![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Jim Sinclair’s Commentary
Fact or fiction? This is making the rounds on the internet right now.
The demise of the dollar
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
By Robert Fisk
Tuesday, 6 October 2009
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."
Jim Sinclair’s Commentary
Hasn’t this already happened?
Will California become America’s first failed state?
Sunday 4 October 2009
Los Angeles, 2009: California may be the eighth largest economy in the world, but its state staff are being paid in IOUs, unemployment is at its highest in 70 years, and teachers are on hunger strike. So what has gone so catastrophically wrong?
California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.
But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kevin Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."
Outside the Forum in Inglewood, near downtown Los Angeles, California has already failed. The scene is reminiscent of the fallout from Hurricane Katrina, as crowds of impoverished citizens stand or lie aimlessly on the hot tarmac of the centre’s car park. It is 10am, and most have already been here for hours. They have come for free healthcare: a travelling medical and dental clinic has set up shop in the Forum (which usually hosts rock concerts) and thousands of the poor, the uninsured and the down-on-their-luck have driven for miles to be here.
Jim Sinclair’s Commentary
So far in High Stakes Poker Iran has always won.
Analysis: Iran is winner in nuclear talks, at least for now
updated 2:43 p.m. EDT, Sat October 3, 2009
By Elise Labott
(CNN) — The United States and its partners in the P5+1 — Britain, France, Germany, Russia and China — left Thursday’s talks with Iran in Geneva, Switzerland, rightfully claiming progress.
The seven hours worth of talks ended much better than anyone anticipated. Iran pledged to admit International Atomic Energy Agency inspectors into its recently disclosed facility in Qom and agreed, in principle, to a proposal under which it ships most of its current stockpile of low-enriched uranium outside the country for further enrichment to power a reactor used for medical research.
Or so they thought. On Friday, Tehran’s ambassador to Britain, a member of the Iranian delegation at the Geneva talks, denied that a deal had been reached. And on Saturday, headlines from Iran’s Press TV quoted the Iranian government: "no deal with P5+1 on shipping Iran’s enriched uranium abroad."
Jim Sinclair’s Commentary
Totally predictable that cash for clunkers at best picked sales from the future. In all probability it simply attracted people into debt that should not be there.
GM, Chrysler sales fall more than 40 percent; Ford, Honda also slip
By CHRISSIE THOMPSON, AUTOMOTIVE NEWS
The biggest automakers posted some of the sharpest U.S. sales declines in September as demand dropped to its lowest level since April in the aftermath of the cash-for-clunkers program.
The seasonally adjusted annual sales rate was 9.51 million units. After thronging dealerships during the government incentive and sending August demand to the year’s high of 13.7 million, consumers backed off in September, dropping the sales rate slightly below June’s 9.55 million.
“I’ve been in the auto business for 39 years, and I’ve never seen a roller coaster year like this,” said Ken Czubay, Ford Motor Co.’s vice president of U.S. marketing, sales and service.
Sales for General Motors Co. and Chrysler Group, both recovering from bankruptcy, plunged more than 40 percent, in line with analysts’ forecasts. American Honda tumbled 20 percent and Toyota Motor Sales was down 13 percent. Ford Motor Co. fell 5 percent after two straight months of year-over-year gains.
Other automakers advanced. BMW Group’s 4 percent rise was its first since August 2008. Porsche rose 8 percent, its second straight monthly increase. Hyundai-Kia soared 26 percent, for its third straight monthly gain.
Jim Sinclair’s Commentary
Here are a few important developments this morning:
1. Fiscal stimulation in significant amounts that has been long delayed is being considered as a tool NOW in Washington as an anti-unemployment plan to NOT be called a second stimulus package. Politically a second stimulus package would indicate the failure of the first.
2. Now how can you really believe that a second dip, maybe a humdinger of second dip, will occur without increased creation of money?
3. Fiscal stimulation will work to draw monetary stimulation into classic inflation.
4. The failure of CIT either to stay out of bankruptcy or to refinance so as to be able to loan and factor to the Middle American business can be compared as follows. The failure of CIT will be to Middle American business what the failure of Lehman was to financial concerns.
