Posted at 7:12 PM (CST) by & filed under In The News.




Jim Sinclair’s Commentary

After the advertisement, the statement of the G-20 is meaningless for an economic recovery, but does contain a commitment to hyperinflation. Whatever is required in what amount required should be done. Even Geithner looked amazed. The G-20 statement is directed to the US Treasury and Fed that WILL via swaps provided what is needed, thereby extending the FUBAR.

You think Geitner’s facial expression betrays his knowledge of what is coming at his and the Fed’s hand? Of course he knows!

There is no difference between what is being done by the US Treasury and the Fed from what the IMF and World Bank lectured all the developing nations not to do because of the hyper-inflationary implications IMPLICIT therein.

The USA is headed for the financial condition of a Banana Republic and is already if the truth was to be known. All of this is delivered to you and I by the manufacturers and distributors of OTC derivatives now at the truthful notional value number of one quadrillion, one thousand, one hundred and forty four trillion US dollars. That is cement shoes on the Western Economy.

Just How Much Is $1 Trillion?

President Obama says his Administration’s stimulus plan could cost more than $1 trillion, and this has many people throwing that number around rather casually.

That got us to thinking about just how much $1 trillion represents.

· $1 trillion is almost enough to buy a controlling interest in all 30 of the companies in the Dow Jones Industrial Average.

· $1 trillion is more than the combined state tax revenue of all 50 states.

· $1 trillion would be enough to buy all of the single-family and multi-family residences in the state of Texas.

· $1 trillion in 2008 dollars would cover the entire U.S. federal budget from George Washington’s inauguration to the end of World War I.

· A stack of 200 $100 bills is roughly an inch thick. If these stacks were set up on end like dominoes, $1 trillion would be the distance from New York City to Chicago.

–From the US Global Investor Alert

Jim Sinclair’s Commentary

Now Obama is talking about the Economic Stimulation requiring $1 trillion:

A quadrillion

Number of zeros


















Now think about how the real number for the total outstanding OTC derivatives, the absolute root of the disaster, is one quadrillion,  one hundred and forty four trillion dollars.

Hyperinflation is assured by this historically unprecedented infusion of endless capital into the world’s monetary system and many private pockets.

Jim Sinclair’s Commentary

This weekend’s drama. Let’s see if AIG gets the bonuses down from $165 million to $160 million.

Treasury pressure leads to AIG scaling back bonuses
updated 1:31 a.m. EDT, Sun March 15, 2009

NEW YORK (CNN) — Under pressure from the Treasury Department, insurance giant AIG plans to scale back bonuses and compensation for some of its top-earning employees.

CNN obtained a letter Saturday from AIG Chairman and CEO Edward Liddy to Treasury Secretary Timothy Geithner, in which Liddy pledges in the letter to reduce 2009 bonus payments, which AIG refers to as "retention payments," by at least 30 percent.

Liddy also addresses steps to limit compensation in AIG Financial Products, the London-based unit responsible for issuing the risky credit default swaps, which on several occasions has brought the company to the brink of collapse.

In the letter, Liddy says the unit’s 25 highest-paid contract employees will reduce their salaries to $1 this year and all other officers in the unit will reduce their salaries by 10 percent. Other "non-cash compensation" will be reduced or eliminated.


Jim Sinclair’s Commentary

Expect the Federal Reserve to discuss a program of buying its own 10 year treasuries.

It is hard for me to believe that the Federal Reserve will monetize its own debt. That out bananas the most egregious of Banana Republic economics. how can any sane commentator discuss this as a reasonable approach to running monetary policy?

It is certainly a program the Chinese would love to participate in.

All artificial efforts to control interest rates fail. That is a market axiom.

Expect more of the following:

Bernanke talks up debt monetization as printing presses go into even higher gear
Tue, Dec 2 2008, 07:36 GMT
by John Hardy

The US dollar got an extra boost to start the month yesterday when the Chinese authorities fixed the renminbi at its weakest level versus the greenback since this spring, and the ‘trading range’ for the day was larger than the range for the past 4-5 months. The timing of the move was significant considering that Paulson is meeting with his Chinese counterparts at the fifth round of the US-China Strategic Economic Dialog talks on Thursday and Friday. There is intense speculation that the Chinese may want the renminbi to weaken to support growth. Any decided effort by the Chinese to keep their currency weak would certainly support the greenback’s rally. The currency has been effectively pegged to the USD for months, so the Chinese have seen their currency gain sharply on most other currencies around the world. This is a key story to watch this week.

Paulson and Bernanke are making it clear that they will do everything in their power to keep yields on the long end of the yield curve as low as possible in an effort to shore up the US housing market. Bernanke was out directly talking up the idea of debt monetization. So far, these scary plans to buy money with money straight from the printing presses is being taken in stride and long yields continue to fall precipitously (macro players are also getting flushed out of the formerly popular bets on the yield curve steepening – the 2-10 spread has collapsed from a near record 260+ bps in mid-November to 180 bps at present.) Are we on the way to deflation or hyperinflation or both…? It’s tough to say, but the Fed has lost control of credit markets by having to resort to these desperate measures. Lenders in the real market for loans are paying record wide spreads to benchmarks if they can get any credit at all, and consumers are also feeling the pinch on their credit cards, where credit limits are being slashed and interest rates jacked up to ridiculous levels – often 30% or more. So despite effectively zero interest rates, quantitative easing, and now signs of debt monetization, the average lender is experiencing a steadily tightening noose on their credit.


Jim Sinclair’s Commentary

Comic relief has brought up serious questions concerning the equity cheerleaders that call themselves interviewers on financial TV.

Jon Stewart puts spotlight on CNBC and meltdown

(AP:NEW YORK) The feud between Jon Stewart and CNBC’s Jim Cramer has been good for laughs _ and ratings _ but has also raised the serious question of whether the experts at TV’s No. 1 financial news network should have seen the meltdown coming and warned the public.

Over the past two weeks, Stewart’s "Daily Show" on Comedy Central has ridiculed CNBC personalities, including Cramer, the manic host of "Mad Money," by airing video clips of them making exuberantly bullish statements about the market and various investment banks shortly before they collapsed.

Stewart has charged that people at CNBC knew what was going on behind the scenes on Wall Street but didn’t tell the public. He has accused CNBC anchors and pundits of abandoning their journalistic duties and acting like cheerleaders for the market.

"In a tremendous boom period, they covered the boom and people wanted to believe in the boom," said Andrew Leckey, a former CNBC anchor and now president of the Donald W. Reynolds National Center for Business Journalism at Arizona State University. "They didn’t uncover the lies that were told to them. Nobody did. But they should be held to a higher responsibility."

But Don Hodges, chairman of Hodges Capital Management in Dallas, said he doesn’t fault CNBC for not seeing the bust coming.


Jim Sinclair’s Commentary

The inviting conclusion is that these two events have a common relationship, if not intentional certain serendipity.

