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Dear Friends,
The MOPErs are making a huge mistake drawing exact lines in the sand.
The work this evening to keep gold under $960 and the USDX above .7840 is so obvious that when it fails, and it must, the house falls down.
This type of action is focused on the huge and growing Federal debt issues. It reveals the panic that is descending on the Treasury.
These guys have such egomania that they really believe acting as they are this early morning is going to accomplish something.
Well it will, but it will not be what is anticipated by the MOPErs
Today was extremely busy, so I had to start JSMineset late. My incoming emails were over the 1200 mark when I started reporting to you four hours ago. They are still over 1200. The incoming messages were arriving much faster than I could read them.
It is late so please keep that in mind if you are looking for me early in the AM Friday.
You will be hearing from Trader Dan as soon as he gets his electronics working.
He has been en-route with his young family from his old digs in Texas to a new and remote ranch on the other side of the country. He practices what we preach.
Good US morning CIGAs.
It is Friday here.
Jim
Jim Sinclair’s Commentary
Have you read, starting on page 434, the pending Health Bill on the subject of END OF LIFE CARE?
The effort to save money is focused on the high cost of end of life care. The bill requires doctors to have this discussion with elderly or terminally challenged patients on the "Do Not Revive" option and Federally paid for Hospice care. That means die and do not cling to life because it costs too much.
The doctor will have to report the specific results of end of life discussions with you, the patient, to the government.
The town meetings are the second challenge by the people waking up slowly from their sleep as sheeple.
This is the first significant challenge to the aura of the present administration and impacts general confidence.
Jim Sinclair’s Commentary
My trust that the Tanzanian people would do the right market orientated action is clearly vindicated.
Tanzania to Table Mining Laws in October, Take Stakes in Mines
Updated: 2009-08-12 13:54
Tanzania will this October table mining laws which will allow it to take stakes in mines, Minerals & Energy Minister William Ngeleja said.
The legislation will give government power to acquire a stake of between 10 percent and 15 percent in strategic gemstone mining, Ngeleja said at a seminar on mineral resources development in Dar es Salaam today.
"This will not be something automatic; it will very much depend on the government’s decision on whether a particular gemstone is strategic in government’s view or not," he said.
Tanzania is Africa’s third-largest gold producer, after South Africa and Ghana, and holds the only known deposit of tanzanite, a precious gemstone. Barrick Gold Corp., the world’s largest producer of the metal, and third-ranking AngloGold Ashanti Ltd. are among companies with mines in the country.
A panel appointed by the nation’s president in 2007 suggested higher royalty rates and fewer tax breaks to help boost revenue from Tanzania’s mineral wealth. Mining companies want government to reconsider, saying this will lower profits.
Jim Sinclair’s Commentary
Positive developments come daily from here.
Tanzania firm hopes to add 45,000 customers to grid
Thu Aug 13, 2009 9:36am GMT
By George Obulutsa
DAR ES SALAAM (Reuters) – A Tanzanian subsidiary of Canada’s Artumas Group Inc says it hopes to add 45,000 customers to Tanzania’s electricity grid in five years if it can secure approval and funds for the project.
The Umoja Light Company, a part of Artumas Tanzania, has been serving about 16,500 customers for the past two and a half years in Mtwara and Lindi in the southeast of the east African nation, where it generates 12 megawatts (MW) from natural gas.
Artumas Tanzania discovered a gas deposit in Mnazi Bay, but has put plans for a 300 MW power plant on hold due to the global economic crisis, which made it harder to access financing.
Umoja Light has been planning the project with the government for the last four years, but is waiting for the Energy and Water Utilities Regulatory Authority to grant it the necessary licences and approvals.
"We are hopeful that this will happen in the near future," Richard Tainton, Umoja Light’s general manager, told Reuters late on Wednesday on the sidelines of a regional infrastructure and energy conference in Dar es Salaam.
Jim Sinclair’s Commentary
Confidence is a subtle thing.
This report by Huffington Post is the kind of thing that impacts confidence.
One chip at a time the confidence built on MOPE utilizing SPIN is failing.
