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Dear CIGAs,
$9.5 trillion of bailout money is enough to pay off every mortgage in the USA or write a check to every person on the planet for $1400.
Where did it go? The Fed keeps it secret. The Fed therefore has bigger secret accounts than Switzerland ever dreamed of.
One in 8 U.S. homeowners late paying or in foreclosure
Thu Mar 5, 2009 5:18pm EST
By Lynn Adler
NEW YORK (Reuters) – About one in eight U.S. homeowners with mortgages, a record share, ended 2008 behind on their loan payments or in the foreclosure process as job losses intensified a housing crisis spawned by lax lending practices, the Mortgage Bankers Association said on Thursday.
With unemployment at a 16-1/2-year high and expected to continue rising until mid- to late 2010, more borrowers will pay late or fall into foreclosure this year, said the group’s chief economist.
"While California, Florida, Nevada, Arizona and Michigan continue to dominate the delinquency numbers, some of the sharpest increases we saw last quarter in loans 90 days or more delinquent were in Louisiana, New York, Georgia, Texas and Mississippi, signs of the spreading impact of the recession," said Jay Brinkmann.
Duress is no longer isolated to borrowers with lower credit quality. As joblessness grew, so did late payments on prime fixed-rate loans that represent two-thirds of mortgages.
U.S. President Barack Obama’s $275 billion housing stimulus program will standardize modifications for distressed loans and pave the way for more refinancing.
Jim Sinclair’s Commentary
Economic changes are processes, not singular events. The following is part of the hyperinflation process.
Because nothing done has targeted OTC derivatives as the villain in all this, there is nothing that can stop the ongoing process towards it final end. That end is not an event but a condition – hyperinflation.
American banking system insolvent, says US economist
6 Mar 2009, 2124 hrs IST, PTI
NEW DELHI: The American banking system has become insolvent following the global financial crisis which is likely to be deep and prolonged hitting the economies of the developing and developed world, said a US-based economist.
"In our assessment, the US banking system is insolvent… they are below the water level", said Nouriel Roubini, professor of the US-based Stern School of Business, while addressing a session on the global meltdown at the India Today Conclave 2009 here on Friday.
According to research, he said, the losses of the US banking system are a mammoth $ 3.6 trillion, with banks accounting for $ 1.8 trillion and pension funds, hedge funds and other shadow banking institutions, the remaining portion.
Pitching for nationalisation of crisis-ridden banks by the American government, the US-based economist said, "they (banks) could be handed over to the private sector after cleaning up".
Suggesting ways for tackling the global crisis, Roubini said it was time for the governments of developed and developing countries to act in concert to prevent further deepening of the global recession.
Jim Sinclair’s Commentary
The Seven Story Mountain seeking the Real Story.
1. All of this, without exception, was an OTC derivative failure, even motors.
2. To a financial institution, every failure was an OTC derivative process.
3. There is not a sound bank in America.
4. There is no major financial institution that can be accurately described as sound.
5. For every loss there is a gain in transaction.
6. The gain can be in cash, position, fees or a mix of all three.
7. Now if everybody lost in the USA and on the planet, who won?
Corporate America’s Icons Crumbling Under Global Recession
By Steven Mufson
Washington Post Staff Writer
Friday, March 6, 2009; Page A01
The truisms have been familiar to generations of Americans: As General Motors goes, so goes the nation; Citigroup is too big to fail; General Electric, one of the 12 original companies in the Dow Jones industrial average in 1896, brings good things to life.
But the giants that only recently seemed like the unshakable foundations of the economy are faltering one after another. The girth that once seemed a source of strength now appears to be undermining them.
A share of Citigroup, worth $55.12 less than two years ago, yesterday cost about half of an ATM fee, finishing the day at $1.02 after briefly breaking below the buck-a-share level. The once-mighty financial conglomerate, valued at more than $300 billion in March 2007, was worth just $5.6 billion yesterday.
General Electric, whose mix of financial services, consumer products and industrial goods was once considered a sturdy pillar of the U.S. economy, closed yesterday at its lowest level since 1992, barely a 10th of its peak level. The price of a GE share, $6.66, was less than the cost of single compact fluorescent flood light bulb.
And battered GM shares slid yesterday yet another 15 percent to $1.86, not quite enough to buy a gallon of gasoline, after news that GM auditors warned the company might not remain a going concern without massive additional assistance from the U.S. government. While GM’s fate might indeed mirror the nation’s for now, the company could perish before an economic recovery arrives.
Jim Sinclair’s Commentary
This type of talk, if it persists and gets heard in public, would begin the process of legislative weakening of the Federal Reserve.
AIG Update: Senators Doubt Fed Could Regulate Systemic Risk
By Emily Flitter, American BankerMarch 6, 2009
As the House Financial Services Committee met Thursday to discuss the creation of a systemic risk regulator, Senate Banking Committee members were questioning the mettle of the main candidate for the job, the Federal Reserve Board.
Senators openly doubted whether American International Group Inc., which has received four government bailouts so far, ever poised a systemic risk to the economy, and they asked if the central bank made a mistake in providing the company with assistance.
It seems as if the Fed led the government to make a "large blunder — the largest in modern history," according to Sen. Bob Corker, R-Tenn.
"I have a hard time understanding the systemic risk issue," Corker said at a hearing on the AIG bailouts.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., said regulators would have to do a better job explaining how and why they rescued AIG.
