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Dear CIGAs,
Mr. Sneavely drops off the unemployment list as he falls out of the safety net into pure hell as a father and householder, yet Wall Street is totally insulated.
Jim Sinclair’s Commentary
119 days to go!
Western Media (China bashers) and Governments should really stop screwing with China. This paper dragon business is insulting the world’s (not only the US) bankers, and a super power.
Respect – where has it gone?
China demands currency reform, France backs debate
Thu Jul 9, 2009 5:53pm EDT
By Simon Rabinovitch and Matt Falloon
L’AQUILA, Italy, July 9 (Reuters) – China called on Thursday for reform of the reserve currency system at a meeting of world leaders in one of its most direct attacks on the dollar’s global dominance.
Chinese State Councillor Dai Bingguo did not specifically name the dollar at talks between the Group of Eight rich nations and G5 emerging powers, but he was unequivocal in calling for the world to diversify the reserve currency system and aim at relatively stable exchange rates.
France also unexpectedly called for a currency discussion and moving toward a "multimonetary" system, though Britain warned any debate should be reserved for the long term to avoid destabilizing markets in the midst of a global recession.
China’s ideas for changing the system had previously been mentioned in reports by its central bank, but had never been voiced in a speech by such a high-ranking political leader.
"We should have a better system for reserve currency issuance and regulation so that we can maintain relative stability of major reserve currencies’ exchange rates and promote a diversified and rational international reserve currency system," Dai told the summit in Italy, according to a statement read by Foreign Ministry spokesman Ma Zhaoxu.
Jim Sinclair’s Commentary
As long as Wall Street owns Washington, Bubble Creation is the name of the Game.
Could cap-and-trade create another economic bubble?
By Eoin O’Carroll | 07.10.09
The American Clean Energy and Security Act, which squeaked through the House of Representatives by a vote of 219-212 last month and is set to be taken up by the Senate in September, proposes to create a huge new market for trading carbon emission permits and offsets. This system would create whole new classes of financial assets, which financial firms could securitize, derivatize, and speculate on.
Sound familiar? Many critics are pointing out that this new market for carbon derivatives could, without effective oversight, usher in another Wall Street free-for-all just like the one that precipitated the implosion of the global economy.
Writing in Mother Jones magazine, reporter Rachel Morris explains that this new market — which is expected to become the world’s largest derivatives market — would be based on two instruments: carbon allowances, that is, permits granted by the government to companies, allowing them to emit greenhouses gases; and carbon offsets, which allow companies to emit in excess of their allowance, provided that they invest in a project that reduces emissions somewhere else, such as a reforestation initiative in the Amazon.
Additionally, carbon emitters and financial services firms would be allowed to trade in carbon derivatives — think “offset futures” or “allowance swaps” — creating a market that Ms. Morris calls “vast, complicated, and dauntingly difficult to monitor.”
And prone to melting down, Ms. Morris warns. Just as the inability of homeowners to make good on their subprime mortgages ended up pulling the rug out from under the credit market, carbon offsets that are based on shaky greenhouse-gas mitigation projects could cause the carbon market to tank, with implications for the broader economy.
Jim Sinclair’s Commentary
When markets are worldwide and scoundrels will use corporations, partnerships or charities to trade through, what impact can this have other than reducing volume on US exchanges? That might not actually be a bad start.
Futures regulators to move quickly on position limits
Fri Jul 10, 2009 2:30pm EDT
By Christopher Doering
WASHINGTON (Reuters) – The Commodity Futures Trading Commission will move aggressively to rein in excessive speculation in energy and commodity markets by focusing on expanding its existing authority and could have new regulations in place by late October.
Bart Chilton, one of five commissioners at the CFTC, said he could not predict what the agency will do, but he would like to see the proposed rules issued in September, then implemented by late October or November after a period of public comment.
"We’re looking at a pretty fast timeline," Chilton told Reuters in an interview. "We’re going to use our authority to the fullest extent possible. That doesn’t mean we’re going to be draconian or go too far."
In response to recent swings in oil prices, the CFTC announced this week it was considering clamping down on big market players by implementing position limits on futures contracts.
The surprise announcement marked an abrupt departure for the once-staid agency that drew criticized for its hands-off approach toward market regulation during the last two decades.
Jim Sinclair’s Commentary
From Tech Magazine, an ode to the father of over the counter derivatives.