All of the above is dollar negative and therefore gold positive.
Jim Sinclair’s Commentary
CIGA JB Slear has reported that there are some undo delays in getting deliveries from certain Comex warehouse sources.
He should know because he is the "real stuff" delivery man.
November could be a trying month for the exchange. It would seem logical that if you intend to take delivery early is better than later.
You can do a reverse spread into the delivery month.
Jim Sinclair’s Commentary
Do you get the feeling someone is playing with your head?
Report Questions Claims On Banks’ Health
Special Inspector General Says Paulson Was Wrong To Say Firms Receiving TARP Funds Last Year Were Sound
WASHINGTON, Oct. 5, 2009
(AP) The credibility of the government’s $700 billion financial rescue program was damaged by claims a year ago that all of the initial banks receiving support were healthy, a new report contends.
Special Inspector General Neil Barofsky generally found that the government had acted properly in October 2008 as it scrambled to implement the Troubled Asset Relief Program to avert the collapse of the U.S. financial system.
But the report said that then-Treasury Secretary Henry Paulson and other officials were wrong to contend at an Oct. 14 press conference that all nine institutions receiving the first round of support – $125 billion – were sound.
"These are healthy institutions, and they have taken this step for the good of the economy," Paulson had declared at the time.
Jim Sinclair’s Commentary
What was that suggestion last week? Maybe there would not be a communiqué from this weekend?
Confidence is a delicate construct.
G7 RUNNING ON EMPTY
Oct 05 2009 12:55 pm (EST)
Saturday’s G7 meeting sadly could have ended pleasantly…the obituary would have read died quietly in its sleep after over 25 years of rarely meaningful meetings and scores of photo shoots.
But no. G7 lives on despite G20 taking over as the main global policy gathering for Kumbaya sing-along’s. With prodding from Japan and European government officials it was determined to carry on. Europe would not even consider a G4 reconfiguration with the Euro Zone having 1 seat at the table instead of 3 plus 1 in the G7 configuration and Canada none instead of 1 at G7.
So what did we learn from Saturday’s meeting?
Currencies matter but not enough to warrant new language in the communiqué…not even on China where the now pegged yuan (for the last year) saw G7 congratulate the CCP for its progress on making its currency more flexible.
Not even the USD which is near last summer’s record lows was cause for mention…not when the US economy is in desperate need of exports to fill the hole in GDP left by weak consumption…though you would never guess that the US is reveling in an orderly USD decline when examining the very hollow mantra chanting Geithner engaged in whenever pressed by a reporter to address the weak US currency. The fine print on the US strong dollar policy is about as open ended as the fine print on the terms banks use for setting interest rates on credit cards…a strong dollar just not now.
Jim Sinclair’s Commentary
First the banksters get their OTC derivative profits privatized and losses socialized, then CIT rolls over.
The impact takes down what is left the real economy, Middle America.
That is a formula that will deck any administration and sitting party control. The inviting conclusion is that here comes a combination of fiscal stimulation and QE.
Confidence is a delicate item.
HSBC Chief Warns of Second Downturn: Report
Published: Monday, 5 Oct 2009 | 1:41 AM ET
HSBC Chief Executive Michael Geoghegan is cautious about "growing too fast" because he fears a second economic downturn could force the bank to make write-downs, he said in an interview with the Financial Times.
Geoghegan told the FT he thought recovery would be W-shaped rather than V-shaped.
Geoghegan said that if he is right, "we have to be very careful we don’t grow the balance sheet so far before the recovery has come, only to write it back into the impairment line later on. I’m cautious about growing too fast," the FT quoted him as saying.
The FT said another senior executive told it that he expected HSBC to make medium-sized acquisitions a priority, with troubled banks’ subsidiaries an area of interest. He highlighted "bits of Lloyds and Royal Bank of Scotland," the FT said.
Jim Sinclair’s Commentary
Confidence in the US dollar is on the skids. There are 34 days left.
