Posted at 7:25 PM (CST) by & filed under Jim's Mailbox.

**Mr. Jack Sloan and Mr. James Carswell please email Editor Dan at jsmineset@gmail.com**

Jim,

Here is some more from Armstrong.

Click here to view the report…

Page 2 on money supply CDS clearly illuminates your assertion that derivative losses that are bailed out do go to the "winners" of the trade.

Page 4 on Chinese thinking in cycles is also interesting.

CIGA Ken

Dear Jim and Team,

You’ve told us to study the writings of Martin Armstrong. So I started to do that.

A must-read piece is "Destroying Capital Formation" where Mr. Armstrong explains what happens when governments start attacking the rich. The rich flee, the economy falls even more apart and a civilization faces destruction.

When the Roman Emperor Commodus started attacking the rich, the people began to flee from Rome (180-192 AD). Rome was than the biggest city on the planet.

Another nice example, that Armstrong forgot to mention, are the politics of presidents Hoover and Roosevelt who raised taxes on the rich during the Great Depression. It deepened the depression.

Please find in the links anecdotal evidence of how Britain is making the same mistakes all over again and how the rich react in 2009 AD.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aKCdIuHonoTM&refer=home

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6169324.ece

It shocked me when I was able to make the link with what happened in the past. Don’t think this is only going through the mind of one rich Cypriot who lived in London for almost two decades. How will the rich Russians in London react on the rising taxes of Gordon Brown? They will definitely flee Londongrad! How will the rich Indians, Pakistani, Chinese, et cetera react? Armstrong writes they will flee.

Londinium will fall because of the actions of Gordon Commodus Brown. London was the first city after the fall of Rome to have a population of more than 1 million. You can bet on it, from now on we’ve seen the top in the London population. By the way, this week, on May 8th, we can still celebrate the 10th anniversary of Gordon Browns Great Gold Dump, when he sold half of the British gold reserves. This is only so sad for western civilization. Because it’s not only Britain that’s coming up with targeting the rich and selling the gold as the solution!

All the best,
CIGA Jeroen

Dear CIGA Jeroen,

I have decided to send you the writings and price objectives of others with which I agree rather than holding myself out to far.

Armstrong is totally correct.

The approach to foreign assets now is if you are identified in any manner whatsoever to have foreign assets they are deemed as tax evasion until you prove otherwise. See today’s posting here.

This means you will be the proud holder of a US Federal tax jeopardy judgement of 100% of your identifiable income, and any assumption of what you may or may not have hidden.

That means you are guilty until proven innocent.

You have to pay for an attorney and accountant’s services required to prove your innocence which may or may not be tax deductable on future income.

Remember the dangers I have been telling you about in seeking privacy in finances since the inception of this site?

The rich who are the banksters will be just fine. They make the legislation and will be in one way or another exempted.

The rich living in London will have loopholes.

Dean Harry’s advice in the 70s was to have your body in one country, your money in another and your citizenship in a third. Dean Harry will be known as having been one the brightest lights on this planet that few believed.

Regards,
Jim

Hi Jim,

I am a longtime reader of the website. I want to thank all of you for all the wonderful work you do.

I have had a recent theft of some gold coins. I would like you to remind everybody to be careful about this possible problem. I had a longtime ex-friend and business associate that knew that I was investing in  gold and silver. He managed to sneak back and steal some from me, even though it was 2 years later after he had left the business.

Please, everybody involved with gold or silver… don’t tell anybody that you have these items. These were locked in safes, and since he knew my operations, he knew where they were and how to get the combinations to them. There are many people out there that may pose as friends or allies, but when it comes to gold people get crazy sometimes and do stupid things. I have since opened a safety deposit box at the bank but the damage is done on the losses. Please remind everybody the importance of safety and protection of your metals and to watch for the unexpected!

If you could please post this email. Even if it helps even one person to avoid the losses that I have experienced it would mean alot to me and help ease a little of the pain of my losses if one of the readers on your site could avoid theft by being extra careful.

Thanks,
CIGA Mark F

Posted at 3:16 PM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

For your information:

Bird Flu has so far infected 416 people and killed 60% of the victims.

The present flu has now infected slightly over 1000 in six weeks and killed 3%

This flu is not as present a problem as it might be in the Fall and early Winter.

Jim Sinclair’s Commentary

Now our intelligence geniuses might consider what Israel’s miscalculation will be and when Turkey goes hot as a victim.

I could save these guys billions wasted on all the bureaucrat spook analysts, and maybe where Pakistan is concerned a middle east conflagration.

Everyone is paranoid about intelligence agencies that think like this. They are government run, littered with corporate type ivy league snobs with a few real heroes buried deeply in a pile and rarely in the noodle factory at Langley, Va.

Joint Chiefs chairman: Afghanistan now top priority

WASHINGTON (CNN) — The U.S. military’s primary focus needs to shift immediately from Iraq to Afghanistan, Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, said Monday.

"We remain committed to the mission we’ve been given in Iraq — make no mistake. … But Afghanistan has been an economy of force operation for far too long," he said at a Pentagon news conference.

Mullen said he is "gravely concerned" about recent Taliban and al-Qaeda gains across much of southern Afghanistan and in Pakistan.

"This isn’t about ‘can do’ anymore. This is about ‘must do,’ " Mullen said. The Taliban and al-Qaeda are "recruiting through intimidation, controlling through fear, and advancing an unwelcome ideology through thuggery. … The consequences of their success directly threaten our national interests in the region and our safety here at home."

Mullen’s remarks came less than a week after the release of a State Department report indicating a dramatic spike recently in terrorist attacks in Afghanistan and neighboring Pakistan.

The report stated that al Qaeda and its extremist supporters have moved across the Afghan border "to the remote areas of the Pakistani frontier, where they have used this terrain as a safe haven to hide, train terrorists, communicate with their followers, plot attacks and send fighters to support the insurgency in Afghanistan."

