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The more I understand about these bone-head bankers, the safer I feel knowing my hard earned bones are buried in the back yard. I ain’t tellin’ where though…
Dear Friends,
I have never seen a day with more meaning and less words.
The morning action in gold was rather spectacular in its firmness against market movement which usually would have resulted is some weakness.
Two more purchases of gold were made by central banks. While these purchases were not major in size, they were major in meaning.
The world has turned for gold in the circle of central banks, and for the dollar in terms of confidence.
Gold is headed to $1224, $1278 and $1650. Alf and Armstrong will be proved correct both in duration and upside.
Do not give up your insurance for any reason. Stay the course.
Regards,
Jim
Jim Sinclair’s Commentary
Nothing was muffed.
NY Fed failed to negotiate AIG concessions
Mon Nov 16, 2009 10:44pm EST
By David Lawder
WASHINGTON (Reuters) – The Federal Reserve Bank of New York used a weak negotiating strategy that failed to wring concessions from AIG trading partners last year, allowing them to reap nearly $30 billion in payments from U.S. taxpayers, a government audit report said on Monday.
The New York Fed had little room to maneuver after bailing out American International Group in September but failed to use what leverage it had when it later cut a deal with AIG counterparties, according to the report by the Troubled Asset Relief Program’s special inspector general.
This resulted in the New York Fed paying full market value for assets underlying credit default swaps written by AIG to banks such as Goldman Sachs, Societe Generale, Merrill Lynch and Deutsche Bank, the report said.
"The refusal of the FRBNY and the Federal Reserve to use their considerable leverage as the primary regulators for several of the counterparties, including the emphasis that their participation in the negotiations was purely ‘voluntary’ made the possibility of obtaining concessions from those counterparties extremely remote," TARP Inspector General Neil Barofsky said in the report.
Jim Sinclair’s Commentary
Bernanke was clear. It was Yellen who was yelling.
She was called in to balance Bernanke after the Chairman gave the carry trade a full speed ahead signal.
Bernanke Predicts Economy Will Keep Growing
by Chris Arnold
Federal Reserve Chairmen Ben Bernanke pledged to keep interest rates low so the economic recovery will stay on track. In remarks to the Economic Club of New York Monday, Bernanke said he was worried that a weak job market could prevent the expansion from being as robust as he would like.
Click here to listen to the story…
Jim Sinclair’s Commentary
Do they see eye to eye, or are we on a path in trade of an eye for an eye?
Since the latter is probable this is bad news for the US dollar.
Obama-Hu joint news conference in Beijing
Tue Nov 17, 2009 2:08am EST
BEIJING, Nov 17 (Reuters) – Following are key quotes by U.S. President Barack Obama and his Chinese counterpart, President Hu Jintao, from their joint statement to the media in Beijing on Tuesday.
ECONOMY
HU JINTAO:
"We reiterated that we will continue to increase dialogue and cooperation on macroeconomic and financial policies and continue to consult, on an equal footing, to properly resolve and address economic and trade frictions, in a joint effort to uphold the sound and steady growth of our business ties and trade.
"I stressed to President Obama that under the current circumstances our two countries need to oppose all kinds of trade protectionism even more strongly."
BARACK OBAMA:
"Going forward we agreed to advance the pledge made at the G20 summit in Pittsburg and pursue a strategy of more balanced economic growth. A strategy where America saves more, spends less, reduces our long-term debt and where China makes adjustments across a broad range of policies to rebalance its economy and spur domestic demand. "I was pleased to note the Chinese commitment made in past statements to move toward a more market-oriented exchange rate over time."
Jim Sinclair’s Commentary
The fall guy falls. GMAC says send more money, please.
GMAC Chief Ousted by Board
Former Citi Executive Takes Wheel; Speedier Revamp Sought as U.S. Readies More Aid
BY DAN FITZPATRICK AND DAVID ENRICH
In a surprise move, the head of GMAC Financial Services — the giant, taxpayer-supported auto lender — was ousted Monday.
The forced resignation of Alvaro de Molina after only 19 months as chief executive caps a series of clashes with regulators and mounting board frustration over his management of the Detroit company. GMAC, which finances inventory for thousands of car dealerships in the U.S., to date has received $12.5 billion in taxpayer money, giving the U.S. government a 35.4% stake and growing power over the firm’s trajectory.
Government officials said they made no suggestion to GMAC’s board to dump Mr. …
Jim Sinclair’s Commentary
I might only have one eye, but this fellow must be missing both.
Fed’s Kohn sees no asset bubbles building in U.S.
Mon Nov 16, 2009 8:06pm EST
By Karen Pierog
CHICAGO (Reuters) – The Federal Reserve’s low interest rate policy is meant to encourage investors to move into riskier assets in order to promote economic recovery, and there are no signs currently the policy is resulting in the build-up of a U.S. asset bubble, the central bank’s number-two official said on Monday.
