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Dear CIGAs,
Now here is a real rescue dog!She is a bit long on the tooth, but right on the mark. Maybe she wrote for us here at JSMineset today.
Jim Sinclair’s Commentary
The problems are far from solved. Dollar problems take their basis in the US financial system malaise, therefore dollar problems are going to get worse, not better.
Fannie, Freddie warn on losses
By NICK TIMIRAOS
Fannie Mae and Freddie Mac, already reeling in red ink, are warning they could face additional losses from the weakening condition of mortgage-insurance companies.
Fannie and Freddie together have required capital injections from the Treasury of $112 billion since the government took them over through conservatorship last year. Their need for government support would have been greater without collecting on claims from mortgage-insurance companies.
But Fannie and Freddie have warned that their claims against the insurers may not be paid in full Fannie set aside $1 billion in loss reserves to cover the possibility that mortgage-insurance companies won’t be able to pay full claims, the company said in a Securities and Exchange Commission filing.
Jim Sinclair’s Commentary
So far not one of these has com e to court. I even believe that the civil side of this one was settled.
OTC derivatives come into the sharp focus of a HARD ASS Italian criminal prosecutor and the jig is up. A guy who prosecutes the mob will be right at home with this issue.
Intl Banks Could Face Milan Trial On Derivatives Sale-Sources
NOVEMBER 12, 2009, 11:17 A.M. ET
By Sabrina Cohen
MILAN (Dow Jones)–A Milan prosecutor wants the London unit of UBS (UBS), JP Morgan Chase & Co. (JPM), Deutsche Bank (DB) and Germany’s Depfa (DEP.XE) as well as other 13 people to face trial for fraud over the sale of derivatives from an around a EUR1.7 billion bond issue by the City of Milan, people with knowledge of the situation said Thursday.
Jim Sinclair’s Commentary
Excellent time for a trade war.
U.S. Grows More Dependent on China
Global Crisis Makes U.S. More Dependent on China than Ever
By GABOR STEINGART and WIELAND WAGNER
Nov. 12, 2009
The scientists at the National University of Defense Technology in Changsha, China, had plenty to celebrate: They had developed a supercomputer that could perform more than a quadrillion calculations per second.
The announcement, released just in time for US President Barack Obama’s visit to China this weekend, had symbolic value: With their new computer, dubbed "Tianhe" ("Milky Way"), the Chinese claim they will be the first country to become a direct rival to the superpower.
China is bursting with self-confidence. The new world power sees itself as a winner in the financial crisis, with its economy growing by an impressive 9 percent in the third quarter, while the economies of the West struggle to recover from a deep recession. And while the Americans are focused on their own problems, China is expanding its influence, both in Asia and among resource-rich African countries.
China’s leaders are challenging the Americans more and more aggressively, not least to demonstrate to their own population of 1.3 billion how far the country has progressed under their leadership.
In an article in the party organ of the People’s Liberation Army, Air Force General Xu Qiliang announced China’s plans to expense its defense capabilities deep into space in the future. By the mid-21st century, the general predicted, the People’s Republic will have become a world power, and its air force will be required to defend the country against many kinds of threats.
Jim Sinclair’s Commentary
Here is what verbal intervention looks like. What it is is a terrible waste of media space.
World Tries to Buck Up Dollar
Thailand, Korea, Russia Seen Buying U.S. Currency; Pressure on China to Boost Yuan
BY JOANNA SLATER, WILLIAM MALLARD AND BOB DAVIS
Governments around the world stepped up efforts to stem the U.S. dollar’s slide, as officials grow increasingly concerned about the impact of the weak greenback on their nascent economic recoveries.
Thailand, South Korea, Russia and the Philippines have been snapping up dollars this week in order to hold down the value of their currencies, traders said Wednesday, as the U.S. currency wallowed near 15-month lows.
In Latin America, Brazil’s finance minister said the country’s currency remained too strong, sparking speculation that the government would intensify recent efforts to curb the real’s ascent. On Tuesday, Taiwan banned foreign investors from parking …
Jim Sinclair’s Commentary
The Weimar syndrome.
Warhol Sells for $43.7 Million at Sotheby’s
By KELLY CROW
In a gear-changing sign that the art market is shaking off the recession, Sotheby’s auctioned off $134.4 million worth of post-war and contemporary art earlier tonight at its Manhattan salesroom, including a smoky sheet of dollar bills by Andy Warhol that sold for $43.7 million. The sale total surpassed the auction house’s own goal of $67.9 million to $97.7 million – and outperformed its $125 million sale of contemporary art last November.