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Jim Sinclair’s Commentary

The best opinion of Pakistan will be the amount of the increase in India’s purchase of gold.

India gold imports 30T in April, up 25pct y/y – trade
Mon May 4, 2009 3:37pm IST

MUMBAI (Reuters) – India imported about 30 tonnes of gold in April, up 25 percent from the same month last year, helped by a drop in prices and festival demand, the head of a trade body said on Monday.

"Prices were a bit lower, so there was buying," said Suresh Hundia, president of the Bombay Bullion Association. "If prices fall below 14,000 rupees ($282) per 10 grams, buying will increase this month."

Prices were at 14,314 rupees per 10 grams at 0950 GMT on Monday, down from an all-time high of 16,040 rupees on Feb. 20.

Hundia revised upwards March imports to 0.8 tonnes from nil reported earlier and for February to 1.3 tonnes from 0.8 tonnes.

Imports in 2008 had fallen sharply to 396 tonnes from 759 tonnes the previous year, data from the trade body showed, mainly due to high prices.

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Jim Sinclair’s Commentary

Of course inflation is over the horizon on the near side. It is an inflation not often understood.

It is a currency event, not an economic event.

Warren Buffett: Inflation on the horizon
The Berkshire Hathaway chief says policymakers will have to raise money to pay off costly rescue plans – one way or another.
Colin Barr, senior writer
Last Updated: May 2, 2009: 1:32 PM ET

OMAHA, Neb. (Fortune) — Berkshire Hathaway chief Warren Buffett defended the government’s handling of the economic crisis, but warned that the purchasing power of the dollar may fall as policymakers stretch to finance expensive rescue plans.

Reflecting on the near implosion of the financial system last fall, Buffett said officials should be judged more leniently when facing "as close to a total meltdown as you can imagine."

But he warned that efforts such as the Treasury’s $700 billion Troubled Asset Relief Program and the $787 billion fiscal stimulus plan passed this year by Congress will have to be paid for, one way or another.

And with political leaders showing little inclination to raise taxes, one sure way to pay for excess spending is to inflate the value of the currency, Buffett said. The biggest losers in a surge of inflation, he added, would include holders of bonds and other fixed-income assets.

"I haven’t had my taxes raised," said Buffett, who has run Berkshire for more than four decades. "My guess is the ultimate price will be paid by a shrinkage of the value of the dollar."

More…

White House Unveils Plans To Fight Individual Tax Evasion
By Martin Vaughan
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–U.S. President Barack Obama wants Congress to pass a law that would change the legal standard that applies in disputes between the Internal Revenue Service and some foreign banks over whether the bank is helping U.S. taxpayers to hide assets.

The legal proposal is part of a set of changes the White House unveiled Monday, aimed at helping the IRS catch offshore tax dodgers.

The proposal would affect banks that do not share information on their U.S. customers with the Treasury Department, under an arrangement known as the "qualified intermediary," or QI, program. It would change legal presumptions that the White House say now work in favor of U.S. individuals hiding assets offshore.

"Under this proposal, the assumption will be that these institutions are facilitating tax evasion, and the burden of proof will be shifted to the institutions and their account-holders to prove they are not sheltering income from U.S. taxation," according to a summary from the White House.

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Jim Sinclair’s Commentary

More from our friends at www.GATA.org

BIG MONEY MOVING INTO COMEX GOLD & SILVER CALL OPTIONS
By Adrian Douglas

In November 2005 when gold was trading about $450 I predicted the mega-move in gold up to $720/oz by noticing a very large build-up of call options in the HUI component shares http://www.marketforceanalysis.com/Pubished%20Articles/assets/Explosive%20Rise%20in%20Gold%20Mining%20Shares%20Coming.pdf)

In August 2007 I identified a massive Gold call option build-up in the COMEX DEC 2007 contract and predicted a big gold move (http://www.marketforceanalysis.com/Published_Articles07_assets/COMEX%20GOLD%20OPTION%20OI.pdf ). Gold was trading at $660/oz at the time and ran up to over $1000/oz by March 2008.

In July of 2008 I noticed a similar build-up in the COMEX December Call options indicating a major upward move in gold before the end of 2008. Considering what transpired in the financial markets from July to December 2008, after I made this prediction, it made perfect sense. We now know, however, that two large banks, probably JPMorgan and HSBC, sold a massive amount of futures short in July 2008 equivalent to 10% of global gold production and changed the intuitive direction of the gold market into a counter-intuitive one. As a result the CFTC was obliged to take note and commenced an investigation into both the silver and gold markets on the COMEX for manipulation. So I think a rain-check is deserved on the 2008 market call until the CFTC officially declares the manipulation or the market blows up (I think the latter will happen before the former!)

It just recently came to my attention from two different confidential sources that JPMorgan and Goldman Sachs have been buying large amounts of Calls in gold and silver. This made me put on my gumshoes and take a serious poke around the COMEX option open interest once again.

Figure 1 shows the cumulative Open Interest across all strike prices for the COMEX Gold Call positions and the Put positions for the JUN 09 options.

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Jim Sinclair’s Commentary

Suck it up gang. The banks own Washington, therefore what is good for the bankster’s is what is going to be done in every financial and legislative case. This guarantees that the bankster’s debt and US debt will be extinguished by hyperinflation.

Top Senate Democrat: bankers "own" the U.S. Congress
THURSDAY APRIL 30, 2009 05:35 EDT

Sen. Dick Durbin, on a local Chicago radio station this week, blurted out an obvious truth about Congress that, despite being blindingly obvious, is rarely spoken:  "And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they franklyown the place."  The blunt acknowledgment that the same banks that caused the financial crisis "own" the U.S. Congress — according to one of that institution’s most powerful members — demonstrates just how extreme this institutional corruption is.

