell us much. If paper was moving lower with the mining shares moving higher, then we would have some insight into the nature of the buying. Right now we are left guessing as to what it all means because day traders and scalpers (which is what the hedge funds are forcing all of us to become) are simply going with the order flow on any given day. No one really bothers to ask questions – they simply react.

The price action we are seeing dovetails with what Monty has written about volatility. Long term position trading is becoming extremely difficult not because there are price retracements in bull markets and such. There have always been price retracements. What has changed is the extent and the ferocity of the price retracements. Having witnessed more than a few trending markets over my trading career, the general pattern (in a bull market for example) is to see strong upside moves, followed by minor price retracements during which volume tends to fall off with volume increasing on the upside days. The hedge funds have pretty much ruined all of that.

Now we see days in which prices shoot sharply to the upside only to be followed by a price retracement the following day which can completely erase the entirety of the previous day’s gains and does so on huge volume. The result is that trend following trading systems and traders for that matter, are left confused, uncertain and nervous. This leads to a loss of conviction in which traders eagerly grasp at small profits and are wary of leaving large positions on for any length of time. The end result is extreme choppiness with many whipsawed back and forth not knowing whether to go long, sell short or jump off the window ledge. Many traders simply opt to sit on the sidelines or attempt to find calmer waters in some other market and hope to ply their trade there. Case in point – just look at a chart of the Japanese Yen since the beginning of this month. The price has swung wildly up and down with huge moves up and huge moves down only to basically end up exactly where it started at the end of February! Talk about a useless waste of time for a position trader! The more frequently this occurs, the worse the volatility is going to become because the stabilizing influence of the longer-term oriented position and value traders is absent to a great extent as the entire trading contingent morphs into some frenetic version of the pit scalper from days past.

Back to gold – it had a tight range but within that range it was quite active in today’s session. Up for a while, then down, then back up, etc. One of the factors that led to selling coming into the gold pit was the move down in crude oil which had been stronger overnight and early in the session only to then succumb to another bout of selling. That brought selling back into the gold pit and silver as well. Then crude bounced back off the worst levels and gold moved higher. Strength in the grains, notably the soybean market moving off a friendly Prospective Plantings report, brought a general bout of buying into assorted commodities but the weakness in crude also generated selling in some of the very same commodity complexes. The Dollar moving lower however reinforced commodity buying but as the Euro moved off its best levels and the Dollar moved off of its worst levels, the sellers appeared once again in the commodities markets. Then you have the copper market moving solidly higher reinforcing a friendly chart pattern and giving further credence to its predictive role as a leading economic indicator (Dr. Copper) and the picture becomes even more muddled.

The point in all this is that there are now so many factors feeding into commodity market price action that attempting to sort them all out is becoming quite the task. I think it safe to say that overall, the commodity markets have bottomed out but the thing creating volatility is traders/investors trying to gauge just how quickly they might move or what kind of bottom they have forged. Copper’s chart for instance is a nice, well rounded gradual bottom and not a “V” bottom which are always a bit more problematic to decipher. That creates a bit of a quandary for gold buyers – is copper signaling the worst of the economic slowdown is behind us and therefore the safe haven needs for gold has abated or is copper signaling that inflation fears are slowly coming to the forefront of investors’ minds and that gold needs to be bought as a hedge to protect the value of one’s holdings? Is the Dollar weakness a sign that the Fed’s dollar debauchment-inducing policies are coming to the forefront of traders’ mind or is it just a mild setback in the intermediate bullish trend? Have the US equity markets bottomed out? Has the bond market also topped out or are long term rates going to head lower reinforced by the Fed’s concerted efforts to shove them down by its announced purchased program? Questions abound and thus so does volatility. Longer term those who have read this site for years know where all of this is headed but it is the “short term” gyrations which can lead one to question their own sanity at times. My advice – drinks lots of cold beer and do so quite heavily! Seriously – the die is cast for the Dollar long term and gold long term but if you are having trouble weathering the huge price swings consider either becoming a bit more active in managing your portfolio or find a good quality money management firm to do that for you (let me put in a plug for Monty and his fine staff at Guild Investment).