After a year of cautious bidding, the mood in the salesroom Wednesday night grew increasingly upbeat, with fashion designer Valentino Garavani and jeweler Laurence Graff among the winning bidders. The night unquestionably belonged to Warhol. The Pop artist is a household name, but his early 1960s silkscreens rarely surface at auction. That’s why at least five bidders, including dealer Jose Mugrabi, chased after the artist’s "200 One Dollar Bills," a seminal 1962 piece that Sotheby’s last sold more than two decades ago for $300,000. A telephone bidder got it tonight for $43.7 million – over three times its $12 million high estimate – or $218,812.50 for each silkscreened dollar bill in the painting.
Mr. Graff, based in London, paid $6.1 million for Warhol’s "Self-Portrait," six times its low estimate. The 1965 painting in red and purple hues had been consigned by a Connecticut woman named Cathy Naso, who once worked as a typist in Warhol’s Factory and had kept the painting out of sight for decades. After the sale, auctioneer Tobias Meyer said the piece’s storied history was part of its appeal: "It’s worth keeping Warhol in your closet for 43 years."
Jim Sinclair’s Commentary
The following sums up this article and the future of the US dollar.
"But there is a definite possibility that the dollar could soon decline further or faster."
The Great Shrinking American Dollar
By PETER BOONE AND SIMON JOHNSON
Peter Boone is chairman of the charity Effective Intervention, a research associate at the London School of Economics’ Center for Economic Performance, and a principal in Salute Capital Management Ltd. Simon Johnson, a senior fellow at the Peterson Institute for International Economic, is the former chief economist at the International Monetary Fund.
The American dollar is in the midst of a large fall in its value, or depreciation, as measured against other major currencies. The decline has been steady since 2002 and our currency is down about 35 percent from that peak. After strengthening slightly more than 10 percent during the global financial crisis of the past 18 months, the dollar is again falling back toward its pre-crisis lows, representing its weakest international value since 1967.
But there is a definite possibility that the dollar could soon decline further or faster.
At the level of general economic strategy, the American government has responded to a financial sector crisis with an expansionary fiscal policy, and the Federal Reserve is implementing loose monetary policy. Andrew Haldane, responsible for financial stability at the Bank of England, puts it this way:
For the authorities, [excessive risk-taking by the financial sector] poses a dilemma. Ex-ante, they may well say “never again.” But the ex-post costs of crisis mean such a statement lacks credibility. Knowing this, the rational response by market participants is to double their bets. This adds to the cost of future crises. And the larger these costs, the lower the credibility of “never again” announcements. This is a doom loop.
In addition to a financial crisis, we also have a large current-account deficit, meaning that we buy more from the world than we sell. The deficit was $100 billion in the latest available (second quarter) data, which is around 3 percentof gross domestic product, and we finance that with capital inflows from abroad. (The current-account deficit is down from around 6 percent, but two-thirds of the decline is due to the lower price of oil).
The US Dollar/Euro $1.50 "Maginot Line"
We have spoken about how contra-productive government intervention is in the market and by public statement.
Sure you get short term influence. But what you do is set up dollar defense bunkers with their foundation in wet sand.
To save you from a tome, the concept is that no government by market intervention and public statement alone (devoid of major economic policy change) can turn the trend in its currency as that is an attempt to re-create the Bretton Woods Agreement single handedly.
Remember the huge expression of glee in the markets when unemployment went from 9.5% to 9.4%, heralded as a major economic turnaround?
12,000 less people showing up for unemployment insurance money is not a trend changer, nor an economic event of merit. This event resulted in a major public address by the President of the USA this morning.
Initial Jobless Claims in U.S. Fall to 10-Month Low
By Courtney Schlisserman
Nov. 12 (Bloomberg) — Fewer Americans than anticipated filed claims for jobless benefits last week, signaling the worst employment slump in the post-World War II era is easing as the economy expands.
Initial unemployment claims fell by 12,000 to 502,000 in the week ended Nov. 7, the lowest level since January, Labor Department figures showed today in Washington. The number of people receiving jobless benefits dropped, as did those getting extended payments.
Firings may slow as the loss of 7.3 million jobs since the recession began in December 2007 probably means many companies have already cut staff to bare minimums. That may not stop the jobless rate from climbing further after reaching a 26-year high in October as the shortest workweek on record gives employers room to increase hours before taking on staff.
The drop in claims is “reassuring, but these levels are still consistent with job losses,” said Jonathan Basile, an economist at Credit Suisse in New York. “We’re not getting a strong enough vote of confidence yet from claims to say companies have stepped up their hiring and greatly reduced their pace of layoffs.”