The G-7 Abandons The Dollar
Carl Gutierrez, 10.05.09, 01:45 PM EDT
The greenback fell further after the G-7 would not come to the rescue.
![clip_image002[1]](http://jsmineset.com/wp-content/uploads/2009/10/clip_image00211.gif "clip_image002[1]"){kind=small}
The Group of Seven will let the dollar fall.
The heated climate before the Istanbul meeting led some to expect global policymakers to take a stand, but despite the strong tone, Andrew Wilkinson, senior market analyst at Interactive Brokers, said it was short on action. "It invites investors to test the dollar’s lines of resistance in order to see what response, if any, might be forthcoming in the event of a further fall in the value of the dollar," Wilkinson said.
The dollar’s loss of value over the past six months has been a cause for concern for the world’s financial chief’s, Wilkinson said, and reasonably so because the greenback’s instability threatens financial markets and economies.
"Many currency traders were braced for some hint of intervention to prevail from this meeting," Wilkinson said, "especially given several verbal warnings or complaints from central bankers and politicians who had warned against dollar weakness."
The problem with intervention is that it would only be partially effective, especially if the U.S. isn’t on board. The Treasury Department would never admit this, but for the time being it’s in the country’s interest to keep its currency low because it stimulates exports for the economy’s manufacturing base and lowers the value of the debt that the Treasury is piling up.
Jim Sinclair’s Commentary
Confidence is a delicate construct.
November is near. This winter is going to be very difficult for the US dollar.
U.S. Lost Credibility by Saying Banks Were Healthy, Audit Says
By Robert Schmidt
Oct. 5 (Bloomberg) — The Treasury Department “lost credibility” when it said its first capital injections from the $700 billion financial rescue were for healthy banks, the inspector general for the Troubled Asset Relief Program said.
In a report issued today, the inspector, Neil Barofsky, said then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke had concerns about the finances of several of the nine banks in which the government invested $125 billion last October. Two of those lenders, Bank of America Corp. and Citigroup Inc., were later given more aid.
Barofsky separately said his review didn’t find any evidence that officials pressured Bank of America to complete its acquisition of Merrill Lynch & Co. While Bank of America considered ending the deal in December after Merrill’s losses spiraled, Paulson and Bernanke advocated its completion, and arranged another $20 billion in assistance.
“Federal officials acted based on their concerns for the financial markets as whole,” Barofsky wrote in his report. Paulson and Bernanke “believed that the already fragile financial system could further destabilize if the acquisition of Merrill Lynch failed.”
Paulson was succeeded by Timothy Geithner, former president of the Federal Reserve Bank of New York, in January. Bernanke in August won nomination by President Barack Obama to a second four-year term as central bank chief.
Jim Sinclair’s Commentary
As we move towards November, event after event undermines the foundations of confidence in the US dollar.
They Lied: Watchdog Says Treasury and Fed Knew Bailed-Out Banks Were Not ‘Healthy’
Before the $700B Bailout, Senior Government Officials Had Financial Concerns About Nine Bank Instiutions Receiving TARP Funds
The Treasury Department and the Federal Reserve lied to the American public last fall when they said that the first nine banks to receive government bailout funds were healthy, a government watchdog states in a new report released today.
Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), says that despite multiple statements on Oct. 14 of last year that these nine banks were healthy and only receiving government funds for the good of the country’s economy, federal officials knew otherwise.
"Contemporaneous reports and officials’ statements to SIGTARP during this audit indicate that there were concerns about the health of several of the nine institutions at that time and, as detailed in this report, that their overall selection was far more a result of the officials’ belief in their importance to a system that was viewed as being vulnerable to collapse than concerns about their individual health and viability," Barofsky says.
Last October, the government was in the midst of trying to contain the worst financial crisis in decades. On Sept. 7, 2008, mortgage giants Fannie Mae and Freddie Mac were placed under conservatorship. On Sept. 15, the massive investment bank Lehman Brothers filed for bankruptcy. The next day, insurance giant AIG needed an $85 billion government loan to avoid collapse.
