Posted at 9:18 PM (CST) by & filed under General Editorial.

Dear Extended Family,

I sent you a certain few emails that I consider to be the most important communications issued in my career that started in 1958.

I am the son of what I know to have been the greatest Lone Wolf trader in Wall Street history ever, Bertram J. Seligman. He was a past master at his business and believed to be a market sensitive. I apprenticed to him, learned from him and inherited some of his ability, not all however.

From this background of experience understanding and sensitivity the following flows.

The emails of note:

1. Said, "This is it."
2. Said, "It is now."

This communication is to inform you as of 2/13/09, "It is totally out of control." There is no longer any means of reversal of the beginning of the final phase of the downward spiral now solidly set in motion.

For your sake, protect yourselves immediately.

Be prepared for disruptions in distribution common to hyperinflation.

1. You should have already distanced yourself from your financial agents. If you haven’t you are headed for significant displeasure and strain.
2. Make sure you stay three months ahead on necessary items that could experience distribution delays such as prescribed medicine and preferred foods.
3. Even though real estate is far from a buy, if you can afford a second home outside of major cities it would serve a good purpose.
4. Own gold.
5. Consider that good gold shares of non-US companies incorporated in a non-US country operating in third country, traded on multiple exchanges are a means of money expatriation legally and in broad daylight if required.
6. For currencies, all you can do is own a spread held by a true custodial ship wherever that might be.

Simply said, as of Friday February 13th, 2009 the situation is in confirmed "Out of Control" mode as this well engineered downward spiral enters into a terminal phase.

The motive was profit and degree of the disintegration caused in the pursuit of this goal was not anticipated.

The key event was when Lehman was flushed – all hell broke loose. The hell cannot be contained in any practical manner.

I seek nothing of you, but the protection of yourselves.

Respectfully yours,

Posted at 4:23 PM (CST) by & filed under In The News.

Dear CIGAs,

US Federal Reserve Chairman, and Secretary TT of the US Treasury take warning!

As you can see, hyperinflation is a "currency event" caused by the failure of spin and sometimes even force producing a violent loss of confidence in the national currency during the worst of business conditions usually called a depression.

The US dollar, regardless of present technical money flows, is far from immune to hyperinflation. Hyperinflation is not a product of "demand-pull" price increases of goods and services, but currency based cost-push.

Do you finally understand?

Can we put the silly semantic argument of inflation versus deflation to bed now

Please do not ask any more questions on that ignorant argument common only to those that never took Economics 101.

Now I know why teachers sometimes scream.

Zimdollar Suffers Pariah Status
Thursday, 12 February 2009 18:14
Zimbabwe Independent

IN ZIMBABWE, many streets are littered with discarded Zimbabwean dollar bills, and nobody bothers to pick them up.

With economists estimating inflation at above five billion percent and the recent dollarisation, the local currency has become a big joke to retailers and services providers who are refusing to accept it as legal tender.

For ordinary Zimbabweans, life has become more difficult as they do not have access to the foreign currency now being demanded by shopkeepers for payment.

This is despite government and Reserve Bank pleas that the new currency should run parallel to the multiple currencies that are on the market, as part of measures to liberalise the economy.

The de facto “dollarisation” which was formally announced this year has been thriving for nearly two years.


Eric Bloch: Economy Shackled
Thursday, 12 February 2009 16:24
Zimbabwe Independent

THE recent 2009 national Budget Statement, closely followed by the Monetary Policy Statement for the first half-year of 2009, contained much that was highly commendable, targeted at stimulating and facilitating the very long-awaited and very overdue, greatly needed, economic turnaround.

Tragically, however, that turnaround will be markedly less than is so desperately needed to restore wellbeing for the grievously distressed, grossly impoverished, majority of Zimbabweans, for both statements were cataclysmically imbalanced in that, notwithstanding many positive contents, there were equally many facets of the intended new policies which are not only inconducive to economic recovery, but will also retard the extent of that recovery.

Of the numerous economic issues which have to be urgently and constructively addressed, the first and foremost is the horrendous hyperinflation which has raised the cost of living to atmospheric heights, beyond the means of almost all. (No authoritative  inflation data exists, in the absence of any releases  from Central Statistical Office (CSO) for more than six months,  but it is indisputable that  the annualised rate of inflation is many trillions per cent, or even more.)

The need for dynamic inflation-reduction actions was unequivocally acknowledged by the Acting Minster of Finance, Patrick Chinamasa, in his Budget Statement, but inconsistently with that recognition of the necessary, he then tabled several proposals which will markably increase inflation, instead of reducing it.

Amongst the inflationary measures is the imposition of the previously foreshadowed fuel levy of 22 US cents per litre.