Jim Sinclair’s Commentary
With the combination of super MOPE, 12,000 less people on line and the $1.50 Maginot Line, we have repeated the history of the French defense against the Germans built in 1935. It has short term success but was ill constructed, resulting in military disaster when it did not hold in the form of today’s dollar market.
Similarly, hot air will not make a bull market out of the dollar’s Sow’s ear.
Gold is going to $1224, $1278, $1650 and then to Alf’s numbers.
The US dollar is cooked. Monetary authority knows what YOU know and will pull out the stops here to try to hold it.
Maginot Line
From Wikipedia, the free encyclopedia
The Maginot Line (IPA: [maʒi'noː], French: Ligne Maginot), named after French Minister of Defense André Maginot, was a line of concrete fortifications, tank obstacles, artillery casemates, machine gun posts, and other defenses, which France constructed along its borders with Germany and Italy, in the light of experience from World War I, and in the run-up to World War II. Generally the term describes only the defenses facing Germany, while the term Alpine Line is used for the Franco-Italian defenses.
The French established the fortification to provide time for their army to mobilize in the event of attack and/or to entice Germany to attack neutral Belgium to avoid a direct assault on the line. The success of static, defensive combat in World War I was a key influence on French thinking. The fortification system successfully dissuaded a direct attack. However, it was an ineffective strategic gambit, as the Germans did indeed invade Belgium, flanked the Maginot Line, and proceeded relatively unobstructed.[1] It is a myth however that the Maginot line ended at the Belgian border and was easy to circumvent.[2] The fortifications were connected to the Belgian fortification system, of which the strongest point was Fort Eben-Emael. The Germans broke through exactly at this fortified point with a unique assault that incorporated gliders and shaped explosive charges. The surrender of the fort, in less than two days, allowed the invasion of France.
Jim Sinclair’s Commentary
OK, what is #5? Bring back the Russians, the British, the Mongols and Alexander the Great for a redo.
Obama Rejects all Four Afghanistan Plans
By Rob Kall
Multiple sources indicate Obama will reject all four plans he’s had submitted to him.
Seymour Hersch suggests this may be Obama standing up on his own.
As many have said, no General wants less troops. It’s the psychology of military leadership.
This announcement comes on the heels of new information that contractors in Afghanistan have been giving the Taliban money to keep supply routes open.
There’s only one word for Afghanistan– a military term– clusterf*ck.
Jim Sinclair’s Commentary
Let me tell you a small story. My brother had 9 children. It was a his and hers family. The all were quite young when the Salk Polio shot was first available. My brother took all his kids to the doctor for their shot. They were crying and balking heavily.
He said to them, "If I take the shot in front of you will you be brave like daddy?"
All answered yes.
Al rolled up his sleeve, took the shot and promptly passed out in front of everybody.
The kids turned and ran out of the doctor’s office with their mother, the nurse and a few of the people in the waiting room helping round up 9 running, screaming kids.
Deputies Hold Boy Who Fled Flu Shot
Student refused; was held down for vaccination
By SHELLEY HANSON Staff Writer
WHEELING – It took the strength of two sheriff’s deputies to keep a middle schooler still enough to receive a shot of the swine flu, or H1N1, vaccine at a recent clinic.
During a regular Wheeling-Ohio County Health Board meeting Tuesday, health department Administrator Howard Gamble told board members about the student’s attempt to flee Wheeling Middle School during a vaccination clinic held there last Friday.
He noted the boy’s mother could not bear to watch the scene and left the gymnasium. Out of apparent fear of receiving the injection, the student ran out of the building. The school’s resource officer, Ohio County Sheriff’s Deputy John Haglock, coaxed the boy back inside. Once at the shot station, however, Haglock apparently needed some help keeping the boy still, and another deputy assisted.
"He tried to run. I looked over and saw two sheriff’s deputies holding a kid down," Gamble said. "Mom took off, she couldn’t take it. You had one nurse with the needle, two deputies holding him, one nurse is grabbing hands – because that’s what they want to do, to go after the needle. And that’s the last thing you want."
Gamble said as soon as the nurse gave the boy his injection and told him he was done, he hopped up like nothing had happened.
Jim Sinclair’s Commentary
This story is not completely true, but it is close enough for examination.
1. You cannot manipulate anything except in the direction it wishes to go in the first place. Call that a Seligman/Livermore rule.
