![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Thoughts For The Day:
The FDIC decision to set high thresholds for private equity to buy banks will result in a decrease on what private capital will pay for busted banks. If private money can’t bid up the price, then the regular buyers of busted banks, if there are any left, will make lower bids that will cost the FDIC more money.
Commercial real estate loans start coming due in large amounts. US Banks have more than $250 billion in unrealized loans on their books in commercial loans. There are estimates by reasonable and accredited people that forecast as many as 500 regional banks could go bust on unrealized losses on loans on their books. This is a massive problem. There is a trillion dollar problem out there. With the shadow banking system in disarray there is no one to turn to. This also feeds into some SIVs. Interpretation of this is an awful problem which only the FDIC can functionally handle, and they will have to go to the treasury. That will further increase the US Federal Budget deficit. That will in turn put additional downward pressure on the US dollar.
Jim Sinclair’s Commentary
Times this figure by a minimum of two and there is only one case for the dollar: BEAR.
Decade of Debt: $9 Trillion
BY JONATHAN WEISMAN AND DEBORAH SOLOMON
Plunging tax receipts, soaring spending and a sluggish recovery will push the nation’s deficits dramatically higher over the next decade, creating new complications for President Barack Obama’s domestic agenda.
The deteriorating budget picture, detailed Tuesday in separate White House and congressional reports, comes just as Democrats and Republicans prepare to resume the battle over Democratic plans to spend $1 trillion overhauling the nation’s health-care system.
Jim Sinclair’s Commentary
To put things into REAL perspective:
Jim Sinclair’s Commentary
This has to be comic relief.
Obama’s Deficit Projections Assume That Congress Will Stop Spending
Aug 26 2009 12:00AM
One of the reasons why the Obama administration had to up their deficit projections for the next decade up a couple of trillion recently is because they finally had to face reality on their projections for economic growth. They were predicting 3% economic growth starting in April of this year, and 4% growth from next year through 2013. And then they based their calculations for tax receipts based on that growth.
The problem? The economy hasn’t grown that fast, and isn’t likely to grow at the screaming-fast 4% rate next year or any year in the near future.
So Obama and his people took were finally honest with us and changed their projections. But here’s another problem with those projections: They presume that Congress will stop spending above the rate of inflation for the next decade. And that’s even more unlikely to happen than 4% economic growth.
Oh, and these protections also assume that the Democrats will let the government spending on things like food stamps and Head Start that was inflated by the “stimulus” bill deflate back again to their previous levels. Which isn’t going to happen either.
Jim Sinclair’s Commentary
Glee amongst the Green Shooters today was at spiritual levels.
Better look further before declaring a party.
Empty Bank Branches Add To Supply In Retail Real Estate
By A.D. PRUITT
* AUGUST 19, 2009, 12:02 P.M. ET
The ruins of Washington Mutual’s aggressive and unorthodox growth strategy is no more apparent than in the Windy City, where roughly 75% of the bankrupt bank’s branches have gone dark.
It’s a stark harbinger of what looms ahead for recession-battered retail real estate. A growing number of vacant branches being dumped on the market due to mergers and Chapter 11 filings are poised to push vacancy rates higher and exacerbate weak property values.
During boom times, WaMu opened about 170 branches in the Chicago area. The growth spurt underscored the Seattle company’s ambition to be the Wal-Mart of retail banking. WaMu attempted to build a presence in "Chicagoland" from the ground up by opening brand new branches to attract customers. It was a nontraditional strategy given that banks usually purchase an existing bank or branch network to expand into new regions.
As WaMu struggled, it shuttered about 60 branches in Chicagoland before it went bankrupt and was acquired by JPMorgan Chase & Co. (JPM) earlier this year. Subsequently, JPMorgan Chase closed about 70 more branches in the area, leaving only 40 of the original WaMu branches open, a company spokesman confirmed. Nationwide, Chase has closed nearly 400 one-time WaMu branches.
Jim Sinclair’s Commentary
This is one you can take to the bank, if you can find a solid one anywhere.
We still have some too big to folds full of worth less than valued paper.
There’s no will to fight inflation
As we’re already seeing outside the US, central banks won’t stop printing money if it means choking off growth. Don’t expect anything different from the Fed.