US warships head for South China Sea after standoff
Tim Reid in Washington
March 14, 2009

A potential conflict was brewing last night in the South China Sea after President Obama dispatched heavily armed American destroyers to the scene of a naval standoff between the US and China at the weekend.

Mr Obama’s decision to send an armed escort for US surveillance ships in the area follows the aggressive and co-ordinated manoeuvres of five Chinese boats on Sunday. They harassed and nearly collided with an unarmed American vessel.

Washington accused the Chinese ships of moving directly in front of the US Navy surveillance ship Impeccable, forcing its crew to take emergency action, and to deploy a high-pressure water hose to deter the Chinese ships. Formal protests were lodged with Beijing after the incident.

On a day that Mr Obama and his senior officials met the Chinese Foreign Minister, Yang Jiechi, in Washington, Beijing showed no sign of backing down. Its military chiefs accused the unarmed US Navy ship of being on a spying mission.

The US keeps a close eye on China’s arsenal, including its expanding fleet of submarines in the area. Washington says that the confrontation occurred in international waters, but Beijing claims nearly all the South China Sea as its own, putting it in conflict with five other nations that have claims over different parts of the waters.


China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries
Published: March 13, 2009

BEIJING — The Chinese prime minister, Wen Jiabao, spoke in unusually blunt terms on Friday about the “safety” of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to offer assurances that the securities would maintain their value.

Speaking ahead of a meeting of finance ministers and bankers this weekend near London to lay the groundwork for next month’s Group of 20 summit meeting of the nations with the 20 largest economies, Mr. Wen said that he was “worried” about China’s holdings of United States Treasury bonds and other debt, and that China was watching economic developments in the United States closely.

As the financial crisis has unfolded, China has become increasingly vocal about what it perceives as Washington’s mismanagement of the global economy and financial system, joining a chorus of foreign critics of unbridled American capitalism. On Thursday, for example, France and Germany rebuffed American calls to coordinate a global stimulus packageat the G-20 meeting, saying financial regulation should come first.

In January, Mr. Wen gave a speech criticizing what he called an “unsustainable model of development characterized by prolonged low savings and high consumption.” There was little doubt that he was referring to the United States.

Mr. Wen sounded similar themes in his remarks on Friday, which came in response to questions at a news conference at the end of the Chinese Parliament’s annual session. While refraining from direct criticism of the Obama administration’s economic policies, he reminded Washington of China’s status as its largest creditor. With budget deficits mounting rapidly, the United States needs China if it is to finance all that new debt at low interest rates.


Jim Sinclair’s Commentary

My gawd, you and I take risks working long and hard to succeed.

These guys deal in unlisted, unfunded, unregulated, fraudulent, non-transparent paper, screw up, go begging, get our money, and receive huge bonuses for total failure, total dereliction of human duty, and in that public ignoble failure cause extreme pain and potentially life long suffering to others.

Rather than huge cash presents they deserve public flogging, if not life imprisonment at Attica.

What the hell is the world thinking? Where is your total outrage?

A.I.G. Planning Huge Bonuses After $170 Billion Bailout

Published: March 14, 2009

WASHINGTON — The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.


Jim Sinclair’s Commentary

The US threatens China on the sea so Russia threatens the US with bombers stationed a good stone’s throw away from Florida.

Putin will do what he says and that is quite dangerous.

Russian strategic bombers could use Cuba airfields
Sat March 14, 2009

MOSCOW, Russia (CNN) — Russia expressed interest in using Cuban airfields during patrol missions of its strategic bombers, Russia’s Interfax news agency reported

"There are four or five airfields in Cuba with 4,000-meter-long runways, which absolutely suit us," Maj. Gen. Anatoly Zhikharev told Interfax.

Zhikharev, who is the chief of staff of the Russian Air Force’s long-range aviation, said, "If the two chiefs of state display such a political will, we are ready to fly there."

Zhikharev also told Interfax that Venezuelan President Hugo Chavez has offered a military airfield on La Orchila island as a temporary base for Russian strategic bombers.

"If a relevant political decision is made, this is possible," he said, according to Interfax. Zhikharev said he visited La Orchila in 2008 and can confirm that with minor reconstruction, the airfield owned by a local naval base can accept fully-loaded Russian strategic bombers


Jim Sinclair’s Commentary

Does anybody believe this bombastic bull? How much money are they wasting on wine and cuisine for bureaucrats that can’t find their way out of a paper bag?

G20 make pledge to restore growth

Finance ministers from the G20 group of rich and emerging nations have pledged to make a "sustained effort" to pull the world economy out of recession.

"We are committed to deliver the scale of sustained effort necessary to restore growth," they said in a joint statement after their talks in the UK.

UK Chancellor Alistair Darling said they agreed the International Monetary Fund (IMF) should be given more money.

The talks were held amid reports of rifts over the best way forward.

BBC economics editor Stephanie Flanders said that the outline agreements represented "cheap talk", and differences remain.

The outline agreements will now provide the basis for more concrete pledges at next month’s meeting of G20 leaders in London.


Jim Sinclair’s Commentary

Do not confuse UBS with Switzerland. They are both different lands. One has serious, long standing cultural traditions unlikely to fold, and the other is OTC derivative central in la-la land.

Switzerland eases banking secrecy

Switzerland, the world’s largest offshore financial centre, has agreed to accept concessions on bank secrecy.

However, while it will now abide by international rules on bank data sharing, it said it would only respond to "concrete and justified" requests.

The government added that it would still protect banking customers from "unjustified watching from abroad".

Switzerland’s announcement comes after it had risked being added to a global blacklist of uncooperative tax havens.


Jim Sinclair’s Commentary

Bloomberg, are you listening? shakes up the corner office
Commentary: Stability is required in a period of tumult

By MarketWatch

NEW YORK (MarketWatch) — Jim Cramer’s week from hell just got even worse on Friday.

Fresh from being dressed down on "The Daily Show" on Thursday night, Cramer had to answer for more bad news when Thomas Clarke resigned as CEO of The Inc. (TSCM), Inc, the online financial news site co-founded by Cramer. Board member Darryl Otte will be the interim CEO.

Cramer, who took the reins as chairman last October, is synonymous with the fortunes of The Street as one of the Web site’s signature columnists. The company’s share price stood at $2 on Friday morning, underscoring its woes and struggle for survival.

TheStreet made big bets on its commentators, and it counted on a bull market to maintain the public’s interest. Problem is, TheStreet’s columnists often come across as being shrill and dogmatic. They seem to care more about speaking to one another than informing their readers.

TheStreet somehow got away from the central mission of every business: serve your customers.


Jim Sinclair’s Commentary

You will now be hearing often about a new chapter in this disaster. It is known as Chapter 9. Guaranteed Municipal are now a joke in terms of guarantee.

Ch 9 Primer
Municipal Bankruptcy.

