Bonds

TLT and TBT (Double short ETF) show roughly the same deterioration in the bond market.  TLT looks weak and TBT shows building strength.  This has to make someone nervous.

CIGA Eric

Click chart to enlarge in PDF format

What goes around comes around. Justice at last

A short guy is sitting at a bar just staring at his drink for half an hour when this big trouble-making central banker steps next to him, grabs his drink, gulps it down in one swig and then turns to the guy with a menacing stare as if to say, ‘What’cha gonna do about it?"

The poor little guy starts crying.

"Come on man, I was just giving you a hard time," the banker says. "I didn’t think you’d CRY. I can’t stand to see a man crying."

"This is the worst day of my life," says the little guy between sobs. "I can’t do anything right. I overslept and was late to an important meeting, so my boss fired me. When I went to the parking lot, I found my car was stolen and I don’t have any insurance. I left my wallet in the cab I took home."

He continues, crying even harder. "Then my dog bit me. So, I came to this bar trying to work up the courage to put an end to my life. And then you show up and drink the damn poison."

Jim Sinclair’s Commentary

This is an excellent review by CIGA Richard B.

Dear Jim,

The following treasure of a news piece from the Associated Press yesterday (11/11/09) is an illustration of the MOPE principle: what you can’t control, you adopt as your own. Secretary Geithner is quoted as saying, "he’s encouraged by efforts in Japan and China to spur domestic demand instead of relying so heavily on American consumers – a shift that will contribute to more stable global growth."

Apparently, over the past couple decades Japan and China have been causing global economic instability by forcing good quality, cheaply-manufactured goods on Western consumers who were blindsided into consuming more and saving less. Therefore, the Asian countries’ shifts to domestic consumption are "an important complement to what we’re doing in the United States, as Americans save more… "

You see, the implosion of the U.S. consumer-based economy was actually well-thought-out economic policy designed to spur domestic savings and persuade Americans to consume less. Now that we’ve got Japan and China on board this policy has a greater chance of success! You can’t make this stuff up.

I was wondering when it might occur to Western thinkers that China could turn to its domestic population of 1.4 billion to make up for sales lost to the West. To better understand this turn of events we need to dust off a concept long lost to the West known as "deferred gratification." This is the idea that individuals and societies make sacrifices in the short term in order to enjoy greater benefits in the long term.

China has for several decades taken over Western manufacturing, exporting most of the fruits of its labor rather than retaining them domestically, in order to gain something it needed: manufacturing infrastructure. Now that the Western consumer is mired in debt and Western governments are in a race to debase their currencies, the Chinese are in a position to keep more and more of what they manufacture, allowing their economy to grow organically from within.

Simultaneously, they are deploying their huge foreign currency reserves to acquire raw materials on the cheap, so they have the resources lined up to fuel domestic growth. It almost seems like the fruition of a long-term plan.

I believe we have not begun to see a fraction of the damage inflicted on Western economies by the sociopathic, short-sited banksters and their control of government. Perhaps that is why we see so little rage. People really have no idea what is coming.

Respectfully yours,
CIGA Richard B.

Geithner encouraged by moves in Japan, China
By MALCOLM FOSTER
Associated Press Writer

Treasury Secretary Timothy Geithner said Wednesday he’s encouraged by efforts in Japan and China to spur domestic demand instead of relying so heavily on American consumers — a shift that will contribute to more stable global growth.

Geithner said he sees broad recognition among governments to create policies that will lead to more balanced, sustainable growth and avoid the kind of dangerous imbalances that contributed to the world recession.

"We’re very, very encouraged to see what’s happening here in terms of a broad reform agenda … to try to produce an economy more dependent on domestic sources of growth," Geithner said in Tokyo on his way to joining Pacific Rim finance ministers meeting in Singapore for the annual APEC summit.

If the world economy is to grow in a stable way, he said, "it’s going to be less driven by the American consumer. You need to see a change in the sources of growth."

Economic cooperation is expected to be a key agenda item during President Barack Obama’s visit to Tokyo on Friday and Saturday that will also address security and climate change. Japan is Obama’s first stop on an Asian tour that will take him to China and South Korea next week after attending the Asia-Pacific Economic Cooperation summit in Singapore this weekend.

More…

Jim Sinclair’s Commentary

A message for you from Dean Harry Schultz:

"This is what we mean when we keep saying: the gold rush hasn’t begun yet."

Dear CIGAs,

This is totally hysterical. Compliments of CIGA JB Slear.

Heaviest Element Yet Known to Science: (Gv)

Lawrence Livermore Laboratories has discovered the heaviest element yet known to science.

The new element, Governmentium (Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons, and 198 assistant deputy neutrons, giving it an atomic mass of 312.

These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons.

Since Governmentium has no electrons, it is inert; however, it can be detected, because it impedes every reaction with which it comes into contact. A tiny amount of Governmentium can cause a reaction that would normally take less than a second, to take from 4 days to 4 years to complete.

Governmentium has a normal half-life of 2 – 6 years. It does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places.

In fact, Governmentium’s mass will actually increase over time, since each reorganization will cause more morons to become neutrons, forming isodopes.

This characteristic of morons promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as critical morass.

When catalyzed with money, Governmentium becomes Administratium, an element that radiates just as much energy as Governmentium since it has half as many peons but twice as many morons.

Jim Sinclair’s Commentary

TARP to reduce the Budget Deficit is quantitative easing to infinity because they are not buying their own bonds. They are creating money to credit the budget deficits.

There has never been a more inflationary scenario in the history of currency. Trader Dan expresses his opinion on the subject at hand.

Guys,

Take a look at the following story…

I am past the point where I read in disbelief anything that this administration is capable of but this is so stupendously asinine that I could not resist sending it out.

If you sweep aside all the BS contained in the article, the crux of the matter is that these hucksters are so out of control and infatuated with their spending, that they now think it is fiscally responsible to print money into existence, saddling this plunge the nation further into debt to create the TARP program and then use the TARP money to reduce the debt and somehow can congratulate themselves for being fiscally responsible???

Once upon a time the rallying call of these drunken spenders was “raise taxes on the rich” to fund their redistributionist schemes. Now it is “raise taxes upon those who are not yet born” by destroying the currency.

With this sort of idiocy now being considered as responsible policy, gold’s target price is moving higher and higher.

White House Considers Using TARP Funds to Cut Deficit
by WSJ

Obama administration is debating whether to set a chunk of the $700 billion financial rescue aside for debt reduction.

WASHINGTON – The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter. It is also expected to lower the projected long-term cost of the program — the amount it expects to lose — to as little as $200 billion from $341 billion estimated in August.

The idea is still a matter of debate within the administration and it is unclear how much impact it would have on the nation’s mounting deficit levels. Still, the potential move illustrates how the Obama administration is trying to find any way it can to bring down the deficit, which is turning into a political as well as an economic liability.

The White House is in the early stages of considering what bigger moves it might make for next year’s budget. The Office of Management and Budget has asked all cabinet agencies, except defense and veterans affairs, to prepare two budget proposals for fiscal 2011, which begins Oct 1, 2010. One would freeze spending at current levels. The other would cut spending by 5 percent.

More…