The ownership of the federal government by banks and other large corporations is effectuated in literally countless ways, none more effective than the endless and increasingly sleazy overlap between government and corporate officials.  Here is just one random item this week announcing a couple of standard personnel moves:

Former Barney Frank staffer now top Goldman Sachs lobbyist

Goldman Sachs’ new top lobbyist was recently the top staffer to Rep. Barney Frank, D-Mass., on the House Financial Services Committee chaired by Frank.  Michael Paese, a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank’s committee in September, will join Goldman as director of government affairs, a role held last year by former Tom Daschle intimate, Mark Patterson, now the chief of staff at the Treasury Department. This is not Paese’s first swing through the Wall Street-Congress revolving door: he previously worked at JP Morgan and Mercantile Bankshares, and in between served as senior minority counsel at the Financial Services Committee.

So:  Paese went from Chairman Frank’s office to be the top lobbyist at Goldman, and shortly before that, Goldman dispatched Paese’s predecessor, close Tom Daschle associate Mark Patterson, to be Chief of Staff to Treasury Secretary Tim Geithner, himself a protege of former Goldman CEO Robert Rubin and a virtually wholly owned subsidiary of the banking industry.  That’s all part of what Desmond Lachman — American Enterprise Institute fellow, former chief emerging market strategist at Salomon Smith Barney and top IMF official (no socialist he) — recently described as "Goldman Sachs’s seeming lock on high-level U.S. Treasury jobs."

Meanwhile, the above-linked Huffington Post article which reported on Durbin’s comments also notes Sen. Evan Bayh’s previously-reported central role on behalf of the bankers in blocking legislation, hated by the banking industry, to allow bankruptcy judges to alter the terms of mortgages so that families can stay in their homes.  Bayh is up for re-election in 2010, and here — according to the indispensable Open Secrets site — is Bayh’s top donor:

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Jim Sinclair’s Commentary

This is only the beginning. He who has the Surplus and the Gold makes the rules.

"No country ever benefits from a prolonged war."
–Sun Tsu in "The Art of War"

USA vs. Iraq, Afghanistan and probably Pakistan and Iran.

Asia’s Economies Form an Alliance the West Can’t Match
Monday, May. 04, 2009

"Asia is doing what the West cannot do despite political and military divisions among many of them that go back decades. Nations in the region are building a coercive plan to protect the region’s financial stability."

The U.S., U.K., and a number of the large countries that make up the E.U. began to form political and military and alliances after WWII and these expanded as the Soviet Union dissolved. Through the current financial crisis there has been very little coordinated economic policy among these same counties even though some of the economically weaker ones would certainly benefit from a program to shore up the financial health of the region by providing a pool of capital for temporary aid.

Asia is doing what the West cannot do despite political and military divisions among many of them that go back decades. Nations in the region are building a coercive plan to protect the region’s financial stability.

According to Reuters, "Japan, China and South Korea have finalized details of an emergency $120 billion liquidity fund for 13 Asian nations." In the event of a financial crisis in one of the counties, this fund would be available to provide assistance.

There is a temptation to compare this new facility to the IMF, but that analysis would miss the move toward a financial alliance that will help serve to bring Asia together as a single, loosely formed economic entity lead by China and Japan, two of the four largest countries in the world as measured by GDP. The program makes the region financially stable, probably more stable than Europe is now with its rising unemployment, stagnant economies, and sovereign debt which faces downgrades in many cases.

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Jim Sinclair’s Commentary

Ignore any reported Pakistan military action as there is no SUSTAINABILITY over ground gained.

Next Taliban conquest? A view from Pakistan’s frontline.
Residents living between the militants and the capital worry their understaffed security forces can’t defend their town.
By Ben Arnoldy | Staff writer
from the May 4, 2009 edition

Haripur, Pakistan – Shopkeeper and local reporter Zeeshan Aslam recently broke the news that residents of Haripur had been fearing: The Taliban had come to town.

These Talibs came in shackles, headed for cells in the local prison. But for residents of Haripur – one of the last outposts between the Taliban frontlines in Swat and Buner and Pakistan’s capital – the news quickly got darker. Newspapers in recent days carried a Taliban warning: Release those prisoners, or we’ll come to town and do it ourselves.

Surprisingly little would be stopping them if they did, highlighting a wider problem of weak police and paramilitary forces in Pakistan. Despite lying just 25 miles by mountain footpath from Buner, where nearly a week of fighting has left at least 80 Taliban and three security personnel dead, Haripur residents say the city and prison are poorly defended.

"We are already living in fear," says Mr. Aslam, flanked by visitors to his corner stationary shop. He lays down a newspaper carrying photos of masked Taliban fighters. Additional security forces have come to this city of 100,000, he says, but too few. "The cordon is porous, and they [the Taliban] can easily come in."

Military spokesman Gen. Athar Abbas offers a different assessment: "There is absolutely no threat to the city of Haripur given the military operation, and all the out routes from Swat [are sealed]."

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Jim Sinclair’s Commentary

Please note the new references to labs (knowledge) and fuel production facilities (raw materials) regarding the danger to Pakistan nukes.

Pakistan Strife Raises U.S. Doubts on Nuclear Arms
By DAVID E. SANGER
Published: May 3, 2009

WASHINGTON — As the insurgency of the Taliban and Al Qaedaspreads in Pakistan, senior American officials say they are increasingly concerned about new vulnerabilities for Pakistan’s nuclear arsenal, including the potential for militants to snatch a weapon in transport or to insert sympathizers into laboratories or fuel-production facilities.

The officials emphasized that there was no reason to believe that the arsenal, most of which is south of the capital, Islamabad, faced an imminent threat. President Obama said last week that he remained confident that keeping the country’s nuclear infrastructure secure was the top priority of Pakistan’s armed forces.