This is the danger of really believing that you can build a healthy economy out of hot air.
Internal Memo Confirms Big Giveaways In White House Deal With Big Pharma
First Posted: 08-13-09 11:10 AM
A memo obtained by the Huffington Post confirms that the White House and the pharmaceutical lobby secretly agreed to precisely the sort of wide-ranging deal that both parties have been denying over the past week.
The memo, which according to a knowledgeable health care lobbyist was prepared by a person directly involved in the negotiations, lists exactly what the White House gave up, and what it got in return.
It says the White House agreed to oppose any congressional efforts to use the government’s leverage to bargain for lower drug prices or import drugs from Canada — and also agreed not to pursue Medicare rebates or shift some drugs from Medicare Part B to Medicare Part D, which would cost Big Pharma billions in reduced reimbursements.
In exchange, the Pharmaceutical Researchers and Manufacturers Association (PhRMA) agreed to cut $80 billion in projected costs to taxpayers and senior citizens over ten years. Or, as the memo says: "Commitment of up to $80 billion, but not more than $80 billion."
Representatives from both the White House and PhRMA, shown the outline, adamantly denied that it reflected reality. PhRMA senior vice president Ken Johnson said that the outline "is simply not accurate." "This memo isn’t accurate and does not reflect the agreement with the drug companies," said White House spokesman Reid Cherlin.
Jim Sinclair’s Commentary
If you recall the interview I did with Bloomberg Radio in March, we here at JSMineset called the time for this equity rally.
Click here to listen to Jim’s Bloomberg interview…
Now RBS is right. It is getting very tired.
RBS uber-bear issues fresh alert on global stock markets
Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts
By Ambrose Evans-Pritchard, International Business Editor
Published: 8:26PM BST 12 Aug 2009
Britain’s Uber-bear is growling again. After predicting a torrid "relief rally" over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears.
"We are now in the middle of a parabolic spike up," he said in his latest confidential note to clients.
"I expect this risk rally to continue into – and maybe through – a large part of August. What happens after that? The next ugly leg of the bear market begins as we get into the July through September ‘tipping zone’, driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets."
The key indicators to watch are business spending on equipment (Capex), incomes, jobs, and profits. Only a "surge higher" in these gauges can justify current asset prices. Results that are merely "less bad" will not suffice.
He expects global stock markets to test their March lows, and probably worse. The slide could last three months. "A move to new lows is highly likely," he said.
Jim Sinclair’s Commentary
CIGA JB Slear says: "To the people they were hired to protect; foreign and domestic."
Rep. Weiner Tries To Ban Cameras From Town Hall Event
Click here to watch the video…
Jim Sinclair’s Commentary
CIGA Rusty Bayonet says: "CNN barely reported this story this afternoon. It didn’t even make their main page on their website. No MOPE going on here, no siree."
Initial jobless claims rebound
Number of people filing first time claims for jobless benefits rose last week, but the total number of people filing ongoing claims fell.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: August 13, 2009: 9:45 AM ET
NEW YORK (CNNMoney.com) — The number of Americans filing claims for first-time unemployment benefits rose last week, while the total jobless rolls decreased, the government said Thursday.
There were 558,000 initial claims filed in the week ended Aug. 8, an increase of 4,000 from an upwardly-revised 554,000 the previous week, according to the Labor Department’s weekly report.
Economists had expected initial claims to fall to 545,000, according to consensus estimates gathered by Briefing.com.
The four-week moving average of initial claims, which smoothes out volatility in the measure, was 565,000. That’s up 8,500 from the previous week’s revised average of 556,500.
Despite last week’s rebound, the number of people filing new jobless claims has eased in recent weeks. In July, the data were distorted by seasonal factors related to early plant closings in the automotive industry.
Jim Sinclair’s Commentary
Substance is overcoming form as reality overcomes spin.
U.S. Economy: Sales Unexpectedly Decrease as Job Losses Mount
By Timothy R. Homan
Aug. 13 (Bloomberg) — Sales at U.S. retailers unexpectedly fell in July, raising the risk that consumers will keep cutting back as job losses mount and temper a recovery from the worst recession since the 1930s.