The next article titled the “Recipe for Disaster: The Formula That Killed Wall Street Again," might well be "The Goldman Sachs Algorithm Trading and Bullying Program."
Recipe for Disaster: The Formula That Killed Wall Street
By Felix Salmon
A year ago, it was hardly unthinkable that a math wizard like David X. Li might someday earn a Nobel Prize. After all, financial economists—even Wall Street quants—have received the Nobel in economics before, and Li’s work on measuring risk has had more impact, more quickly, than previous Nobel Prize-winning contributions to the field. Today, though, as dazed bankers, politicians, regulators, and investors survey the wreckage of the biggest financial meltdown since the Great Depression, Li is probably thankful he still has a job in finance at all. Not that his achievement should be dismissed. He took a notoriously tough nut—determining correlation, or how seemingly disparate events are related—and cracked it wide open with a simple and elegant mathematical formula, one that would become ubiquitous in finance worldwide.
For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.
His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.
Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li’s formula hadn’t expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system’s foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.
David X. Li, it’s safe to say, won’t be getting that Nobel anytime soon. One result of the collapse has been the end of financial economics as something to be celebrated rather than feared. And Li’s Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.
Jim Sinclair’s Commentary
The symbol of a new world currency – the G8 Gold coin.
The Russians gave the currency of the future to the G8 which is Gold. That is the truth, like it or not!
The subtle nature of the Russian gift to the G8 and BRIC nations has eluded all commentary and as well our esteemed leaders.
The inscription on the coin was " Unity in Diversity." This inscription in the Christian tradition can be aligned with "I am the vine and you are the fruit of the vine." It might be aligned with the mystical body of Christ of which all are considered one.
In the Gnostic tradition is would simply be the Gnostic Gospel of St. John.
In the Hindu tradition it is pure Vedantic philosophy.
Unity in Diversity can be considered in higher physics as the big bang theory, black holes or quantum mechanics theory.
The bottom line is that Unity in Diversity in hundreds of disciplines and persuasion means TRUTH. The Russians gave the currency of the future to the G8, which is gold. That is the TRUTH, like it or not!
Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8
By Lyubov Pronina
July 10 (Bloomberg) — Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”
“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”
The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.
The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”
Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the U.S. dollar’s future as a global reserve currency. Russia’s proposals for the G-20 meeting in London in April included the creation of a supranational currency.
Jim Sinclair’s Commentary
There is so much that has escaped programs designed to rescue Wall Street and send Main Street to hell.
Commercial Real Estate Is a ‘Time Bomb,’ Maloney Says (Update2)
By Dawn Kopecki
July 9 (Bloomberg) — The $3.5 trillion commercial real estate market is a ticking “time bomb” that may lead to a second wave of losses at large U.S. banks, congressional Joint Economic Committee Chairwoman Carolyn Maloney said.
About $700 billion in commercial mortgages will need to be refinanced before the end of 2010 and “doing nothing is not an option,” Maloney, a New York Democrat, said at a committee hearing today. This “looming crisis” may lead to significant losses for banks, force shopping center and hotel owners into bankruptcy, and impede economic recovery, she said.
The response by banks to this “growing threat has been slow and inadequate,” said James Helsel, a partner at RSR Realtors in Harrisburg, Pennsylvania, and treasurer for the National Association of Realtors. “The lack of liquidity and banks’ reluctance to extend lending are also becoming apparent in the increasing level of delinquent properties.”
There were 5,315 commercial properties in default, foreclosure or bankruptcy at the end of June, more than twice the number at the end of last year, with hotels and retail among the most “problematic,’ Real Capital Analytics Inc. said in a report yesterday. Losses on commercial mortgage-backed securities, or CMBS, will total 9 percent to 12 percent of the market, or as much as $90 billion, said Richard Parkus, a research analyst for Deutsche Bank Securities in New York.
Jim Sinclair’s Commentary
Of course they have, and will continue to. As you integrate even modest percentages of people in huge populations as consumers, business booms.
China tops U.S. in car sales so far this year
Jul 9, 2009, 4:38 p.m. EST
By Shawn Langlois, MarketWatch
SAN FRANCISCO (MarketWatch) – China wrestled the new-car sales crown from the U.S. through the first half of the year, topping 6 million cars and trucks at a time when the long-time global sales leader grapples with historic declines.
