Jim Sinclair’s Commentary

Maybe nationalized? Who are you kidding, they are!

The Economist Of The Year award is going to Lenin.

Citigroup, Bank of America May Look ‘Nationalized’ (Update1)
By Ari Levy

Jan. 23 (Bloomberg) — The U.S. government’s decision to pledge billions of additional dollars with strings attached to Citigroup Inc. and Bank of America Corp. may be nationalization by another name, according to former bankers and regulators.

Faced with pressure from lawmakers, banks have shaken up management, eliminated executive bonuses and staff and canceled conventions. They’ll be forced to do monthly reports on how they’ve boosted lending while slashing quarterly dividends to one cent a share for three years.

“When the Treasury tells a bank to pay a penny a share vs. its old dividend, you know who’s calling the shots,” said Jon Bruss, a 40-year industry veteran and founder of Hartland, Wisconsin-based Fortress Partners Capital Management Ltd., which invests in banks. “It may not be de jure nationalization but I think it’s de facto nationalization.”

While avoiding steps taken by the U.K., which this week acquired a 70 percent stake in Royal Bank of Scotland Plc, U.S. regulators are no longer passively injecting capital into the nation’s biggest banks. Investors have fled, sending Citigroup and Bank of America down by more than 50 percent this year, on concern that tougher U.S. oversight is coming after the government takeover last year of mortgage financers Fannie Mae and Freddie Mac, and insurer American International Group Inc.

Citigroup, based in New York, tumbled 56 cents, or 15 percent, to $3.11 yesterday on the New York Stock Exchange. Bank of America plunged 97 cents, or 15 percent, to $5.71. The 24- company KBW Bank Index has dropped 38 percent in 2009, following last year’s 50 percent decline.

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Jim Sinclair’s Commentary

My apology to those that object, but I believe there are three human rights.

1. Potable Water
2. Health
3. Education

A society that fails to provide this is not a society but simply a grouping of people.

I firmly believe that these requirement come before Bernard Madoff hedge fund rescues, any Administration, declaration of preemptive wars and rampant white collar theft.

Having said that the following cannot be funded without a resort to inflating away old debt, NOW. Too bad.

House Committee on Ways and Means
For Immediate Release:
Thursday, January 22, 2009

Ways and Means Passes Economic Recovery Legislation

Bill would provide critical tax, health and unemployment benefits for families, gives incentives to create jobs

WASHINGTON, D.C. – The House Committee on Ways and Means voted today in support of a comprehensive economic recovery package to provide tax, health and unemployment relief to families while also encouraging businesses to create new jobs.  The legislation, H.R. 598, passed the Committee by a party-line vote of 24 to 13.  The legislation will now be combined with other components of the recovery package from other House Committees into H.R. 1, the American Recovery and Reinvestment Act for consideration by the full House of Representatives next week.

“This legislation will provide critical benefits and incentives to middle-America, poor-America, and businesses, large and small, who are struggling during this economic downturn,” said Chairman Charles B. Rangel (D-NY).  “This plan will go a long way to help relieve the pain these families and businesses are experiencing so that we can restore some confidence and economic security and help America maintain its prominence in the global marketplace.  Simply put, the American people cannot keep the engine of our economy running if they don’t have money to spend and this package provides tax relief and critical benefits to help them take home a little more each month and help the economy grow.”

Critical Benefits to Families, Businesses, Incentives to Create New, Green Jobs:

The Plan, as passed by the Committee will provide critical tax relief to working families and assistance with healthcare costs as well as extended and enhanced unemployment benefits for those who have lost their jobs during the economic downturn.  The Plan would also give businesses, large and small, tax incentives to invest in plants and equipment and expand to hire new workers, helping to strengthen our economy and create new jobs.   In particular, the Plan would help create new, green jobs by making a critical investment in renewable energy and energy efficiency.

Important Health Benefits, Improvements to Care:

The Plan would also provide payment incentives to encourage the widespread adoption of Health Information Technology (HIT) and establish standards for interoperability and privacy.  The investment in HIT is a critical step toward modernizing American healthcare, cutting red tape, eliminating redundant care and reducing health insurance premiums for millions.