But the United States does not know where all of Pakistan’s nuclear sites are located, and its concerns have intensified in the last two weeks since the Taliban entered Buner, a district 60 miles from the capital. The spread of the insurgency has left American officials less willing to accept blanket assurances from Pakistan that the weapons are safe.

Pakistani officials have continued to deflect American requests for more details about the location and security of the country’s nuclear sites, the officials said.

Some of the Pakistani reluctance, they said, stemmed from longstanding concern that the United States might be tempted to seize or destroy Pakistan’s arsenal if the insurgency appeared about to engulf areas near Pakistan’s nuclear sites. But they said the most senior American and Pakistani officials had not yet engaged on the issue, a process that may begin this week, with President Asif Ali Zardari scheduled to visit Mr. Obama in Washington on Wednesday.

More…

Posted at 1:15 PM (CST) by & filed under In The News.

Dear CIGAs,

Winston Churchill said, "He is a blind soul indeed, that cannot see a great purpose is being worked out here below."

Do not allow the Spin to convince you the Banksters are finished their evil deeds. The Banksters should know there is a power much greater than I possess that will certainly end their demonic rule.

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Jim Sinclair’s Commentary

From the good people at www.GATA.org.

MineWeb: Warren Buffet’s good news for gold
Submitted by cpowell on 02:04PM ET Sunday, May 3, 2009. Section: Daily Dispatches
By Alec Hogg, Editor
MineWeb.com
Sunday, May 3, 2009

OMAHA — In the 44 years he’s been building a reputation as the world’s savviest investor, Warren Buffett has rarely offered any good news on gold. Until now.

The two key messages he delivered to 35,000 shareholders at Berkshire Hathaway’s annual general meeting in Omaha over the weekend were inflation is coming back, and the U.S. dollar is headed lower. Both predictions, if fulfilled, are powerfully positive for gold. …

Despite his gloomy forecasts for inflation, Buffett hasn’t exactly signed up to gold-supporting groups like GATA. Rather, he suggested to Berkshire shareholders their best protection was "invest in yourself, and, as a second option, buy stock in a well-run company." …

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Jim Sinclair’s Commentary

It is not the standing nukes as much as it is the raw materials, manufacturing capabilities, technicians and Dr. Doom’s network.

Pakistan’s nuclear program grows as Islamist threat does, too
(SUNDAY 5-3 RELEASE) BY JONATHAN S. LANDAY
McClatchy Newspapers

Pakistan is expanding its nuclear weapons program even as Islamic extremists in northwest Pakistan continue to advance in the direction of several highly sensitive nuclear-related sites, U.S. officials and other experts said this week.

Pakistan’s government is completing two new nuclear reactors to produce plutonium for weapons that would be smaller, lighter and more efficient than the 60-odd highly enriched uranium-fueled warheads that Pakistan is now thought to possess, the officials and experts said.

"In the current climate, with Pakistan’s leadership under duress from daily acts of violence by insurgent Taliban forces and organized political opposition, the security of any nuclear material produced in these reactors is in question," said an April 23 report by the Institute for Science and International Security.

Some of the officials and experts are more worried that Islamic radicals or sympathizers inside Pakistan’s military might get their hands on radioactive material that could be used to make a crude dirty bomb than they are about a theft of one of the heavily guarded weapons themselves.

The two new plutonium production reactors are being built next to a reactor at Khushab, about 160 miles southwest of Islamabad, the capital, that’s been operating since 1998. It’s on the heartland Punjab Province’s northern border with the restive North West Frontier Province, much of which is under the Taliban’s control or influence.

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Jim Sinclair’s Commentary

Is the Kentucky Derby reading my mind?

Breaking News Alert
The New York Times
Saturday, May 2, 2009 — 6:33 PM ET
Mine That Bird Wins the Kentucky Derby

Mine That Bird, a 50-1 longshot ridden by Calvin Borel, won the 135th Kentucky Derby at Churchill Downs on Saturday after I Want Revenge, the morning-line favorite, was scratched.

Jim Sinclair’s Commentary

A two sided strategy is in place to get the US legislative to provide Pakistan funds.

What is below is closer to TRUTH than any thought that the Pakistan government can provide sustainability to any ground gained on the Taliban.

US general says Pakistan could be just two weeks from collapse
By Isambard Wilkinson in Islamabad 
Last Updated: 8:53PM BST 01 May 2009

American officials have watched with growing anxiety as Taliban fighters have strengthened their grip on north-western Pakistan.

Militants advanced to within 60 miles of Islamabad, the capital, last month and were pushed back only when the US put pressure on Pakistan to launch a counter-offensive.

Gen Petraeus, the head of Central Command, which covers all US forces in the Middle East and south Asia, is reported to have said that “the Pakistanis have run out of excuses” and now accept that tough action has to be taken to guarantee the government’s survival.

Gen Petraeus, who oversaw the American troop surge credited with quelling the insurgency in Iraq, is reported to have wearied of Pakistan’s excuses for failing to take on the Taliban.

According to Fox News, he told colleagues “we have heard it all before”.

He is reported to have urged concrete action to destroy the Taliban in the next two weeks before determining the United States’ next course of action.

Gen Petraeus made the assessment in private talks with congressmen and members of the senate, according to Fox.

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Jim Sinclair’s Commentary

Look at the significant improvement in the wrong part of the housing equation.

Record number of default notices sent
Thursday, April 23, 2009
By Melissa MacBride

VALENCIA, Calif. (KABC) — The number of default notices sent to California homeowners reached an all-time record during the first three months of this year. It’s another sign that the mortgage crisis isn’t slowing down any time soon.

New numbers show 135,000 notices were sent out, which is an 80 percent increase.

A default notice is the first step in a foreclosure process.

According to Dataquick, a real estate tracking firm, the ongoing recession is a big factor, plus lenders are playing catch-up after a temporary lull in foreclosure activity.