Vehicle sales in China jumped 36.5% in June from a year ago to mark the fourth straight month that vehicle sales have topped 1.1 million units, according to data released by the China Association of Automobile Manufacturers on Thursday.
Sales for the month reached 1.14 million units, bringing total sales for the first half of the year to 6.09 million units, a rise of 17.7% from the same months a year earlier thanks in part to generous government incentives, including tax breaks and subsidies.
"If this trend lasts for the whole year, it will put China on top for the first time ever," said Lincoln Merrihew, managing director at research firm Compete. "While the shift isn’t at all surprising, it’s happening faster than most people thought."
The U.S. showed signs of bottoming out in June, but the results were still dramatically off previous highs with consumers still dealing with the sour economy. Total new car and light trucks sales dropped 28% from a year ago, resulting in an annualized sales rate of 9.69 million, according to Autodata Corp. See full story.
Analysts forecast the U.S. market to potentially fall short of the 10 million-vehicle mark while China’s industry group is looking for sales in its country to move past 11 million cars and trucks by the end of the year.
Jim Sinclair’s Commentary
According to our friend Armstrong, cyclically speaking, a third party may well succeed in the next election.
The Fed Must Be Stopped
Written by: Ron Paul
July 9, 2009
Our country currently finds itself in the midst of the worst economic crisis since the 1930s and, as during all economic crises, people search for the answer as to why this has happened. Not only have large financial firms been affected, but also mainstays of American industry such as GM and Chrysler, all the way down to the Mom & Pop stores on Main Street. The easy way out is to blame the traditional scapegoats: foreign governments, fraudulent businessmen, and greedy speculators. But the real villain is far more sinister; the organization entrusted with maintaining a stable dollar and touted as the guarantor of economic stability – the Federal Reserve.
In the United States, monetary policy has been the domain of the Federal Reserve since its inception in 1913. Since that time we have had a number of cyclical recessions, each one following a boom caused by the Federal Reserve’s loose monetary policy. The problem with the Federal Reserve is that i t interferes with market pricing functions. Interest rates are a price just like any other and arise because of the fact that people prefer to consume in the present rather than in the future. The extent to which people defer present consumption is reflected in interest rates, which in a free market are determined by the spontaneous interactions and decisions of millions of people.
Fed intervention to set prices throws markets and interest rates out of equilibrium. When the Federal Reserve pushes interest rates below what the market rate would be, everyone wants to borrow money for long-term projects. Shortages of loanable funds would occur, except that the Federal Reserve has the ability to create bank balances out of thin air. The Fed can create a bank ledger on paper, or on a computer, establish a balance of millions or billions of dollars, and then spend these dollars out into the economy.
Loans become cheap, and the result of these lower interest rates is an economic boom which eventually manifests itself as a bubble. Beginning in 2001, the Federal Reserve pushed interest rates to as low as one percent, which after adjusting for inflation meant that the real interest rate was negative, so businesses were actually making money by taking out loans. This was the fuel for the housing bubble and the reason there are 19 million empty houses today.
Jim Sinclair’s Commentary
QE is alive and well
Federal Reserve Purchases $3 Billion In Long-Term Bonds 15
(RTTNews) – The Federal Reserve continued its treasury buyback program Thursday, completing its second quantitative easing move of the week.
The New York Federal Reserve purchased $3 billion worth of securities with maturity dates ranging from July of 2010 to April of 2011. The day’s buyback saw a total of $17.1 billion in treasuries submitted for purchase. Overall, the Fed has purchased a total of $200.72 billion since the program began on March 25th.\
Jim Sinclair’s Commentary
Here is an equation you can count on from California to New York: Restrict new hiring of police and fire fighters. Release large amounts of convicted prisoners. Increase the risks of the ordinary law abiding citizens.
Up To 10,000 Illinois Prisoners May Be Released
Gov. Pat Quinn: Release Of Inmates Could Save Taxpayers $125 Million
Jul 8, 2009 5:35 pm US/Central
Mike Flannery
CHICAGO (CBS) ― Up to 10,000 convicted criminals could soon be released early from prisons across Illinois. It’s all because of the state’s budget mess. Gov. Pat Quinn says cutting those prisoners loose could save more than $100 million. But at what cost to you?
CBS 2 Political Editor Mike Flannery reports that some people are worried. They don’t want to pay higher taxes. And they don’t want these prison reductions set for Sept. 30, either.