Purchases decreased 0.1 percent, the first drop in three months, as shrinking demand at department stores such as Macy’s Inc. and Wal-Mart Stores Inc. overshadowed a boost from the cash-for-clunkers automobile incentive program, Commerce Department figures showed today in Washington.
A separate government report today showed more Americans than forecast filed claims for unemployment insurance last week, underscoring the threat to spending from the continued deterioration in the job market. Treasury securities jumped and the dollar fell after the reports, and some economists lowered estimates for growth this quarter.
“Until we start seeing job growth, consumers are still going to be very cautious,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto, which accurately forecast the drop in purchases excluding automobiles. “It’s premature to talk about the sustainability of a recovery,” he said, until there’s “follow-through on the demand side.”
The gain in Treasuries sent the yield on the benchmark 10- year note down to 3.66 percent at 11:40 a.m. in New York from 3.72 percent late yesterday. The dollar dropped against the Japanese yen to 95.47 yen from 96.06 on Aug. 12. Stocks were little changed.
Jim Sinclair’s Commentary
12 trillion has made the bankrupt OTC derivatives good to the winner but accomplished little else.
Problems remain unsolved and without practical solution. They are not years off. That is the last stab at SPIN on this.
US CREDIT-Ambac, MBIA liquidity at risk without new business
Thu Aug 13, 2009 4:13pm EDT
By Karen Brettell
NEW YORK, Aug 13 (Reuters) – Ambac Financial Group (ABK.N) and MBIA Inc (MBI.N) risk a liquidity crunch in coming years as continuing losses at their bond insurance arms deplete capital and plans to write new business remain on hold.
Bond insurers have been decimated by losses from selling hundreds of billions of dollars of protection on debt that included large exposures to deals packed with risky mortgage-backed securities.
Attempts to launch new municipal bond insurance operations have also run into snags. Ambac in June delayed plans to launch a new insurance arm after struggling to raise capital for the unit, called Everspan.
MBIA plans to write new business through a unit called National Public Financial Guarantee Corp, but it is facing litigation from a group of banks that is delaying this effort.
The banks allege the transfer of assets to the new company leaves fewer resources to pay claims in its bond insurance arm.
Jim Sinclair’s Commentary
There is no solution or end to the need for funds now that Wall Street is bailed out. Here goes the real economy.
TARP Remains Troubled
Alexandra Zendrian, 08.13.09, 04:00 PM EDT
The Congressional Oversight Panel has concerns about the still very much present troubled assets on banks’ balance sheets.
The Troubled Asset Relief Program has being in place for 10 months. The program was originally designed to purchase troubled assets off the banks’ balance sheets; when the financial crisis became dire and the previous plan wouldn’t fly, the funds’ intention morphed into a cash injection for the banks. So in these 10 months, we still have many of the troubled assets that were previously on banks’ balance sheets but we’re $700 billion in the hole. The Congressional Oversight Panel has a problem with this.
In a recent report about the TARP funds, the panel cited the lack of transparency and available information about how many troubled assets are out there. "It is likely that an overwhelming portion of the troubled assets from last October remain on bank balance sheets today," the report says. Likely, as in "we’re not totally sure because we don’t have all the data."
This info isn’t readily available for a few reasons. One, only 19 banks were stress tested. Two, banks classify these troubled assets differently, with some banks considering an asset troubled while another doesn’t, for the same type of asset. The oversight panel anticipates asking for the Treasury Department to look into the size and scope of this problem the next time Secretary Timothy Geithner testifies before the panel, which will be in September, according to an oversight panel spokesman. The panel would also be interested in expanding the stress tests so they are applicable to smaller banks.
Jim Sinclair’s Commentary
Now here is the perfect hedge. Buy banks, gold and gold company shares.
Paulson Buys Banks That Lost Value in Credit Crisis (Update1)
By Saijel Kishan and Cristina Alesci
Aug. 13 (Bloomberg) — John Paulson, the hedge-fund manager whose wagers against the U.S. housing market helped him earn an estimated $2.5 billion last year, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.