By Bill Fleckenstein
The world’s central banks are loath to take away the punch bowl. Lest you think otherwise, consider the path forged by the Reserve Bank of Australia.
After recently suggesting it might raise interest rates sometime soon, the bank had a change of heart. I quote from the minutes of its Aug. 4 meeting:
"A particular source of uncertainty was whether the recent growth in household spending was due mainly to temporary government handouts, in which case it would probably soon fade."
We’ll see a variation of the Bloomberg headline for that story — "Australia’s RBA sees danger of raising rates too soon" — often in the days ahead. That’s because all of the central banks will be particularly reluctant to snuff out any "green shoots" in the economy.
And, when you remember that business is booming in Australia versus America (via its strong housing and commodity markets), you can only imagine how slow the Federal Reserve will be to take away the punch bowl here. This is all the more true given the political heat it will face as the unemployment problem proves to be particularly intractable.
Jim Sinclair’s Commentary
The Chairman of the Fed did not protect his personal credit. This explains a lot.
Bernanke Victimized by Identity Fraud Ring
Exclusive: According to court documents, the Fed chairman and his wife were swindled in 2008 by a skilled team of crooks.
By Michael Isikoff | Newsweek Web Exclusive
Aug 25, 2009
If ever there were living proof that identity theft can strike the mighty and powerful as well as hapless consumers, look no further than the nation’s chief banker: Ben Bernanke. The Federal Reserve Board chairman was one of hundreds of victims of an elaborate identity-fraud ring, headed by a convicted scam artist known as "Big Head," that stole more than $2.1 million from unsuspecting consumers and at least 10 financial institutions around the country, according to recently filed court records reviewed by NEWSWEEK.
Last summer, just as he was dealing with the first rumblings of the financial crisis on Wall Street, Bernanke learned that a thief had swiped his wife’s purse—including the couple’s joint check book. Days later, someone started cashing checks on the Bernanke family bank account, the documents show. "It’s fair to say he was not pleased," said one close associate of Bernanke, who asked not to be identified discussing what the Fed chairman considers a private matter.
The theft of the Bernanke check book—never publicly revealed until now—soon became part of a wide-ranging (and previously underway) identity-theft investigation by the Secret Service and the U.S. Postal Inspection Service. The probe culminated in recent months with a series of arrests, criminal complaints, and indictments brought by federal prosecutors in Alexandria, Va. The targets: members of a nationwide ring that used an inventive combination of old-fashioned thievery and high-tech fraud to loot the bank accounts of unsuspecting victims.
Jim Sinclair’s Commentary
What comes after minus junk rating? The LA rating signed with each bond certificate by the Governor
Service lowers Detroit’s bond status to below junk
1:52 p.m. CDT, August 26, 2009
DETROIT – Mayor Dave Bing says Moody’s further downgrade of Detroit’s bond status to below junk is more evidence that city operations need restructuring.
The international investors service has dropped Detroit’s bond rating from Ba2 to Ba3. Other certificates also have been downgraded. The outlook for other ratings are revised to negative.
Moody’s says Detroit’s negative general fund balances are "expected to be larger than previously reported," and the city is unlikely to meet plans to eliminate accumulated deficits.
Bing says in a release Wednesday that he wants to work with city unions to "make Detroit leaner, more efficient and financially sound."
He has asked for a 10 percent wage cut and other concessions to help trim a $300 million deficit.
Jim Sinclair’s Commentary
The Green Hornet says the number goes up every day.
Crime really pays. The question is did the warden get his check?
3,900 stimulus checks went to prison inmates
By STEPHEN OHLEMACHER (AP)
WASHINGTON — The federal government sent about 3,900 economic stimulus payments of $250 each this spring to people who were in no position to use the money to help stimulate the economy: prison inmates.
The checks were part of the massive economic recovery package approved by Congress and President Barack Obama in February. About 52 million Social Security recipients, railroad retirees and those receiving Supplemental Security Income were eligible for the one-time checks.
Prison inmates are generally ineligible for federal benefits. However, 2,200 of the inmates who received checks got to keep them because, under the law, they were eligible, said Mark Lassiter, a spokesman for the Social Security Administration. They were eligible because they weren’t incarcerated in any of the three months before the recovery package was enacted.