Dataquick said a lot of risky loans were made in mid to late 2006, and the foreclosure process is now working its way through. 8.5 percent of the 3 million home loans made in California that year have ended up in default.

Fewer default notices went out during the end of 2008 after a new state law took effect requiring lenders to help keep troubled borrowers in their homes. That has lead to a 6 percent drop in the number of foreclosures so far this year.

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Jim Sinclair’s Commentary

Now do you still want to argue with Armstrong or Alf?

"Thorsten Polleit, Honorary Professor at Frankfurt School of Finance and Management, did some calculations for this and found (as of March ’09):

backing all of M1 with gold. M1 divided by gold oz. results in $6000 per oz.

backing M2 with gold and you get $31,000 per oz.

backing Euro M3 and gold is E26,000"

Does Mises’ Equation Give a Basis for Gold Price?
May 03, 2009

Assuming you agree to a strict Austrian approach to life and love, Mises advocated sound monetary policy by returning to a gold standard and developed this equation for a “regression” to a properly backed currency called the gold cover ratio:

GCR = (C+D+T+S+L) / G

Where C is cash, D is demand deposits, T time deposits, S savings, and L banks long term liabilities. And our favorite variable G is oz of gold at Fort Knox.

Thorsten Polleit, Honorary Professor at Frankfurt School of Finance and Management, did some calculations for this and found (as of March ’09):

backing all of M1 with gold. M1 divided by gold oz. results in $6000 per oz.

backing M2 with gold and you get $31,000 per oz.

backing Euro M3 and gold is E26,000

But the real impact of Mises’ work is not in what the price of gold should or could be but rather the conclusion that no matter what the government does (e.g. quantitative easing, free running printing presses, artificially low interest rates, stimulus packages, bank bailouts, TARP, TALF, etc, etc) we still get a serious erosion if not all out loss of the exchange value of fiat money.

Deflation (mark to market) results in bank failures wiping out bond holders or savers or both but monetizing any substantial portion of the bubble debt means hyperinflation. No escape. This is why Geithner looks like such an idiot. Not because he’s not smart.

Government debt issuance only buys time. Sooner or later rates go up and voila, insolvency as payments usurp ever larger chunks of real working capital and wages.

Thus Mises concludes that a market agreed upon currency with real valuation and without government intervention behind it is the only way to avoid fiat money crisis after crisis. After all, when they first established the Federal Reserve they too saw the need to tie it to a gold standard and did again in legislation intended to abolish the Fed again in 1936…

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Posted at 1:12 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

The US is busted, most do not know it yet… and on the verge of WWIII in Pakistan.

Best,
CIGA BT

China has ‘canceled US credit card’

China, wary of the troubled US economy, has already "canceled America’s credit card" by cutting down purchases of debt, a US congressman said Thursday.

China has the world’s largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.

But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.

Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had "very legitimate" concerns about its investments.

"It would appear, quietly and with deference and politeness, that China has canceled America’s credit card," Kirk told the Committee of 100, a Chinese-American group.

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Dear Big Tatanka,

No one can deny that China has certainly restricted the USA’s credit line. Why do you think the Fed is buying Treasury paper?

Regards,
Jim

Posted at 5:25 PM (CST) by & filed under In The News.

Dear CIGAs,

Good morning. The Army is quite busy so we are the police here to help you.

Policemen in Seattle wearing masks made by the Red Cross, during the influenza epidemic, December 1918.

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Jim Sinclair’s Commentary

There are powerful traditions that say when the world is so afflicted by selfish, amoral, degraded, rank and foul evil people that there seems no relief possible, the Absolute Divine takes human form to destroy that evil and save the devotees.

Father, there has never been more evil everywhere on this lost planet than now.

Caligula was one, but the banksters are a multitude. Their rotten tentacles are everywhere. They have killed us all to some degree. They preach their demonic ways as if deputized by you.

If you are coming Absolute Divine, could you please HURRY?

Berkshire’s Munger Says ‘Venal’ Banks May Evade Needed Reform 
By Christine Harper, Betty Liu and Erik Holm

May 2 (Bloomberg) — Berkshire Hathaway Inc. Vice Chairman Charles Munger, whose company is the largest private shareholder in Goldman Sachs Group Inc. and Wells Fargo & Co., said banks will use their “enormous political power” to prevent changes to the industry that would benefit society.

“This is an enormously influential group of people, and 90 percent of that influence is being spent to gain powers and practices that the world would be better off without,” Munger, 85, said yesterday in an interview with Bloomberg Television. “It will be very hard to accomplish the kind of surgery that would be desirable for the wider civilization.”

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Jim Sinclair’s Commentary

All of this is Hollywood and Wag the Dog.

Its purpose is to please the US legislative for additional funds required by the present Pakistan government retirement fund. The real answer is sustainability.

The strategy of the Taliban is exactly what I told you before the Iraq War. In comes shock and awe so everyone runs away, buries their weapons and puts on street attire. After the shock and awe is over and the photo ops are finished, they dig up their weapons, bury the street attire and bleed the other side to death.

That strategy has been in place since before the birth of Jesus Christ.

There is NO SUSTAINABILITY in PAKISTAN.

A real offensive, or a phoney war?
Apr 30th 2009 | BUNER, ISLAMABAD AND SWAT
From The Economist print edition

As the Pakistani army launches a new assault on the Taliban, America hopes it is now more serious about defeating the militants

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WHEN Barack Obama unveiled his new policy on Pakistan and Afghanistan in March, he gave a warning that al-Qaeda, the Taliban and other jihadist gangs were “killing Pakistan from within”. The generals who guard Pakistan’s national security had shown only “mixed results” in combating the threat, he said. They would no longer enjoy a “blank cheque”; they must show that they are fighting in good faith.

