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Thought for Today:
The singular most important and least reported event today was the announcement of a settlement of the lawsuit brought by the Italian city against JP Morgan concerning OTC derivatives sold to that city.
Normally the defendant will say the suit was settled in order to save the large expenses of protracted legal procedures. Generally the terms of settlement are sealed. That means kept secret by agreement of both parties.
It is my expert opinion that suits like this can never see the legal light of day because they are slam-dunk losers for the defendant.
Everyone brought will be settled, not tried.
Jim Sinclair’s Commentary
It might be an ethical idea if the deliberations, if any, of the rating agencies were made public when the rating agency puts on, takes off, and then puts on, takes off a company from their S&P/TSX index in the space of just three years.. They never are!
Moody’s, S&P May Face More Disclosure, Liability in SEC Rules
By Jesse Westbrook
Sept. 16 (Bloomberg) — Moody’s Investors Service, Standard & Poor’s and Fitch Ratings may face more disclosure requirements and greater accountability for debt analyses after being faulted for misreading risks of investing in toxic mortgage securities.
The U.S. Securities and Exchange Commission will propose that firms seeking to sell bonds disclose the grades they got while shopping among credit-rating companies, according to people familiar with the matter. Other changes scheduled for discussion tomorrow at a Washington meeting may make it easier for investors to sue credit raters and require the companies to disclose revenue from their biggest clients, the people said.
Congress will decide whether the steps go far enough to reform an industry whose wrong assessments on subprime-mortgage securities fueled the financial crisis by helping banks sell assets that went sour. House Financial Services Committee Chairman Barney Frank this week said he wants to cut references to credit ratings from U.S. rules because the provisions foster reliance on ratings and deter investors from doing research.
“What happens as a result of these rules is that investors have to buy securities that have particular ratings,” said Frank Partnoy, a University of San Diego law professor and former Morgan Stanley banker who has written research papers about credit-rating companies. “It creates this incredible dysfunctionality where the ratings agencies, instead of surviving based on their ability to generate good ratings, are basically selling licenses” to the capital markets.
Jim Sinclair’s Commentary
Canadian Jitney Naked Shorts come clean. They are also known as Victoria’s Pugs. Their real names are Bonnie and Clyde, but I prefer Justin and Clyde
![clip_image002[1]](http://jsmineset.com/wp-content/uploads/2009/09/clip_image00211.jpg "clip_image002[1]")
Jim Sinclair’s Commentary
It is hard to get rid of Andrew. This subpoena might as well be on the US Fed and Treasury.
RPT-UPDATE 1-Cuomo subpoenas 5 Bank of America directors
Wed Sep 16, 2009 2:47pm EDT
NEW YORK, Sept 16 (Reuters) – Ratcheting up pressure on the largest U.S. bank, New York Attorney General Andrew Cuomo has subpoenaed five current or former Bank of America Corp (BAC.N) directors to learn what they knew about Merrill Lynch & Co’s problems as the companies prepared to merge.
Cuomo issued the subpoenas Wednesday morning, seeking information concerning knowledge of Merrill’s mounting losses, the $5.8 billion of authorized bonus payouts, and how much should be disclose to shareholders, according to a person familiar with the probe.
The person requested anonymity because the probe is ongoing. Bank of America and Cuomo’s office declined to comment.
It was unclear which directors were issued subpoenas, but they include "those most likely to have been briefed the most" about the merger in November and December, the person said.
"This is a sign that Cuomo intends to hold the BofA board accountable if it was involved in the decisions, or if it took a purely passive role and didn’t perform its required function as a check on management," the person said.
Most if not all directors on the board in December will likely be expected to provide testimony, the person said.
Jim Sinclair’s Commentary
The greatest risk to the now general acceptance of ETFs on gold. and silver is the well being of any major paper exchange.
No one doubts that much of the gold held is held in the form of OTC derivatives granted by gold banks.
Jim Sinclair’s Commentary
Do you have a strange gnawing feeling that Americans have been taken prisoner in their own country? Do you feel a great sucking feeling on your assets?
No, you are not paranoid, just read the following.
Americans Have Been Taken Hostage
The American people have been taken hostage to a broken system.
It is a system that remains in place to this day.
A system where bank lobbyists have been spending in record numbers to make sure it stays that way.
A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built.
It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC.
A system partially built by the very people who currently advise our President, run our Treasury Department and are charged with its reform.