Get ready or get buried. Please note the following passage:

The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts and obligations. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of debt principal or interest, or refinancing the debt by obtaining a new loan.

• extending debt maturities
• reducing the amount of debt principal
• reducing the amount of interest
• refinancing
Got that? There is no authority for new taxes. Good news but unfortunately the only good news. Reading further:

Different types of bonds receive different treatment in municipal bankruptcy cases. General obligation bonds are treated as general debt in the chapter 9 case. The municipality is not required to make payments of either debt principal or interest on account of such bonds during the case. The obligations created by general obligation bonds are subject to negotiation and possible restructuring under the plan of adjustment.

Special revenue bonds, by contrast, will continue to be secured and serviced during the pendency of the chapter 9 case through continuing application and payment of ongoing special revenues.

GO (General Obligation) debt is worthless. Municipal pensioners stand in line with all the other debtors. Special revenue bonds are only protected to the limits of revenue received.


Jim Sinclair’s Commentary

This is a greater problem than Iraq and Afghanistan together.

A pre-emptive act is probable.

Pakistan teeters on the brink of chaos
By Jonathan Manthorpe, Vancouver SunMarch 13, 2009

Washington and London are leaning heavily on Pakistan’s squabbling political leaders as the nuclear-armed nation totters on the brink of chaos.

Britain’s foreign secretary David Miliband, U.S. ambassador to Islamabad Anne Patterson and Washington’s regional point man Richard Holbrooke are all expressing concern to Pakistani leaders that a mass anti-government march due to arrive in the capital on Monday threatens to topple the year-old and insecure administration of president Asif Ali Zardari.

The sense of impending doom is heightened by the increasing authority over large areas of Pakistan of the Taliban, whose fighters are waging a guerrilla war against North Atlantic Treaty Organization forces, including Canadians, across the border in Afghanistan.

Riot police arrested hundreds of demonstrators in the southern commercial centre Karachi on Thursday as opponents of the government of Zardari and his Pakistan People’s Party (PPP) attempted to set out on a so-called "long march" in buses and cars to the capital Islamabad.

The Zardari government has issued a two-week ban on gatherings of more than four people in an attempt to head off the march by supporters of former prime minister Nawaz Sharif and his opposition Muslim League.


Jim Sinclair’s Commentary

Another Taliban picnic.

Militants torch NATO trucks in Pakistan: police

PESHAWAR, Pakistan (AFP) — Taliban militants in northwestern Pakistan torched eight trucks carrying supplies for NATO forces in neighbouring Afghanistan in a pre-dawn attack on Sunday, police said.

A dozen more trucks and trailers were damaged when the militants, armed with automatic weapons and rockets, attacked a terminal on the outskirts of Peshawar city.

"Taliban militants fired four rockets on a truck terminal on the ring road on the city’s outskirts and destroyed eight trucks completely," local police official Gohar Khan told AFP.

"The militants also torched 12 more trucks and trailers."

Khan said police arrived during the attack, in which the two truck drivers were shot and injured, but the militants fled to the neighbouring tribal area.


Posted at 6:22 PM (CST) by & filed under Jim's Mailbox.

Dear CIGAs,

The following is for my CIGAs flying as passengers and pilot friends. The following is purported to be real:

Never let it be said that ground crews have never lacked a sense of humor. Here are some actual maintenance complaints submitted by UPS ‘ pilots (marked with a P) and the solutions recorded (marked with an S) by maintenance engineers.

By the way, UPS is the only major airline that has never, ever, had an accident.

P: Noise coming from under instrument panel. Sounds like midget
pounding on something with a hammer.
S: Took hammer away from midget.

P: Test flight OK, except auto-land very rough.
S: Probably because auto-land is not installed on this aircraft.

P: Something loose in cockpit
S: Something tightened in cockpit

P: Dead bugs on windshield.
S: Live bugs on back-order.

P: Autopilot in altitude-hold mode has a 200 ft. per min. descent.
S: Cannot reproduce problem on ground.

P: Evidence of leak on right main landing gear.
S: Evidence removed.

P: DME volume unbelievably loud.
S: DME volume set to more believable level.

P: Friction locks cause throttle levers to stick.
S: That’s what friction locks are for.

P: IFF inoperative in OFF mode.
S: IFF IS inoperative in OFF mode.

P: Suspected crack in windshield.
S: Suspect you’re right.

P: Number 3 engine missing.
S: Engine found on right wing after brief search.

PS: Aircraft acting funny
S: Aircraft warned to straighten up, fly right and be serious.

P: Target radar hums.
S: Reprogrammed target radar with lyrics.

P: Mouse in cockpit.
S: Cat installed.


About this article…

"Stewart has charged that people at CNBC knew what was going on behind the scenes on Wall Street but didn’t tell the public. He has accused CNBC anchors and pundits of abandoning their journalistic duties and acting like cheerleaders for the market.

"In a tremendous boom period, they covered the boom and people wanted to believe in the boom," said Andrew Leckey, a former CNBC anchor and now president of the Donald W. Reynolds National Center for Business Journalism at Arizona State University. "They didn’t uncover the lies that were told to them. Nobody did. But they should be held to a higher responsibility."

But Don Hodges, chairman of Hodges Capital Management in Dallas, said he doesn’t fault CNBC for not seeing the bust coming.

"I’m not sure that anybody had seen it coming," he said. "I’ve listened to all of the so-called experts, and it’s obvious that everybody is very confused."

Oh really, no one saw this "coming"! Many people saw this coming but journalists were not taking the problem seriously. This is a little missive from March of 2008.

Have a nice weekend and welcome to hell!
CIGA Greg Hunter

Dear CIGA Richard,

I trust you are doing well in Tbilisi.


The answer to your question of what is the notional value of all OTC derivatives outstanding must now be answered by interpolation as the Bank for International Settlement has adopted the Shiller approach of "Value to Maturity."

The assumption required to determine what the financial conditions will be at the maturity render the conclusions another computer cartoon, but pleasing to the statisticians working for the bank 30% lower in notional value.

The number issued prior to the change of method of calculation was one quadrillion, one hundred and forty four trillion dollars.

This has been reduced to 700 trillion dollars.

Now we need to increase any BIS total OTC derivative total notional value figure by 30% to approach the real notional value of OTC derivatives outstanding.

Start with the most recent number of 700 trillion, recognizing this number is but 60% of the real number. Then consider that in bankruptcy notional value becomes full value.


There is no way OTC derivatives can ever be traded on an organized exchange primarily because there is no standard arrangement in the specific performance contracts. It is implicit that to have a clearinghouse function where the winner gets paid and the loser pays in daily true valuation has to be easily arrived at.

Going forward, exchange listings for certain types of derivatives is probable.

Going forward is not the problem. Looking back is the disaster.


In the sense of the need to adjust those that they have in terms of market changes, yes.

Good to hear from you.

Respectfully yours,

Dear CIGA Randy,

You ask about when to sell gold.