His firm, Paulson & Co., bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. It was the biggest new purchase in the second quarter for Paulson, 53, and made him the bank’s fourth-largest owner.
“It’s ironic because he was the one that made the right call shorting subprime,” said Jerome Dodson, who oversees $2.5 billion at Parnassus Investments in San Francisco. “His timing is good but he probably won’t be as successful with this purchase as he was with betting the housing market would collapse.”
Paulson, who manages about $29 billion, last year started a hedge fund, called Paulson Recovery fund, to invest in financial firms hurt by mortgage writedowns. He boosted investments in gold companies this year to help mitigate potential inflation as governments worldwide increase spending to help their economies recover from recession. Gold has gained 7.7 percent this year.
Stefan Prelog, a spokesman for New York-based Paulson, declined to comment on the filing.
Jim Sinclair’s Commentary
Note the extreme security system with the two guards near the missile with their backs turned shooting the bull. Sure, the nukes are safe…
Pakistan’s nukes are safe. Maybe.
Thu, 08/13/2009 – 4:57pm
By Vipin Narang
An excellent series of recent articles on the subject by Shaun Gregory, Rolf Mowatt-Larssen (a former director of intelligence at the Department of Energy), and Brig. Gen. Feroz Hassan Khan (Ret.) assess the very grim threat of Pakistan losing control over its 60-warheads-and-growing nuclear weapons arsenal. Given the lack of publicly available data on this critical issue, such articles by extremely knowledgeable scholars and practitioners represent some of the best information we have on realistic threats to Pakistan’s nuclear arsenal.
Gregory’s article has gotten some recent attention for noting that there have worryingly been several attacks at the perimeter of bases that may house nuclear components, though U.S. intelligence officials are quick to point out that there is little reason to believe that nuclear assets were ever at risk. So whatare the primary risks to the security of Pakistan’s nuclear arsenal?
In answering this question, it is important to differentiate between the various organizations involved with Pakistan’s nuclear weapons, and where and when nuclear assets are more or less vulnerable to internal and external threats. The bigger threat is probably not the Army losing control of nuclear assets, but rather insider-outsider collusion or diversion of nuclear material from the civilian nuclear agencies during either the production phase or transfer to Army locations.
The good news is that once the Pakistani Army takes custody of nuclear assets, the threat of terrorists successfully boosting a warhead or fissile cores — either through direct attack or facilitated by insiders — is reassuringly low. The Pakistani Army has every incentive to ensure firm control over the country’s nuclear assets since, should they be lost or stolen, there would literally be hell to pay.
Jim Sinclair’s Commentary
Foiled once, foiled twice, but attacked until a worldwide shocking change comes out of Pakistan
Pakistan nuclear thefts foiled
Arnaud de Borchgrave
Published 04:45 a.m., August 13, 2009
Is Pakistan’s nuclear arsenal theft-proof? Former President Pervez Musharraf and his successor, Asif Ali Zardari, and their army and intelligence chiefs repeatedly have assured both the Bush and Obama administrations that their 80-odd nuclear weapons are as secure as the U.S. arsenal of some 7,000 city busters.
The Pakistanis have separated warheads from delivery systems and stored them in different secret locations throughout the second-largest Muslim country in the world (after Indonesia). The United States has given Pakistan copies of its own blueprint to ensure fool-proof, total safety. Yet Pakistan’s secret nuclear-storage sites are known to Islamist extremists and have been attacked at least three times over the last two years, according to two recent reputable reports.
The Baltimore-based Maldon Institute, whose worldwide staff consists mostly of retired intelligence officers, and the Times of India’s Washington-based foreign editor Chidanand Rajghatta both report attempted nuclear thefts that have been tracked by Shaun Gregory, a professor at Bradford University in Britain.
