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Jim Sinclair’s Commentary
Historically the greatest waste of words and money has been official intervention to offset a falling currency or statements contrary to the currency bear market.
It calls attention to the basic weakness and is useless to change the trend against the Carry Trade and basic economics. It has always been so.
U.S. dollar drop overrides official pleas for strength
Doubts about Washington’s sincerity, Fed’s low-rate regime offset rhetoric
By Laura Mandaro, MarketWatch
SAN FRANCISCO (MarketWatch) — Increased public hang-wringing over the U.S. dollar’s drop — from finance officials in Tokyo to Brussels to Washington — have failed to lift the greenback as investors bet major central banks won’t back up their remarks by buying dollars.
The U.S. dollar index, which measures the U.S. dollar against a basket of six currencies, has lost 4% since Sept. 1, bringing its drop this year to nearly 7% and its level to a 14-month low.
Against other units, such as the Canadian and Australian dollars, the greenback’s slide has been even more dramatic. It’s fallen about 6% since Sept. 1 against Canada’s loonie, bringing both units close to the same level, and about 8% against the Aussie dollar.
These declines have come despite a steady stream of official statements — with many coming from the European Central Bank head and finance ministers in Japan and France — in some cases saying that a strong U.S. dollar is important, while in others highlighting the greenback’s weakness.
Finance officials in New Zealand and Canada have mentioned the risks from the rapid rise in their own currencies.
The disconnect between the rhetoric and the dollar’s action reflects doubts by currency investors that governments, starting with the U.S., are preparing anything more to help support the U.S. dollar, analysts say.
Jim Sinclair’s Commentary
What a mess! What a disaster! Selling British Federal Assets is not a solution.
This must be a very bad dream.
Treasury slams EU report on debt spiral
The Treasury has lashed out at the European Commission in highly charged language after it suggested that Britain risks a debt compound spiral that could push public borrowing to levels never seen in a modern democracy.
By Ambrose Evans-Pritchard
Published: 9:20PM BST 14 Oct 2009
Brussels said UK public debt will rise from around 60pc of GDP this year to 160pc by 2020, 406pc by 2040, and 760pc by 2060 unless there are drastic spending cuts.
"The UK’s budgetary position poses severe risks to the sustainability of public finances," the EC said in its Sustainability Report.
A UK Government spokesman cast doubt on the figures. "This report has no basis in reality and calls into question the ability of the EC to carry out credible economic analysis," he said. "It takes no account of any member state’s plans to reduce its debts and only shows what would happen if no government took any action to reduce borrowing for 50 years. The UK Government set out a clear plan to halve the deficit over the next four years."
The Commission’s figures are based on a "no-policy change scenario" and are intended to highlight risk rather make a forecast. The report said Britain’s "sustainablity gap" has reached 12.4pc of GDP using a definition that factors in the rising costs of pensions and elderly care. Countries must be in balance over time to stabilise debt. Both spending cuts and tax rises will be needed, and probably some slimming down of the "social protection system".
Philip Hammond, Conservative Treasury spokesman, said the findings echo Tory calls for credible cuts. "This latest rebuke is further evidence of the extent of Gordon Brown’s debt crisis," he said.
Jim Sinclair’s Commentary
The rescuer must be rescued.
FDIC bank fund in the red until 2012
Even as regulators try to replenish deposit insurance fund, it will be over two years before it boasts a positive balance, warns agency chief.
By David Ellis, CNNMoney.com staff writer
October 14, 2009: 3:48 PM ET
NEW YORK (CNNMoney.com) — The government insurance fund designed to protect consumer bank deposits will likely stay in the red through 2012, Federal Deposit Insurance Corp. chief Sheila Bair said Wednesday.
Testifying before members of the Senate Banking Committee, the nation’s top commercial bank regulator stressed that her agency was taking immediate steps to replenish the dwindling fund. But she said those efforts would not put the rescue fund in the black until a little more than two years from now at the earliest.
The fund has come under severe strain in recent months amid the recent surge in bank failures. Ninety-eight banks have failed so far this year, which has reduced the fund’s value to $10 billion from $45 billion a year ago.
Last month, the agency painted an even more dire picture, estimating that the fund is currently in the red after taking into account future bank failures it anticipates will happen.
That would not be the first time the fund has had a negative balance. During the S&L crisis of the late 1980s and early 1990s, it slipped into the red.
Jim Sinclair’s Commentary
This comment comes from authoritative sources. It points out a problem generally misunderstood or unknown in the West.
Pakistan in turmoil — Army, govt on collision course
Pakistan is in turmoil as the Army challenges the writ of the elected government over the Kerry-Lugar Act passed by US Congress, alleging that its provisions violate Pakistani sovereignty, says G. PARTHASARATHY.
The tranquility around Pakistan’s Army Headquarters in Rawalpindi was rudely disturbed on October 11. A small group of militants clad in military uniforms from the “Amjad Farooqi Group” of the Tehriq-e-Taliban Pakistan (TTP) struck at the hallowed precincts of the Army Headquarters, killed army personnel, including a Brigadier and a Lieutenant Colonel, and held the army Headquarters hostage for around 18 hours.
A few days earlier, a militant dressed in the uniform of the predominantly Pashtun Frontier Constabulary carried out a suicide bomb attack on the UN offices at the very heart of Pakistan’s capital, Islamabad. The attacks had evidently been planned by people with inside knowledge of security arrangements in the most sensitive areas of the national capital.
These attacks come at a time when Pakistan is witnessing an unseemly tussle between the elected Government headed by President Zardari, and the army Chief, Gen Ashfaq Parvez Kayani, over the provisions of the Kerry-Lugar Act passed by the US Congress, authorising $7.5 billion of economic assistance to Pakistan.
A statement issued last week after a meeting of Corps Commanders presided over by Gen Kayani alleged the provisions of the US legislation violated Pakistani sovereignty and called on the country’s Parliament to decide whether the provisions of the Act should be accepted.
Jim Sinclair’s Commentary
The Cold War is back as Monty has declared for the last few years. That is not what anyone wants to hear.
Thanks to CIGA Green Hornet for this heads up.
Russia considering ‘first use’ nuclear strike
Wed, 14 Oct 2009 15:23:46 GMT
A top Russian policy-maker announces a revision of Moscow’s military doctrine, saying Russia could attempt a first nuclear strike, should it detect the threat of an incoming attack.
"In conditions critical for national security one should not also exclude a preventive nuclear strike on the aggressor," Secretary of the Russian Security Council Nikolai Patrushev was quoted as saying in comments to the domestic paper Izvestia.
The official said Moscow was reconsidering its military doctrine. Based on the doctrine’s current provisions, Russia would reportedly only carry out a nuclear strike if it were attacked with weapons of mass destruction or if it were the victim of "large-scale aggression" using conventional arms.
"The conditions have been revised for the use of nuclear weapons to rebuff an aggression with the use of conventional weapons, not only on a massive-scale but on a regional and even local level," Patrushev added.
"Moreover, different variants are considered to allow the use of nuclear weapons depending on a certain situation and intentions of a would-be enemy," he added.