There is a good argument that gold will not fall like it did in 1980.

As gold reaches $1650, we will examine the sell question, but before that there is no need.



I thought you might get a kick out of the following link to the Application for Federal Bailout 2008 – 2009.

Click here to view the application…

You may have already seen this, but if not… enjoy.

As they say…. the truth is said in jest.



Dear Jim,

Maybe they should buy 165 million in lead and shackle it to all the legs of the AIG people who get "bonuses"! Rewarding dishonesty and stupidity, or should I say incompetence, is disgusting! They need to be tried for treason!


Obama team anger simmers over AIG bonuses
Sun Mar 15, 12:38 PM
By John O’Callaghan and Philip Barbara

WASHINGTON (Reuters) – The Obama administration has done all it can to discourage big bonus payouts by American International Group Inc, advisers to the president said on Sunday, as anger rose over the embattled insurer’s plans.

AIG, which has received three U.S. government bailouts totaling $180 billion, is at the heart of a global financial crisis that President Barack Obama is trying to address with plans for trillions of dollars in spending.

The economy dominated Sunday’s television news shows, with several of Obama’s top advisers and senior Republicans squaring off over the financial sector bailout and healthcare reform.



This article states that 49 mainstream economic forecasters are losing faith in the current administration because of its failure to create a viable plan to stabilize big U.S. banks.

Geithner testified on Thursday that, "It requires different approaches, and to solve it we’re going to have to work with the market, because we don’t want the taxpayer and the government taking all those risks on the government’s balance sheet and leaving the government with huge, incalculable losses — risks we cannot manage effectively."

It seems to me that his admission that the losses would be "incalculable" is tantamount to saying what you’ve been saying all along: "There is no practical solution to the OTC derivative problem." Hats off for figuring this out years in advance!

CIGA Wallace

Obama’s econ failure: Still no plan to fix the banks
Kevin G. Hall, Mcclatchy Newspapers – Thu Mar 12, 5:26 pm ET

WASHINGTON — The Treasury Department has failed to persuade the world that it has a viable plan to stabilize big U.S. banks, and unless and until it does so, the economic downturn at home and abroad is unlikely to bottom out.

Federal Reserve Chairman Ben Bernanke has said as much, telling Congress last week that "restoring a reasonable degree of financial stability will be critical determinants of the timing and strength of the recovery."

Yet experts warn that each week that goes by without a credible bank plan puts an economic recovery and public confidence in President Barack Obama at risk.

A McClatchy-Ipsos poll this week found that 65 percent of Americans still approve of Obama. However, a Wall Street Journal survey of 49 mainstream economic forecasters this week found that this elite group — which influences public confidence — is losing faith in Obama and in Treasury Secretary Timothy Geithner .


Posted at 7:00 PM (CST) by & filed under In The News.


Dear CIGAs,

Let’s not write off the Swiss too fast!

Swiss Gold

Jim Sinclair’s Commentary

The following is a lesson in socialistic thinking.

It is also a lesson in how governments will run nationalized businesses by vetting the CEOs.

Citi get ready!

"In these current economic crises, we are sorry but we see no other alternative but to reduce our staff.

We have to lay off André."


Jim Sinclair’s Commentary

Can you imagine if they had to mark to market what these pensions would be worth?

Florida’s public employee pension fund plummets
By Sydney P. Freedberg, Times Staff Writer
In Print: Friday, March 13, 2009

Florida’s giant public employee pension fund needs a bailout.

Hit by the stock market crash and losses in risky investments, the pension plan faces a big funding gap, according to a study presented Thursday.

That means that the Legislature likely will have to ask financially strapped state and local governments to pony up additional cash to meet their pension promises.

Almost 1 million public employees and retirees — from teachers and firefighters to social workers and police officers — participate in Florida’s plan.

Because of the funding hole, their employers could see their pension costs roughly double from 10 to 20 percent of their payrolls in six years, according to the study.

The more local governments put in the fund, the more they will have to compensate by hiking property taxes or reducing services. All Floridians, not just those in the pension plan, could be affected.



Jim Sinclair’s Commentary

Now here is a total contradiction in terms. The US ambassador is going to defuse this?

Note the cane swinging in the lower right corner. Now there is diplomacy in action by the Pakistan police.

American Envoys Try to Defuse a Political Crisis in Pakistan


RAIWIND, Pakistan — In an effort to defuse the Pakistani political crisis, the American ambassador, Anne W. Patterson, traveled to see the opposition leader Nawaz Sharif to urge him to reconcile with Pakistan’s president, Mr. Sharif said.



Jim Sinclair’s Commentary

You have the ability to stop the Comex manipulators but they know you will not.

World mints report soaring demand for gold coins
Fri Mar 13, 2009 8:36am EDT
7:07am EDT

LONDON (Reuters) – Mints around the world say demand for gold coins has risen sharply as interest in the precious metal soars on the back of financial instability and concerns over the inflation outlook.

The Royal Canadian Mint, which produces Maple Leaf bullion coins, said it quadrupled its production capacity late last year as demand for gold and silver bullion products leapt.

Gold was one of the few commodities to rise last year as turmoil in the financial sector sharpened investors’ appetite for assets seen as a safe store of value, such as bullion.

Spot gold rallied to an 11-month high of $1,005.40 on February 20 as a slide in equity markets increased interest in the precious metal. Demand for physical gold products such as coins and bars has been particularly strong, traders say.

The United States Mint said sales of its one-ounce American Eagle gold bullion coins rocketed to 710,000 ounces in 2008, from 140,000 ounces a year before.


Jim Sinclair’s Commentary

Sounds quite correct to me!

Stewart slings barbs face-to-face with Cramer

NEW YORK (CNN) — After a week of pointed verbal barbs, host Jon Stewart sat face-to-face with financial analyst Jim Cramer on Comedy Central’s "The Daily Show" and continued the assault Thursday. Stewart blamed Cramer and cable network CNBC for being irresponsible cheerleaders in the lead-up to the stock market meltdown.


Jim Sinclair’s Commentary

Now here is one way to negotiate with your bankers. How dare they want guarantees (not reassurance as today’s morning spin says) on already full faith and credit guarantees that Treasury instruments carry.

China condemns US warship deployment as tensions mount
March 13, 2009
Jane Macartney in Beijing and Tim Reid in Washington

Chinese Navy officers reacted with annoyance today when it emerged that the United States had sent a destroyer to back up a surveillance vessel in the South China Sea after it was harassed by People’s Liberation Army (PLA) sailors.

The decision by President Obama to send an armed escort for US surveillance ships in the area follows the aggressive and co-ordinated manoeuvres of five Chinese boats on Sunday. The vessels harassed and nearly collided with the unarmed USNS Impecccable.

One unidentified officer quoted in the China Daily newspaper said that the decision was disproportionate. While China’s Foreign Ministry has so far kept tight-lipped on the latest development, the decision to run such a comment so swiftly in the state-run English-language newspaper was a signal of Beijing’s concerns.