"The law specified that any beneficiary eligible for a Social Security benefit during one of those months was eligible for the recovery payment," Lassiter said.
The other 1,700 checks? That was a mistake.
Jim Sinclair’s Commentary
Mark his reappointment as the day of transition from the FOMC to the White House on monetary policy.
Bernanke May Redefine Fed Mission in Financial-Market Stability
By Craig Torres
Aug. 26 (Bloomberg) — Ben S. Bernanke’s renomination allows him to redefine the Federal Reserve’s mission as he expands its power over financial markets and pulls back on a credit surge the central bank used to keep the economy from collapse, economists say.
Bernanke’s agenda during the next four years will include elevating the Fed’s role in reducing excessive risk in major financial institutions, figuring out how to curtail asset bubbles, and scaling back $1.2 trillion of monetary stimulus.
“He will have the opportunity to permanently change the structure of the Federal Reserve system,” said Vincent Reinhart, a former director of the Fed’s Monetary Affairs Division who’s now a resident scholar at the American Enterprise Institute, a Washington-based research group.
President Barack Obama nominated Bernanke, 55, for a second term yesterday, lauding the Fed chairman for helping “put the brakes on our economic free fall.”
Bernanke, a former Princeton University economist, has already set in place numerous changes since he took over from Alan Greenspan in February 2006. He’s forced more cooperation between bank supervisors and staff economists and steered the Fed toward greater transparency. He’s also made his office more accessible, explaining his actions to the public on the CBS Corp. television program “60 Minutes” and at a town-hall meeting in Kansas City, Missouri.
Jim Sinclair’s Commentary
The dollar cannot, and will not remain the primary reserve currency.
74 days to go.
French President: Dollar Can’t Remain World’s Only Reserve Currency
PARIS -(Dow Jones)- French President Nicolas Sarkozy said Wednesday that the dollar can’t remain the world’s only reserve currency, as the rise of emerging powers such as China and Russia challenge the U.S.’s prominence.
"The political and economic reality of a multipolar world will have to find sooner or later a translation on the monetary level," Sarkozy told foreign ambassadors, gathered for a yearly reception at the Elysee Palace. "A multipolar world can’t count upon one currency only."
Sarkozy also said that he won’t allow the euro to be the only currency to bear the weight of foreign exchange market adjustments as has happened in the past.
Jim Sinclair’s Commentary
From the Washington Post, the Center for Public Integrity questions the integrity of the massive publicly funded foreclosure prevention program. Once again a government initiative is named for exactly what it is not.
Subprime Lenders Getting U.S. Subsidies, Report Says
By Renae Merle
Washington Post Staff Writer
Wednesday, August 26, 2009
Many of the lenders eligible to receive billions of dollars from the government’s massive foreclosure prevention program helped fuel the housing crisis by issuing risky subprime loans, according to a report to be issued Wednesday by the Center for Public Integrity.
Under the $75 billion program, called Making Home Affordable, lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations.
Much "of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place," Bill Buzenberg, executive director of the center, said in a statement.
For example, J.P. Morgan Chase, Wells Fargo and Countrywide, which has been bought by Bank of America, are eligible to receive billions of dollars under the program, according to the report.
Jim Sinclair’s Commentary
What is wrong with this picture?
The world is mad.
Jim Sinclair’s Commentary
The FDIC sets guidelines for financial criteria for private non-bank, non-financial private capital to purchase busted banks.
The requirements basically eliminate most private capital and funds outside of China, Russia and the Middle East. This reveals the critical weakness of the FDIC capital position.
As their capital disappears, the public and known weaknesses of the FDIC call for a bailout, even a unique one, like paying off obligations in short term non marketable US Treasuries.
Seized Texas Bank Sold to Spanish Firm
Guaranty Deal Shows FDIC’s Willingness to Broaden Search for Buyers
By Binyamin Appelbaum
Washington Post Staff Writer
Saturday, August 22, 2009
The federal government is casting more broadly as it seeks buyers for a growing number of failed banks, including entertaining bids from foreign firms and seeking to attract new investors to the industry by easing restrictions.
The results were on display Friday, as regulators seized Guaranty Bank of Texas and immediately sold its branches, deposits and most of its assets to Spain’s Banco Bilbao Vizcaya Argentaria.