"Oh, my God. I don’t agree with that at all," one woman said. "They can pull money out of some other things."
The proposed prisoner release stems from plans to lay off more than 1,000 corrections workers at Stateville Prison and a half-dozen facilities downstate.
The state’s making a list of thousands of so-called non-violent inmates with less than one year left to serve who could be released early. The governor says it could save taxpayers $125 million.
But some don’t like the idea.
Jim Sinclair’s Commentary
For your information.
INFLUENCE IS ALL IN THE BAG FOR ‘GOVERNMENT SACHS’
JOHN CRUDELE
NEW YORK POST
July 9, 2009
WHEN I last wrote about Goldman Sachs in late March the most politically-connected and luckiest firm on Wall Street was in the middle of rigging the stock market — again.
"Something smells fishy in the market. And the aroma seems to be coming from Goldman Sachs," is the way I put it in that March 28 column.
Well, a lot has changed in just the past few weeks. And I’d like to put it all together for you, and for the rest of the media should it choose to follow what is shaping up to be the most incredible financial story ever.
Back in March I noted that the rally occurring in the stock market had the indisputable fingerprints of Goldman all over it. There were numbers to back it up.
Despite the fact that regular investors seemed to be pulling their money out of the market or — at best — investing conservatively, stock prices were zooming. The reason was simple: Big investors were pouring money into equities.
Jim Sinclair’s Commentary
You think there is a stop sign at 10% unemployment because the present Administration has admitted this double digit will be accomplished?
No end in sight to US jobless rise
By Hossein Askari and Noureddine Krichene
The unemployment rate in the United States rose to 9.5% in June 2009 from 3.6% in October 2000 and 4.1% in October 2006. Most puzzling, as indicated in the chart below, has been the obvious failure of Federal Reserve chairman Ben Bernanke’s unprecedented aggressive monetary policy to produce the quick economic recovery that he promised at each interest rate cut.
The more he cut interest rates and the more he inflated the balance sheet of the Fed, the higher unemployment has risen. Unemployment has kept on rising even though the federal funds rate has been near zero since December 2008. The unfulfilled promise of Bernanke, a proclaimed expert of the Great Depression, has been certainly disappointing. However, Bernanke and his supporters have kept crediting themselves that, without unorthodox cheap monetary policy, the unemployment rate would have been much higher.
Jim Sinclair’s Commentary
Have you read the book, One Point Safe?
It is one of the few books to make the NY Times Best Sellers list but not go into a second printing
Swiss to destroy papers in intl nuke smuggling case
Thu Jun 25, 2009 3:03am IST
By Laura MacInnis
GENEVA, June 24 (Reuters) – Switzerland said on Wednesday it would destroy bomb designs and other sensitive documents seized from a Swiss man accused of being part of an international nuclear smuggling ring.
Thousands of papers were confiscated from Urs Tinner, who is being prosecuted for his suspected role in a trafficking network run by Pakistan’s Abdul Qadeer Khan, who in 2004 admitted to leaking nuclear secrets.
The Khan network trafficked nuclear materials, equipment and know-how to Iran, Libya and North Korea for about two decades. Its leader was released from house arrest earlier this year on the order of Pakistan’s High Court.
In a statement posted on the federal government’s website, Swiss authorities said they had agreed with the International Atomic Energy Agency (IAEA) that documents related to uranium enrichment or atomic weapon design posed a risk.
Switzerland, which is not a nuclear power, is not authorised under the global Non-Proliferation treaty to possess documents related to nuclear weaponry.
Jim Sinclair’s Commentary
Marc says, "all the MOPE in the world can’t hide these number." The scary reality is that they must grow and grow. The dollar cannot and will not survive this onslaught of supply
Monthly Treasury Issuance Chart
Jim Sinclair’s Commentary
It was a slow week.
Wyoming Bank Closed; 53rd Failure of 2009
By AP Saturday, Jul. 11, 2009
(AP / NEW YORK) — Regulators have shuttered Bank of Wyoming, marking the 53rd failure this year of a federally insured bank.
The Federal Deposit Insurance Corp. on Friday was appointed receiver of the failed bank, based in Thermopolis, Wyo. It had $70 million in assets and $67 million in deposits as of June 30. (See TIME’s photos of the G-20 protests)
The FDIC says Central Bank & Trust of Lander, Wyo., will assume all deposits and purchase about $55 million in assets.