One naval source said the PLA had taken note of the latest US move and was watching developments closely

Another described the deployment of the USS Chung-Hoon, armed with torpedoes and missiles, as a signal of the Pentagon’s intention to “keep on pressing” China in the South China Sea.

He added: “The timing and the extent have gone beyond what you could call proportionate.”



Jim Sinclair’s Commentary

Face it. Armstrong is right, Alf is right, and the Western world is stone cold broke!

"Think again, however, if you believe you’ve found quiet refuge among the growing ranks of play-it-safe types who have nearly $3.9 trillion stashed in these investments."

Shakeout from money fund’s collapse just starting
AP Online via NewsEdge :

BOSTON_It’s not the sexiest investment around, but the money-market mutual fund has become a high-demand safe haven for those who can no longer stomach the stock market.

Think again, however, if you believe you’ve found quiet refuge among the growing ranks of play-it-safe types who have nearly $3.9 trillion stashed in these investments.

Money funds are generally safe places to park cash because they invest in the safest types of debt. Many buy government bonds such as Treasury bills, while so-called prime funds seek slightly higher yields but accept marginal risk by venturing into short-term corporate bonds.

The downside of such risk hit home last fall when a soured investment in Lehman Brothers debt spooked investors who suddenly pulled cash out of the Reserve Primary Fund. While that run was triggered by the fund’s institutional clients, individual investors could end up losing roughly 8 cents on each dollar invested. The fund’s collapse marked just the second instance that money fund investors have been exposed to losses in the nearly four decades money funds have been around.

To prevent another such debacle, the industry and government regulators are weighing fundamental changes in how money funds operate. Their moves could make money funds even safer, but trim their already tiny yields.


Jim Sinclair’s Commentary

They have the ability to stop the short side manipulators by taking delivery out of the Comex warehouse, but don’t hold your breath until they do.

Third Point Goes For The Gold
March 13, 2009

Another prominent hedge fund is turning to gold to weather tough times.

Third Point has told investors that it has moved a substantial amount of its assets into the precious metal, following the lead of another activist hedge fund shop, Greenlight Capital. Gold is now the single largest holding in Third Point’s fund, the Financial Times reports.

Third Point founder Daniel Loeb, famous for his poison pen, offered a self-critical take in the letter, acknowledging that “mistakes were made” last year. Were they ever: Third Point plunged 38% in 2008, although it has recovered somewhat this year, returning 1.8% so far.

Loeb paints a grim picture of the global economy, calling attention to the “issue of global insolvency which can be addressed only by massive corporate and sovereign restructuring.” He also played up the issue of corporate pension plans.

“I recently read the 10-K for a major steel company based in the U.S. whose pension liability went from a surplus of $200 million at the end of 2007 to a deficit of approximately $2 billion at the end of 2008,” he wrote. “To add insult to injury, in addition to its pension liability, this company’s healthcare plan is underfunded by $3 billion.”



Jim Sinclair’s Commentary

Will China be reassured when they wish to be guaranteed?

Do you really believe that a statement that the budget deficit now headed into the TRILLIONs will be cut in half in four years is sound comfort for a debt holder?

Did you ever imagine that this would be the subject of a public exchange of statements?

Obama Aides Try to Reassure China on Treasury Debt
By Rebecca Christie and Kim Chipman

March 13 (Bloomberg) — The Obama administration sought to ease Chinese Premier Wen Jiabao’s concern about the security of his country’s investments in U.S. government debt, reiterating pledges to cut the budget deficit in half in four years.

“There’s no safer investment in the world than in the United States,” White House Press Secretary Robert Gibbs said today.

Wen earlier said that China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets,” he said at a press briefing in Beijing.

President Barack Obama is relying on China to sustain buying of Treasuries amid record amounts of U.S. debt sales to fund a $787 billion stimulus package and a deficit this year forecast to reach $1.5 trillion. Investors abroad own almost half of all U.S. debt outstanding, and China last year overtook Japan as the biggest foreign buyer.

Wen’s words contributed to a decline in Treasuries, before the losses were recouped. Yields on benchmark 10-year notes rose as high as 2.96 percent, from 2.85 percent late yesterday, and were at 2.89 percent at 4:14 p.m. in New York.

White House National Economic Council Director Lawrence Summers, asked today about Wen’s remarks, said overseas “confidence” in Treasuries would be hurt without the administration’s steps to end the economy’s decline.


Posted at 2:57 PM (CST) by & filed under General Editorial.

March 13, 2009

Dear James:

Last fall we promised to keep you apprised of any developments on short selling or the uptick rule. As you know, I have been a big proponent of reinstating the uptick rule and from the survey we did last fall, the vast majority of you agree with me. We are the only U.S. exchange to support this position from day one. It seems that we are finally gaining some traction with regulators and there is now some political momentum to make a change, and I am hopeful that the other trading venues in the U.S. will finally support such a change.

Barney Frank, who chairs the U.S. House of Representatives Financial Services Committee, said earlier this week that he hopes the uptick rule will be reinstated within the next month and I was in Washington yesterday speaking with top officials at the SEC about this very thing.

I am not sure if the rule will be reinstated in its original form, but I do see us working with other equity markets and regulators in the near future to come up with a few new ideas for the best way in which some form of the "tick test" could be reintroduced. This could involve a price test that takes the greater speed of today’s markets into account or stock-specific rules that would be triggered by trading activity. This was part of my message in a speech before the U.S. Chamber of Commerce Wednesday in Washington and in press interviews the past couple of days, including CNBC for which a web link follows if you care to watch. —

No matter what form the rule ultimately takes, change is coming and that should help restore some confidence and stability in the markets. As always, your comments and suggestions are welcome. I will keep you updated as more information is available and we will continue to advance on this and other positions that support your company and shareholder interests.



Duncan Niederauer
Chief Executive Officer,
NYSE Euronext

Posted at 2:50 PM (CST) by & filed under Jim's Mailbox.


In every scenario of hyperinflation this choice has been available but rarely taken.


Or …


It has always been your choice. We are here to deliver.


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

Dear Jim,

Regarding The Chinese, how do you guarantee a Treasury instrument?

Dr. Bob

Dear Dr. Bob:

I interpret it differently as it may pertain to the G20 picnic and their criticism of the Yuan.

Taken literally, it would mean the Agency Paper they hold in abundance, Freddie and Fanny.


Posted at 6:52 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

This entire destruction is a product of our dear friends, the OTC derivative manufacturers and distributors.

We are getting the destruction reports piece by piece.

Piece by piece it will all be bailed out.

Hyperinflation as the major consequence cannot be avoided by any means short of Divine.

Those financially in charge are the antithesis of Divine.

Are you ready?

45 percent of world’s wealth destroyed: Blackstone CEO
Wed Mar 11, 2009 3:10am EDT
By Megan Davies and Walden Siew

NEW YORK (Reuters) – Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world’s wealth has been destroyed by the global credit crisis.

"Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."

But the U.S. government is committed to the preservation of financial institutions, he said, and will do whatever it takes to restart the economy.

U.S. Treasury Secretary Timothy Geithner plans to unfreeze credit markets through a new program that will combine public and private capital in a fund that would buy bank toxic assets of up to $1 trillion.

"In all likelihood, that will have the private sector buy troubled assets to clean the banks out in terms of providing leverage … so that we can get more money back into the banking system," Schwarzman said.


Jim Sinclair’s Commentary

Since US Treasury instruments carry the full faith and implicit guarantee by the US government, what is China saying here? Do they want gold as a guarantee as the only other guarantee might be a mortgage on the White House.

Whenever a statement is issued by a high placed representative in China it is serious and well considered. It is not an offhand remark.

It sounds like "keep the G20 off our currency or we will hammer you!"

Jiabao ‘Worried’ About Safety of U.S. Investments, Wen Says
By Eugene Tang

March 13 (Bloomberg) — China wants the U.S. government to “ensure the safety” of its investments in the world’s largest economy, Premier Wen Jiabao said.

“We have lent a huge amount of money to the United States,” Wen said today at a press conference in Beijing that marked the closure of the annual National People’s Congress meeting. “Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried.”


Jim Sinclair’s Commentary

This is starting to mirror the 1970s. I told you it would happen!

Banks were January net buyers of 1.1 million oz of gold: CPM
New York (Platts)–10Mar2009

Central banks, which have been net sellers of gold in recent years, were net buyers of an estimated 1.1 million oz in January, according to the latest Market Alert by the CPM Group, the New York-based metals consultancy. The world’s central banks were both buyers and sellers, but the quantity bought outstripped what was sold.

Ecuador is estimated to have purchased 920,000 oz of gold in January, Venezuela bought 240,000 oz and Russia purchased 130,000 oz, after having bought 310,000 oz in December.

"Ecuador’s government has run into severe political and economic problems, and has a dollarized economy, using the US dollar as its currency and thus not having many monetary tools, such as being able to issue money that other central banks possess," CPM noted. France was the largest seller of gold in January by 40,000 oz and 10,000 oz, respectively.


What is an Earmark?

Earmarks are funds provided by the Congress for projects or programs where the congressional direction (in bill or report language) circumvents the merit-based or competitive allocation process, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to properly manage funds. Congress includes earmarks in appropriation bills – the annual spending bills that Congress enacts to allocate discretionary spending – and also in authorization bills.


My Dear Friends,

What do you wish your estate to look like, a bag of paper or gold?

Gold is going to $1224 and $1650 on its way to Alf’s numbers.

I made my decision and it was carried in the Forbes article of 2001 found here.

I have not changed one cubit from 2001 – I have only added to it. I challenge anyone out there to do better trading.

Success comes from making a plan and working a plan within a bull market. Failure comes from the egomania that says you, the newbie, can out trade the seasoned pro of 25 years or more. This is total and complete madness.

As the song the Gambler sings goes, the best you can hope for is the break even. Listen to the Gambler and learn a great lesson.

Today the US dollar declared its intention of retesting and failing at .7200


Jim Sinclair’s Commentary

You know this is a product of the many Fed dollar swaps done to camouflage the bailout of non US banks in Switzerland and elsewhere. That is why those that predict the imminent collapse of Switzerland are smoking something.

Today’s action in the Swiss franc could have been a gift from the Swiss national bank to the massive shorts in the non-euro European currency raid that has taken place as another price for the Fed bailing out UBS and many others.

I have seen this kind of game played before. What a world we live in.

I would say if you have not cheated uncle, you need not worry. Remember my advice to play straight.

Liechtenstein eases bank secrecy amid crackdown
Thu Mar 12, 2009 8:34am EDT
By Jason Rhodes

VADUZ, Liechtenstein, March 12 (Reuters) – Liechtenstein agreed to ease its strict bank secrecy by committing to international tax and data standards, increasing pressure for similar concessions from other tax havens.

The move comes as finance ministers from the G20 group of rich nations and emerging powers prepare to meet in Britain from Friday ahead of a summit in London on April 2 that is expected to seek ways to fight tax evasion through offshore centres.

The tiny principality, a financial centre wedged between Switzerland and Austria, is seeking to be removed from a blacklist of tax havens and will now offer bilateral tax deals for cooperating in cases of tax fraud and tax evasion.

"Today’s declaration was very important in the run-up to the G20 meeting, so that Liechtenstein’s strategy is recognised," Prime Minister Otmar Hasler told a news conference.

Liechtenstein, whose banks have suffered big withdrawals since Germany launched a probe last year into 1,000 citizens suspected of dodging tax by parking money there, said its move could serve as an example to other nations under pressure.


Jim Sinclair’s Commentary

Defuse Pakistan? You have to be kidding!

That is the same as trying to make Mullah Omar a Christian. Impossible and stupid.

US and British diplomats scramble to defuse Pakistan crisis
Zahid Hussain in Islamabad and Jeremy Page in Lahore

US and British diplomats were scrambling to broker a truce between Pakistan’s feuding political leaders tonight as thousands of black-suited lawyers defied a government ban to launch a mass protest across the country.

Richard Holbrooke, the new US special envoy for Pakistan and Afghanistan, telephoned Asif Ali Zardari, Pakistan’s President, to discuss the unrest, which has raised fears that the army could take power once again.

“Mr Holbrooke conveyed the anxiety of the US Administration over the worsening political crisis and asked the president to find ways to end the strife,” a senior Pakistani official told The Times.

David Miliband, the Foreign Secretary, also spoke to Mr Zardari as lawyers and opposition activists clashed with police at the start of a “long march” from major cities towards Islamabad, the capital. Organisers hope that hundreds of thousands will join the march, due to end with a rally in front of the national parliament on Monday, to demand that the government reinstate judges deposed under Pervez Musharraf, the former president.

Nawaz Sharif, the former Prime Minister whose party quit the government last year over the same issue, has urged Pakistanis to join the march and to rise up against their weak civilian government.


Jim Sinclair’s Commentary

This the end of the beginning and now the plot is the beginning of the end of the present Pakistan government.

The buggers (present Paki government) were suckered into doing just what they should not have done.

Pakistan police swarm into major anti-government demonstration
By Mark Magnier 
11:56 AM PDT, March 12, 2009

Reporting from Islamabad, Pakistan — Police overwhelmed anti-government protesters today in Karachi, Pakistan’s largest city, arresting opposition leaders and preventing several hundred lawyers and activists from leaving for a planned demonstration in Islamabad.

Over the past 24 hours, the government of President Asif Ali Zardari has detained hundreds of people critical of its policies, arguing that public gatherings could serve as a focal point for terrorists and otherwise endanger property and lives.