Jim Sinclair’s Commentary

Any thought that this is not going to occur in the US is akin to the once strongly held belief that terrorism was only a European problem.

You will see social disorder in 2009. More than likely in the hot summer months In the 1800s in a similar situation crowds dragged out Wall Street bankers and hung them in the US. Maybe this time it will be Hedgies. I am ready. Sounds positively productive to me.

Job Losses Pose a Threat to Stability Worldwide
Published: February 14, 2009

PARIS — From lawyers in Paris to factory workers in China and bodyguards in Colombia, the ranks of the jobless are swelling rapidly across the globe.

Worldwide job losses from the recession that started in the United States in December 2007 could hit a staggering 50 million by the end of 2009, according to the International Labor Organization, a United Nationsagency. The slowdown has already claimed 3.6 million American jobs.

High unemployment rates, especially among young workers, have led to protests in countries as varied as Latvia, Chile, Greece, Bulgaria and Iceland and contributed to strikes in Britain and France.

Last month, the government of Iceland, whose economy is expected to contract 10 percent this year, collapsed and the prime minister moved up national elections after weeks of protests by Icelanders angered by soaring unemployment and rising prices.

Just last week, the new United States director of national intelligence, Dennis C. Blair, told Congress that instability caused by the global economic crisis had become the biggest security threat facing the United States, outpacing terrorism.



Jim Rogers Says Geithner Caused Crisis, Must Let Banks Fail, Feb. 11, 2009

Jim Sinclair’s Commentary

One more down for Madoff.

British Family Blames Madoff for Suicide
By Mary Jordan
Washington Post Foreign Service
Sunday, February 15, 2009; Page A17

LONDON, Feb. 14 — A former British soldier killed himself after losing his life savings in Wall Street financier Bernard L. Madoff’s alleged $50 billion fraud scheme, according to the man’s family.

William Foxton, 65, a decorated soldier who lost an arm during his military service and worked on United Nations humanitarian missions, died from a single bullet wound to the head Tuesday in the southern English city of Southampton, police said. He apparently walked to a park near his home, sat on a bench and fired the fatal shot.

Foxton’s son Willard told reporters that his father recently discovered that his life’s savings, estimated at more than $1 million, which he invested in two hedge funds, had then been poured into Madoff’s fund.

"We were looking forward to him spending a long and happy retirement with us, but unfortunately very recently . . . I got in contact with him to ask him some ordinary family stuff, and halfway through the conversation he said: ‘Look, I’m really sorry, I can’t concentrate. I’m afraid I’ve lost everything. I’ve lost all the money. I might have to declare myself bankrupt,’ " Willard Foxton told Sky News.


Madoff’s wife pulled out $15 million before his arrest
Wed Feb 11, 2009 6:11pm GMT
By Svea Herbst-Bayliss and Martha Graybow

BOSTON/NEW YORK (Reuters) – The wife of Bernard Madoff withdrew more than $15 million from an account linked to the accused swindler in the days before his arrest, Massachusetts authorities said on Wednesday, adding a new layer of intrigue into the probe of the purported $50 billion scam.

Ruth Madoff pulled $10 million on December 10, the day before her husband was arrested and charged with running a global investment fraud, and $5.5 million on November 25, according to Massachusetts Secretary of State William Galvin.

Galvin did not file any charges against Ruth Madoff. The disclosure of her withdrawals came in reports produced by Cohmad Securities, a firm co-owned by Bernard Madoff that had funneled millions of dollars from its clients to Madoff.

Bernard Madoff, 70, is the only person charged so far in the alleged scam that has hit banks, charities, wealthy investors and celebrities worldwide.

Madoff told authorities he acted alone in confessing to the fraud, prosecutors have said.



Jim Sinclair’s Commentary

Turkey, Israel and Pakistan:

War of words between Israel and Turkey sparks formal complaint
updated 10:00 p.m. EST, Sat February 14, 2009

ISTANBUL, Turkey (CNN) — Turkey’s Foreign Ministry summoned Israel’s ambassador to the Turkish capital of Ankara on Saturday to issue a formal complaint over a top Israeli commander’s reported remarks criticizing Turkey.

The complaint is part of the escalating war of words between the two regional allies, stemming from Turkey’s outspoken criticism of the recent conflict in Gaza.

The Turkish Foreign Ministry said Saturday that it had requested an "urgent explanation" from Ambassador Gabby Levy for recent remarks reportedly made by a top Israeli military commander.

According to the Israeli newspaper Ha’aretz, Maj. Gen. Avi Mizrahi told an international conference that Turkish Prime Minister Recep Tayyip Erdogan should "look in the mirror" before criticizing Israel.


