![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Jim Sinclair’s Commentary
Oh yes, the meeting today between US and Chinese financial representatives went swimmingly.
Believe that and you are stupid.
China’s Wang: U.S. must manage dollar supply
Tue Jul 28, 2009 10:34am EDT
WASHINGTON (Reuters) – Chinese Vice Premier Wang Qishan on Tuesday urged the United States to carefully manage the impact of the massive fiscal and monetary policy stimulus it has issued to counter a devastating financial crisis and deep economic recession.
"As a major reserve currency-issuing country in the world, the United States should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Wang said at a U.S.-China summit.
Jim Sinclair’s Commentary
Yes and I promise you eternal youth, life everlasting free of death and no flu epidemic.
U.S. Assures a ‘Concerned’ China It Will Shrink Record Deficit
By Rob Delaney and Rebecca Christie
July 27 (Bloomberg) — The Obama administration’s economic leaders assured Chinese counterparts they will rein in a record budget deficit as China underscored its concern about preserving the value of its holdings of Treasuries.
“China has a huge amount of investment in the U.S.” and “we are concerned about the security of our financial assets,” Assistant Finance Minister Zhu Guangyao said in a press briefing at the end of the first of two days of talks in Washington. Treasury Secretary Timothy Geithner said in opening remarks that the U.S. will ensure a “sustainable” deficit by 2013.
In a shift from Bush administration meetings, officials indicated little sign of tension over the value of China’s yuan, which U.S. lawmakers have labeled as artificially cheap and an aid to Chinese exports. That may be because the “best idea is just to keep the yuan-dollar rate stable” given U.S. need for Chinese demand for Treasuries, said Ronald McKinnon, a professor of economics at Stanford University.
“The Chinese are trapped with supporting the value of the dollar,” McKinnon said in a telephone interview from Stanford, California. “If they withdrew from the market, there’s a big appreciation” of the yuan as a result that would send China’s exports down, he said.
Record Holdings
The new focus on the deficit and Treasuries reflects the legacy of China’s record trade surpluses and its accumulation of dollars as a result of holding down the yuan. Chinese foreign- exchange reserves surpassed $2 trillion for the first time in the second quarter, and its holdings of Treasuries reached $801.5 billion in May, about 100 percent more than at the start of 2007.
Jim Sinclair’s Commentary
Judging from all the quasi-business entities and functions the government has run, I would say Chrysler is absolutely correct here.
Chrysler: Washington meddling could kill us
Lawyer testifies before congressional committee of dire consequences of being forced to renew contracts.
By Peter Valdes-Dapena, CNNMoney.com senior writer
Last Updated: July 27, 2009: 1:50 PM ET
NEW YORK (CNNMoney.com) — A Chrysler Group executive, testifying before a congressional committee hearing on Chrysler and General Motors’ auto dealership cuts, warned that being forced to reinstate dealers could force Chrysler out of business.
The House of Representatives recently passed a bill that would require GM and Chrysler to reinstate the contracts of dealers that were recently dropped as part of their separate bankruptcy proceedings.
Louann Van Der Wiele, Chrysler Group general counsel, testified Tuesday before a sub-committee of the House Judiciary Committee. She warned that forcing Chrysler to reinstate the 789 dealer contracts it had left behind in bankruptcy court earlier this year would force "new" Chrysler into bankruptcy again. This time with no buyer to bail the company out.
"Complete liquidation, with all of its dire consequences, could follow," she said, according to a transcript of her testimony.
Auto dealerships are separate businesses from auto manufacturers. Both GM and Chrysler have argued that having too many dealerships has hurt profitability by spreading sales too thinly and forcing dealers to compete with one another.
Jim Sinclair’s Commentary
Here are more examples of government helping businesses.
Lawsuit Seeks to Block Home Foreclosures in Minn.
By THE ASSOCIATED PRESS
Published: July 28, 2009
MINNEAPOLIS (AP) — A group seeking to stop home foreclosures in Minnesota sued the federal government Tuesday, saying a program meant to help struggling homeowners refinance their mortgages fails to give them proper notice or the right to appeal when they’re rejected.
The Home Affordable Modification Program, set up earlier this year, reduces monthly mortgage payments for at-risk borrowers. The Obama administration has set aside $75 billion for the program to try to prevent 3 million to 4 million foreclosures.
Jim Sinclair’s Commentary
Next time you see the Verizon ad with the thousands of people representing the walking network behind you, look for cardboard people in the crowd.
Verizon to cut 8,000 employee and contractor jobs, won’t be hiring much until recession ends
By Associated Press
11:19 AM EDT, July 27, 2009
NEW YORK (AP) — Phone company Verizon says it will cut 8,000 jobs from among employees and contractors before the end of the year to keep costs in line as the recession saps demand from businesses for telecommunications services.
Executives said the cuts will come from the wireline side of the business.
In recent years, New York-based Verizon Communications Inc. has balanced layoffs in its wireline business with hiring in wireless, making for a net increase.
But Chief Operating Officer Denny Strigl says that will not be the case this time. He says there will be no large-scale hiring in wireless until the recession is over.
Verizon ended June with 235,000 employees. That doesn’t include contractors.
Jim Sinclair’s Commentary
You can dress the markets all you want for a day or three, but you cannot fool the Chinese as spokes-nation for all the BRICs.
Such clear and obvious currency market intervention, always known as temporary at best, is actually contra-productive and childish under present circumstances.
I could solve the USA’s problems with the Chinese, conversely China’s problem with the USA, without drastic action, but Geithner would never ask me.
Paul Volcker might. I doubt he has thought about the answer.