Authorities also banned public assembly in two key provinces and blocked major roads leading into Islamabad, the capital, with barriers and paramilitary vehicles.

"The government has resorted to raiding the houses of the leaders of political parties," said Farooq Tariq, an official with the Pakistan Labor Party. "I’ve been underground for the last three days."

Lawyers were at the forefront of demonstrations against the former government of President Pervez Musharraf, who incurred their wrath in part by firing dozens of senior judges in 2007 in an apparent bid to head off legal challenges to his rule. The attorneys have continued to press Zardari to reinstate key judges.


Hundreds seized as panicky Asif Ali Zardari struggles to keep grip on power
March 12, 2009

Pakistan rounded up hundreds of lawyers, activists and political opponents yesterday before protests that threatened to loosen the Government’s increasingly shaky grip on power.

Raja Zafarul Haq, a senior opposition leader, was placed under house arrest and police were hunting for Imran Khan, the former cricketer-turned-politician, after he escaped a police raid on his house in the middle of the night.

Clashes broke out in many cities in the eastern province of Punjab, where protesters took to the streets defying the government ban on public gatherings.

The crackdown, the most severe since the US-allied Government came to power a year ago, will damage the democratic credentials of President Zardari further. His administration is already rocking from a growing Islamic insurgency that culminated last week in a deadly attack on the touring Sri Lanka cricket team. The army, which has repeatedly seized power in Pakistan from civilan governments, was placed on high alert as tension mounted. Most of those detained belonged to the opposition Pakistan Muslim League (N) led by Nawaz Sharif, the former Prime Minister, and Imran Khan’s Tehreek-e-Insaf. Scores of others who evaded the morning raids have gone into hiding.

Police and paramilitary troops sealed off the capital, Islamabad, where opposition parties and lawyers planned to stage a sit-in outside the parliament building.

“My house was raided at 3 in the morning but I managed to escape,” Imran Khan told The Times on the telephone.




Jim Sinclair’s Commentary

The following is from JB Slear, famous to us and infamous to our evil Comex brothers.

Pretending to be a Mutual Fund manager after losing ¾’s of their clients liquidity, or just a princess. Your pick


Jim Sinclair’s Commentary

OTC derivative plus the market is the correct reason.

Note the underfunded amount. This also does not include January 1 to present!

I would make a guess they would be $400 to 500 billion down if accounted for today.

Largest U.S. pension plans’ assets fall $217 billion short
By Sandra Block and Sue Kirchhoff, USA TODAY

Last year’s stock market collapse left the nation’s largest private pension plans with a deficit of more than $200 billion, a study released Wednesday said, which could force companies to invest more money in their plans when they can least afford it.

The nation’s 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008, holding only 79% of the assets needed to cover estimated long-term liabilities. That compares with an $86 billion surplus — 109% of estimated liabilities — at the end of 2007, according to Watson Wyatt, a human resources consulting firm.

Pension plans’ assets fell 26% last year, primarily because of investment losses, the study said. A separate study released Wednesday by Milliman said the nation’s largest plans lost an additional $54 billion in February.

It’s not unusual for companies to have underfunded pension plans, and the deficit typically doesn’t affect payouts to near-term retirees. But to avoid future problems, companies with underfunded pensions are required to increase contributions.

Companies are also facing stricter federal funding requirements for pensions, says David Speier, senior retirement consultant at Watson Wyatt. "This combination will require employers to make staggering pension contributions over the next couple of years, at a time when they can least afford them."


JB Slear’s Commentary

That’s it!! Time to protest in the streets.

Chocolate tax call in obesity fight

Chocolate should be taxed in a bid to control the obesity epidemic, a medical conference will hear.

A doctor called to tax chocolate to fight obesity

Family doctor David Walker believes that chocolate is a "major player" in the problem of the country’s expanding waistlines.

Taxing the treat would raise its profile as an unhealthy food which can contribute to weight-related conditions including diabetes, high blood pressure and back pain, the Lanarkshire GP will tell doctors at a conference in Clydebank.

He said people are often eating more than half a day’s worth of calories when they polish off a bag of chocolates in front of the television.

Dr Walker, based at Airdrie Health Centre, said: "I believe that chocolate is a major player in obesity and obesity-related conditions.

"What I’m trying to get across is that chocolate is sneaking under the radar of unhealthy foods.

"More than one person has said to me, ‘oh, but isn’t chocolate good for you?’ but any benefits are more than outweighed by the detrimental effect of obesity.



Jim Sinclair’s Commentary

I am appalled that a major source of World Economic data can just adopt a new computer model and no one questions it.

The following, as I have told you, was what the Bank for International Settlement stated prior to adopting a new computer model to reduce it by 50%.

Where is the outrage? Nowhere I imagine in a world populated by sheep.

Global Derivatives Market Now Valued at $1.14 Quadrillion!
By: Jutia Group   Thursday, July 24, 2008 1:40 PM

The Bank of International Settlements, which seems to be the only institution that tracks the derivatives market, has recently reported that global outstanding derivatives have reached 1.14 quadrillion dollars: $548 Trillion in listed credit derivatives plus $596 trillion in notional/OTC derivatives.

Yes, that is Quadrillion. One and 15 zeroes!



Jim Sinclair’s Commentary

This (corporate losses of the too big to fail) is not ending. Bailouts (every dime and more) are not ending.

Therefore the prediction by the Super Bears of a further implosion in business activity after a dead cat bounce guarantees hyperinflation and gold at Alf’s levels.

Take that you mal-informed deflationists that do not know the definition of deflation.

Freddie Mac reports massive loss

US mortgage giant Freddie Mac has revealed a loss of $50.1bn (£36.1bn) for 2008, and said it plans to ask the government for another $31bn of aid.

The company had already received $13.8bn in federal aid last year.

Freddie said the last quarter had been particularly bad, reporting a loss of $23.9bn for the three months to the end of December.

Last month, fellow mortgage company Fannie Mae reported an annual loss of nearly $59bn due to the housing crisis.

It also said it needed $15.2bn in government aid.

The huge losses made by the companies led to the government bailout.


Jim Sinclair’s Commentary

The Whopper Award of the century goes to Alan Greenspan

Greenspan again finds the Fed blameless in housing bubble
10:35 PM, March 11, 2009

Alan Greenspan just cannot bring himself to say, "I’m sorry."

The former Federal Reserve chairman wrote an op-ed piece for the Wall Street Journal on Wednesday that repeated his favorite refrain: The Fed’s easy-money stance of 2002-2004 didn’t cause the housing bubble.

It wasn’t the rock-bottom short-term interest rates of that period, as dictated by Fed policy, that fueled the housing mania, Greenspan says.

Rather, he blames "the decline in long-term interest rates across a wide spectrum of countries" from 2000 through 2005.

Long-term interest rates, Greenspan wrote, became "disconnected" from Fed policy in that period as rising wealth in China and other foreign countries was plowed into Treasury bonds and other long-term fixed-income securities — pushing long-term rates down, including on 30-year mortgages.