The first such attack against the nuclear-missile-storage facility was on Nov. 1, 2007, at Sargodha; the second, by a suicide bomber, occurred Dec. 10, 2007, against Pakistan’s nuclear air base at Kamra; and the third, Aug. 20, 2008, and most alarming, was launched by several suicide bombers who blew up key entry points to a nuclear-weapons complex at the Wah Cantonment, long believed to be one of Pakistan’s main nuclear-weapons assembly points, where warheads and launchers come together in a national emergency.
Mr. Gregory’s research paper was first published in West Point’s Counter Terrorism Center Sentinel, and elicited no attention or reaction. Renowned terrorist expert Peter Bergen, one of the very few journalists to interview al Qaeda chief Osama bin Laden before Sept. 11, 2001, reviewed Mr. Gregory’s paper and was baffled by the lack of reaction from the rest of the media.
Jim Sinclair’s Commentary
From the unreal to the real will be a shock to those who have been hypnotized by MOPE via F-TV and their SPIN.
Bleak sales are another reality check for economy
By CHRISTOPHER S. RUGABER (AP) – 1 hour ago
WASHINGTON — A bleak report on retail sales Thursday reinforced a nagging worry of economists: Shoppers won’t spend enough to help a recovery take hold.
The figures served as a reality check for an economy that lately has appeared poised to emerge from recession and grow again. Consumer spending powers about 70 percent of economic activity.
The Cash for Clunkers rebate program helped give auto sales to their biggest jump in six months in July, but sales sank elsewhere. Gas stations, department stores, electronics outlets and furniture stores all suffered.
Overall, sales fell 0.1 percent, the Commerce Department said, after two months of modest gains. Economists had expected a 0.7 percent increase. Excluding autos, sales fell 0.6 percent, also much worse than predicted.
Unemployment, flat wages, tighter credit, fear of layoffs and to urge to save more have caused many consumers to spend less. Shrinking home equity and stock portfolios have compounded the problem.
Jim Sinclair’s Commentary
Now here is a cost saving, mean and lousy thing to do.
Fire the politicians first before you kill the kids and cull the geezers.
California board votes to drop healthcare coverage for 60,000 children
As a result of state budget cuts, the Healthy Families program will have to begin terminating coverage for more than 60,000 children on Oct. 1. Nearly 670,000 children could be dropped by June 30.
By Patrick and McGreevy and Evan Halper
August 13, 2009 | 7:49 p.m.
Reporting from Sacramento – The announcement by state officials that California has enough cash to stop paying bills with IOUs did little to take the sting out of other budget news Thursday: Tens of thousands of poor children are about to lose their healthcare coverage.
A state board voted Thursday to begin terminating health insurance for more than 60,000 children Oct. 1 as a result of the budget amendments signed into law recently by Gov. Arnold Schwarzenegger.
Those children would be up for an annual review of their coverage next month, but instead they may be dropped from the California Healthy Families program under the action by the state Managed Risk Medical Insurance Board.
The board is scrambling to secure funding from other sources, including money set aside by voters for early childhood education, but so far it has come up short. If additional funds are not found, board officials said, the program could ultimately drop 669,296 children in the current fiscal year, which ends June 30, 2010. Currently, 921,000 people age 18 and younger are enrolled in Healthy Families.
"There are not sufficient funds for the services we are providing," said Board Chairman Cliff Allenby. "We will work to do what we can do" to find additional money.
The budget cuts made by Schwarzenegger and the Legislature left the Healthy Families program with a $194-million shortfall.
Jim Sinclair’s Commentary
From California moving east, and from the Sun Coast moving north and west, the real economy is now rolling over hard.
The Wall Street guys may not even know there is something called the real economy. They only know casino swaps, market manipulating super fast soft ware and predatory destruction of the real.
D/FW area foreclosure filings up 32%
Dallas Business Journal
Foreclosure filings on Dallas-Fort Worth homes jumped 32 percent in the third quarter of this 2009 compared to last year, according to a new report issued by Addison-based Foreclosure Listing Service Inc.
With the filing deadline passed for September foreclosures, FLS was able to report on third-quarter and year-to-date (January through September) numbers.