Technically nothing has changed concerning gold – it is still range bound and managed to recapture the floor of the very tight $940 – $920 range after losing that support for a brief period yesterday. It its broader range, $960 still lurks on the topside as resistance and $900 as support on the bottom. Open interest barely moved yesterday and is sitting near the 370,000 level.

April gold experienced some very heavy deliveries and stoppers in its first delivery day today. AS a point of interest, back when there was a great deal of excitement surrounding the delivery process in December of last year, the first day of deliveries totaled an unusually large 8,600 contracts. Well guess what? April in its first day saw an even greater number of deliveries taken at 8,867 contracts stopped or a total of 886,700 ounces of gold. That is no small matter and is quite encouraging. We would need to see another 7,000 contracts or so taken over the rest of the delivery period to really rock the perma shorts’ world. Whether that will occur is anyone’s guess but it would certainly level the playing field at the Comex were the shorts to be served such notice that the longs intend to force the issue. 15,050 contracts remain open in April as of yesterday – if half of them were to stand for delivery things would indeed heat up. According to the Comex stats, there are 2.94 million ounces of registered gold in their approved warehouses.

Incidentally, the big seller was Deutsche Bank while Morgan and Bank of Nova Scotia were the two largest stoppers. Morgan has been stopping a lot of gold lately.

Today was both the end of the month and the end of the quarter so it is not wise to read too much into today’s price action as a large number of funds are closing out some of their positions to book profits in preparation for sending statements to clients. They always want to show a profit for the month and/or quarter when they can. Tomorrow’s price action will carry more weight from an analysis standpoint. If we get the funds moving in the same direction as many of the markets did today, that will reinforce either trend changes in some or new trends or more of the same. If the markets give back a lot of the gains or losses they put on today, that will be a sign that the funds have moved right back in again and are re-establishing many of the positions that they just lifted at quarter’s end.

By the way, last night on “24”, Jack Bauer was exposed and contaminated by a biological agent and the FBI and a Navy Seal Team walked right into a trap set up by the bad guys. No wonder the Dollar is selling off today!  Things are not looking good for Jack to return next season!

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

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Posted at 11:08 PM (CST) by & filed under In The News.

Dear CIGAs,

Last weekend the President’s meeting with the bankers at the White House was a repeat of the JP Morgan meeting with the then bankers, but this time the meeting ran into a problem. Even if the banks could cooperate, who is going to borrow?

The meeting with Jesse Livermore ran into the richest lobby effort ever and never took place. No meaningful action on the uptick rule means Jesse did not agree. No agreement from Jesse and no rally can have legs.

Putting out a new form of the uptick rule for discussion is no action at all. Both initiatives fail then all bear market rallies run into thunderous reactions and quick culmination.

The Evil Knievel Formation compliments of CIGA Currie:

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Jim Sinclair’s Commentary

We are so far from the end of this disastrous period.

Soros Predicts 30 Percent Fall in US Commercial Real Estate Prices
By Barry Wood 
Washington
26 March 2009

Legendary hedge fund investor George Soros said Thursday that US commercial real estate prices will fall 30 percent, a development that he says shows that the financial crisis is continuing.

Soros told a Washington forum that it is inevitable that commercial property prices in the United States will fall drastically. The 78-year-old investor said the price declines will come shortly. Other experts, including analyst Christopher Whalen, agree, saying the demand for commercial property is falling rapidly while overbuilding has created a huge surplus of supply.

More…

Jim Sinclair’s Commentary

Not everyone agrees with Timmy’s plan.