Jim Sinclair’s Commentary
This is nothing new or unexpected. It is the root cause of why Pakistan will go Taliban. It is the root cause why Afghanistan is a losing battle.
Both governments are totally corrupt.
Rent an army and surges costs lives, accomplishing little in terms of sustainability.
Pakistan kept billions in US aid from military
Generals say misuse of funds common, costly
ISLAMABAD, Pakistan – The United States has long suspected that much of the billions of dollars it has sent Pakistan to battle militants has been diverted to the domestic economy and other causes, such as fighting India.
Now the scope and longevity of the misuse is becoming clear: Between 2002 and 2008, while Al Qaeda regrouped, only $500 million of the $6.6 billion in American aid actually made it to the Pakistani military, two army generals said.
The account of the generals, who asked to remain anonymous because military rules forbid them from speaking publicly, was backed up by other retired and active generals, former bureaucrats, and government ministers.
At the time of the siphoning, Pervez Musharraf, a Washington ally, served as chief of staff and president, making it easier to divert money intended for the military to bolster his image at home through economic subsidies.
“The army itself got very little,’’ said Mahmud Durrani, a retired general who was Pakistan’s ambassador to the United States under Musharraf. “It went to things like subsidies, which is why everything looked hunky-dory. The military was financing the war on terror out of its own budget.’’
Jim Sinclair’s Commentary
The theme for today is simple. Confidence in the us dollar is breaking.
Volcker: Emerging Economies Threaten U.S.
Friday, October 2, 2009 2:33 PM
By: Julie Crawshaw
Former Fed chairman and Obama economic adviser Paul Volcker says the rise of China and other emerging economies pose a challenge to the United States.
The growth of emerging economies is “symbolic of the relative, less-dominant position the United States has, not just in the economy but in leadership, intellectual and otherwise,” Volcker told PBS interviewer Charlie Rose.
“I don’t know how we accommodate ourselves to it,” Volcker said.
“You cannot be dependent upon these countries for $3 to $4 trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.”
“I would like to think that given the history of the past, given the strength, actual and potential of the American economy, we can still provide a kind of indispensable element of leadership here,” Volcker added.
Jim Sinclair’s Commentary
This has taken a most serious profile.
Two Leaks and the Deepening Iran Crisis
October 5, 2009
By George Friedman
Two major leaks occurred this weekend over the Iran matter.
In the first, The New York Times published an article reporting that staff at the International Atomic Energy Agency (IAEA), the U.N. nuclear oversight group, had produced an unreleased report saying that Iran was much more advanced in its nuclear program than the IAEA had thought previously. According to the report, Iran now has all the data needed to design a nuclear weapon. The New York Times article added that U.S. intelligence was re-examining the National Intelligence Estimate (NIE) of 2007, which had stated that Iran was not actively pursuing a nuclear weapon.
The second leak occurred in the British daily The Times, which reported that the purpose ofIsraeli Prime Minister Benjamin Netanyahu’s highly publicized secret visit to Moscow on Sept. 7 was to provide the Russians with a list of Russian scientists and engineers working on Iran’s nuclear weapons program.
The second revelation was directly tied to the first. There were many, including STRATFOR, who felt that Iran did not have the non-nuclear disciplines needed for rapid progress toward a nuclear device. Putting the two pieces together, the presence of Russian personnel in Iran would mean that the Iranians had obtained the needed expertise from the Russians. It would also mean that the Russians were not merely a factor in whether there would be effective sanctions but also in whether and when the Iranians would obtain a nuclear weapon.
Jim Sinclair’s Commentary
Again today the World Bank pans the US dollar. One might suspect this is not as unwelcome as it appears. Regardless, confidence is a fragile construct.
World Bank President: Time to Diversify out of the Dollar
October 05, 2009
According to Robert Zoellick, World Bank President and former Goldman Sachs head and U.S. Secretary of State, you shouldn’t take the U.S. dollar’s reserve currency status for granted. Swelling government deficits and the strength of emerging countries is weakening the demand for the dollar. Time to head for the exits?
o how should you diversify out of the dollar?