On April 26th, Pakistan gave a glimpse of this: by launching an attack on the Pakistan Taliban in parts of North-West Frontier Province (NWFP) recently overrun by the militants. It began with an assault in Lower Dir, near the border with Afghanistan, in which the army claims to have killed 70 militants and lost ten soldiers, and which displaced some 30,000 people.

On April 28th the army launched a bigger offensive in the scenic Buner valley, just 100km (62 miles) from Islamabad, Pakistan’s capital. As helicopter gunships and jets strafed their positions, the Taliban took around 70 policemen and soldiers hostage. But showing more resolve than it had previously, the army said airborne troops had been dropped behind Taliban lines and freed 18 of the captives. Major-General Athar Abbas, a military spokesman, said 50 militants had been killed in the first two days of fighting. He said it would take a week to drive the Taliban out of Buner.

This sudden violence seems to have been provoked, in part, by embarrassing media reports of the Taliban’s capture of Buner. Many of the bearded fighters had come from the neighbouring district of Swat, a Taliban stronghold, where NWFP’s government, at the army’s urging, had brokered a ceasefire with the militants in February. Under the terms of this pact, the government promised to institute Islamic law, sharia, throughout the Malakand division (whose seven districts, including Swat and Buner, make up about a third of NWFP’s area). In return, the local Taliban, led by a zealot called Mullah Fazalullah, were to lay down their arms.

The Taliban’s advance into Buner, which had resisted Talibanisation, was a violation of the deal, but at first neither the government nor the army seemed concerned. America, which had opposed the Swat deal from the start, was furious. On April 22nd Hillary Clinton, the secretary of state, said Pakistan was becoming a “mortal threat” to the world; its government and people needed to “speak out forcefully against a policy that is ceding more and more territory to the insurgents”. On April 25th she expressed concern for the safety of Pakistan’s nuclear arsenal if the Taliban were to “topple the government”.

Some Western diplomats considered this scaremongering. The Taliban are near Islamabad because the capital, a 1960s new town, was built close to the rugged border area where these Pushtun tribesmen live. But there is no chance of their seizing Islamabad. If, unthinkably, the disparate warlords who make up the Pakistan Taliban were to mass together for a frontal attack, Pakistan’s army, which is 620,000-strong and well-drilled for conventional warfare, could crush them. Indeed, many pundits reckon that an Islamist takeover in Pakistan would be possible only with the army’s support.

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Jim Sinclair’s Commentary

Remember Dr. No and Chung Phat? Now we know who they were acting for. The real question now is what is the true figure of US Treasury instruments supposedly held by China. In 2010 will we find out that there is 1/4 of what people think it is now? The Chinese are smart and take no financial prisoners. In this fight for national financial survival you tag em and bag em.

China’s gold buy raises eyebrows for all the right reasons
By Myra P. Saefong, MarketWatch
Last update: 7:00 a.m. EDT May 1, 2009

TOKYO (MarketWatch) — The precious-metals market took notice for all the right — but not-so-obvious — reasons when China announced last week that it ramped up its gold reserves by 76% in the last six years.

After all, the world’s largest producer of gold, which also happens to be the world’s most populous nation and third-largest economy, must have a good reason for its purchases — and quite a few experts said the move solidifies gold’s place as a monetary asset, and shows that it’s destined for a brighter future.

"The important take-away is that China itself is absorbing the bulk (if not all) of the production of the world’s largest producer of gold (also China) with the now confirmed intent of building reserve holdings," said Peter Grant, a senior metals analyst at USAGOLD-Centennial Precious Metals.

"That is very favorable for the longer-term outlook for gold," he said.

Last week, China announced that the amount of gold in its reserves has climbed to 1,054 tons from 600 tons in 2003.

"China … has taken the golden path and now they want the world to know about it.’

— Michael Kosares, Centennial Precious Metals

"China, true to its reputation for patience and steady, long-term progress toward its goals, has taken the golden path and now they want the world to know about it," said Michael Kosares, president of Centennial Precious Metals.

The nation has become the fifth-largest individual-country holder of the precious metal.

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Posted at 10:56 AM (CST) by & filed under Jim's Mailbox.

Jim,

The recent nominal rallies in Amex Composite, Nasdaq Composite, and New York Composite look quite unimpressive when priced in a stable currency such as gold. When the world gets tired of getting their pockets picked this distinction will matter.

Regards,
CIGA Eric

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Posted at 7:03 PM (CST) by & filed under In The News.

Dear CIGAs,

A modern selfless friendship attitude of Pooh:

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Jim Sinclair’s Commentary

We are in an economic war to end capitalism and the US dollar. Fox just woke up to this.

Forget Nukes — Watch Out for Economic War

Fought with currencies, embargoes and hackers, economic warfare may lack the “shock and awe” of conventional battles but it could still pose a threat to the U.S., especially in these troubling economic times.

Picture this hypothetical dreamed up by a national security expert obsessed with economic catastrophe:

Angry that U.S. policies aimed at boosting the economy have devalued their $2 trillion of currency reserves, the Chinese decide to stop buying Treasurys just as America tries to finance its massive spending plans. 

In response, the U.S. imposes trade sanctions against China, which in turn pushes for a global currency. From there, the U.S. accuses China of manipulating its own currency and things escalate further.

Without a shot being fired, those actions represent a type of unfriendly economic competition that some are very worried about.

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Jim Sinclair’s Commentary

If you read about the Flu Epidemic of 1918 you would get a log cabin in the Talkeetna Wilderness of Alaska and go there if the present Flu turns to pandemic level 6 and reappear in the fall. Anybody got one they want to rent out for a year? All I need to bring is the proper electronics, a GenSet, fuel and an M14.

Fox News: Martial Law, Forced Vaccinations If It’s a Pandemic?

A segment on Fox News’ Fox and Friends this morning explored the issue of whether a swine flu pandemic could result in a declaration of martial law in America and a suspension of constitutional rights.