And most stunningly — it is a system that no one in our government has yet made any effort to fundamentally change.
Like health care, this is a referendum on our government’s ability to function on behalf of the American people. Ask yourself how long you are willing to be held hostage? How long will you let our elected officials be the agents of those whose business it is to exploit our government and the American people at any cost?
As hostages — was there any sum of money we wouldn’t have given AIG?
Jim Sinclair’s Commentary
The MOPE that is being built in here is that if the economy tanks then of course the dollar has to become a great investment. Yes, for a week maybe.
Dollar Pessimism Highest in 18 Months as Growth Outlook Rises
By Matt Townsend
Sept. 16 (Bloomberg) — Investors turned the most bearish on the dollar in 18 months as signs of a recovery in the global economy reduced demand for the currency as a refuge, a survey of Bloomberg users showed.
The world’s main reserve currency will fall and Treasury yields will rise over the next six months, according to 1,851 respondents in the Bloomberg Professional Global Confidence Index. Their outlook on the economy improved for a second month, after saying it worsened every month since the index began in November 2007.
The U.S. Dollar Index fell yesterday to the lowest level in a year as a decline in foreign-exchange price swings encouraged investors to borrow the currency at record low interest rates to finance the purchase of assets in countries offering yields as much as 8.1 percentage points higher than deposit rates in America.
“You’ve had a lot of people being in the dollar that are going to exit when it isn’t a necessity as a safe haven,” said Fabian Eliasson, a survey participant and head of U.S. currency sales at Mizuho Corporate Bank Ltd. in New York. Eliasson said he expects the dollar to weaken.
Sentiment toward the greenback fell to 30.8 in September, from 38.8 in August, according to the survey. The reading is the lowest since it dropped to 30.3 in March 2008, and has tumbled from a high of 68.86 a year ago. The measure is a diffusion index, meaning a reading below 50 indicates Bloomberg users expect the dollar to weaken.
Jim Sinclair’s Commentary
This is important as it will stand as lesson when proved correct. Here is the MOPE question:If in 1929-1930 you could have lied about and manipulated economic figures (cash for clunkers) would you have avoided the deep and terrible depression?
The answer is NO because a deeper and longer depression would have ensured due to the impact of false hopes when reality sets in.
MOPErs will of course disagree, basing their position on how a business recovery can be built out of a false foundation. The Fed and Treasury position on this is the MOPErs position.
U.S. credit card defaults up, signal consumer stress
Tue Sep 15, 2009 5:04pm EDT
By Juan Lagorio
NEW YORK (Reuters) – Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks’ consumer lending woes are far from over.
The trend was echoed among most other major credit card issuers, dashing optimism sparked when many banks and specialty finance companies reported lower default rates for July.
"People have gotten very bullish with the July data, and (the August data) raises the question about how fast the consumer will get better," said Scott Valentin, an analyst at FBR Capital Markets. "People were assuming the pace would be pretty rapid, and this maybe slows the pace down."
The worse-than-expected August numbers bolstered the contention of some analysts that the July decline in defaults was due more to seasonal effects, like tax refunds, then an improvement in consumers’ financial health.
Many analysts expect bad-loan levels will keep rising until later this year or early 2010.
Jim Sinclair’s Commentary
FPFF program has just been initiated by the US Federal Reserve. Free Prozac for Financiers.
Four Apparent Suicides/Deaths in 48 Hours – CEO-Financiers-Fundraiser
Posted by sakerfa on September 15, 2009
Rockefeller & Co’s CEO committed suicide: report
(Reuters) – James McDonald, chief executive officer of investment management firm Rockefeller & Co, committed suicide on Sunday in Massachusetts, the Wall Street Journal said, citing people familiar with the matter. – Read More
Newport Beach financier Danny Pang dies at 42
(LATimes) – Newport Beach financier Danny Pang died early Saturday at a local hospital, according to the Orange County coroner’s office. The cause of death has not been determined and an autopsy is planned for Sunday, said Larry Esslinger, supervising deputy coroner. – Read More
Financier Finn Casperson dead in apparent suicide
(Inquisitr) – Ex-CEO of Beneficial Corp. Finn H.W. Casperson was found dead in an apparent suicide behind an office building in Westerly, Rhode Island. – Read More
Dying Blagojevich fundraiser said he overdosed, mayor says
(CNN) – Police are investigating the death of the former chief fundraiser for ex-Illinois Gov. Rod Blagojevich as a “death-suicide,” an Illinois mayor said Sunday. – Read More
Jim Sinclair’s Commentary
I believe that rather than Ron Paul’s bill being perceived by the legislative as correct and timely, he is being used to establish the total political control of the Federal Reserve’s monetary policy in a back door manner, bringing ever increasing power to the White House.
