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“Protecting yourself and your family is not an action for the faint of heart or downright dedicated cowards.
–Jim Sinclair
“The bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding, go out to meet it.”
–Thucydides, 471 B.C.
Jim Sinclair’s Commentary
The financial industry, those just bailed out by us through a debt which must be paid by our children and grandchildren, gave 5000 employees a bonus of at least $1 million EACH.
The average man is depicted below.
This illustration has occurred in one out of every 10 citizens, but those 1 out of 10 have not found any work.
Where is your rage?
Jim Sinclair’s Commentary
Greenshoots will go down in glib market statement history with the Plateau of Prosperity, the Goldilocks market and Rear View Mirror statistics
Industrial Capacity Use Hits Record Low
Thomas L. Gallagher | Jun 16, 2009 3:00PM GMT
Falling production idles nearly a third of nation’s factories, mines, utilities
Use of industrial capacity fell to its lowest point ever in May as output of factories, mines and utilities slipped another 1.1 percent from April and fell 13.4 percent below last May’s level.
The nation’s industries used only 68.3 percent of available capacity, according to a monthly report from the Federal Reserve. Prior to the current recession, the lowest rate since the Fed started this series of records in 1967 was 70.9 percent in December 1982. Since February this year, the rate of capacity utilization has been below that mark.
Industrial production decreased 1.1 percent in May after having fallen a downward-revised 0.7 percent in April. The average decrease in industrial production during the first three months of the year was 1.6 percent, said the Fed.
Manufacturing output moved down 1 percent in May with broad-based declines across industries. Factory production was more than 15 percent below its year-earlier level. The factory operating rate decreased 0.6 percentage point to a historical low of 65 percent in May; prior to this recession, the low for this series, which begins in 1948, was 68.6 percent in December 1982. The production of durable goods fell 1.8 percent with declines in most categories. The largest decreases were in motor vehicles and parts and in machinery.
The output of mines dropped 2.1 percent, and the output of utilities fell 1.4 percent. At 95.8 percent of its 2002 average, overall industrial output in May was 13.4 percent below its year-earlier level.
Jim Sinclair’s Commentary
Is this Paris or the USA?
Maybe people have had enough. Maybe the Sheeple are becoming people again.
I suggest a town meeting in Middle America for banks and financial institutions.
Town halls gone wild
Alex Isenstadt Alex Isenstadt – Fri Jul 31, 5:30 am ET
Screaming constituents, protesters dragged out by the cops, congressmen fearful for their safety — welcome to the new town-hall-style meeting, the
once-staid forum that is rapidly turning into a house of horrors for members of Congress.
On the eve of the August recess, members are reporting meetings that have gone terribly awry, marked by angry, sign-carrying mobs and disruptive behavior. In at least one case, a congressman has stopped holding town hall events because the situation has spiraled so far out of control.
“I had felt they would be pointless,” Rep. Tim Bishop (D-N.Y.) told POLITICO, referring to his recent decision to temporarily suspend the events in his Long Island district. “There is no point in meeting with my constituents and [to] listen to them and have them listen to you if what is basically an unruly mob prevents you from having an intelligent conversation.”
In Bishop’s case, his decision came on the heels of a June 22 event he held in Setauket, N.Y., in which protesters dominated the meeting by shouting criticisms at the congressman for his positions on energy policy, health care and the bailout of the auto industry.
Within an hour of the disruption, police were called in to escort the 59-year-old Democrat — who has held more than 100 town hall meetings since he was elected in 2002 — to his car safely.
Jim Sinclair’s Commentary
Of course it would leave open the most dangerous instruments, making the biggest money for the Banksters.
Derivatives Plan Leaves Open ‘Naked’ Swaps Issue (Update2)
By Dawn Kopecki and Robert Schmidt
July 30 (Bloomberg) — A new U.S. regulatory regime being pushed by Representatives Barney Frank and Collin Peterson for the $592 trillion over-the-counter derivatives market leaves open for debate whether to ban so-called naked trading.
The legislative proposal, which would push most derivatives onto an exchange or clearinghouse, fails to resolve the issue of outlawing credit-default swaps where the buyer doesn’t own the underlying asset. A three-page summary of the plan also shows lawmakers haven’t agreed on disclosure rules and trading limits, or how to divide oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission.
“None of the remaining areas are deal breakers,” Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, said at a news conference in Washington today touting the plan. He said “we are very close,” and a bill may pass Congress by the end of the year.
At a minimum, hedge funds and other companies using credit- default swaps would have to report to regulators any short positions related to those contracts, according to the proposal. The bill, which may change as it works its way through committees and the House floor, includes most of what the Obama administration has been pitching to rein in the derivatives market, including clearinghouses and margin requirements.
“We clearly want to err on the side of too much regulation rather than too little, given what we’ve been through,” Peterson, a Minnesota Democrat and chairman of the House Agriculture Committee, said at the news conference.
Jim Sinclair’s Commentary
“The Board agreed to propose that all financial instruments will be presented on the balance sheet at fair value with changes in value recognized in net income or other comprehensive income with an optional exception for own debt in certain circumstances, which will be measured at amortized cost.”
For the financial industry that exists on legal (FASB now) fabricated balance sheets, this is akin to Raid on a bug!
FASB is the Financial Accounting Standards Board
Mark-To-Market Is Back — With A Vengeance!
Jul 31 2009, 1:15 pm by Daniel Indiviglio
Attention: This may be the single most important piece of news regarding the financial industry you will read this week. Maybe for the whole month. Maybe for the whole year. Okay I’ll stop being melodramatic and get right to it. The Financial Accounting Standards Board (FASB) is in the process of making banks very unhappy. In a complete reversal from their revised policy released in April, it is considering vastly tightening mark-to-market requirements to include virtually all securities on a bank’s balance sheet. Yes, it even wants the very, very illiquid stuff marked-to-market.
