Dear Friends,

Gold is going to $1650 and that is for starters.

The US dollar is going to .6200 and then .5100.

The Safe Haven Dollar is as stupid now as the Goldilocks Economy and rear view mirror economic events were.

I am getting calls from people who either don’t read or should only be in US dollar treasury bills.

My leash is getting tight so please read JSMineset first. Email me if you do not understand something and if it was ill presented, it will be corrected. Do not call me and ask me if I have changed my mind since I posted something this morning. Remaining polite is becoming hard.

The following amount of money can:

1. Pay off every mortgage in the USA.
2. Send a check for $1400 to ever person on this planet.

Hyperinflation cannot be avoided.

Respectfully yours,
Jim

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
By Mark Pittman and Bob Ivry

Feb. 9 (Bloomberg) — The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

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Jim Sinclair’s Commentary

And finally for this evening a word from Bloomberg for the all the Pollyanna’s out there.

Bank Failures May Reach 1,000 on Bad Loans, RBC Says (Update2)
By David Mildenberg and Margaret Chadbourn

Feb. 9 (Bloomberg) — As many as 1,000 U.S. banks may fail in the next three to five years, almost double the one-year tally at the height of the saving-and-loan collapse, as losses mount on commercial real-estate loans, RBC Capital Markets analysts said.

Most of the failures will probably occur at banks with less than $2 billion in assets as their commercial customers default, said Gerard Cassidy, an analyst at RBC, in an interview today.

“There are billions of dollars of losses embedded in the system, and the system has to flush them out,” Cassidy said. “The people that are going to take the losses are the taxpayers and bank stockholders, and if regulators say there won’t be much loss to taxpayers, they will be lying.”

Regulators are taking steps to help lenders avoid losses as President Barack Obama’s administration readies a rescue package that may include guarantees for toxic assets, according to people familiar with the plan. The Federal Deposit Insurance Corp. closed nine banks so far this year after shutting 25 in 2008 and identified 171 “problem” institutions as of the third quarter.

The FDIC has already raised the estimate for the cost of U.S. bank failures through 2013 after fourth-quarter financial reports from banks signaled possible additional losses to the deposit insurance fund. The agency said failures through 2013 may cost more than the $40 billion estimated in October.

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Jim Sinclair’s Commentary

What, me worry? If I’m not why would you?

Jim Sinclair’s Commentary

Here is a neat approach. The Fed buys its own paper in amounts in excess of what it issues thereby financing itself and no longer requiring China’s help.

The catch is that the value of the US government would head for the floor as rates went through the roof because there are too many treasuries already out there.

How damn stupid can a central bank be? To the degree they buy their own paper they depreciate the paper already out there. Have you ever seen a stock buyback stop a bear market in the buyback company? All a stock buyback ever does is to allow the insider a firm bid to sell into.

If the Fed does what amounts to a buyback is China the seller?

Fed Lacks Consensus on Treasuries as Yields Rise
By Scott Lanman and Craig Torres

Feb. 9 (Bloomberg) — Federal Reserve officials have failed to resolve an internal debate over whether to purchase long-term Treasuries, even as rising yields on the securities threaten to undermine the central bank’s objective of cutting borrowing costs for consumers and businesses

Policy makers are instead focusing on a program to purchase $200 billion in consumer and small-business loans and on a plan to buy $600 billion in home-finance debt, according to people familiar with the deliberations.

Forgoing purchases of Treasuries may exacerbate a jump in borrowing costs for the government as federal debt managers seek to finance an unprecedented budget deficit. Benchmark 10-year note yields this week exceeded their level of Dec. 1, when Fed Chairman Ben S. Bernanke first talked about the option. That’s raised other borrowing costs, potentially delaying a recovery.

“The Fed will get a lot more bang for its buck by buying mortgages than buying Treasuries,” said John Ryding, founder and chief economist of RDQ Economics LLC in New York and a former Fed economist. “We were kind of a little surprised when the Fed wanted to go down this route” in comments starting in December, Ryding said.

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Jim Sinclair’s Commentary

Hello, I am from the Federal Government here to help you.

GM, Chrysler May Face Bankruptcy to Protect U.S. Debt (Update3)
By Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) — General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

“They are negotiating to see if they can reach an agreement,” said Workman, a bankruptcy lawyer based in Washington. “If not, they are saying ‘We are pretty darn sure that a bankruptcy judge will allow us’” to be first in line for repayment.

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Jim Sinclair’s Commentary

Here is an FYI from CIGA Jesse. Maybe GM deserves to go broke?

General Motors to Invest $1 Billion in Brazil Operations — Money to Come from U.S. Rescue Program
By Russ Dallen
SAO PAULO — General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn’t be logical to withdraw the investment from where we’re growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company’s revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil’s automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.

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Jim Sinclair’s Commentary

Let the truth be known!

You know all these car company got the major axe, not from bad business, but first from the use of OTC derivatives by their credit arm which in turn killed business.

If you cannot borrow money to buy a car, no cars are bought!

Nissan to Cut 20,000 Jobs as Carmaker Forecasts Loss (Update3)
By Makiko Kitamura

Feb. 9 (Bloomberg) — Nissan Motor Co., Japan’s third- largest automaker, said it will slash 20,000 jobs and post its first loss in nine years as the global recession cripples car demand and a stronger yen ravages the value of overseas earnings.

The company expects a net loss of 265 billion yen ($2.91 billion) for the year ending March 31, compared with its October estimate of 160 billion yen in net income. It also scrapped its second-half dividend.

Nissan’s sales in the U.S., its biggest market, plunged 31 percent in January as demand for Altima sedans and Xterra sport- utility vehicles dried up. Chief Executive Officer Carlos Ghosn’s elimination of 9 percent of the workforce caps a month in which all of Japan’s carmakers slashed forecasts and Panasonic Corp. and NEC Corp. cut workers.

“The economic storm is wreaking havoc on everyone,” said Yuuki Sakurai general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets. “Things could get even worse.”

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Jim Sinclair’s Commentary

It is so stupid as not to be stupid.

Money given to Pakistan for any reason goes to them for one reason and into very few pockets.

Damn, country leadership can be a great private enterprise.