2. Recall that many of the firms mentioned here are related to the Seligmans and therefore to Bert.
3. Yes you can play the price and the volume in the manipulative manner discussed.
4. In the final analysis the price of energy will be a product of the US dollar.
5. The price of US equities in the final phase will also be a product of the US dollar.
6. The bullies cannot continue what they are doing because it is being done in a zero sum game.
7. When 10 fat sharks get in a feeding frenzy the end result is one fat shark. Then what does that shark have left to eat?
8. So will go the dark pools until they implode for reason number 7.
9. This is why if you try to trade for a living from your homes you are bonkers if you think you can do better than break even.
The Global Oil Scam: 50 Times Bigger than Madoff
$2.5 Trillion – That’s the size of the global oil scam.
It’s a number so large that, to put it in perspective, we will now begin measuring the damage done to the global economy in "Madoff Units" ($50Bn rip-offs). That’s right – $2.5Tn is 50 TIMES the amount of money that Bernie Madoff scammed from investors in his lifetime, yet it is also LESS than the MONTHLY EXCESS price the global population is being manipulated into paying for a barrel of oil.
Where is the outrage? Where are the investigations?
Goldman Sachs (GS), Morgan Stanley (MS), BP (BP), Total (TOT), Shell (RDS.A), Deutsche Bank (DB) and Societe Generale (SCGLY.PK) founded the Intercontinental Exchange (ICE) in 2000. ICE is an online commodities and futures marketplace. It is outside the US and operates free from the constraints of US laws. The exchange was set up to facilitate "dark pool" trading in the commodities markets. Billions of dollars are being placed on oil futures contracts at the ICE and the beauty of this scam is that they NEVER take delivery, per se. They just ratchet up the price with leveraged speculation using your TARP money. This year alone they ratcheted up the global cost of oil from $40 to $80 per barrel.
A Congressional investigation into energy trading in 2003 discovered that ICE was being used to facilitate "round-trip" trades. " Round-trip” trades occur when one firm sells energy to another and then the second firm simultaneously sells the same amount of energy back to the first company at exactly the same price. No commodity ever changes hands. But when done on an exchange, these transactions send a price signal to the market and they artificially boost revenue for the company. This is nothing more than a massive fraud, pure and simple.
Jim Sinclair’s Commentary
I believe it says Squeeze the People.
U.S. Foreclosure Filings Surpass 300,000 for 8th Straight Month
By Dan Levy
Nov. 12 (Bloomberg) — U.S. foreclosure filings surpassed 300,000 for an eighth straight month as unemployment made it tougher for homeowners to pay their bills, RealtyTrac Inc. said.
A total of 332,292 properties received a default or auction notice or were seized by banks in October, up 19 percent from a year earlier, Irvine, California-based RealtyTrac said today. One in every 385 households received a filing. The tally fell 3 percent from September, the third consecutive monthly decline.
“The foreclosure problem is still with us and will keep prices down,” Stephen Miller, chairman of the economics department at the University of Nevada at Las Vegas, said in an interview. “The real issue is we don’t know what inventory banks are holding that they have yet to put on the market.”
Distressed real estate transactions accounted for 30 percent of all home sales in the third quarter as the median price fell 11 percent from a year earlier to $177,900, according to the National Association of Realtors. U.S. unemployment surged to a 26-year high of 10.2 percent in October as payrolls fell by 190,000 workers, the Labor Department said last week.
Housing will reach a bottom by March 2010, with lower- priced properties recovering value more quickly than expensive homes, First American CoreLogic said last month.
Jim Sinclair’s Commentary
How many times can you go to the well?
$45 billion is not going to take the FDIC all the way.
FDIC Orders Banks to Prepay $45 Billion to Rebuild Deposit Fund
By Alison Vekshin
Nov. 12 (Bloomberg) — U.S. lenders will prepay three years of premiums to replenish the government’s deposit insurance fund drained by the fastest pace of bank failures in 17 years, the Federal Deposit Insurance Corp. decided today.
The FDIC board at a Washington meeting unanimously approved the payments to pump $45 billion into the fund that slipped into a deficit at the end of the third quarter. The U.S. has closed 120 banks this year.
The action satisfies the deposit fund’s “need for liquidity without imposing undue burden on the industry,” FDIC Chairman Sheila Bair said at the meeting. Industry groups have backed the premium prepayments.
A surge in failures has pushed the industry-supported fund into a deficit for the first time since 1991, according to agency estimates. The FDIC had set aside $32 billion for 2009 failures expected through June 30, and estimates bank failures through 2013 will cost $100 billion.