Posted at 4:16 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

As an Australian expat overseas, I’ve been reading stories of the bushfires there. They are unbelievable stories, but a common theme seems to be, everyone could sense a disaster looming, but when it actually came, it was so much faster, bigger, and more terrifying than anything anyone could have imagined. As I read the stories I can’t help but feel they are a picture of what is coming financially.

Thanks for all your work, and tireless warnings,

CIGA Darren

These are some of the most incredible stories I have read.

"How we cheated the flames of death"

"Where the hell is everyone "

"No Phoenix of hope arising from the ashes" Gary Hughes


Happy V Day Jim,

Thank you for your selflessness, time and effort to see the community is safe. I’ve been reading JSMineset for a couple of years but forgive me ,as I’m not clear on all elements of protection, specifically retirements accounts. I remember your writings regarding true custodial accounts and the correct ‘titling" of such accounts. However, you recently wrote about the democratic party’s hearings on confiscation of IRAs/401ks etc. That makes me think I might want to liquidate my IRAs and take the tax hit! Presently I’m engaged in having the custodial agreement looked at by an attorney, ( as a very wise man has suggested). Would this be considered protection?

If I may ask a second question, do you suggest a second home outside of a major city due to crime/riots etc?

Thanks again and best of luck with the new puppies!


Dear Lisa,

1. The process you are working on is to protect yourself from getting tied up in bankruptcy court concerning your assets.

2. This process you are asking about is protection from your government.

3. What Uncle gives you can be sure Uncle can take back.

4. I doubt that either gold or retirement accounts will be confiscated because an uprising of the public is waiting to happen just because of unemployment and terror concerning melted paid in retirement programs. The temptation to press hard will be cushioned by problems emanating from nothing else but the trend already in motion.

5. As a minimum do not add to mistakes by putting any additional funds in tax attractive retirement accounts.

6. Gold and related assets are the only means of guaranteeing retirement.

Regarding a second home:

I live in Bubbaville. That has its own problems.

My new neighbour, a Mr. Ram whose is a refugee from NYC not yet in residence, gave me a wood pile he had. Unbeknownst to me, he also gave the wood pile to a local Bubba. Those things can result in a shootout. It got real close.

Study well where you move and make sure you are up to it. I am.


Posted at 2:22 PM (CST) by & filed under In The News.

Dear CIGAs,

Happy Valentine’s Day!


It is major hunker down time.


Jim Sinclair’s Commentary

As you ponder this keep in mind the significant error of "Bring em on."

1. Israel makes a serious miscalculation.
2. Pakistan goes nuclear.
3. Turkey is a victim.
4. It is now January 14th, 2011

U.S. missile strike kills 25 militants in Pakistan

By Hafiz Wazir

A U.S. missile attack killed at least 25 al Qaeda-linked militants in a Pakistani tribal region on Saturday, security and Taliban officials said, the highest death toll of militants in a single such strike.

The strike by pilotless drones in the South Waziristan region on the Afghan border was the third such attack since U.S. President Barack Obama took office last month and could ignite fresh popular anger in Pakistan over the cross-border raids from Afghanistan.

The Taliban official said those killed were mostly Uzbek fighters.

"Our people have informed us that at least 25 people were killed. It could be more," the official told Reuters. A resident, who spoke on condition of anonymity for security reasons, said 25 to 30 people were killed.



Jim Sinclair’s Commentary

You really accept the media line that the problems of the US dollar are less than other national currencies? Come on, you have bought the spin. Wake up!

Federal obligations exceed world GDP
Does $65.5 trillion terrify anyone yet?
Posted: February 13, 2009 11:35 pm Eastern
By Jerome R. Corsi

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office,according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.

The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.


Jim Sinclair’s Commentary

Dean Harry Schultz advises that the gold gang take delivery of Comex gold out of Comex warehouse. Team work, that is the key.


Dean Harry Schultz advises us all to keep our eye on the ball and if we wish to succeed in 2009 it is simple.

Stay focused on your job:


Aim for greater heights:


Largest Tax Increase in USA History Proposed by Oregan State Government

Excise Tax on Beer to rise 1900%

Cost of one barrel of beer to be taxed $49.

Oregon maintains the increase in the beer excise tax is necessitated by the cost of assisting those that suffer from alcoholism and attendant matters.

Oregon your nose grows, your nose grows. This is a direct hit on Joe Six to pay for the Madoffs of the world. Where is your rage?

The Economy’s Affect on NASCAR

The Daytona Cup Series race tickets have been reduced in price. All testing has been banned off season. Famous teams have been sold.

There has been a reduction in the sales of NASCAR goodies.

God help us if the NASCAR gang hears about the Oregon beer tax.

Google Latitude

Soon new services for the clients of Google will allow you to locate the exact position of anyone you have the cell number for 24 hours a day, .