That is why bill HR 1207 or similar initiatives have accelerated.
Some would say who cares, but replacing the demon with the devil is not necessarily a good trade.
Rep. Alan Grayson Announces a Hearing on Ron Paul’s Bill to Audit the Federal Reserve (HR 1207)
Jim Sinclair’s Commentary
Is this Health bill #4 or #5?
There are no Fibs here like costing JUST $856 billion.
Baucus Releases Health Care Proposal
By David Herszenhorn
It’s out.
The much-ballyhooed, long-wrangled-over Baucus health care proposal , which meets many of the requirements President Obama has laid out for remaking an industry that accounts for about one-sixth of the American economy, is now public. Only to be wrangled over some more.
The proposal is the result of more than a year of preparation and more than three months of intense negotiations between a small group of Democrats and Republicans led by Senator Max Baucus, Democrat of Montana, the chairman of the Finance Committee.
The first surprise in the Baucus plan: a slimmed down price-tag of $856 billion over 10 years. Earlier versions of the health care legislation had come in costing $1 trillion or more. But stay tuned for a close look at the fine print; Congressional budget-scoring is often as much art as science.
Another number to watch: 13 percent. That’s the share of family income that the Baucus plan envisions middle-class American families having to pay in health insurance premiums before co-payments, deductibles and other cost-sharing.
Jim Sinclair’s Commentary
The inviting question is are they OTC short of gold derivatives OR acquisitions?
I will go for one before two.
Acquisition speculation rife as Newmont says it will raise $2 billion
With gold trading around $1,000 and the Denver Gold Forum as the backdrop, Newmont Mining Corporation, the world’s second largest gold miner, couldn’t have chosen a better time to announce it is to raise around $2 billion through the sale of Senior Notes.
Author: Lawrence Williams
Posted: Wednesday , 16 Sep 2009
Speculation was rife at the Denver Gold Forum as to the reasons for Newmont Mining Corporation’s (NYSE: NEM) announcement it is to make a public offering of $2.0 billion of Senior Notes. Newmont reckons the net proceeds will amount to around $1,966 million, after deducting estimated discounts and expenses. With the gold price at around the $1,000 level this is a particularly opportune time to make the offering given the strong investor interest in gold.
Newmont said that it intends to use the net proceeds of this offering for working capital and for general corporate purposes, including costs of exploration, development of its project pipeline and acquisition initiatives that may become available, although no specific acquisitions were identified. Pending those uses, Newmont says it intends to use the money raised to repay a portion of its senior revolving credit facility and place the remaining proceeds in short-term liquid investments.
The offering will be in two parts – 5.125% Senior Notes due 2019 in the principal amount of $900 million, and 6.250% Senior Notes due 2039 in the principal amount of $1.1 billion. The offering is expected to close on September 18th. The joint book-runners for the offer are Deutsche Bank Securities and UBS Investment Bank.
With this announcement coinciding with the big Denver Gold Forum meeting, packed with mining company corporate delegates as well as analysts and financiers there was naturally considerable speculation as to the reasons with the consensus being that the company almost certainly had a major acquisition target in its sights, but which company this might be, and when news of any offer might emerge, was not immediately apparent.
Jim Sinclair’s Commentary
The functioning phrase here is "To avoid asking for an additional raise in the debt ceiling." The test is MOPE.
I might add "so quickly after the last request."
Treasury to Shrink Financing Program
SEPTEMBER 16, 2009
BY DEBORAH SOLOMON AND JON HILSENRATH
WASHINGTON — The Treasury Department is expected to begin winding down a temporary program created at the height of the financial crisis to address a new problem — the government’s rapidly expanding debt.
According to people familiar with the matter, the step is being taken to help the Treasury avoid hitting the $12.1 trillion debt ceiling that was expected to be reached by mid-October. The decision could also be controversial, since the program was put in place to help blunt any inflationary impact from emergency actions taken by the Federal Reserve.
Since last year, the Treasury has been selling special …