Bankrupting the world
By Jerry Mazza
Mar 30, 2009, 00:25

The so-called Public Private Partnership Investment Program (PPPIP) introduced last Monday, by Treasury Secretary Timothy Geithner not only stands to bankrupt America but the global financial system as well. This is the worst yet of the bailouts, a swindle if ever there was one, which will cause President Obama’s approval rating to plummet. In fact, count me among those coming to the president’s aid. I really don’t think he understands what this means.

Consider Geithner as the face, the voice though not the brain, for this program which advocates turning over the keys to the banking system to a bunch of hedge fund sharks, and all at taxpayer’s expense. The cost could more likely end up being $6 trillion than the $1 trillion in starter money. In fact, it’s more likely that the dastardly plan was launched like a missile from jolly old London, which is in line to lose big if their offshore hedge fund empire is shut down.

So, we are not dealing with just your typical political blunder. This is a policy fiasco built to bring down the United States altogether. I believe it’s coming from a London-based financial oligarchy out to do in the US altogether. Speaker of the House Nancy Pelosi and House Financial Services Committee Chairman Barney Frank and the one and only Larry Summers, head of the Whitehouse Economic Council, are completely complicit in what amounts to an act of treason in recommending this.

More…

Jim Sinclair’s Commentary

This is not in the definition of a Democracy.

New Task Seen for Fannie, Freddie
By JAMES R. HAGERTY

The regulator of Fannie Mae and Freddie Mac is considering giving the government-backed mortgage companies another role: helping to finance small mortgage banks.

A spokeswoman for the regulator, the Federal Housing Finance Agency, said it is looking at ways that the two companies might help revive the market for so-called warehouse loans, which are loans made to mortgage banks. This possible role for Fannie and Freddie is the latest sign of how they are being used increasingly as instruments of government policy rather than corporations focused on shareholder returns.

More…

 

Jim Sinclair’s Commentary

Look for Asia to back Russia on gold. Only the US Sheeple are clueless. Gold is your lifeline. Don’t let the paper players on the COMEX fool you. Anyone without gold is a castaway on the Ocean of Samaras. It is just that serious.

Russia backs return to Gold Standard to solve financial crisis
Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system.
By Ambrose Evans-Pritchard
Last Updated: 8:23AM BST 30 Mar 2009

Arkady Dvorkevich, the Kremlin’s chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund.

Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.

Mr Dvorkevich said it was "logical" that the new currency should include the rouble and the yuan, adding that "we could also think about more effective use of gold in this system".

The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.

It was revived as part of fixed dollar system until US inflation caused by the Vietnam War and "Great Society" social spending forced President Richard Nixon to close the gold window in 1971.

More…

Jim Sinclair’s Commentary

The following video is Ambrose Evans-Pritchard on Gold.

Jim Sinclair’s Commentary

We are nowhere near overcoming the deep credit market lock up. Gold is your only way out. Take it or stay inside the problem.

Deutsche Bank’s Banziger Says Crisis ‘Far From Over’
By Aaron Kirchfeld

March 30 (Bloomberg) — Deutsche Bank AG Chief Risk Officer Hugo Banziger said the global credit crisis is “far from over” and global financial regulations must be overhauled to regain investor trust.

“We are in the middle of it,” Banziger, 53, said today at an event at the Frankfurt School of Finance and Management. The industry has “an opportunity” to build a stable financial system that seeks higher capital buffers, and encourage investors to return money to the market and help stem the crisis, he said.

Deutsche Bank in February reported its first annual deficit in more than 50 years after the worst financial crisis since the Great Depression pummeled bond and stock trading. The crisis has caused $1.3 trillion in losses for financial companies worldwide, a total that may climb to more than $3 trillion, Banziger said today, citing forecasts.

Deutsche Bank has gained 40 percent this month in Frankfurt trading, valuing the bank at 18 billion euros ($24 billion), and eclipsing the 5 percent advance in the Bloomberg Europe Banks and Financial Services Index of 65 companies. The bank fell 10 percent to 28.75 euros in trading today.