According to Zoellick, the Euro and the Chinese Yuan are good alternatives (source: BusinessWeek). But a lot of people think that investing in a basket of currencies is a better approach. In the short-term, currency volatility is unpredictable since exchange rates are more likely to be impacted by government policy than fundamentals. In the long term, all fiat currencies devalue and buying gold and silver is probably a better bet. But if you really want to park your savings in cash, consider a currency that has stronger fundamentals the the US dollar, the British pound and euro.
Until 2000, the Swiss Central Bank had a legal requirement to hold 40% of its reserves in gold. This requirement has been relaxed to around 20%, but in terms of volatility the Swiss franc is still one of the most stable currencies. You can purchase the Swiss franc via the Currencyshares ETF (FXF) quite easily.
Jim Sinclair’s Commentary
My comment on this article is yes, of course it would.
Iran conflict could send oil to high: Raymond James
Mon Oct 5, 2009 3:08pm EDT
NEW YORK (Reuters) – Oil prices may surge to a record if conflict over Iran’s uranium enrichment leads the oil producer to slash exports or block the Strait of Hormuz, Raymond James analysts said in a Monday research note.
The note says that the risks of a military strike against Iran’s nuclear facilities are rising, which could potentially cut off the OPEC nation’s 2-million-barrels-a-day of exports.
It could also lead to a blockage of 20 percent of global oil supplies which are transported through the Gulf’s Strait of Hormuz, the note said.
While the threat of a disruption due to the standoff between the West and Tehran over its nuclear program has pushed up oil prices from time to time over recent years, oil markets have remained calm amid rising tensions during the past month.
"With oil (prices) now around $70 a barrel we would argue that the market isn’t factoring in the risks," said Pavel Molchanov, one of the report’s authors, in a telephone interview. "Catalysts for higher oil prices could include more saber-rattling, or Iran reverting back to a more confrontational stance."
Iran has touted its uranium enrichment as a peaceful program for internal energy markets, while rejecting Western charges that it seeks to build nuclear weapons.
Jim Sinclair’s Commentary
So we did get a communiqué?
The original idea was that if you cannot say something good, maybe it is better to say nothing.
G-7 finance ministers warn recovery ‘fragile’
By PAN PYLAS (AP) – 1 day ago
ISTANBUL — Finance ministers from the Group of Seven rich countries warned the recovery remains "fragile" and tried to talk up the U.S. dollar amid fears it could fall farther and disrupt the global economy.
The officials said in their closing statement after meeting Saturday in Istanbul that decisive moves by governments had improved conditions for the world economy and financial markets.
But they warned against "complacency" since growth prospects remained "fragile" and unemployment continues to rise. Figures on Friday showed the U.S. economy shedding more jobs than expected in September, with unemployment at a 26-year high of 9.8 percent.
They agreed it was too soon to withdraw the stimulus measures such as government deficit spending and rock-bottom interest rates that have helped re-start growth.
U.S. Treasury Secretary Timothy Geithner said the United States will unwind the "extraordinary" policy measures it has taken only when conditions stabilize and growth strengthens.
Jim Sinclair’s Commentary
Here is a radical suggestion – apply the laws that already exist.
Re-regulating U.S. banks a no-brainer
Lax, muzzled watchdogs ignored tricks financial giants developed to hide all the junk they shilled
Oct 04, 2009 04:30 AM
DAVID OLIVE
It can be fairly argued that the way to prevent another worldwide financial crisis and the global recession it triggered is, quite simply, to go back to regulating the financial industry as we did during most of the 20th century. Or, to be parochial, the way Canada has scrupulously overseen its financial sector since the 1920s.
Canada did not follow the U.S. example of financial deregulation that began there in the early 1980s. Ottawa did permit the brokerage and trust sectors to be absorbed by the banks. But the feds maintained strict supervision so Canada is the only major economy in the current crisis in which government has not had to bail out its banks
