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Dear Extended Family,
New York State spending is out of control. California tried to go off the dollar but the California IOU is a total failure.
There are 38 states right behind California and New York, all of which are too big to fail.
The debts of the weaker European Union states are under attack by the huge short players. In time every currency will come under attack by the same ever-growing source of wealth.
Today’s action in gold, especially before the Crimex attack and dollar linking in the inverse, has delivered me my answer.
The following is ABSOLUTELY correct, so therefore sell all currencies into strength and buy gold on all weakness. There is no other strategy that will survive.
This is all you need to know:
1. Bretton Woods was folded.
2. The floating exchange rate system is about to be folded.
3. By default or design we are going to a one-world currency and a one-world central bank of central banks.
4. For Portugal, Ireland, Italy, Greece or Spain to break off from the euro would be an expansion of the floating exchange rate system under present conditions.
5. There are presently 3 major currencies. That is the US dollar, the euro and gold.
6. The SDR was an attempt to form a single reserve currency that never took flight.
7. The SDR is an accounting unit made up of an index of currencies much like the USDX.
Respectfully,
Jim
Thought For The Day:
The recent two central banks meeting are so secret that it has all the appearance of how the Nazis were tricked into thinking General Patton would lead the invasion of Europe.
They were cordoned off by military or police to a distance of three miles in all directions with air force cover protection.
I accept the action of gold in Asia and Europe pre-Crimex attack with a modestly lower Euro as confirmation of the conclusions contained in the email sent to you over the weekend.
Social security is headed for the rocks.
The longer the heavy business conditions last the more retirements will occur within the social security network.
You have to ask yourself if there is anything government wise of a financial nature that is not a wreck. Then ask yourself can these wreckers make anything right except the OTC derivative winners.
You have to ask yourself if the social security system is being analyzed as net cash or gross cash and receivables from the Federal government.
Should it be the latter then the problem is more serious.
Rash of retirements pushes Social Security to brink
By Richard Wolf, USA TODAY
WASHINGTON — Social Security’s annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability.
The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.
"Things are a little bit worse than had been expected," says Stephen Goss, chief actuary for the Social Security Administration. "Clearly, we’re going to be negative for a year or two."
Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed.
Experts say the trend points to a more basic problem for Social Security: looming retirements by Baby Boomers will create annual losses beginning in 2016 or 2017.
Jim Sinclair’s Commentary
Meaning no disrespect, the following photoshopped picture clearly communicates our views on allowing corporations to make political contributions without limit.
Jim Sinclair’s Commentary
The following is from Zero Hedge.
Their suspicions are on the mark. It is a short raid just like we witnessed when Bear, CITI and Lehman went down.
One has to wonder if the MOPE of draining liquidity, the Fed and Britain are sustaining this raid. I think intentionally or coincidently the answer is yes!
"In the pre-math of the Greek collapse, conspiracy theories are swirling about who keeps blowing Greek CDS spreads wider. The answer, so far completely unconfirmed, is that a large US investment bank (we "wonder" just which US investment bank dominates the sovereign CDS market), and two major hedge funds are behind the CDS "attacks" on Greece, Portugal and Spain. According to Jean Quatremer, and his Coulisses de Bruxelles, UE blog, the plan involves blowing spreads to record levels, and is prompted by the hedge funds’ anger at not having been allocated substantial amount of the recent €8 billion GGB issue, in order to lock in profits from their CDS long exposure. Being thus unhedged with a short bias, their alternative is to continue buying protection else risking to mark losses on their extensive CDS short risk exposure."
Jim Sinclair’s Commentary
This was not limited to the G7 meeting. This was a very secret meeting.
I gave you the skinny on it yesterday both by postings here on the site and by direct email. Secrets are not required when the material in discussion is about normal matters.
"However, a secretive gala dinner at the Art Gallery of NSW to mark the event last night attracted a who’s who of Australia’s political and business world."
"The event was held in the Grand Court, which seats up to 350 people."
"The low profile of the meeting is also a matter of design. Security is tight and the location of events a closely guarded secret."
Treat for elite as Reserve Bank celebrates
JESSICA IRVINE, VANDA CARSON AND ELLIE HARVEY
February 9, 2010
CENTRAL bankers are an unobtrusive breed by nature and necessity. So it might have escaped the attention of many that Sydney is playing host to a meeting of some of the world’s top money men and women to celebrate the 50th birthday of the Reserve Bank of Australia.
However, a secretive gala dinner at the Art Gallery of NSW to mark the event last night attracted a who’s who of Australia’s political and business world.
Bankers rubbed shoulders with celebrated economic figures. Past prime ministers from both sides of the political divide gathered to drink a toast to Australia’s success in weathering the global economic storm, including John Howard and Paul Keating.
Past treasurers included Peter Costello, John Dawkins, John Kerin and Ralph Willis. And, of course, the RBA was well represented, with governor Glenn Stevens and former governors Ian Macfarlane and Bernie Fraser in attendance.
Around 7.15pm, John Howard and his wife Janette arrived, almost at the exact time as Mr Costello, from the other side of the entrance. The pair met, shook hands, and offered a polite ”Good to see you” before moving up the stairs.