Finally, the Plan would provide temporary subsidies to help families who have lost their jobs maintain their healthcare coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA).  This benefit will be of tremendous assistance to families struggling to find new work and maintain economic security during the downturn.

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Jim Sinclair’s Commentary

It is really never going to happen in absolute terms. Wait until you see what gold does as the dollar treasuries reveals themselves to not be a safe haven.

DJ MARKET TALK: Higher Comex Gold Decoupling From Dollar

1426 GMT [Dow Jones] – Comex gold is decoupling from its normal inverse relationship to the U.S. dollar, says Bart Melek, global commodity strategist with BMO Capital Markets. Despite a stronger dollar, February gold is up $21.70 to $880.50 an ounce as investors turn to the metal as a safe haven and monetary asset, he says. He also describes the market as tightening physically, with mining output down lately but strong investment demand for physical gold and holdings rising in ETFs. Metal that is backing the SPDR Gold Trust, the world’s largest gold ETF, rose 13.15 metric tons Thursday and now stand at a record 819.11 metric tons. March silver is up a more modest 21 cents to $11.575. (ALS)

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Jim Sinclair’s Commentary

Do you really think that the US and GB are going to avoid social unrest? Wait until you see how politicians react to these upcoming events.

It will be physically nasty, and the balance of payments together will be expensive.

Iceland Is Burning — Day 2
Iris Erlingsdottir
The Huffington Post
01-23-09

The extensive protests that shook Iceland Tuesday have continued into Wednesday and are beginning to have an effect on one of the two political parties making up Iceland’s coalition government.

Late Wednesday night, as thousands of protesters re-lit a large bonfire in front of the Parliament, the Reykjavik chapter of the Progressive Party voted to recommend to the party’s national representatives that they withdraw from the ruling coalition, and called for new elections in May 2009. As the night wore on, though, matters descended into violence. Around 1:30 am, police dispersed the crowd with tear gas, the first time tear gas had been used against Icelanders in 60 years. The crowd soon reformed and pelted riot police with stones. One officer was severely injured by a cobblestone, the newspaper Morgunbladid said.

Although the leader of the Social Democratic Alliance, Foreign Minister Ingibjorg Solrun Gisladottir, was out of the country, Prime Minister Geir Haarde, leader of the Independence Party, told reporters that he believed she remained committed to the current ruling coalition. He insisted that the government was "functional" and that holding elections this spring would result in nationwide chaos.

The rank and file members of the Social Democratic Alliance appear to differ, however. Calls for the current representatives within the Party to step aside were widely applauded at tonight’s meeting, as were calls for spring elections and a new coalition.

The protests have been sparked by Iceland’s catastrophic economic collapse over the past three months, and the failure of the government to call for immediate elections or to investigate the rumored widespread malfeasance by the country’s leading bankers, businessmen, and politicians. "It should be clear to everyone that a government that has failed as utterly as the Icelandic government has can neither investigate, nor clear up the past, nor forge a new path into the future," said retired professor Njörður P. Njarðvík.

Wednesday morning began with angry protesters throwing paint at the government building and surrounding Prime Minister Geir Haarde’s car. They banged on the vehicle’s windows and pelted it with eggs for several minutes before his bodyguards and police pushed them away. The protesters gathered in front of the Parliament building banged on pots and pans while shouting "Unfit government!" "You’re fired!" and more creative insults. Although the racket calmed down to show respect to mourners at a funeral in the neighboring Reykjavik Cathedral, a mourner encouraged them to "produce enough racket to be heard across the country" when it was over.

Iceland has come to expect little change from the members of Althingi, the elected representatives, who have been widely criticized for being little but a rubberstamp for the conservative government agenda, but they claim they are getting the message. "So why aren’t the protests getting through to you, why hasn’t there been any change?" a state television reporter asked a Social Democratic Alliance representative. "We very clearly noticed the protests, and we get the message that people want change," he said without elaborating. The Conservative Party Representative’s reply to the question painfully demonstrated whose interests the Icelandic Althingi represents: "Well, representatives are just representatives," Ms. Ragnheidur Rikhardsdottir, said, "and ministers are ministers, and theirs is the power."

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