In Dallas-Fort Worth, foreclosure filings were issued on 15,880 properties for the third quarter of 2009, up from 12,050 postings during the same period last year.
Three local counties—Tarrant, Collin and Denton—set new record highs in the most recent quarter, the report concluded.
Collin County foreclosures rose 33 percent to 2,138 total filings. Meanwhile, Tarrant County foreclosures jumped 40 percent to 5,252 filings and Denton County foreclosures rose 35 percent to 1,745 foreclosure filings, according to the FLS report.
Jim Sinclair’s Commentary
Anyone that says China is dollar bound is a raving idiot. These dollars are being used for acquisition.
China May Boost Spending on Energy Acquisitions by Half in 2009
By John Duce
Aug. 14 (Bloomberg) — China, unfazed by failures to invest in Rio Tinto Group and Unocal Corp., will boost spending on oil and mining acquisitions by at least half this year to take advantage of lower valuations after commodity prices slumped.
State-owned Yanzhou Coal Mining Co.yesterday agreed to buy Australia’s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion), a day after Sinochem Corp., China’s biggest chemicals trader, offered to buy Emerald Energy Plc for 532 million pounds ($881 million) to gain oil fields in Syria and Colombia.
China National Petroleum Corp.’s plan to buy Repsol YPF SA’s Argentine unit may push Chinese purchases of overseas commodity assets to $43 billion this year, a 48 percent increase on 2008, according to data compiled by Bloomberg.
“The Chinese don’t have enough nickel, don’t have enough oil, and they don’t have enough copper,” Jim Rogers, chairman of Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist”, said in a telephone interview yesterday. “There’s a crisis coming. They are going around the world buying up what they can. They’re preparing for a rainy day.”
Bids for resources by China, whose $2.1 trillion in currency reserves are the world’s largest, have been met with opposition in the U.S. and Australia. Neither concern over its growing influence nor the arrest of four Rio executives in Shanghai have stopped Chinese companies from buying assets abroad as the nation’s 4 trillion yuan ($585 billion) economic stimulus spurs demand.
Jim Sinclair’s Commentary
What election today anywhere is on the level? Come on now.
Observers see pattern of fraud before Afghan vote
By JASON STRAZIUSO, Associated Press Writer – Thu Aug 13, 6:23 pm ET
KABUL – Voting observers expect fraud during next week’s Afghanpresidential election and warn that cheating will most likely take place at polling stations in remote or dangerous areas where independent monitors won’t be able to be present.
A suspiciously high number of women — far more than men — have been registered to vote in culturally conservative provinces wherePresident Hamid Karzai expects to do well, a leading election monitor said this week. An adviser to the top U.S. commander said the black market for voter registration cards is flourishing and that she could have personally bought 1,000.
Jim Sinclair’s Commentary
Look at what Wall Street has done to main street.
Home foreclosure filings up more than 100 percent in Seattle area
By CHRIS GRYGIEL
Last updated August 12, 2009 10:24 p.m. PT
Home foreclosure filings in the greater Seattle area increased 115 percent in July compared to the same period last year, according to data released Thursday.
Filings in Washington state were up 94 percent from July of this year compared to the same month last year, according to RealtyTrac. The online service tracks foreclosure filings, which are default notices, scheduled auctions and bank repossessions. In King County, such filings were up 148 percent compared to July of last year.
Nationally foreclosure filings were up 32 percent in July of 2009 compared to last year, the tracking service said. Nevada had the nation’s highest foreclosure rate for the 31st consecutive month, with one in every 56 housing units receiving a filing last month.
Washington state ranked 13th. There were 5,370 filing notices last month (one out of every 511 housing units). Oregon’s rank was 10th nationally, with 3,605 filing notices, translating to one out of every 446 housing units.
In the Seattle-Tacoma-Bellevue metro area, there were 3,476 foreclosure filings last month. That was up almost 5 percent from June of this year.
Thursday’s report came a day after a state study that showed a $8,000 federal tax credit for first-time home buyers appears to be drawing people back into Washington’s housing market.