Jim Sinclair’s Commentary

Legislation watch:

Mr. Hastings of Florida introduced the following bill on January 22, 2009:

*Text of H.R. 645: To direct he Secretary of Homeland Security to establish national emergency centers on military…



Jim Sinclair’s Commentary

Here is the flawed Time list in order of responsibility:

Time Magazine’s List 25 People to Blame for Financial Crisis…

1. Angelo Mozilo – Co-founder and former head of Countrywide
2. Phil Gramm – Chairman of the Senate Banking Committee from 1995 through 2000
3. Alan Greenspan – Former chairman, Federal Reserve
4. Chris Cox – Former chairman, Securities and Exchange Commission
5. American Consumers
6. Hank Paulson – Former Secretary of the Treasury
7. Joe Cassano – Founding member, AIG’s financial-products unit
8. Ian McCarthy – CEO, Beazer Homes
9. Frank Raines – Former chairman and CEO, Fannie Mae
10. Kathleen Corbet – Former CEO, Standard & Poor’s
11. Dick Fuld – Former CEO, Lehman Brothers
12. Marion and Herb Sandler – Former heads, World Savings Bank
13. Bill Clinton – Former U.S. President
14. George W. Bush – Former U.S. President
15. Stan O’Neal – Former CEO, Merrill Lynch
16. Wen Jiabao – Premier, China
17. David Lereah – Former chief economist, National Association of Realtors
18. John Devaney – Hedge fund manager
19. Bernie Madoff – Ponzi scheme orchestrator
20. Lew Ranieri – Father of mortgage-backed securities
21. Burton Jablin – Programmer at Scripps Networks, which owns HGTV
22. Fred Goodwin – Former chairman and CEO, Royal Bank of Scotland
23. Sandy Weill – Former chairman and CEO, Citigroup
24. David Oddsson – Former Prime Minister, Iceland
25. Jimmy Cayne – Former chairman and CEO, Bear Stearns

The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part. In the second part of a week-long series looking behind the slump, Guardian City editor Julia Finch picks out the individuals who have led us into the current crisis.


Jim Sinclair’s Commentary

This is a major component of the January 14th, 2011 event.

Taliban is in "huge" amounts of Pakistan – Zardari
Fri Feb 13, 2009 5:39pm EST

NEW YORK, Feb 13 (Reuters) – The Taliban has established itself across a large part of Pakistan, forcing the country to fight a war against the hardline Islamist group that is about Pakistan’s own survival, President Asif Zardari told CBS News.

"(The Taliban) do have a presence in huge amounts of land in our side. Yes, that is the fact," Zardari told "60 Minutes" in an interview to be broadcast on Sunday, excerpts of which were released on Friday.

U.S. President Barack Obama said this week there was no doubt terrorists were operating in safe havens in the tribal regions of Pakistan, and the United States wanted to make sure Islamabad was a strong ally in fighting that threat.

Obama and Zardari spoke by telephone on Wednesday, the Pakistani foreign ministry said. The two discussed the surge in violence by al Qaeda and the Taliban, which has stepped up its insurgency against U.S. forces and the Afghan government.

Zardari said Pakistan had been in denial about the Taliban in the past. "Our forces weren’t increased … . We have weaknesses and they are taking advantage of that weakness," he said.



Jim Sinclair’s Commentary

"As goes Motors so goes the US" is as true now as it was in the 50s.

GM considering Chapter 11 filing, new company: report

CHICAGO (Reuters) – General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.

"One plan includes a Chapter 11 filing that would assemble all of GM’s viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."

Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.

GM declined to comment, the story said.

General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.

Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.


Jim Sinclair’s Commentary

There are ramifications to fraud that will not go away.

Retired UK Veteran Kills Himself Over Madoff Losses

A retired British Army major has killed himself after losing his life savings to the Bernie Madoff Ponzi scheme.

Just before Christmas Rene-Thierry Magon de la Villehuchet, a hedge fund manager, committed suicide after his fund lost $1.4 billion to Madoff.

William Foxton, 65, who retired last November had invested his entire savings in the Herald USA Fund and Herald Luxemburg Fund, both of which suffered hundreds of millions in losses as a result of Madoff’s Ponzi scheme.

Last Tuesday, he left his Southampton home and walked to a park, where, sitting on a bench, he shot himself in the head with a pistol.

Foxton’s son, Willard, 28, told the Times Online:

"I think it’s disgusting that Bernie Madoff is sitting in his New York property, thinking that all he did was steal money, when, in fact, what he was really doing was ruining lives.


Posted at 12:04 AM (CST) by & filed under In The News.

Dear CIGAs,

Check back here every Friday for the FDIC failed bank web link.


Jim Sinclair’s Commentary

The following site provides the up to date map of where citizen’s money has gone to make good on OTC derivative winnings as per our video post today.