The FDIC will retain the remaining assets to sell at a later date.
Jim Sinclair’s Commentary
You have to love how prices are changed by $50.
COMEX traders predict gold at $1,600 by December
Here are 10 compelling reasons why gold is going to do well this year.
The Stimulus Effect: Including $1 trillion in cash infusions, the stimulus plan will pump $9.7 trillion into the economy, according to Bloomberg. As the Globe & Mail reports flatly, “Many believe that the monetary stimulus efforts will cause a spike in inflation,” driving gold higher.
COMEX Traders Predict $1,600 Gold… by December: If gold trades at or above $1,600 by December, some 100,000 call option contracts will be “in the money.” Big-money players Goldman Sachs and JPMorgan are reportedly helping to drive the action, ahead of a huge purchase of gold futures contracts.
“Big Money” Inflows: In 2008, NYC-based hedge fund Paulson & Co’s flagship fund returned 37%, as the world markets burned. Paulson’s bullish on gold, big time, including the Mar. 17 purchase of 39.9 million shares of AngloGold, worth $1.28 billion. Other major hedge funds are piling into gold, too, including Eton Park Capital, Green light Capital and Hayman Advisors.
China’s Doubling Down! China just revealed that it has doubled its gold holdings to 1,054 tons. Yet that still only equals 1.6% of its overall reserves. As China moves out of U.S. Treasuries and into gold, this will help fuel the next leg of the run-up.
Demand Building across the Board: Worldwide demand for gold jumped by $29.7 billion in the first quarter, a 36% bolt, according to the World Gold Council. Demand for gold ETFs (Exchange Traded Funds) rocketed 540%… another trigger for the coming gold boom.
Jim Sinclair’s Commentary
Why would anyone accept California IOUs? What makes you think California’s problem is short term other than MOPE?
Where is the White Knight to save a state, if the Feds do not?
Today final day before some banks won’t accept state IOUs
By Shauntel Lowe/Times-Herald staff writer
Posted: 07/10/2009 02:57:37 PM PDT
Today is the last day many major banks will accept state-issued IOUs. Bank of America and JPMorgan Chase officials have said they will not accept the IOUs, also known as registered warrants, after today.
The state has issued more than 100,000 IOUs worth nearly $400 million since July 2 after legislators failed to pass a budget before the end of the previous fiscal year.
The IOUs have gone out for taxpayer refunds and contractor and county program payments.
JPMorgan Chase, formerly Washington Mutual in California, has a "frequently asked questions" document on its Web site specifically about the IOUs at www.chase.com or www.wamu.com.
A Bank of America spokeswoman said customers have until the end of the day to deposit their IOUs. After today, the bank will work with customers on a one-on-one basis if it is a hardship to not be able to cash the IOU.
The state-issued IOUs do not mature until Oct. 2 when the state is expected to redeem them with 3.75 interest.
Jim Sinclair’s Commentary
Wake up sheeple! Many of you are in total denial of reality.
119 days to go.
I firmly believe that the MOPE reporting on the G8, which was the G8 plus 5, has angered the Chinese.
The Chinese as spokes-nation for the BRICs seems to be getting hotter every day.
China criticises dollar
Dai Bingguo, who is standing in for the Chinese president Hu Jintao at the G8 meetings, raised questions over the dominant role of the dollar as the world’s reserve currency.
By Malcolm Moore in Shanghai
Published: 8:01AM BST 10 Jul 2009
The discussion, which took place between the leaders of five emerging economies and the G8 industrialised nations, including Barack Obama, caused concern among western leaders.
"We should have a better system for reserve currency issuance and regulation, so that we can maintain relative stability of major reserve currencies exchange rates and promote a diversified and rational international reserve currency system,” said Mr Dai, according to the Chinese foreign ministry.
While he did not single out the dollar, Mr Dai was clearly calling for the world to diversify its reserve currency system and stabilise exchange rates among leading currencies.
China has made a series of attacks on the dollar in recent months, and went as far as to question Hillary Clinton, the US secretary of state, about the trustworthiness of the currency on her visit to China earlier this year.
A policy paper from the governor of the People’s Bank of China also laid out an alternative to the dollar in the form of a special international reserve currency administered by the International Monetary Fund.
