Jim Sinclair’s Commentary

JB Slear goes ballistic!

Jim,

Think of this question with a backdrop of what the media is pointing to. TV claims that the stately politician’s talk of the costs of health care is skyrocketing around the country and that they must control this “out-of-control” problem. This tells me that business decisions’ are far more important than living life itself. But that’s not the question I wish to post, but to utilize the media’s direction in the back-ground…

Here’s the question: What social entity out there is the most expensive to the American tax payers and its struggling businesses? Health Care, Swine Flu? Unemployment Insurance? Any other social problems you can think of?

What about the current banking system and Wall Street? Are they not the most expensive burden that is out of control on our society? Are they not the ones that use ruthless tactics to pressure individuals into the herd like mentality, utilizing media forces with language that is based to confuse, than points to their view of an answer as the only answer worth thinking? This to me is the one entity that needs to be controlled…heavy ruthless control… No other entity has ever been so costly to any nation in written history that I’ve studied.

If the politicians listened to the protestors at the town hall meetings, they would be aiming at the banks and pressuring all other elected officials to audit these far more taxing, fabricating entities than all the other “social” dysfunctional problems combined. If they did that, they might actually be doing what the public wants. Far less taxes and far more individual freedom and the utopia the founding fathers envisioned… Well at least that’s my answer. What’s your answer?

CIGA JB Slear
Fort Wealth Trading Co. LLC
www.FortWealth.com
866-443-0868 ext 104

Jim,

Load up the boat, then beat the grass to startle the snakes.

I’ve seen this so many times, I’ve have called it the "Prechter effect".

COT Commercial traders stone wall gold’s advance with a massive increase in paper shorts in gold and longs in the USD. Around this time the media tends rediscovers Prechter’s long standing bullish and bearish views on the USD and gold, respectively.

What I have noticed is that the "Prechter effect" no longer packs the same wallop that it used.

CIGA Eric

Dear Jim,

This article tells all we need to know about the real condition of banks. By my back of envelope math, Regions has a negative $4 billion net worth after receiving TARP funds and that’s according to its own evaluation of loan values. As a real estate investor/developer of 40 years experience, I can assure you the values being used by Regions for its bad loans collateral in our local market is a dream and fantasy.

CIGA Doug

Next Bubble to Burst Is Banks’ Big Loan Values: Jonathan Weil
Commentary by Jonathan Weil

Aug. 13 (Bloomberg) — It’s amazing what a little sunshine can accomplish.

Check out the footnotes to Regions Financial Corp.’s latest quarterly report, and you’ll see a remarkable disclosure. There, in an easy-to-read chart, the company divulged that the loans on its books as of June 30 were worth $22.8 billion less than what its balance sheet said. The Birmingham, Alabama-based bank’s shareholder equity, by comparison, was just $18.7 billion.

So, if it weren’t for the inflated loan values, Regions’ equity would be less than zero. Meanwhile, the government continues to classify Regions as “well capitalized.”

While disclosures of this sort aren’t new, their frequency is. This summer’s round of interim financial reports marked the first time U.S. companies had to publish the fair market values of all their financial instruments on a quarterly basis. Before, such disclosures had been required only annually under the Financial Accounting Standards Board’s rules.

More…

Jim,

Left unsaid is what’s going to happen to the FDIC’s deposit insurance fund on this one – my guess is that it will be ugly, as these guys were up to their necks in Florida on development projects that went bad. The "value" of that paper may be very close to zero; if the FDIC avoids doing one of their 40% loss deals I will be quite surprised.

A 40% loss on this one would, if my math is right, kill the rest of their insurance fund plus quite a bit and put the FDIC in the position of immediately needing to go hit up the Treasury for more money.

That ought to be good for confidence, right?

Oh, there are two more on the "you’re dead" list that I’ve been talking about for a while: CORUS and Guaranty, both of which have said they (as of last filing) have a negative Tier Capital Ratio, meaning that they are formally underwater and IMHO should have been seized months ago.

But don’t worry, Treasury has an infinite credit card to keep funding the FDIC with, right? 

Do they really believe that China can you spare an extra trillion – or three and TIPS (inflation indexed bonds) are the silly asinine fix?

CIGA Jeff H

One Of Three Down; Is The FDIC Still Solvent?

Here we go!

Colonial, Alabama’s second-largest bank, is being closed by regulators today, the person said, becoming the largest U.S. bank failure of 2009 after an expansion into Florida saddled the lender with more than $1.7 billion in soured real-estate loans.

The FDIC usually waits until the close of business Friday; they must have had a slight problem with withdrawals…

More…

Jim,

Updating some economic trends. Nothing new. Charts simply restating the same thesis.  Lower dollar.

CIGA Eric