U.S. Budget Is Scrutinized by a Big Creditor
By DAVID E. SANGER
July 29, 2009
No sooner had President Obama greeted nearly 200 of the bankers, bureaucrats and policymakers who could make or break his economic plans on Monday than they started grilling his economic team with the hardest questions about his economic strategy.
How long are these huge deficits sustainable, they wanted to know. How long do you keep stimulating the economy, and when do you break for the exits? If the dollar nosedives compared other major currencies, what’s the administration’s Plan B?
The questions were mostly asked in Chinese — by a delegation from Beijing that, diplomatic niceties aside, has come to check in on the investment of more than $1.5 trillion that China has made in United States government-issued securities.
“We are concerned about the security of our financial assets,” China’s assistant finance minister, Zhu Guangyao, said with uncharacteristic bluntness during a briefing for reporters covering the “U.S.-China Strategic and Economic Dialogue” on Monday.
It was a comment that underscored how much the global financial crisis has changed the subtle balance of power in meetings of “the G-2,” the shorthand now used to describe sessions between the world’s largest economy and its fastest-rising economic power. Gone, probably forever, are the days when American delegations would show up in Beijing with advice about how the Chinese could become a “responsible stakeholder” in the world — the phrase coined by the Bush administration. The demands that the Chinese let their currency appreciate, clean up their banks or get rid of the subsidies for state-owned enterprises have been toned down.
You do not talk to your biggest creditor that way — especially when you have a record-sized loan application pending.
Jim Sinclair’s Commentary
Things are improving? You have to be kidding.
What OTC derivatives and legal actions do not do to the financial industry, lousy business will. The exception to this is those financial institutions getting huge amounts of rescue funds from the government at low rates, ensuring enormous profit and marking up of worth-less OTC derivatives on the books of their trading units as a still standing gift of disgusting financial fabrication from the presently disgraced FASB.
BofA could eventually cut 10 pct of branches
By IEVA M. AUGSTUMS,
CHARLOTTE, N.C. – Bank of America Corp. could eventually shrink its 6,100-branch network by about 10 percent as consumers utilize other methods of banking, a company spokesman said Tuesday.
Bank of America spokesman James Mahoney made the comments when asked about a published report that CEO Ken Lewis and another bank executive described such a plan to investors at a meeting last week in Charlotte, N.C., where the bank is based.
The move would be a pullback from the bank’s two-decade expansion, most recently under Lewis’ command, which expanded the bank from coast to coast.
"What took place was a discussion about the long-term direction of the company," Mahoney said. "Over the longer-term, as customer demands evolve, we see a fewer number of branches that provide more services."
The bank does not have a specific number of branches that will ultimately compose its franchise, Mahoney said, adding there’s no immediate plan to close 10 percent of the bank’s branches.
Jim Sinclair’s Commentary
This is the ever courteous Chinese way of saying the USA cannot commit to what the Chinese wish.
The Chinese have stated what they want, leaving nothing to the imagination. PLEASE put your emphasis on the last sentence of the
Meeting statement:
Zhou said, "the U.S. agreed that Chinese should have a greater voice at the World Bank and International Monetary Fund."
Now ask yourself what is the heck was accomplished by the showmanship in the currency market today?
Talks with U.S. focus on banks, not dollar: Zhou
Jul 28, 2009, 12:46 p.m. EST
By Greg Robb
WASHINGTON (MarketWatch) — The U.S. and China focused their attention on domestic and international bank reform and not on currency issues or the rebalancing of the economic relationship in their two-days of closed door meetings, Xiaochuan Zhou, the head of China’s central bank, said Tuesday. In a press conference, Zhou said China did not urge the U.S. to insure the security of China’s investments in the United States. Some U.S. officials did raise the topic of trying to rebalance the bilateral relationship by having China boost domestic demand and having the U.S. consumer save more but Zhou said there was not follow up discussion. Zhou said the U.S. agreed that Chinese should have a greater voice at the World Bank and International Monetary Fund.
Jim Sinclair’s Commentary
The pedigree of the managers of this business with declining demands are the same as the managers of GM now with declining demand.
One would assume the results will be the same.
Postal Service Joins ‘High Risk’ List
The above chart demonstrates the rapid decline of American mail volume in the past three years (Image courtesy of GAO).
Updated 11:15 a.m. ET
The U.S. Postal Service urgently needs restructuring to meet rapidly declining mail volume and must immediately cut costs, according to a new report by the Government Accountability Office. The Congressional auditing agency today added the nation’s mail delivery service to its list of "high risk" federal government agencies and programs that cost taxpayers billions of dollars in waste, fraud, abuse or mismanagement.
“There are serious and significant structural financial challenges currently facing the Postal Service," acting GAO director Gene L. Dodaro said in a statement.
The mail service has suffered as customers continue to choose e-mail and online bill payment programs over snail mail and as the recession has cut overall business spending. The Postal Service also faces significant infrastructural and personnel costs, including hefty payments to a retiree benefits program, Dodaro noted.
Mail volume is expected to fall by 28 billion pieces this fiscal year, to a total of 175 billion pieces, down from 203 billion pieces in fiscal year 2008, according to GAO. USPS projects a net loss of $7 billion this fiscal year and debts to climb above $10 billion, leading to a cash shortfall of approximately $1 billion. Losses are expected to continue in 2010.
The GAO’s classification "accurate reflects our current financial reality," USPS spokeswoman Yvonne Yoerger said in an e-mail. "Securing the fiscal stability of the Postal Service will require continued review of retiree health benefit pre-funding, as well as gaining flexibility within the law to move toward five-day delivery, to adjust our network as needed, to develop new products the market requires and to work with our unions, mailers, stakeholders and Congress to meet the challenges ahead."