Jim Sinclair’s Commentary

They all have blood on their hands. How about the courage to go with life after your fortune is gone, you are unemployable and your pension has gone broke owning OTC derivatives called Securitized Investment Vehicles. These killers might as well have built crematoriums.

They carry just that – Karma. Death is easy. Life is hard. They will pay, this I assure you of.

OTC derivative manufacturers.
OTC derivative distributors.
Predatory Hedge Funds.

Their only protection is anonymity. God will not help them when they are all identified. They cannot live in the sunlight just like the demons of Lanka could not. They are demons by night, hiding in the foul lairs waiting to devour the lame, halt and widowed.

Who will stand to help the widows son? We meet upon the Square.

Bernard Madoff has ‘blood on his hands’ over William Foxton suicide
A former British soldier who shot himself was facing bankruptcy after becoming the victim of Bernard Madoff’s alleged fraud, his son said

Susan Thompson
From Times Online
February 12, 2009

Bernard Madoff, the disgraced financier accused of the biggest fraud in corporate history, was accused of having "blood on his hands" after a former soldier killed himself over the loss of his family’s life savings.

The son of William Foxton, 65, said that his father was so distraught after losing his family’s entire savings in the alleged Ponzi scheme that he shot himself with a handgun in a park in Southampton on Tuesday.

Mr Madoff, 70, is under penthouse arrest and 24-hour surveillance after being arrested on December 11.

He was accused of one count of securities fraud after authorities said that he admitted to running a scheme over many years with losses of $50 billion (£35 billion).

Willard Foxton, of London, said that his father, a grandfather of two and a former French Foreign Legionnaire, was “brought low by the greed of Bernie Madoff”.

Mr Foxton said: “I spoke with my father recently and he confided in me that he was in ‘an absolute s***fight’ with his banks’, as his life savings had been invested in two hedge funds: the Herald USA Fund and Herald Luxembourg Fund.


Jim Sinclair’s Commentary

Real wealth is called to our attention by Marty M. and Lao Tzu.

"Being deeply loved by someone gives you strength, while loving someone deeply gives you courage."
–Lao Tzu

Jim Sinclair’s Commentary

On the brink? You have to be kidding. They are broke. just go to the controller of the currency month report of derivative exposure versus capital. It screams broke right at you.

Keep in mind that the USA Controller of the Currency is now using a value to maturity to calculate notional value. This has reduced the amount of notional value outstanding by 80%. Anything stated at 20% of its value is a bullshit statistic. It still screams BROKE.

All of this hell is a gift to you from the pig rich OTC derivative manufacturers and distributors. they have killed us all to some degree.

Large U.S. banks on brink of insolvency, experts say
By Steve Lohr
Friday, February 13, 2009

Some of the large banks in the United States, according to economists and other finance experts, are like dead men walking.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are insured by the U.S. government. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.

The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.


Jim Sinclair’s Commentary

Pakistan owns up.

Pakistan Sees Terror Role
Official Recognition on Mumbai Attack Is Concession to India
By ZAHID HUSSAIN in Islamabad and MATTHEW ROSENBERG in New Delhi

Pakistan publicly acknowledged for the first time Thursday that last year’s terrorist attack on Mumbai was partly planned on its soil and said it had arrested most of the key plotters, the clearest sign yet that Pakistan intends to cooperate with international efforts to prosecute those behind the attacks.

Interior Ministry chief Rehman Malik’s announcement appeared to mark a break from Pakistan’s equivocation over the role of its people in the attacks. While India and the U.S. urged Islamabad to take responsibility, some Pakistani officials had suggested the plot was hatched elsewhere.

"Some part of the conspiracy has taken place in Pakistan," Mr. Malik said. "I want to assure our nation, I want to assure the international community, that we mean business."

Detailing a strong Pakistani link to the three-day rampage in November, Mr. Malik said six people have been charged in Pakistan with "abetting, conspiracy and facilitation" of a terrorist act, and several other suspected plotters are in Pakistani custody or under investigation.

India’s Foreign Ministry called Pakistan’s statement "a positive development" and said it would share whatever additional information it could.



Jim Sinclair’s Commentary

Friday the 13th, 2009 is a good Friday for the banking system. Four down and few thousand to go.

Nebraska, Florida, Illinois banks are latest failures
12 banks have failed so far in 2009, 37 shut since credit crisis began
By John Letzing, MarketWatch
Last update: 7:37 p.m. EST Feb. 13, 2009

SAN FRANCISCO (MarketWatch) — Loup City, Neb.-based Sherman County Bank, Cape Coral, Fla.-based Riverside Bank of the Gulf Coast and Pittsfield, Ill.-based Corn Belt Bank and Trust Company were closed by regulators Friday, bringing the number of U.S. bank failures for 2009 to 12 and 37 total since the start of the credit crisis, the Federal Deposit Insurance Corp. said.