The German bank skirted the worst of the U.S. subprime mortgage collapse by betting against the bonds that contributed to credit losses and writedowns at the world’s largest financial companies and forced government-led bailouts from Berlin to London to Washington.

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Jim Sinclair’s Commentary

Pakistan in crisis: When Pakistan falls it will start a ball rolling that can produce a $100 up move in crude that holds its price in the middle of a depression.

12 die in bloody siege at Pakistan police academy
By BABAR DOGAR – 2 hours ago

LAHORE, Pakistan (AP) — A group of gunmen, some in police uniforms, attacked a police academy Monday and held it for hours, seizing hostages, throwing grenades and killing at least six trainee officers before being overpowered by Pakistani commandos.

Four suspected militants were arrested while at least three blew themselves up in the eight-hour battle to retake the compound on the outskirts of Lahore in eastern Pakistan, said Rao Iftikhar, a top government official in Punjab province. He said three other bodies were still unidentified.

Interior Ministry chief Rehman Malik said one of the arrested man was an Afghan, and that investigators believe the attack may have its roots along Pakistan’s border with Afghanistan, where Taliban militants have hideouts. But Malik also pointed fingers at a Punjab based Sunni extremist group and also refused to rule out an Indian role.

As the siege ended, black-clad Pakistani commandos fired their guns in the air in celebration at the top of the building, shouting "God is Great!" and "Long live Punjab police!"

Officials said more than 90 officers were wounded and that some of the attackers wore police uniforms.

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Jim Sinclair’s Commentary

The statement that "We are on a Road to Hell" did in fact state the position of the G20 even if cloaked in plausible deniability.

The Hell in this statement is a worldwide Weimar if the G 20 was to do what the Obama Administration’s finance guys wished for. America is headed to this Weimar Hell, but only North Americans seem not to know it.

Being on this road that now has "no exit," Gold becomes your lifeline.

I mean this literally. It is your LIFEline.

Respectfully yours,
Jim

 

Jim Sinclair’s Commentary

The USA is not made up of people. It is made up of sheeple.

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Jim Sinclair’s Commentary

This is what is known as Permanently Impaired. There are plenty of them so get used to the new term of valueless and hopeless assets.

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Jim Sinclair’s Commentary

You think Fitch just realized this might carry a bit of risk, certainly when granted naked?

What raving BSers! Who do they think they are kidding.

Fitch rethinks structured credit counterparty risk
Mon Mar 30, 2009 11:40am EDT

LONDON, March 30 (Reuters) – Fitch Ratings proposed changing its evaluation of counterparty risk in structured finance deals after the rapid demise of Lehman Brothers and Icelandic banks last year hurt investors and forced some notes to default.

The ratings agency aims to help investors reduce exposure to counterparty risk embedded in collateralised debt obligations (CDOs), asset-backed securities and other types of structured credit.

Experience in 2007 and 2008 showed that counterparties such as Lehman could jump rapidly from an investment-grade rating to default and that a ratings downgrade could rachet up pressure on a bank to come up with more funding and push it into a downward spiral, known as "cliff" risk, Fitch said on Monday.

The ratings agency made several alternative proposals and asked people in the market to provide feedback by May 1. It scheduled a conference for Tuesday to discuss its presentation.

"There are a number of alternatives to the current approach," Stuart Jennings, Fitch managing director, said in a statement. "All provide enhanced mitigants to problems such a cliff risk, but equally each option has its own drawbacks as well as advantages." Under the existing rating system, when a counterparty’s rating falls below a minimum of ‘A’ for long-term deals and ‘F1’ for short-term, the investor has 30 days to replace that counterparty or get it to post collateral for mark-to-market losses before Fitch downgrades the deal.

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G20 meeting will fail

This week there will be a meeting between G20 leaders and central bankers in London to save the world economy.