“If it becomes a pandemic, you could lose some simple rights – like going to the movies,” said host Steve Doocy, before introducing legal analyst Peter J. Johnson, Jr.

“People in our government need to start thinking about how, if this actually becomes a pandemic, how it’s going to affect our daily life and our rights,” said Johnson, before asking if people who try to escape quarantines or refuse mandatory vaccinations would face jail time.

Johnson added that Americans were willing to give up rights in order to “stay alive” but that an orderly discussion of how that would happen needs to take place.

Closing schools, closing the border, forcibly quarantining Americans and eliminating the right to freely assemble, including preventing people from going to shopping malls, were all mentioned as possibilities.

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Jim Sinclair’s Commentary

The formula for the end of financial days is simple:

1. Pakistan goes Taliban.
2. Israel makes a major miscalculation.
3. Turkey is a victim.

Israel very concerned as Turkey looks to build alliances with Syria

Israeli defense minister Ehud Barak commented that Turkey’s decision to hold three days of military maneuvers with Syria is "disturbing."

And that is not all. The exercise will be accompanied by the signing of a letter of intent between Turkish defense minister Vecdi Gonul and his Syrian counterpart Hassan Turkmani for cooperation in the defense industry.

DEBKAfile’s military sources report that the signing and the exercise are major landmarks on the shrinking road of military and trading ties between Turkey and Israel. In 2009, Ankara pared exchanges down to $2.2 billion in 2009 and expanded its trade with Syria to $2.6 billion.

Israel is now in a hurry to slash its military exchanges with Turkey to prevent the leakage of military secrets to an avowed Arab enemy.

Ankara is furthermore defaulting on payments for military purchases and other contracts. It has piled up a debt of several million dollars to Israel’s military and air industries, in payment for a $5 billion deal to build a Mark 3 Chariot plant in Turkey. Production of 1,000 Israeli tanks, to have been Turkey’s main theater tank, should have begun in early 2009.

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Jim Sinclair’s Commentary

Of course the small banks have to pay just like we taxpayers have to pay for the bankster’s grand Greenwich CT lifestyle. Madam, need two more vacuum cleaners? They are the ladies in blue uniforms.

Small banks say they’re paying for big bank failures
By Christine Pratt
Posted May 01, 2009

CASHMERE — Small community banks — like Cashmere Valley Bank — that had nothing to do with the excesses of big Wall Street firms that led to the finanical meltdown are now paying a price they protest is unfair.

Community bankers find themselves under tighter scrutiny from federal regulators. They say the $700 billion financial bailout has favored large institutions. And they are upset about a special assessment the government wants to charge to shore up the Federal Deposit Insurance Fund, which failed banks are draining.

“We’ve run a successful, safe financial institution,” Ken Martin, president of the Cashmere-based bank said Tuesday. “Those of us who were responsible and still exist are getting hit with those huge premium increases. And at the same time they’re giving these huge bailout amounts to the Citigroups.”

In 2007, Cashmere Valley Bank paid about $89,000 in 2007 in premiums to the FDIC, the federal entity that insures bank deposits.

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Jim Sinclair’s Commentary

This article speaks for itself.

Sales Headlines Are Misleading

Decision makers don’t have time to study all of the data, yet they make huge decisions every day based on what they believe to be the market outlook. Smart decision makers rely on someone who is unbiased to study all of the data and provide a fair outlook.

National sales volumes have not bottomed, as reported earlier this month. New home sales are falling in all regions of the country. Existing home sales have risen sharply in the West and, while they continue to fall elsewhere, it is at a slower rate of decline in more recent months.

Recent headlines based on Seasonally Adjusted (SA) data are misleading. Reporters have been trained to cover the SA numbers each month. While the SA numbers have merit, they bounce around a lot because of sample size, weather, or other issues such as whether Easter is in March or April. These issues are often addressed in the body of the article, or in the later stages of the TV report, but most people unfortunately do not pay attention to the details.

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Jim Sinclair’s Commentary

Retirement fund for the present Pakistan government. Look at how the amount of dollars has mushroomed into the stratosphere.

US congress pressed on Pakistan aid

Robert Gates, the US defence secretary, has urged congress to quickly approve increased military aid for Pakistan and funding for wars in Afghanistan and Pakistan.

The request came as the US state department released a report saying al-Qaeda remained the main "terror" threat to the US and that the group was increasingly using Pakistan as its battleground.

Barack Obama, the US president, has requested $83.4bn for the remainder of the 2009 fiscal year, including $76bn for Iraq and Afghanistan and about $400m to aid Pakistan in its battle against the Taliban.

"I urge you to take up this bill and pass it as quickly as possible," Gates told the senate appropriations committee on Thursday.

Unless the request is approved, the US government would begin running out of money in mid-May to reimburse Pakistan for military assistance and by July the US army and marines would also be short of funds, Gates said.

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Jim Sinclair’s Commentary

Please take the time to watch this video from Dr. Henry Niman of ‘Recombinomics’ discussing the H1N1 flu. His projections are disturbing, to say the least. Please keep in mind that the name Swine Flu is a given but this flu is not from pigs.

Click here to view the video…

 

Jim Sinclair’s Commentary

Fox News on the loss of civil liberties, martial law and the Swine Flu:

Jim Sinclair’s Commentary

Berkshire probably worked out their last contract yesterday.

You have to love listening to Bloomberg. Even this AM they were referring to the insurance index on sovereign debt which is of course just what Berkshire is talking about here – OTC credit default derivatives.

The banksters reap the bailouts, having raped the public and still continue to manufacture more weapons of mass financial destruction. You and I can go jump in the lake if we needed anything.

Berkshire’s Munger Favors ‘100% Ban’ on Credit-Default Swaps
By Betty Liu, Shannon D. Harrington and Erik Holm

May 1 (Bloomberg) — Berkshire Hathaway Inc. Vice Chairman Charles Munger said he supports an outright ban of credit- default swaps to prevent speculators from profiting on the failure of companies.