Fed Vice Chairman Donald Kohn said the recent rise in asset prices reflects several factors: the reversal of the "extreme panicky conditions" of late 2008, the turnaround in economic prospects, and ultra-low interest rate policies in the United States and other key economies.
Many investors, scarred by the damage wrought by the bursting of the housing bubble, are wary of the potential of new bubbles building as a result of ultra-low interest rates in key countries.
Kohn underscored why the low rates are critical to an economic recovery.
"One of the purposes of these policies is to induce investors to shift into riskier and longer-term assets in order to lower the cost and increase the availability of capital to households and businesses," Kohn said at an event co-sponsored by the Kellogg School and Northwestern University.
Jim Sinclair’s Commentary
The will to make things right exists nowhere in management of financial affairs.
Since this is so, the dollar is finished.
The following is an example of why a matured democracy is destroyed by its chosen leaders on all levels.
Tax Carry-Backs, Or Political Payoffs?
November 16, 2009
Tom Lindmark
Gretchen Morgenson’s Times article today is enough to make you retch.
Buried in the law extending unemployment benefits and reauthorizing the tax credit for homebuyers was a “little” gift to any company that happened to lose money in the past five years. Here’s how she describes the largesse:
But tucked inside the law was another prize: a tax break that lets big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004. The tax cuts will generate corporate refunds or relief worth about $33 billion, according to an administration estimate.
Before the bill became law, the so-called look-back on losses was limited to small businesses and could be used to counterbalance just two years of profits. Now the profit offset goes back five years, and the law allows big companies to take advantage of it, too. The only companies that can’t participate are Fannie Mae and Freddie Mac and any institution that took money under the Troubled Asset Relief Program.
Among the biggest beneficiaries are home builders, analysts say. Once again, at the front of the government assistance line, stand some of the very companies that contributed mightily to the credit crisis by building and financing too many homes.
Morgenson takes this travesty to task by focusing on the homebuilders. Fair enough. There are too many of them, they are financially in fine shape and based on recent history they appear to be managed by fools. Why they should receive such a gift is beyond comprehension.
Jim Sinclair’s Commentary
The following says it all.
In times when no governments are considered worthy of trust, only gold is.
"British forces should buy off potential Taleban recruits with “bags of gold”, according to a new army field manual published yesterday."
Army tells its soldiers to ‘bribe’ the Taleban
From The Times
November 16, 2009
British forces should buy off potential Taleban recruits with “bags of gold”, according to a new army field manual published yesterday.
Army commanders should also talk to insurgent leaders with “blood on their hands” in order to hasten the end of the conflict in Afghanistan.
The edicts, which are contained in rewritten counter-insurgency guidelines, will be taught to all new army officers. They mark a strategic rethink after three years in which British and Nato forces have failed to defeat the Taleban. The manual is also a recognition that the Army’s previous doctrine for success against insurgents, which was based on the experience in Northern Ireland, is now out of date.
The new instructions came on the day that Gordon Brown went farther than before in setting out Britain’s exit strategy from Afghanistan. The Prime Minister stated explicitly last night that he wanted troops to begin handing over districts to Afghan authorities during next year — a general election year in Britain.
Jim Sinclair’s Commentary
Small but still meaningful and spreading.
Sri Lanka buying gold ‘to diversify reserves’
Sat Nov 7, 7:43 AM
COLOMBO (AFP) – Sri Lanka’s central bank on Saturday said it has been buying gold to diversify its reserves amid volatile currency markets, days after India announced it had purchased 200 tonnes of the precious metal.
Central Bank assistant governor Nandalal Weerasinghe declined to confirm analysts’ estimates that the tropical island nation had purchased around five tonnes of gold.
"We have been observing that prices of gold have been going up so we have been strategically buying gold over the past several months as part of a reserve management process of diversifying our portfolio," he told AFP.
The price of gold hit a record high above 1,100 dollars an ounce in London trading on Friday following a report that Sri Lanka had joined India in purchasing the precious metal.
Weerasinghe did not disclose from which sources the bank was buying the gold or at what prices. He gave no breakdown of how much of the country’s more than five-billion-dollars in foreign reserves were held in gold.
Jim Sinclair’s Commentary
Small but still meaningful and spreading.
International Monetary Fund
Press Release No. 09/413
Monday, November 16, 2009
The International Monetary Fund announced today the sale of 2 metric tons of gold to the Bank of Mauritius, the nation’s central bank. The sale was conducted on the basis of market prices prevailing on November 11, 2009 with proceeds equivalent to US$71.7 million (SDR 44.7 million).
This transaction is part of the total sales of 403.3 metric tons approved by the Executive Board in September 2009 (see Press Release No. 09/310), and it adds to the 200 metric tons already sold to the Reserve Bank of India (see Press Release No. 09/381).
As previously announced (see Press Release No. 09/310), in accordance with the guiding principle of avoiding disruption of the gold market, the IMF’s Executive Board adopted modalities for the gold sales consistent with guidelines it had earlier established. In particular, the Fund is standing ready for an initial period to sell gold directly to central banks and other official holders that may be interested in such sales.