In other words, the housing bubble was "all the fault of those pesky foreigners," says Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, N.Y.


Posted at 4:06 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

This is a pretty good explanation of the financial crisis.


"Heidi is the proprietor of a bar in Berlin Germany. In order to increase sales, she decides to allow her loyal customers – most of whom are unemployed alcoholics – to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around and as a result increasing numbers of customers flood into Heidi’s bar.

Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit.

He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

One day, although the prices are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar.

However they cannot pay back the debts.

Heidi cannot fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80 %.

The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers.

Finally an explanation I understand…"

Dear Mr. Sinclair,

According to Martin Armstrong: "We may be in the midst of a "Waterfall Effect" that could undermine the very structure of Western Civilization. Historically, it has always been the debt crisis that destroys the greatest plans of men and dictators. This could be phase two of the collapse of Marxism. After phase one reshaped Russia and China, phase two may mean that it is the United States’ turn."

He goes on to state: "I cannot stress enough that the level of volatility that we are experiencing during this financial crisis is just well beyond even that experienced during the early stages of the Great Depression and is more akin to the collapse of Rome."

He concludes with the following: "We are on the edge where the way of life may be altered forever."

And now for the bad news…



I wish it were not true, but the last many years, most certainly the last, has busted the West making them stone cold broke. Gold is the only answer. There is nothing else!

Armstrong, although certainly colorful life wise, is a genius – a word I rarely use. To not take heed will cost you greatly!

I strongly recommend that you and all readers of JSMineset see the interesting movie "W."


Martin Armstrong: Is It Time To Turn Out The Lights?
Posted: 03/11/2009 21:27:45

This Economic Depression is far more complex than meets the eye. I believe that the Investment Bankers, in their own greed, used the final days of the Bush Administration to try to grab as much as they could while there was an ex-Goldman Sachs boss in the driver seat.

Full Story:

Click here for original source…

Posted at 2:45 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

The big stunner of today was massive intervention by the Swiss National Bank into the Forex markets which absolutely obliterated the Franc. They caught everyone flatfooted and achieved maximum shock value. I had to double check my price quotes and the charts to make sure that they were correct as the currency simply evaporated… The last time the SNB had intervened in these markets was all the way back to 1995 or 14 years ago.

The Swiss cut their 3 month Libor target by 25 basis points but they also stepped into the bond market and purchased substantial amounts of Swiss franc bonds. That in combination with them buying large amounts of foreign currency is in my view what shoved gold up so sharply today. The strategy of the Swiss is pretty clear – undercut their own currency to remain export competitive especially against the Euro and the US Dollar and provide substantial amounts of liquidity in the process. While I have not yet had a chance to calculate the gold price in terms of the Swiss Franc, there is no doubt whatsoever that it shot sharply higher today. After all, it is evident that the Swiss have decided to play the “beggar thy neighbor” policy in terms of the foreign exchange arena. All of this serves to remind investors why it is an imperative in today’s environment to own gold – after all, if your Central Bank is determined to debauch your native currency, you have to protect yourself. It is that simple!

I can well remember when the Swissie was once the “go-to” currency when it came to a safe haven during times of economic or geo-political crisis. Obviously that is no longer the case. My how times have changed! It is going to be interesting now to watch the contest between the SNB and the speculators to see how the game is played out. Will the specs leave them alone or will they play the cat and mouse game and bid it back up to see what kind of reaction they get from the Swiss monetary authorities.

I find the move by the Swiss particularly interesting in light of the following story carried by Reuters –

Click here to view the story…

Note – the Obama’s “tax everything that moves until you kill it” policies coupled with his smash-mouthing of energy companies is indeed having the effect that so many have warned – they are chasing US Corporations out of the US and with that will go many high quality, high paying jobs.

The rush back into gold shoved it up into resistance that I noted yesterday near the $930 level. That is the top of the potential range trade with $890 serving as the bottom. The 25% Fibonacci retracement level also comes in near the $930 level so it has a technical significance. Gold will need to push through this level and through the 20 day moving average near $950 to run out some more of the shorts that were put on early this week. Initial support still remains down near $890 to $880.

Euro Gold managed to build on yesterday’s bounce up and away from the €700 level coming in at €724.777 at the PM Fix with British Pound priced gold moving further away from the 650 level as it was fixed at 671.737, not far off of its all time high at 690.353 for a London PM Fix. Both movements bode well for gold in US Dollar terms as the 700 level in the Euro gold and the 650 in the Pound priced gold both are somewhat synonymous, loosely speaking, with even number $900 in US Dollar terms.

Rolling has begun in the Comex April gold contract and will intensify as we head into the next two weeks.

Today was obviously a reflation day as most commodities were higher with even natural gas getting a bit of a bounce off its fresh 7 year lows of yesterday. That is interesting because the Dollar was higher – again, in contrast to what we have been seeing recently. As I said yesterday, attempting to decipher the day to day gyrations in these whacked out markets is pretty much a guessing game since no one really knows what the psychology is going to be from day to day among the investing public and hedge funds.

I don’t know what got into the bonds yesterday that caused such a sharp rally especially since equities were higher across the board. There was chatter that a particular auction went off better than some were expecting and I suppose that served to allay supply fears somewhat. Technically they managed quite a save as they were on the verge of another technical leg down on the price charts. Bulls dodged a bullet, that is for certain – at least for now. We are seeing further upside in them today as news that the 30 year auction was well received ran the shorts out of their positions – the ongoing technical play continues. They would have to run above 128^00 to give the charts a more constructive look with a move above 130^00 to really spook the bears and threaten to be more than a bounce. The speed at which they are currently rising is indicative of a helluva lot of shorts getting squeezed out. One has to wonder who is going to buy once that has run its course as this is not safe haven buying. Then again, I am amazed that the auctions are supposedly going so well – You could not pay me to own this stuff not with what is coming down the pike.

The mining shares, while higher today as evidenced by the HUI and XAU, still have a lot of technical damage to repair. The 295-296 level in the HUI is a must if it is going to be able to run the bears out of their dens while 124-125 must be taken out in the XAU to prove the bulls are in command. Apparently share dilution to finance ongoing operations is taking its toll on many of the miners but it still beats non-recourse loans if you ask me with their toxic hedged positions. At some point the cost savings in the mines as a result of falling energy prices, etc, will pass through and find their way onto the books. That along with more cash on hand to finance acquisitions should make things interesting in the future.

Equities are now building on their third consecutive day of gains. That will have bottom pickers brimming with confidence and nervous shorts continuing to cover as the squeeze continues. Today’ gains were attributed to not as bad as expected retails sales data and a downgrade of GE debt that was not as severe as many were anticipating.

I will be unable to provide a midday commentary tomorrow due to another obligation but will hope to get something up later in the evening if time permits. Ditto for Monday of next week.

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