“If I were the governor of the world, I would eliminate it entirely — 100 percent,” Munger said in a Bloomberg Television interview today. “That’s the best solution. It isn’t as though the economic world didn’t function quite well without it, and it isn’t as though what has happened has been so wonderfully desirable that we should logically want more of it.”

Munger, second in command at Omaha, Nebraska-based Berkshire behind billionaire Chairman Warren Buffett, has long decried some of Wall Street’s tactics as short-sighted. He said in a Washington Post opinion column in February that the U.S. government must expand regulation to prevent the excesses that caused the current fiscal crisis, and said credit-default swaps were partly to blame.

Munger, 85, and Buffett have touted a buy-and-hold strategy of investing in undervalued firms as a more reliable way to profit from financial markets. The two have at times departed from that approach, and Berkshire began selling credit-default swaps on individual companies in 2008. The firm backed $4 billion in debt at 42 corporations as of Dec. 31, Buffett, 78, said in a February letter to shareholders.

“The national policy that allowed the derivative markets to develop as they did was a stupid policy and we think the derivative markets as they evolved have done more public damage than public benefit,” Munger said. “That said, if they exist and they are legal and some opportunity therein is presented to us that we think makes sense to the shareholders of Berkshire, we would seize that opportunity.”

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Jim Sinclair’s Commentary

Yet no matter how they drove the world to its knees with OTC derivatives, they are bailed out 110% while the rest of us "can eat cake." Not one insider financial institution will be let go, no matter how much money they need. If you listen to Volcker’s interview you would have heard that. This is so very WRONG!

The blue collar guy loses his home as the master bankster in Greenwich adds a new wing on his 46 room mansion that directly faces the Long Island Sound. That renovation is paid for with TARP money, of course. The Madam is pleased as it will be much easier to get help in a depression. Her definition of a vacuum cleaner is a lady wearing a light blue uniform.

Bankers made ‘astonishing mess’

The effects of the continuing banking crisis will be felt for generations, a committee of MPs has warned.

The Treasury committee, in its second report on the crisis, said it had been caused largely by the banks’ own reckless behaviour.

"Bankers have made an astonishing mess of the financial system," said committee chairman John McFall.

The MPs supported the various attempts of the government to bail out the banks and to shore up the banking system.

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Jim Sinclair’s Commentary

I am from the government and am here to help you. Please put on these cuffs and proceed (crawl) to the bus across town.

Look at all the sheeple crawling in circles.

You will receive the finest of government medicine and housing at the NYC abandoned docks.

Come along now, your dogs and children are perfectly able to take care of themselves. We left them a 5 pound bag of government surplus dried (in 1941) swine food and written instructions.

Culling the gene pool is good just like GREED. He is resisting, tazer him! Take his $250,000 and throw him, in the political re-education jail (see presidential order 13375).

DHS Sets Guidelines For Possible Swine Flu Quarantines
Posted by Declan McCullagh
April 28, 2009 5:12 PM

The U.S. Department of Homeland Security has sent a memo to some health care providers noting procedures to be followed if the swine flu outbreak eventually makes quarantines necessary.

DHS Assistant Secretary Bridger McGaw circulated the swine flu memo, which was obtained by CBSNews.com, on Monday night. It says: "The Department of Justice has established legal federal authorities pertaining to the implementation of a quarantine and enforcement. Under approval from HHS, the Surgeon General has the authority to issue quarantines."

McGaw appears to have been referring to the section of federal law that allows the Surgeon General to detain and quarantine Americans "reasonably believed to be infected" with a communicable disease. A Centers for Disease Control official said on Tuesday that swine flu deaths in the U.S. are likely.

Federal quarantine authority is limited to diseases listed in presidential executive orders; President Bush added "novel" forms of influenza with the potential to create pandemics in Executive Order 13375. Anyone violating a quarantine order can be punished by a $250,000 fine and a one-year prison term.

A Homeland Security spokesman on Tuesday did not have an immediate response to followup questions about the memo, which said "DHS is consulting closely with the CDC to determine appropriate public health measures."

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Jim Sinclair’s Commentary

Yes, it definitely would do that but it depends where you are at the time, Karachi or Washington DC.

Robert Gates: bombing Iran would not stop nuclear threat
Bombing Iran would fail to stop the Islamic Republic from building nuclear weapons and could only ‘buy time’, according to Robert Gates, the US defence secretary.
By David Blair, Diplomatic Editor 
Last Updated: 2:50PM BST 01 May 2009

Testifying before the Senate Appropriations committee, Mr Gates outlined the central objection to using force to halt Iran’s nuclear programme.

All of the country’s known nuclear installations, notably the crucial uranium enrichment plant in Natanz, could in principle be destroyed. But the Iranian regime would eventually be able to rebuild them – and it would almost certainly do so without admitting the inspectors from the International Atomic Energy Agency, who presently monitor Iran’s most important nuclear plants.

A military strike would only delay Iran’s nuclear programme, while the regime’s resolve to build a weapon, if it so chooses, may only be hardened.

"Even a military attack will only buy us time and send the programme deeper and more covert," said Mr Gates, during the hearing on Thursday.

The attitude of Iran’s regime was, he added, the crucial factor. Mr Gates said that America’s key aim should be to make clear to Tehran that developing a nuclear arsenal was not in Iran’s own interests.

"Their security interests are actually badly served by trying to have nuclear weapons. They will start a nuclear arms race in the Middle East and they will be less secure at the end than they are now," said Mr Gates.

If Iran were to acquire a nuclear bomb, rival powers in the Middle East, especially Egypt and Saudi Arabia, would probably follow suit. Since Iran began enriching uranium on a large scale in 2006, 13 countries across the Middle East have embarked on nuclear energy projects.

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