The FDIC is required to rebuild the fund, used to pay depositors as much as $250,000 per account in a failure, when the balance divided by insured deposits falls below 1.15 percent. The ratio as of June 30 was 0.22 percent.
Jim Sinclair’s Commentary
Oops, wrong consulate!
Iran Mission Official Shot Dead in Pakistan
November 12, 2009
Unknown gunmen have shot dead a local official at Iran’s consulate in Pakistan’s northwestern city of Peshawar. Abul Hassan Jafari, director of public relations at the consulate, was attacked by assailants on Thursday as he was on his way to work, police said. He died of severe injuries on the way to hospital.
The gunmen escaped after the shooting. No group has yet claimed responsibility for the attack. Iranian Ambassador to Islamabad Mashallah Shakeri has confirmed the incident. This is not the first time that an official at Iran’s consulate in Peshawar comes under attack.
Last year, Iran’s commercial attaché, Heshmatollah Attarzadeh-Niyaki, was kidnapped on his way to the consulate. Iran has urged Pakistan to tighten security measures in the violence-stricken region in which hundreds have been killed as a result of terrorist attacks and bombings.
Jim Sinclair’s Commentary
Fundamentally, the dollar is a disaster that has happened.
Plea to reduce demand for dollar reserves
By Krishna Guha in Washington
Published: November 11 2009 20:55 | Last updated: November 11 2009 20:55
The world should try to mitigate flaws in the dollar based global monetary system by reducing demand for dollar reserves and exploring alternative reserve assets, a group of economists from the International Monetary Fund said on Wednesday.
The economists said the crisis had “brought to the fore” long-standing concerns about a system based on a single core currency issued by one country.
They said the dollar-based system “suffered inherent weaknesses”.
The US, at the centre of the system, was under pressure to run large current account deficits in order to supply the world with the dollar assets it wants, they said, while there was no effective discipline on either the US or countries such as China that have big external surpluses to adjust their policies.
The report was published by the authors in their individual capacity and not endorsed by the IMF as an institution. But it comes amid renewed global focus on and dissatisfaction with the role of the dollar in the world economic system, following the experience of a crisis at the core rather than the periphery of the world system.
The IMF economists said the crisis highlighted the “scale and volatility of global capital flows” that led countries to accumulate reserves to protect themselves against a sudden reversal in capital.
Jim Sinclair’s Commentary
The FDIC is broke and needs a bailout strategy.
Add the Federal Housing Administration to the busted zombie status list.
Cash cushion shrivels – U.S. housing agency
Federal Housing Administration’s reserve fund drops below 2% ratio required by Congress. Calls increase for revamping lending guidelines.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: November 12, 2009: 2:26 PM ET
NEW YORK (CNNMoney.com) — The mortgage meltdown has ravaged the finances of a crucial government agency tasked with propping up the housing industry.
The Federal Housing Administration’s reserve fund has dropped to .53% of its insurance guarantees, well below the 2% ratio mandated by Congress and the 3% ratio it had last fall, according to its annual independent audit, released Thursday. The fund covers losses on the mortgages the agency insures.
Housing officials said the agency will not have to turn to Congress for a bailout, but the agency’s weakening financial condition has prompted renewed calls to change its lending guidelines.
The FHA has skyrocketed in popularity during the mortgage crisis since it backstops banks if borrowers stop paying. Housing experts are growing increasingly concerned about the agency’s ability to handle rising numbers of defaults.
Jim Sinclair’s Commentary
It isn’t the best time to pay admission to the Pakistani nukes to be protected by the US against the Pakistani Taliban.
Pakistanis Blame U.S. for Taliban Terror Bombings
PESHAWAR, Pakistan Nov. 12, 2009
There are no girls choosing colorful bangles, no women buying dresses anymore in the narrow, dusty, aisles of Mina bazaar, one of the few markets in this frontier town that used to cater to families.
Instead, most of the small, fragile shops are now piles of bricks, destroyed two weeks ago by a massive car bomb that gutted this crowded corner of the city. The explosion was one of the most violent acts of terrorism in Pakistan’s history. The official death count was more than 110, but residents here say at least 60 more bodies were never found, obliterated in the blast.
But the depravity of a bomb clearly designed to kill as many people as possible did not stoke the city’s anger at the Taliban, who have recently launched a wave of violence in and around the largest city in the country’s volatile northwest.
The bomb seems to have done the opposite. Most people in this city blame the United States instead of radical Islamist militants for the increased violence. Some blame the U.S. for launching the attacks, or accuse the U.S. of pushing the Pakistani army into an operation
