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Dear CIGAs,
There comes a time to cut the bait or to fish. What is your firm mindset on the US dollar?
The dollar is much different today than it ever has been in your lifetime.
1. It has the carry trade against it.
2. It has the wish of central banks to diversify against it.
3. It has economic factors against it.
4. It now faces the Rise of Asia.
The dollar will have periods of violent counter-bear trend rallies, but they will be short and limited. The dollar is going significantly lower.
Gold will follow the dollar in the inverse, no matter what else is happening out there. The dollar will not provide safety for the flight to safety crowd.
The dollar is dead – long live the renminbi
Whatever happens at the G20, the days of Western dominance are at an end, says Jeremy Warner.
By Jeremy Warner
Published: 7:42PM BST 25 Sep 2009
Sometimes it takes a crisis to restore reason and equilibrium to the world, and so it is with the trade and capital imbalances that were arguably the root cause of the financial collapse of the past two years.
To economic purists, the changes now under way in demand and trade are inevitable, necessary and even desirable. Even so, dollar supremacy and the geo-political dominance of the West are both likely long-term casualties.
One, almost unnoticed, effect of the downturn is that past imbalances in trade and capital flows are correcting themselves of their own volition, the simple consequence of lower demand in once profligate consumer nations.
Current-account surpluses in China, Germany and Japan are narrowing, as are the deficits of the major consumer nations – primarily America, but also smaller profligates such as Britain and Spain.
The key question for G20 leaders as they meet in Pittsburgh is not bankers’ bonuses, financial regulation and other issues of peripheral importance, but whether this correction in trade might be used as the basis for a permanently more balanced world economy.
In direct contradiction of US objectives, Angela Merkel, the German Chancellor, accuses Britain and America of using the issue of trade imbalances to backtrack on financial reform and bankers’ bonuses. "We should not start looking for ersatz [substitute] issues and forget the topic of financial market regulation," she said before boarding the plane to Pittsburgh.
Jim Sinclair’s Commentary
Mark this as the public advent of the new Western World Order.
The sun sets on the dollar as gold and Asian currencies rise.
New world currency order starts to unfold
Joe Prendergast
Last Updated: September 21. 2009 7:17PM UAE / September 21. 2009 3:17PM GMT
The US dollar still retains a disproportionately large representation in international trade transactions, official reserves and exchange rate regimes.
This is largely due to the many institutional arrangements and incumbencies which remain from the Bretton Woods era of 1944 to 1971 when the gold-linked dollar provided the formal anchor for the world monetary system.
Now, though, this privileged, inherited status of the paper dollar is under threat from the falling relative economic size of the US and its cyclical influence and the scale of the excesses that very privilege has allowed.
Appropriately straddling the turn of the 21st century, the “borrowed” consumer decade of 1997–2007 may come to be regarded as the fin de siecle, marking a critical juncture in the drift away from the US dollar hegemony that has dominated the international financial system since the Bretton Woods regime ended in 1971.
Instead, we are on the road to a new, multilateral currency order.
Jim Sinclair’s Commentary
The process begins.
Rich nations give India and China more sway in IMF
World leaders trumpet new global economic as old industrialized elites cede influence to fast-growing developing powers
Campbell Clark
Saturday, Sep. 26, 2009 03:56AM EDT
World leaders trumpeted a new global economic order at the G20 summit yesterday as the old industrialized elites ceded influence to fast-growing developing powers.
While developing countries such as China and India have long argued for a bigger say in the economic councils of the world, it took the global financial meltdown to persuade the United States and other rich nations that they cannot go it alone.
The decision at yesterday summit in Pittsburgh to transfer a chunk of control in the powerful International Monetary Fund to “dynamic” emerging economies, such as China, India and Brazil, and to enshrine the G20 as the world’s economic steering committee both mark a profound shift in the global power balance.
“The old system of international economic co-operation is over. The new system, as of today, has begun,” British Prime Minister Gordon Brown declared.
Jim Sinclair’s Commentary
Please check out the following video.