Thereafter, on-market sales of any amounts remaining from the 403.3 tons would be conducted in a phased manner over time, following the approach adopted successfully by central banks participating in the Central Bank Gold Agreement.
As previously indicated, the Fund will inform markets before any on-market sales commence, and will report regularly to the public on progress with the gold sales.
Jim Sinclair’s Commentary
MOPE snagged.
Congressman Blasts White House for Faulty Job Data on Government Web Site
Updated November 17, 2009
The government Web site — Recovery.gov — is under fire for posting a number of jobs created in congressional districts that don’t exist and for accepting unrealistic data from several reporting outlets.
The Democratic chairman of the House Appropriations Committee is demanding greater accountability from the Obama administration after gross inaccuracies were found on a government Web site that tracks jobs purportedly saved or created by the $787 billion stimulus plan.
In a statement late Monday, Rep. David Obey of Wisconsin, chairman of the House committee, called the inaccuracies "outrageous" and said the administration owes the American public "a commitment to work night and day to correct the ludicrous mistakes."
"Credibility counts in government and stupid mistakes like this undermine it," Obey said. "We designed the Recovery Act to be open and transparent and I expect the Recovery Accountability and Transparency Board, who oversees the recovery act Web site and data to have information that is accurate, reliable and understandable to the American public."
The site — Recovery.gov — is under fire for posting a number of jobs created in congressional districts that don’t exist and for accepting unrealistic data from several reporting outlets.
Jim Sinclair’s Commentary
Governments running businesses have proven to be an oxymoron unless you mean running them down.
Post Office reports loss, may cut Saturday service
Agency continues to lose money despite $6 billion in cost-cutting measures, and proposes that it drop Saturday delivery.
By Hibah Yousuf, CNNMoney.com staff reporter
Last Updated: November 16, 2009: 5:58 PM ET
NEW YORK (CNNMoney.com) — The U.S. Postal Service reported a $3.8 billion loss in the 2009 fiscal year, and plans to propose to Congress in 2010 that it drop Saturday delivery.
The agency already reduced expenses by $6 billion during the year ended Sept. 30.
Those measures included eliminating 40,000 jobs, however the cash-strapped agency still employs over 712,000 people. The Postal Service also reduced overtime hours and lowered transportation-related costs.
Additionally, the USPS lowered the payments it made for retiree health benefits by $4 billion in fiscal 2009.
"To say this was a difficult year might be a bit of an understatement," said the USPS chief financial officer Joseph Corbett, on a conference call with the media. Corbett blamed the agency’s difficulties on the recession and "the continued migration [of customers] to electronic means."
Big changes
Jim Sinclair’s Commentary
Plausible denial for snagged MOPE
Exclusive: Jobs ‘Saved or Created’ in Congressional Districts That Don’t Exist
Human Error Blamed for Crediting New Stimulus Jobs to Nonexistent Places
By JONATHAN KARL
Nov. 16, 2009
Here’s a stimulus success story: In Arizona’s 15th congressional district, 30 jobs have been saved or created with just $761,420 in federal stimulus spending. At least that’s what the Web site set up by the Obama administration to track the $787 billion stimulus says.
There’s one problem, though: There is no 15th congressional district in Arizona; the state has only eight districts.
And ABC News has found many more entries for projects like this in places that are incorrectly identified.
Late Monday, officials with the Recovery Board created to track the stimulus spending, said the mistakes in crediting nonexistent congressional districts were caused by human error.
"We report what the recipients submit to us," said Ed Pound, Communications Director for the Board.
Jim Sinclair’s Commentary
Replace the dollar in terms of reserve currency, in time and to a significant degree.
An alternative to the dollar now? Yes, definitely.
The result is a lower dollar due to market momentum. As the dollar goes lower, up goes the call for a Super Sovereign Currency Unit.
IMF head eyes currency change
Alan Wheatley and Simon Rabinovitch
BEIJING — Reuters Published on Tuesday, Nov. 17, 2009 6:36AM EST Last updated on Tuesday, Nov. 17, 2009 11:30AM EST
The imperative of greater global currency stability means the world can no longer rely, as it has done since the end of the gold standard, on a currency issued by a single country, the head of the IMF said on Tuesday.
Dominique Strauss-Kahn, the managing director of the International Monetary Fund
, restated his view that a new global currency might evolve out of the special drawing right, the Fund’s in-house unit of account.
“That probably has to be a basket,” Mr. Strauss-Kahn said of the eventual replacement for the dollar. “In a globalized world there is no domestic solution,” he told a forum.
Speaking later at a news conference, Mr. Strauss-Kahn reiterated the message that has been a constant refrain during his visit – that China needs a stronger yuan as part of a package of policies to help rebalance its economy by promoting domestic demand.
“For us, because it just is consistent with the new economic policy in China, the sooner the better. How fast? It will take time. It is not something which will change in one step overnight,” Mr. Strauss-Kahn said.
