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Jim Sinclair’s Commentary
You were sold the dollar rally based on a sustainable US economic recovery and a barrage of MOPE saying that the US dollar has no problems with bankrupt states but that the weak countries of the EU threaten the life of the euro.
That is raving total BS.
Gloomy Scenarios as Bankers Duck for Cover
Jan 27 2010, 3:49 pm by Alan Friedman
DAVOS, Switzerland – The U.S. and European economic recoveries could run out of steam later this year, and they could be faced with a prolonged period of low growth, high unemployment, a huge debt overhang on both governments and households, dangerous budget deficits, and a continuing loss of competitiveness.
That was the gloomy consensus taking shape among members of the world’s business, financial and political elites attending the 40th anniversary meeting of the World Economic Forum here.
By contrast, China, India and the rest of Asia are likely to be the only real engines of continuing economic growth this year, according to most of the economists, corporate types, sovereign wealth fund managers and government officials I talked to on the opening day of proceedings in this freezing cold Swiss ski resort.
The other theme that emerged was a barrage of banker bashing, debate, and criticism of Wall Street that would even make President Obama blush.
Nicolas Sarkozy of France, who formally opened the Davos meeting on Wednesday, won hands-down the title of Bank Basher In Chief with a rambling, ranting and only occasionally coherent speech about why a fundamental rethink of capitalism was needed.
Jim Sinclair’s Commentary
Sell the Euro versus the US dollar based on Spain and Greece? Man have you been brainwashed.
States, cities, municipalities, villages, and hamlets are busted all across the US. MOPE is silent on this.
Pennsylvania Capital Should Weigh Bankruptcy, Controller Says
By Dunstan McNichol
Jan. 26 (Bloomberg) — Harrisburg, Pennsylvania, the capital of the sixth-largest U.S. state by population, should skip a $2.2 million debt service payment due Feb. 1 and consider bankruptcy, City Controller Dan Miller said.
Harrisburg faces $68 million in payments this year in connection with a waste-to-energy incinerator and should weigh Chapter 9 protection from creditors or state oversight through a program known as Act 47, Miller said today. Chapter 9 bankruptcy allows municipalities to reorganize rather than liquidate.
The alternatives are to sell assets such as an historic downtown market; an island in the Susquehanna River that includes the city’s minor-league baseball stadium; and the city’s parking, sewer and water systems, according to a preliminary 2010 budget and an emergency financial plan submitted yesterday.
“What I’m suggesting is we stop paying the debt service until we have a plan or we decide which way to go, in bankruptcy or Act 47,” Miller, a former city council member who became controller this month, said in a telephone interview. “I think it could save our assets instead of selling them.”
Mayor Linda Thompson, who unseated 18-year incumbent Mayor Stephen Reed in a Democratic party primary last year to lead the city of 47,000, didn’t return a call to her office for comment.
Jim Sinclair’s Commentary
Manipulation of Perspective Economics. Get ready to put them all back in place by June 2010.
Central banks end US dollar emergency swap lines
By JANE WARDELL
The Bank of England said Wednesday that it and other major central banks are ending emergency lending arrangements put in place with the U.S. Federal Reserve in the wake of the global credit crisis, citing improvements in financial markets.
The decision marks the first unified retraction by central banks around the world of extraordinary support measures to boost lending after credit markets seized up in late 2007, causing the global economic downturn.
The Bank of England was joined by the European Central Bank, the Bank of Japan and the Swiss National Bank in announcing that the temporary reciprocal currency arrangements with the Fed would expire on Feb. 1.
"These lines, which were established to counter pressures in global funding markets, are no longer needed given the improvements in financial market functioning seen over the past year," the bank said in a statement. "Central banks will continue to cooperate as needed."
The Fed announced in December 2007 that it had authorized so-called liquidity swap lines with the European Central Bank and the Swiss National Bank. The agreement was extended to include several other central banks in April 2009.
Jim Sinclair’s Commentary
For your information.
UBS tax evasion deal falls apart.
The Swiss government backed away from an agreement with the U.S. to hand over the names of U.S. clients of UBS (UBS) who were suspected of tax evasion. The development follows rulings from two Swiss courts that said disclosing the names would be a violation of Switzerland’s secrecy laws. The Swiss cabinet said it would continue talks with the U.S. on the matter but acknowledged the risk that the U.S. could resume its civil proceedings against UBS.
Jim Sinclair’s Commentary
The Fed is angry anyone wants the details
AIG Draws $2.4 Billion From Fed Credit Line, Most Since October
By Hugh Son
Jan. 28 (Bloomberg) — American International Group Inc., the bailed-out insurer whose borrowing through a U.S. commercial paper program was set to expire this month, increased its draw on a Federal Reserve credit line by the most since October.
AIG owes $25.8 billion on the line, about $2.4 billion more than last week, according to Fed data released today. The draw has increased for six straight weeks. The company said in November that it may borrow additional funds from its five-year Fed credit line to make payments on maturing commercial paper.
“This helps to highlight the risks we’re exposed to as citizens standing behind AIG,” said Bill Bergman, an analyst at Morningstar Inc. in Chicago. “While there’s much more liquidity in markets as a whole, lenders are still being selective.”
AIG, which got a $182.3 billion government bailout, had relied on the U.S. commercial paper program as firms including MetLife Inc. and General Electric Co. reduced their use of government-backed funds. New York-based AIG said it lost access to its traditional sources of liquidity after its 2008 rescue.
Commercial paper is used by companies to finance daily expenses such as payroll and rent. The Fed, which started a program in October 2008 to bolster the market after the Lehman Brothers Holdings Inc. bankruptcy, said it may wind down the facility in February. Lending through the program peaked a year ago at $350 billion.