Neil Barofsky, TARP Inspector: Financial System May Now Be In A "Far More Dangerous Place" (VIDEO)
Christine Spolar and Lagan Sebert
First Posted: 09-25-09 02:19 PM
Neil Barofsky is the man who tracks the historic bailout known as the Troubled Asset Relief Program, or TARP. The 39-year-old special inspector general monitors a dozen separate bailout-related programs that now account for nearly $3 trillion in financial commitments. A former federal prosecutor, Barofsky has subpoena power and has launched about three dozen investigations since being named to the post in December 2008. In an audit released in July, Barofsky made clear that he was intent on demanding transparency from all quarters — including the U.S. Treasury. His next audit is due in October. During an interview with the Huffington Post Investigative Fund, Barofsky made some striking observations. Among them were:
He found hundreds of banks capable of tracking their use of the TARP money – despite claims by the U.S. Treasury that the task was impossible.
If the purpose of the TARP rescue was to increase lending, it has failed.
The U.S. financial system, now dependent on bigger and fewer banks, is shakier than ever.
WATCH the Huffington Post Investigative Fund’s interview
http://www.youtube.com/watch?v=BvwKzF6TLKo
Jim Sinclair’s Commentary
It would appear that Iran is inviting more than a simple strike by Israel.
Hardline Iran Goes Harder on Nuke Site
Supreme Leader’s Aide: Nuclear Facility Will Begin Operating, "God Willing"; IAEA to Be Allowed on Site, But No Word When
Iran has actually hardened up its line on this newly-disclosed uranium enrichment site, which it had not disclosed to the International Atomic Energy Agency (IAEA).
It was under construction; now, reports CBS News correspondent Elizabeth Palmer, Tehran says it’s going to be put into operation.
An aide in the office of Supreme Leader Ayatollah Ali Khamenei told the Fars News agency, "God willing, this plant will be put into operation soon, and will blind the eyes of the enemies."
That is squarely in line with the tone taken by Iran’s president in New York this week, where Mahmoud Ahmadinejad, was on the offensive, saying Tehran was not obliged to inform Western government "of every facility that we have."
Iran didn’t tell the IAEA, the world’s nuclear watchdog, until last Monday, and only came clean then, say Western intelligence agencies, because their secret had been discovered.
Jim Sinclair’s Commentary
With so much smoke there is apt to be an order to FIRE.
Military action on Iran would only ‘buy time’: Gates
WASHINGTON — Any possible military action against Iran would only "buy time" and delay Tehran’s nuclear program by about one to three years, US Defense Secretary Robert Gates said.
"The reality is there is no military option that does anything more than buy time," Gates told CNN.
"The estimates are one to three years or so," he said when asked about the impact of possible military options on Iran’s disputed nuclear sites.
The Pentagon chief meanwhile told ABC television’s "This Week" program that "the Iranians have the intention of having nuclear weapons," but stressed that whether Tehran had formally decided to develop them "is in doubt."
Iranian President Mahmoud Ahmadinejad earlier quipped that a nuclear enrichment plant whose existence was disclosed by Western leaders on Friday had not been kept secret and that US President Barack Obama should apologize for accusing Tehran of violating international law.
"Not a chance," said an unequivocal Gates.
Jim Sinclair’s Commentary
When I first reported this, Editor Dan, always the gentleman, would not permit me to tell you exactly where the explosives were placed.
He will still only allow me to say that the terrorist was walking with some difficulty. The terrorist exploded internally all over the place without injuring anyone but himself.
Can you imagine the shock of the Prince as the terrorist had to whipped off his gowns? It was akin to putting an un-cracked egg into a microwave.
Explosives ‘inside’ suicide bomber
An al-Qaeda suicide bomber who died last month while trying to blow up a Saudi prince in Jeddah had hidden the explosives inside his body.
Security and intelligence experts are worried that current security checks would not prevent this technique.
Frank Gardner reports.
Jim Sinclair’s Commentary
CIGA Green Hornet says this is every major publication around the world.
Regardless of some intelligence sources commenting to the contrary, this has to significantly concern the citizens and government of Israel.
Add to this Chavez deal with Iran over uranium and the pot is boiling.