Nebraska has not seen a bank failure since 1990, according to the FDIC. However, Riverside Bank follows Fla.-based Ocala National Bank, which failed on Jan. 30. Prior to Corn Belt Bank, the last Illinois bank to fail was National Bank of Commerce on Jan. 16.

Nebraska’s Sherman County Bank had roughly $129.8 million in assets as of Feb. 12 and $85.1 million in deposits, the FDIC said.

Wood River, Neb.-based Heritage Bank has agreed to assume all of the failed bank’s deposits, and will purchase roughly $21.8 million worth of its assets, the FDIC said.

The FDIC estimated the cost of the failure to its deposit-insurance fund will be $28 million.


Jim Sinclair’s Commentary

The G7 is no longer the ball in world economics. The back seat may become permanent.

G-7 Takes ‘Back Seat’ as Financial Crisis Pushes G-20 to Fore
By Simon Kennedy

Feb. 13 (Bloomberg) — The Group of Seven, whose finance chiefs convene this weekend in Rome, is ceding its traditional power to rebuild the world economy to a broader body of governments that now wield greater sway over global growth.

As U.S. Treasury Secretary Timothy Geithner and European Central Bank PresidentJean-Claude Trichet join their G-7 counterparts, it’s the Group of 20 that occupies the vanguard responding to the financial crisis.

The shift in influence to the group, whose membership ranges from the U.S. to China to Saudi Arabia, reflects the fact that industrial nations lack the resources to fix the world’s economic woes alone. That curbs the G-7’s scope to deliver new initiatives this week, say economists and former officials.

“The world has changed,” said Paul Martin, Canada’s former prime and finance minister who attended G-7 meetings and helped establish the G-20 a decade ago. “The G-20 reflects the realities of the global economy. Its finance ministers are becoming the dominant policy-making body.”


Jim Sinclair’s Commentary

Here is today’s prime question:

Why, all of a sudden, is Mr. Monk (at Davos) so bullish on gold, assuming it has little to do with the gold price?


Due to recent state and city budget cuts, the cost of electricity, still high gas and oil prices for the consumer, as well as current job market conditions and the continued decline of the U.S. economy with lack of immediate impact for Federal Stimulus plans and ill targeted Treasury financial firm bailouts…

The Light at the End of the Tunnel has been turned off.

The Management

Jim Sinclair’s Commentary

This is the story of every single one of the walking financial wounded entities being or soon to be bailed out. Here is where they made their billions that has broken their companies, but in no way injured those that benefitted from the deluge of money made in the manufacturing and distribution. You are paying for their secured profits.

"The company made huge profits selling credit default swaps – insurance contracts which protected investors against the risk of companies being unable to pay their bills. But at the end of 2007 it began to report drastic quarterly losses. In April last year Mr Cassano was nudged into retirement but kept on in a consultancy role for £700,000 a month for nine months."

Fraud probe into UK firm’s role in collapse of world’s largest insurer AIG
By Arthur Martin and Ben Laurance
Last updated at 11:50 PM on 12th February 2009

A fraud investigation was launched last night into a UK firm’s alleged criminal involvement in the multi-billion-pound collapse of the world’s largest insurer.

The probe by the Serious Fraud Office into AIG Financial Products will focus on those with ‘inside knowledge’ of the collapse.

Investigators will try to establish how it lost almost £8billion and brought its American parent, AIG, to its knees.

The downfall of AIG, now 80 per cent owned by the U.S. government, was one of the pivotal events in the start of the global financial crisis.

The company was forced to seek £59billion ($85billion) in emergency credit from the Federal Reserve.

Part of the inquiry into the Mayfair-based subsidiary is likely to focus on its boss, Joseph Cassano.

Since starting AIG Financial Products in 1987, Mr Cassano, 53, is thought to have earned almost £200million.


Jim Sinclair’s Commentary

With all the media screaming “the problems are worse for others,” an examination of the following should clear that misconception up.

Rescue Efforts Ding U.S.’s Triple-A Rating

The creditworthiness of the U.S. is deteriorating more rapidly than most of its triple-A rated brethren.

The effects of the U.S.’s efforts to solve the financial and economic crisis are taking a toll on the country’s ability to uphold a triple-A rating, according to a report published by Moody’s Investors Service, though the agency shied away from warning of any ratings downgrade. As the government moves forward with President Barack Obama’s $789.5 billion stimulus package and the Treasury gears up to borrow as much as $2 trillion with new debt sales this year, Germany, France, Canada and Scandinavian countries are pulling ahead of the U.S. as stronger credits, said the report. While all face headwinds, they remain triple-A.