"Public confidence in what we’re doing is at stake," he said.
Jim Sinclair’s Commentary
Mullah Omar makes for today’s Pakistan:
Mullah Omar Calls for a Taliban Surge
By ROBERT MACKEY
March 6, 2009, 8:26 AM
The Pakistani newspaper Dawn reports that on Thursday, “the mausoleum of renowned Pashto mystic poet Abdur Rehman Baba was bombed by unidentified miscreants,” outside Peshawar, in Pakistan’s North West Frontier Province. Dawn calls the bombing of the shrine to “a 17th century poet, revered for his message of love and peace” part of an “attack on Sufism.”
As the BBC notes, suspicion has turned to the Taliban, “who represent a more purist form of Islam and are opposed to Sufism, preventing people from visiting shrines of Sufi saints in areas they control.” The BBC also says that “No casualties are reported but the poet Rahman Baba’s grave has been destroyed and the shrine building badly damaged.”
According to Dawn:
The shrine’s watchman had received a threat from suspected militants on his cell phone three days ago. He told police that the attack took place to crack down on the tradition of women making pilgrimages to the site.
In spirit, the attack on the Pashtun poet’s shrine in Pakistan seems to echo one of the Afghan Taliban’s most infamous acts of cultural cleansing: the destruction of the Great Buddhas of Bamiyan in 2001. But, surprisingly, the Taliban leader who ordered the attack on the “idols” at Bamiyan, Mullah Muhammad Omar, might not approve of this bombing in Pakistan, or, for that matter, the attack on the Sri Lankan cricket team and its Pakistani police escort in Lahore.
Jim Sinclair’s Commentary
"Eric the Gold" speaks about what might well be another difficult situation; a situation that many of your retirement plans are involved in.
As Safe As Gold
Sprott Asset Management
February 2009
Eric Sprott
Sasha Solunac
What are phrases that connote safety? Two that come to mind are: “Like money in the bank” or “As safe as houses”. Given events of the past year, these two phrases no longer seem to hit the mark, do they? These days, the one word that signifies safety is “gold”, being far safer than both cash and houses. It therefore stands to reason that a more accurate phraseology would be “Like gold in the safe!” or “As safe as gold!” Yes, the barbarous relic is back… and with a vengeance.
As our readers may have already surmised, we like gold around here, and evidence suggests the world is beginning to like it more and more too. We therefore hope our readers can forgive us for harping on the same theme over and over. For the past seven articles including this one, the subject of gold has been a dominant theme, if not the prevailing theme in four of these articles; namely, “The Phony Express” (August 2008), “Cash or Gold” (October 2008), “Surviving the Depression” (December 2008), and now “As Safe as Gold”. Although we may seem obsessed, there is a method to our madness.
Not coincidentally, the past seven months have also coincided with the worst financial crisis the vast majority of us have ever seen in our lifetimes, as well as the worst global economic contraction the world has seen since the Great Depression. As we wrote in our previous article, “So You Think 2008 Was Bad? Welcome to 2009”, the world is currently in an environment where weakness only begets more weakness, and furthermore, the olden days of economic prosperity through endless credit creation are likely never coming back. That’s right; we believe there has been, and will continue to be, a paradigm shift in the way financial markets function going forward. We believe this last point is a very important distinction to make – one that fundamentally distinguishes the current environment from a run-of-the-mill recession. The implication is that current government policies, which are all focusing on bringing the olden days back (this time through endless government credit/debt creation) are in fact ruinous strategies that will have dire implications for financial stability and investment portfolios going forward.
If one believes the above (indeed, it seems increasingly difficult not to), then it should go without saying that, from an investment perspective, these are extremely challenging times. It has become very difficult to preserve wealth, let alone create it. Just like a rising tide lifts all ships, a receding tide tends to ground them one and all. You could have bought almost anything in 2003-2007 and made money (provided, of course, you got out by the beginning of 2008!) Likewise, right now you can buy almost anything and lose money. Those who have been “bargain hunting” on the way down have been taken to the cleaners. There was a time not that long ago when big bank stocks were considered conservative and ‘safe’ investments. Today this notion seems laughable. Bank stocks are now the biggest dogs on the planet – the common equity of which, in its current form, will be shown to be completely worthless in our opinion. Thus, buying bank stocks remains a sucker’s game – at any price. But there isn’t much solace to be found elsewhere. The direction for almost everything, in any industry, remains down. You show us an investment and we’ll tell you why it’ll lose money.
Jim Sinclair’s Commentary
Some subjects seem to evade CNN.
BUDGET BACKLASH: Thousands Rally At City Hall
Taxpayers Furious With Budget Cuts Take Frustration To Streets Of NYC
Organizers Say 50,000 On Hand For ‘Rally For New York’
NEW YORK (CBS) ― A massive budget backlash came to lower Manhattan on Thursday. Tens of thousands of New Yorkers marched on City Hall, rallying to stop proposed funding cuts.
The rally cries of labor unions, community groups and families outside City Hall could be heard throughout lower Manhattan. Desperation for an economic lifeline brought out more than 50,000 people along several blocks of Broadway in a self-described "Rally For New York."
Their message for Gov. David Paterson came in the form of booming chants:
"No more cuts! No more cuts!"
Everyday New Yorkers had their own personal messages for the governor as well.
"Governor Paterson, I wish you could have an open heart that we are going to suffer if this budget cut goes through," said China Lankford of Jamaica.