Concern over new Iranian uranium plant
“The latest reports that Iran has built a new enrichment plant give cause for grave concern,” said Foreign Minister Støre after it was revealed on Friday that Iran has concealed the existence of an uranium enrichment plant from international nuclear authorities for several years.
He said there is a crisis of confidence between Iran and the rest of the international community today because of Iran’s lack of transparency regarding its nuclear programme and its lack of willingness to comply with demands put forward by the IAEA and the UN Security Council. “The latest reports that Iran has built a new enrichment plant give cause for grave concern,” said Foreign Minister Støre. “This is incompatible with Security Council requirements, and shows clearly that Iran has not laid all its cards on the table,” he said.US President Barack Obama, French President Nicolas Sarkozy and British Prime Minister Gordon Brown spoke with one voice in condemning Iran’s new uranium enrichment plant at a press conference during the G-20 meting in Pittsburgh. “This latest turn of events also shows how crucial it is that Iran show full transparency regarding its nuclear facilities and allow the IAEA full access. Otherwise it will be impossible for Iran to gain international confidence, which is also necessary for the country to exercise its right to use nuclear energy for peaceful purposes, which we have never contested,” said Foreign Minister Stoere.Stoere pointed to the fact that on Thursday the UN Security Council adopted a historic resolution on nuclear disarmament and non-proliferation. "The uncertainty surrounding Iran’s intentions could, unfortunately, complicate the efforts to eliminate nuclear weapons. This is extremely regrettable,” said Mr Stoere.
“Our aim is to find a diplomatic solution. It is essential that the international community is united in putting political pressure on Iran,” the Norwegian Foreign Minister concluded.
Jim Sinclair’s Commentary
What do you mean IF?
AP Interview: Egypt warns of Mideast nuclear arms race if Israel and Iran are pursuing weapons
By: EDITH M. LEDERER
Associated Press
09/25/09 6:05 PM EDT
UNITED NATIONS — Egypt’s foreign minister warned Friday that a nuclear-capable Israel and an Iran pursuing nuclear weapons could trigger a nuclear arms race in the Middle East.
Ahmed Aboul Gheit said in an interview with the Associated Press that Iran has a right to the peaceful use of nuclear energy but it must be verified.
If the existence of a new uranium plant was kept secret, he said, "that will shed doubts, of course, on the credibility of the Iranian position, no doubt about it."
Iran kept the facility hidden from weapons inspectors until a letter it sent to the International Atomic Energy Agency on Monday.
Iranian President Mahmoud Ahmadinejad told a news conference Friday that the facility is part of its peaceful pursuit of nuclear energy, which is allowed under the Nuclear Nonproliferation Treaty.
Jim Sinclair’s Commentary
CIGA JB Slear had a good comment. "Between education and financial institutions the institution of education lost."
University of California campuses erupt into protest
Students and faculty members demonstrate against plans to raise tuition fees and cut workers
Mary O’Hara in California
University of California Berkeley students and faculty protest against fee increases and budget cuts. Photograph: Justin Sullivan/Getty
In the sweltering California heat with their placards, posters, red armbands and chants of "no cuts, no fees, education should be free", the demonstrators packed in to Sproul Plaza at the centre of University of California Berkeley campus today meant business.
The crowd cheered and passing cars hooted as speakers implored them to fight state authorities’ plans to hike student fees and lay off workers.
Daniella, a petite second-year Latina undergraduate sitting quietly in the shade echoed what many making the rallying calls were articulating. "My whole life I wanted to come here. If they increase the fees I will have to drop out. We have to fight this."
The Berkeley protest was one of many held across California in an unprecedented day of action directed at university authorities and state governor, Arnold Schwarzenegger as he attempts to curb the state’s multibillion-dollar budget crisis. Faculty, students and unions from the University of California’s 10 campuses including its two most prestigious, UCLA and Berkeley, joined forces in what was the biggest student protest for more than a generation.
Jim Sinclair’s Commentary
Read what the government determines a "fugitive" to be.
Social Security Owes ‘Fugitives’ Millions
By ELLEN E. SCHULTZ
A federal judge approved a civil-court settlement requiring the Social Security Administration to repay $500 million to 80,000 recipients whose benefits it suspended after deeming them fugitives.