"By the end of a two year period, the U.S. debt ratios will be higher and moving the country’s metrics to the lower end of the pack," said Steven Hess, sovereign credit analyst at Moody’s. Mr. Hess said that while the analysis on the U.S. is the current view, "this triple rating isn’t assured forever."

Regardless of the U.S. spending spree, investors around the world still buy U.S. Treasury bonds when they become anxious about the financial system, as it is the world’s largest bond market and functions in dollars, the world’s reserve currency. The 10-year Treasury rose in price Thursday to yield 2.732%, while the two-year bond rose as well, to yield 0.883%. The U.S. and the United Kingdom are what Moody’s called "resilient triple-A" rated nations facing big tests as the economic downturn stresses their ability to harvest revenue from taxes and as they take on debt to rescue large financial institutions and restore markets to health. Moody’s notes, though, that the U.S. is uniquely positioned to restore its financial health once the crisis abates, given the size of its economy and its tax base.


Jim Sinclair’s Commentary

Is this intended to be read as the US Federal Reserve acting in a proper way by doing unlimited amounts of dollar swaps with other central banks in order to support all the nations deemed critical to the national security of the US?

This is exactly how Chairman Volcker bankrupted the USSR. It is exactly how forces at the heart of Anti-Americanism and Anti Globalism will bankrupt the USA.

Intelligence czar: Economy is top threat to U.S.
Says prolonged crisis could cause some nations’ governments to collapse
Updated 6:07 p.m. MT, Thurs., Feb. 12, 2009

WASHINGTON – The economic crisis has trumped bullets and bombs in the intelligence agencies’ latest assessment of threats to the United States.

That shift is a reflection of the depth of the unfolding recession, but also of the progress made in the war against terrorists and the Obama administration’s more expansive definition of national security.

Sounding more like an economist than the war-fighting Navy commander he once was, National Intelligence Director Dennis Blair told a Senate panel Thursday that if the crisis lasts more than two years, it could cause some nations’ governments to collapse. And a number of allies the United States depends on might no longer be able to afford to meet their own defense and humanitarian obligations, he said.

Blair said the financial meltdown, which started in the United States and quickly infected other countries, already has eroded confidence in American economic leadership and belief in free markets.

"Time is probably our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests," he told the Senate Intelligence Committee, as Congress prepares to vote Friday on a $789 billion stimulus package.


Posted at 11:42 PM (CST) by & filed under Guild Investment.

Dear CIGAs,



Those who have the wisdom to be prepared during the down phase, and have the courage to act when the cycle is close to its nadir, will end up the winners in the next up phase.



In this letter, we are including a few recent articles that we would like to share with our readers.


Appraisal Management Companies (AMCs) are supposed to be the new watchdogs with respect to keeping lenders and brokers from influencing or exaggerating appraisals.   According to a recent BusinessWeek article, some AMC’s are being run by "the same subprime players that helped inflate the real estate bubble in the first place."

Here is a link to the article by Chad Terhune:
Housing Appraisals: Still Blowing Bubbles?


Below is a great article about the Chinese demanding guarantees from the U.S. that the value of China’s huge portfolio of U.S. Treasuries won’t be eroded by "reckless policies".  We guess that the Chinese don’t trust the bond rating geniuses at Standard and Poors and Moody’s.

Also, perhaps now is not the time to complain to the Chinese about their currency being undervalued versus the dollar.  Here is a link to the article.
China Needs U.S. Guarantees for Treasuries, Yu Says


Many of the "investments" that were constructed by investment banks and then sold to investors, banks, insurance companies, etc. in recent years are merely side bets on the bill paying performance of borrowers who…have demonstrated poor bill paying performance.  It is hardly surprising to us that so many of them are worthless.

Financial Times
Half of all CDOs of ABS failed
By Paul J Davies
Published: February 10, 2009

Almost half of all the complex credit products ever built out of slices of other securitised bonds have now defaulted, according to analysts, and the proportion rises to more than two-thirds among deals created at the peak of the cycle.

The defaults have affected more than $300bn worth of these collateralised debt obligations, which were built from bits of other asset backed securities (ABS) such as mortgage bonds, other CDOs and structured bonds, or derivatives of any of these, according to analysts at Wachovia and Morgan Stanley.

So-called CDOs of ABS caused huge losses to banks such as Merrill Lynch, UBS and Citigroup, which held large amounts of the supposedly safest, top-rated chunks of them. They have since been damned by bodies such as the Bank for International Settlements as being too complex to risk manage effectively.

CDOs of ABS were used increasingly at the peak of the credit bubble to keep the securitisation machine moving by recycling hard to sell bits of subprime mortgage bonds and other risky tranches into new structures with top-notch credit ratings.