Jim Sinclair’s Commentary
Bernanke either goes to infinite QE, or will be made redundant as will the Fed itself.
Political direct control of monetary policy will reside in the White House more effectively.
Rethinking the Fed Chairmanship and Weighing Who’s Right for the Job
By Steven Pearlstein
Friday, August 14, 2009
A popular parlor game among Washington insiders this summer is guessing whether Ben Bernanke will be reappointed to a second four-year term as chairman of the Federal Reserve, or whether President Obama will try to put his own stamp on the Fed by appointing his most trusted economic adviser, Larry Summers.
Before getting to the question of who will be the next Fed chairman, however, perhaps it’s worth considering what the job ought to be. Over the last two years, we’ve certainly all learned that it involves a lot more than adjusting interest rates and dissembling knowledgeably before Congress. We also saw the consequences of having left the previous chairman in the job so long that it created a cult of personality that drained the Fed of the kind of critical thinking that might have averted the recent financial crisis. If there ever was a time to reconceptualize the role of Fed chairman, now would be it.
So here are a few thoughts:
Whenever the Fed comes under serious attack, as it has recently, its reflexive response is to accuse its critics of jeopardizing the Fed’s independence. Yet if you think about it, the greatest threat to the Fed’s independence comes not from outside the institution but from a chairman and members who are so anxious to get reappointed that they begin to tilt policy to win favor with the White House or with Wall Street or take on a reluctance to criticize policies that they think harmful to the economy.
There are two easy fixes for this problem. Congress could extend the chairman’s term from four years to six but remove the possibility of reappointment. And it could end the current practice of appointing new members of the Fed’s board of governors to fill the partial, unexpired terms of governors who leave. All new governors should be appointed to their own 14-year terms, without possibility of reappointment.
Jim Sinclair’s Commentary
Here comes the humdinger for the average guy looking forward to retirement in the USA and GB.
U.K. Companies Face Pension-Plan Deficits
BY MARIETTA CAUCHI
LONDON — Pension deficits have hit many top U.K. companies — and about 22% of the FTSE 100 firms don’t have enough cash to pay out on existing liabilities, according to research released Thursday.
The increased pressure on already stretched balance sheets is forcing many companies to consider whether to continue supporting defined-benefit schemes, KPMG said, adding many will end up pulling the provision for existing employees.
It …
Jim Sinclair’s Commentary
In a MOPE world you can have a recovery even if there was no economy at all. They would just make up one, and start issuing bullish statistics.
A ‘Jobless’ And ‘Wageless’ Recovery?
Nouriel Roubini, 08.13.09, 12:01 AM EDT
After severe job losses in early 2009, the pace of job losses slowed starting in April, and the July numbers have brought more respite. Non-farm payroll job losses were 247,000 in July. However, the private sector lost 254,000 jobs. This is considerably better than analysts expected (around 325,000) but not good enough to claim that we are in the middle of a strong and sustainable recovery.
Looking at the recessions of the post-war period, average monthly job losses ranged between 150,000 and 260,000. Average monthly losses in this recession are still at 350,000. For the first four months of the year, the average was at 648,000. The improvement with respect to the first part of the year is clear. The improvement with respect to what we are used to seeing in recessionary periods is much less clear cut. The latest numbers are not exactly what you’d call good news, at least not in absolute terms. In relative terms, however–after skirting a near-depression–markets seem to consider 247,000 payroll losses a breath of fresh air.
![clip_image001[7]](http://jsmineset.com/wp-content/uploads/2009/08/clip_image00171.jpg "clip_image001[7]")
Data Source: Bureau of Labor Statistics
The increase in average weekly labor hours in July is certainly a positive sign. But it also shows that, when economic conditions begin improving, companies will increase labor hours and temporary workers and move workers from part time to full time. Only after that do they begin hiring new workers. So hiring is still a long way ahead. The decline in the unemployment rate from 9.5% in June to 9.4% in July was not due to an improvement in the employment situation but is explained by the large decline in the labor force (-422,000). Workers facing hiring freezes, fewer full-time jobs and jobs at lower wages are leaving the labor force.