The supposed fugitives include a disabled widow with a previously suspended driver’s license, a quadriplegic man in a nursing home and a Nevada grandmother mistaken for a rapist.
They were among at least 200,000 elderly and disabled people who lost their benefits in recent years under what the agency called the "Fugitive Felon" program. Launched in 1996 and extended to Social Security disability and old-age benefits in 2005, the program aimed to save taxpayers money by barring the payment of Social Security benefits to people "fleeing to avoid prosecution."
Jim Sinclair’s Commentary
What has happened to us as a people? Who are we rewarding as a society? Who are we punishing as a society?
U.S. seeing more female homeless veterans
By Thom Patterson
(CNN) — When Iraq war veteran Angela Peacock is in the shower, she sometimes closes her eyes and can’t help reliving the day in Baghdad in 2003 that pushed her closer to the edge.
While pulling security detail for an Army convoy stuck in gridlocked traffic, Peacock’s vehicle came alongside a van full of Iraqi men who "began shouting that they were going to kill us," she said.
One man in the vehicle was particularly threatening. "I can remember his eyes looking at me," she said. "I put my finger on the trigger and aimed my weapon at the guy, and my driver is screaming at me to stop."
"I was really close to shooting at them, but I didn’t."
Now back home in Missouri, Peacock, 30, is unemployed — squatting without a lease in a tiny house in a North St. Louis County neighborhood.
Jim Sinclair’s Commentary
You think China is the only one that has told someone to take a long walk off a short dock when reneging on an OTC derivative?
Sure these CDS (credit default swaps, an OTC derivative) can be listed and cleared. What are you smoking?
This is a court case that we will want to read every word of before it settles in a secret agreement between parties.
Citi sues Morgan Stanley over CDS, claims $245 million
Fri Sep 25, 2009 10:43pm EDT
NEW YORK (Reuters) – Citigroup Inc (C.N) sued Morgan Stanley (MS.N) on Friday for breach of contract, saying the Wall Street firm owed it $245.4 million for protection it bought on a loan.
Citibank bought a credit default swap (CDS) from Morgan Stanley & Co International in 2006 on a $366 million revolving credit facility it provided to an issuer of collateralized debt obligations (CDO), according to the complaint filed in U.S. District Court in Manhattan.
The swap obliged Morgan Stanley to pay Citibank the money as a result of a payment default on the credit facility to the CDO, known as Capmark VI, it said in the complaint.
Liquidating the CDO collateral did not cover the entire amount, and Citibank said it exercised its right under the CDS to have Morgan Stanley make up for the shortfall, but it refused, according to the complaint.
Citibank paid Morgan Stanley about $750,000 for the CDS, according to the complaint.
Jim Sinclair’s Commentary
Pakistan will go Taliban and remain the most dangerous place on the planet.
Pakistan discovers ‘village’ of white German al-Qaeda insurgents
Investigators have discovered a "Jihadi village" of white German al-Qaeda insurgents, including Muslim converts, in Pakistan’s tribal areas close to the Afghan border.
By Dean Nelson in New Delhi and Allan Hall in Berlin
Published: 11:44AM BST 25 Sep 2009
The village, in Taliban-controlled Waziristan, is run by the notorious al-Qaeda-affiliated Islamic Movement of Uzbekistan, which plots raids on Nato forces in Afghanistan.
A recruitment video presents life in the village as a desirable lifestyle choice with schools, hospitals, pharmacies and day care centres, all at a safe distance from the front.
In the video, the presenter, "Abu Adam", the public face of the group in Germany, points his finger and asks: "Doesn’t it appeal to you? We warmly invite you to join us!"
According to German foreign ministry officials a growing number of German families, many of North African descent, have taken up the offer and travelled to Waziristan where supporters say converts make up some of the insurgents’ most dedicated fighters.
The Islamic Movement of Uzbekistan, which has a foothold in several German cities, has capitalised on growing concern over the rising profile of German forces in Afghanistan. Their role has become increasingly controversial in Germany in recent weeks after dozens of civilians were killed in an air strike ordered by German officers.