However, the ratings of these deals proved unsustainable, as evidenced by the fact they have accounted for 92.9 per cent of all 16,587 ratings downgrades globally from all rating agencies since the beginning of last year, according to Morgan Stanley.

The way these complex and risky transactions were exploited at the peak of the bubble can be seen in data from analysts at Wachovia, who reckon that 47.6 per cent of all CDOs of ABS by volume issued since the market substantively began in 2002 have now hit an event of default.

By their records, the first three years of the market saw less than 100 deals sold per year and less than 10 per cent of those have defaulted. The number of deals done rose to 133 in 2005, less than 20 per cent of which defaulted, and 89 in just the first half of 2006, about one-third of which have defaulted.

However, the real peak of the market saw 147 deals done in the second half of 2006 and 172 done in the first half of 2007 – of which 68 per cent and 76.2 per cent, respectively, have now defaulted.

The way these CDOs have performed has especially hurt the new wave of specialist credit hedge funds, which sprang up in recent years and became heavily dependent from creating and managing such deals. They were drawn to such business by a belief in the sustainability and predictability of the fees it would generate.

However, about one-third of the CDOs of ABS that have defaulted, or almost $105bn worth, have been or are being liquidated – often ¬leading to losses for investors and putting further pressure on market prices of the bits of mortgage bonds and other CDOs they are selling.


For no charge, as a service to our readers, we will be happy to examine your current investment portfolio, and explain how we might restructure it to meet your needs for income and capital appreciation in the current environment.  Please give us a call if we can help you in this regard.

Thanks for listening.

Monty Guild and Tony Danaher

Posted at 8:37 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Friday the 13th, 2009 is the official day the American Dream died.

Friday the 13th, 2009 is the day a Federal Economic rescue Bill passed a most important vote and turned out to be a total pork barrel exercise.

Where the Hell did the American Dream of the pot of gold for those that saved and worked hard go?

It went to the Wall Streeters, Bankers, OTC derivative manufacturers and distributors plus the predatory Hedge Funds and of course Madoff. For the regular guys and their family, their pension, their currency and their dreams went directly into the macadam of the highway.

Where is your Rage?



Posted at 8:33 PM (CST) by & filed under General Editorial, Greg Hunter.

Dear CIGAs,

As I watch the News out of Washington today, I see the heads of our nation’s biggest banks being grilled in Congress on the causes of the economic problems we are facing. None of those guys can say they are there because their bank is flush with cash and great investments. The banks and the economy are in the shape they are in because of greedy incompetent bankers who paid lobbyists to erase all regulation to allow them to make reckless highly leveraged investments into toxic assets.

Now taxpayers are being asked to clean up the mess and pick up the tab.

Many people are asking what is going to happen next?

One of my jobs as a journalist is to break things down so people can understand what is going on. I don’t always hit the mark, but I can sure appreciate people who can do that task well. What is going to happen next was brilliantly summed up recently by Martin Armstrong an investment pro. He says, “We are headed into the debt tsunami that is of historical proportions unheard-of in history.” Succinctness and clarity all rolled up into one sentence. That is the simple truth.

A lot of that tsunami is coming from distressed homeowners facing resets of mortgage payments. Last year while I was working for CNN, I asked a 76 year old woman whose mortgage was resetting to higher payments why in the world she agreed to an adjustable rate mortgage when she knew the resets would force her into foreclosure. She told me the mortgage lender promised when the higher payments came she could simply refinance. Multiply that logic by millions of Americans and you can see where the flood of bad debt is coming from. The simple truth is best summed up by Richard Benson,” We got here because far too many loans were priced based on the probability of being refinanced and not the ability of being repaid! As long as liquidity was flowing, bad loans could be rolled over into bigger bad loans, but now the music has stopped for refinancing these loans.”

To address the economic crisis we are facing, the new Treasury Secretary Tim Geithner is proposing the taxpayer to commit up to a trillion dollars for the Fed to guarantee more illiquid loans. He admitted to Brian Williams this week on CNBC he did not know how much money it would take to fix the financial problem. Geithner has been widely criticized for announcing a “plan” this week with few details on how it would work. I did not find the simple truth in anything Geithner said this week. I just saw deep black water.

At the same time the bankers were being grilled to well done on Capitol Hill, the House and Senate were putting the final touches on a “stimulus bill” that is now headed for the President’s desk. Susan Collins the Republican Senator from Maine was one of three who broke ranks with the GOP and negotiated a compromise with the Democrats. She announced the bill was only “789 billion dollars” which was billions less that the House or Senate versions. Then with a straight face, she said the bill was “fiscally responsible.” Fiscally responsible is how the biggest single spending bill in history is characterized. I hear water.