Let us make it very clear – the meeting is bound to fail. There is no chance that the G20 leaders will reach an agreement that will save the world economy. Even two world leaders can’t agree on how solve the biggest global financial crisis that the world has ever encountered, never mind twenty.  Each one of twenty leaders has a different political agenda and they will all blame each other, so there is no possibility whatsoever that the meeting will result in more than the normal platitudes about cooperation  to solve the crisis. Both Merkel and Sorkozy have already rejected Gordon Brown’s proposed stimulus package and that is before the meeting has even started.

But the main reason why the meeting will fail to reach a result is the worthless derivatives of over $ 1 quadrillion and unlimited amounts of toxic debt which will never be repaid with real money.

We have long said that we will have a worldwide depression which will be worse than the 1930’s. But worse than that it will be a hyperinflationary depression in many countries.

The famous financier George Soros agrees with us.  He sees a global financial meltdown and a major depression as he explains in an interview in the Times today (Soros interview). Soros also states that the UK will probably have to be bailed out by the IMF as we outlined in our February newsletter. But as we stated then, the IMF has also run out of money!

Although governments at the G 20 meeting will not solve the insoluble world financial crisis, they will continue with the only thing they know – TO PRINT MORE MONEY!

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Jim Sinclair’s Commentary

Everyone knows what has happened except Americans and Canadians. This article, published in Jakarta, calls for accountability of the raw criminality behind the scenes.

What Asia and the world need from America now
Tom Plate ,  Beverly Hills ,  California   |  Sat, 03/28/2009 1:29 PM  |  Opinion

What the American governing and legal establishment must do, before too much time goes by, is to come completely clean not only with the American people but with Asia, especially, which has poured so much of its wealth into the US China and Japan are its biggest financial investors.

Everyone needs to know what really happened and who should be held accountable for the raw criminality behind the scenes.

The US needs to come clean by devising a wide-ranging – but fair — criminal investigation of hedge-fund leaders and managers, derivatives sales groups and their allies, and of course any and all Ponzi-schemers that have defrauded people of their life savings. We don’t need a visceral witch-hunt; we require fair and honest accounting.

What’s at stake is not so much an eventual honest return on investments (which, in many instances, may be impossible, as many funds have vaporized down the rat-holes of criminal enterprises), but the credibility of the United States of America. And this is something that, when healthy, is priceless, and when destroyed, is worthless.

America, which has often and loudly described itself as a "nation of laws, not men *or women*," now needs to demonstrate for the world what that phrase represents. Criminal conspirators like members of the Mafia know what the lash of our law can mean.

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Jim Sinclair’s Commentary

The supposed shock of other European nations at the statement of the President of the European Union is purely plausible denial and politics.

You read the position of France and Germany carried in the Euro press. The US is on a road to hell, so to hell with the US demand for drastic ramped up spending and tax reductions across Euroland.

We are on that "Road to Hell" so now gold is your lifeline and survival suit in the Bering Sea winter storms.

EU presidency: US stimulus is ‘the road to hell’
By AOIFE WHITE, AP Business Writer – Wed Mar 25, 3:38 pm ET

BRUSSELS – The head of the European Union slammedPresident Barack Obama’s plan to spend nearly $2 trillion to push the U.S. economy out of recession as "the road to hell" that EU governments must avoid.

The blunt comments by Czech Prime Minister Mirek Topolanekto the European Parliament on Wednesday highlighted simmering European differences with Washington ahead of a key summit next week on fixing the world economy.

It was the strongest pushback yet from a European leader as the 27-nation bloc bristles from U.S. criticism that it is not spending enough to stimulate demand.

Shocked by the outburst, other European politicians went into damage control mode, with some reproaching the Czech leader for his language and others reaffirming their good diplomatic ties with the United States. The leaders of EU’s major nations —France, Britain and Germany, among others — largely ignored Topolanek and his remarks.

Obama pays his first official visit to Europe next week, aiming to thrash out reforms to the global financial system with the Group of 20 nations and call on NATO allies to commit more troops to the U.S. war in Afghanistan.

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