The failure of Guaranty, with $13 billion in loans and other assets, was the 10th-largest in U.S. history and the fourth-largest since the financial crisis began last year.
Regulators have sharply increased the pace of seizures this summer after months in which they left many unraveling firms untouched. The resulting spike in failures appears at odds with other signs that the economy is starting to mend, but analysts say the failures actually are an important step toward recovery. The seizure of a bank is in many ways the end of a problem, as the federal government absorbs the losses before selling the healthy parts to a new owner, setting the stage for renewed lending.
The greatest threat to that process is the dwindling supply of buyers. Guaranty is the 106th bank to fail since the beginning of 2008, and some healthy banks have sated their appetites for acquisitions. Regulators liquidated a Nevada bank last week after failing to find a buyer.
Jim Sinclair’s Commentary
Before you read this excellent article lets clear up a major mistake inherent but not said here. The total dollar increment of the Chinese reserves at the high did not exceed $800 billion. It is not the total 2.1 trillion in reserves. You think they are stupid then you are stupid? They have NO dollar problems.
Now read the tables.
Why Is China Investing Overseas?
August 26, 2009
Erik Bethel
Chinese Premier Wen Jiaobao recently gave a speech mentioning that China will use its foreign exchange reserves, the largest in the world, to support and accelerate overseas expansion and acquisitions by Chinese companies.
At the end of 2008 China had US$1.9 trillion in foreign exchange reserves. Today, that number is over US$2.1 trillion.
China’s Foreign Exchange Reserves 2009 (US$Bn)
![clip_image001[6]](http://static.seekingalpha.com/uploads/2009/8/26/462107-125127461304828-Erik-Bethel_origin.jpg "clip_image001[6]")
Source: State Administration of Foreign Exchange
China has three main reasons for undertaking overseas M&A.
First, Beijing is looking for a way to diversify its massive holdings of US debt securities given the possibility of a U.S. dollar devaluation (yet, ironically, a dollar devaluation relative to the yuan means greater purchasing power abroad—another incentive for outbound investment).
Secondly, China is tapped out of most major commodities including iron ore, copper, oil and timber. The country simply cannot continue to grow at 9% per year (as it has for 30 years) without securing a stable supply of commodities.
Third, many Chinese firms want to move up the value chain and are looking to acquire retail and distribution assets, or firms that have proprietary technology, in order to complement their factories.
Jim Sinclair’s Commentary
Do you really believe this hopeless group can lead us out of our present problems or even find their own way out without stealth actions?
EXCLUSIVE: House quietly gives ‘bonuses’ to top aides
Says student-loan subsidies needed in hiring market
By Stephen Dinan
Originally published 08:43 p.m., August 25, 2009, updated 04:18 a.m., August 26, 2009
A month after they voted to punish some corporate executives for taking hefty bonus payouts, members of the House of Representatives quietly gave their own staffers a new potential bonus by making even their top-earning aides eligible for taxpayer dollars to repay their student loans.
The change, which took effect in May, means House employees earning up to $168,411, or the top level, are now eligible for government-funded subsidies to help pay down their student loans.
House officials defend the change as a job-related benefit necessary to keep the government competitive in the hiring market – the same argument corporate chieftains used to defend their own pay scales.
"There’s still a tremendous demand for high-end Hill talent even in this current job market. Expanding eligibility for the benefit allows us to retain valued and seasoned personnel who might otherwise be lured away to more financially lucrative pursuits," said Kyle Anderson, a spokesman for the House Administration Committee.
The committee, which has jurisdiction over internal House employment, salaries and expenses, directed House officials to make the change.
Jim Sinclair’s Commentary
Fine the company and there is no blame.
A kid in the ghetto boosts a car and goes away for 10 years in Attica.
Judge Rips SEC on BofA Pact
AUGUST 26, 2009
BY JESS BRAVIN
Federal judge Jed S. Rakoff fired a new shot in his challenge to a $33 million settlement by Bank of America Corp. over investor disclosures, saying the government’s justification for letting individual executives off the hook is "at war with common sense."
The Securities and Exchange Commission reached the settlement with the bank last month. The agency charged that a Bank of America proxy statement in November misled investors about bonuses for employees at Merrill Lynch, …