To understand a bit more about what how assets are valued, this entry I wrote a while back may help. Mark-to-market is an accounting concept requiring that banks mark the value of the assets on their balance sheets up or down depending on how their values change in the market. Right now, very illiquid assets do not have to be marked-to-market, so instead can be valued by the bank using internal assumptions.
Here’s a blurb from FASB’s July 15th board meeting:
The Board agreed to propose that all financial instruments will be presented on the balance sheet at fair value with changes in value recognized in net income or other comprehensive income with an optional exception for own debt in certain circumstances, which will be measured at amortized cost.
Why almost no one is reporting on this shocks me, because it’s a huge deal. FASB is suggesting that all financial instruments — the good, the bad and the ugly — must be valued on a bank’s balance sheet at their market value. Illiquid CDOs, property holdings, credit derivatives and anything else you can think of will all now be marked, mostly down, to what they would trade for in the market. Currently, banks can classify the most illiquid stuff on their balance sheet as “held for investment” or “held to maturity” and use whatever value they believe the assets are worth based on internal assumptions.
Jim Sinclair’s Commentary
The Formula will continue its downward spiral until meaningful intervention occurs.
The key word here is “MEANINGFUL,” which must focus on the REAL PROBLEM.
There isn’t a snowball’s chance in hell this will happen.
U.S. foreclosures spreading to regions formerly spared
By Alan J. Heavens
Fri, Jul. 31, 2009
The U.S. foreclosure crisis is spreading, and areas that previously appeared immune are now seeing the numbers rise, according to a report yesterday from RealtyTrac Inc., of Irvine, Calif., which tracks filings nationwide.
Some high-foreclosure states (California and the Midwest) saw their numbers drop. But states relatively untouched in the past (Oregon, Idaho, Utah, and South Carolina) experienced increases in foreclosure filings, which RealtyTrac chief executive officer James J. Saccacio suggested may be more directly related to growing unemployment than fallout from subprime and adjustable-rate loans.
Nationally, one in every 84 homes had a foreclosure notice filed against it in the first six months of the year, RealtyTrac said. In the Philadelphia region, it was one in every 168 houses.
The Philadelphia metropolitan area, into which RealtyTrac tucks Wilmington, remained well below national averages for the first half of 2009, ranking 121st of 203 metro areas monitored.
Foreclosure filings in the region were down about 6 percent from the same period a year earlier, and were almost 8 percent lower than in the last six months of 2008.
Jim Sinclair’s Commentary
How many of you are insured by AIG?
AIG Is Even Worse Off Than You Think
John Carney Jul. 31, 2009, 9:25 AM
Remember the fairy tale about AIG being an otherwise healthy insurance company that just got a little crazy selling credit default swaps? Well, it’s time to put that one to rest.
The New York Times has reviewed state regulatory filings and discovered that “AIG’s individual insurance companies have been doing an unusual volume of business with each other for many years — investing in each other’s stocks; borrowing from each other’s investment portfolios; and guaranteeing each other’s insurance policies, even when they have lacked the means to make good. Insurance examiners working for the states have occasionally flagged these activities, to little effect.”
“More ominously, many of A.I.G.’s insurance companies have reduced their own exposure by sending their risks to other companies, often under the same A.I.G. umbrella,” the NYT reports.
Regulators have been turning a blind eye to this sort of thing because they are worried about putting the taxpayer investment in AIG at risk.
Read that again: we invested billions in AIG and now we can’t properly regulate it without putting that investment at risk. It’s a brand new type of regulatory capture. Great work, team.
Jim Sinclair’s Commentary
WRONG, WRONG, WRONG! Where is your OUTRAGE?
We all could learn a lesson this time from the French
What recession? Nine U.S. banks pay $32.6b bonus
New York (PTI): They survived the financial turmoil with taxpayers’ money, still nine leading U.S. banks shelled out more than $32 billion in bonus to their employees last year, with crisis-ridden Citigroup alone paying $5.3 billion.
Detailing the bonus payments made by the TARP-funded financial institutions in 2008, the latest report from the Office of the New York Attorney General has said that there “is no clear rhyme or reason to the way banks compensate and reward their employees.”
The U.S. government had pumped in billions of dollars into the banks through the Troubled Asset Relief Program (TARP) to help them tide over the worst financial crisis in decades.
The nine banks together paid $32.6 billion in bonus while they received $175 billion worth funds from the U.S.
The ‘Bank Bonus Report’ by Attorney General Andrew M. Cuomo said that even though Citigroup and Merrill Lynch incurred massive losses in 2008, together they paid nearly $9 billion in bonus to the employees.
The Citigroup, led by Indian-origin Vikram Pandit, gave away bonus worth $5.3 billion while Merrill Lynch shelled out $3.6 billion.
Jim Sinclair’s Commentary
Face facts, regardless of emotions, provincialism or xenophobia.
China flexes muscles at WTO in disputes
Fri Jul 31, 2009 11:44am EDT
By Jonathan Lynn
GENEVA, July 31 (Reuters) – China flexed its muscles on the international trade stage on Friday, launching its first dispute against the European Union and setting litigation at the World Trade Organisation in train in a row with the United States.
The moves showed a growing willingness by China, which only joined the WTO in 2001, to use the global trade watchdog’s procedures to advance its own interests.
In practice that means that China — one of the most frequent targets of trade measures from both developed and developing countries — is increasingly appearing as plaintiff.
“I think it is a very important step for China to adapt itself to professionalism with WTO rules,” a trade official at the Ministry of Commerce said in Beijing.
“As a new WTO member with only seven years, China needs to learn and this is a learning step,” he said, commenting on the move against the European Union.