Jim Sinclair’s Commentary
This is what CIT is. Small business depends on CIT to factor inventories as well as other requirements.
This is Main Street’s business life blood. This is a company with no access to the commercial paper market. No commercial paper market means no funds for factoring.
Small businesses could drag down recovery.
Small businesses helped lead the economy out of the four recessions since 1980, but are now threatening the country’s economic recovery as they continue to cut capital spending and fire employees. Another 3,000 jobs were eliminated from small businesses in January; if the trend continues, improvement in the national unemployment rate, which dropped to 9.7% in January from 10.1% in December, could stall and economic growth could fall short of the 2.7% annual rate forecast.
Jim Sinclair’s Commentary
This seems to me to as comparable to President Bush’s shipboard announcement on the Iraq war, "Mission Accomplished."
There is something I am careful about and that is NEVER say NEVER. It is however a volley over the bow of Moody’s rating service.
Geithner Says U.S. Will ‘Never’ Lose Aaa Debt Rating (Update1)
By Rebecca Christie
Feb. 8 (Bloomberg) — Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.
“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”
Geithner said investors around the world turn to U.S. Treasury securities and dollar-denominated assets whenever they are worried about global stability. That reflects “basic confidence” in the U.S. and its ability to bounce back from the global recession, he said.
Moody’s Investors Service Inc. last week said the U.S. government’s bond rating will come under pressure in the future unless additional measures are taken to reduce budget deficits projected for the next decade.
The U.S. plans to rein in the deficit once the labor market recovers, Geithner said. In the short run, that means focusing on ways to “make sure that this economy is growing again,” he said. The administration says the deficit will shrink over the next four years as more Americans find jobs and the economy accelerates.
Jim Sinclair’s Commentary
The real CIT story is that they are NOT welcome in the commercial paper market which restricts their business to their present fixed loan lines and available cash capital.
That is extremely bad news from Middle America. Thain will not find a ready buyer for CIT as he did for Merrill, even though that was not his will.
Former Merrill Lynch boss appointed CIT chief
The former chief executive of Merrill Lynch, John Thain, has been appointed as the new boss of US lender CIT Group, which recently emerged from bankruptcy.
CIT will pay Mr Thain $6m (£3.8m) a year – $500,000 in cash, $2.5m in stock to be held for one year, and $3m in stock to be held for three years.
Mr Thain resigned from Merrill just after it merged with Bank of America at the start of last year.
He was criticised for allowing big bonuses despite Merrill’s hefty losses.
These were paid out just days before the takeover by Bank of America.
Jim Sinclair’s Commentary
There is no PRACTICAL means of draining the huge liquidity injected into the economy.
The operative word is PRACTICAL.
The Fed is playing with fire as this will not impress Wall Street, but scare the hell out of worldwide equity people.
By playing this game the Fed may well loose the wealth effect of the improved equity market, thereby risking losing it all.
QE to infinity or the Fed is history.
The Fed’s "Exit Plan" Is Just Another Secret Gift To Wall Street
Feb 08, 2010 09:50am EST
by Henry Blodget
The Fed is planning to detail its "exit plan" this week, the WSJ says. This exit plan is the means by which the Fed will gradually reverse the tremendous stimulus it is still pumping into the economy and financial system.
As we’ve noted often over the past year, the Fed is in a bind. During the financial crisis, it bought hundreds of billions of dollars of real-estate and other assets from banks to reduce mortgage rates and ease the pressure on bank balance sheets. This, in turn, pumped hundreds of billions of new dollars into the economy, which has enabled the banks–and bankers–to make a killing over the past year. The question is how the Fed can reverse this stimulus without killing the economy.
The idea behind giving the banks cheap money was that the banks would lend it to consumers and businesses. Unfortunately, that hasn’t happened: Since the start of the crisis, bank lending has fallen off a cliff. The banks are, however, lending to the Federal government, which needs to fund record deficits by borrowing more than $1 trillion a year. The combination of the Fed’s desire to stimulate lending via cheap money and the government’s desire to stimulate the economy by running a huge deficit has made it a great time to be a bank: Banks can borrow from the government at artificially cheap rates and then lend the money back to the Federal government at higher rates, pocketing the difference.
And now it’s going to get even better to be a bank.
Jim Sinclair’s Commentary
The best technology for this type of transportation is not resident in the USA. The US program to build this will benefit non American companies to a large degree.
China’s fast trains may offer tips for U.S.
By Calum MacLeod, USA TODAY
ABOARD THE GUANGZHOU-WUHAN EXPRESS — Once the speed gauge hits 350 kilometers per hour, or 217 miles per hour, passengers charge down the aisle to photograph the electronic display.
"If we go any faster, we’ll take off!" jokes Hu Qing, cracking open another can of beer on China’s world-record-breaking train.
The Dec. 26 opening of the high-speed link between south Chinese cities Guangzhou and Wuhan is the latest example of massive state spending to keep China’s economy roaring. The fast-expanding network of high-speed trains is stoking patriotism, too.
"This train is the pride of the Chinese people," says Hu, 42, the boss of a paper factory, who chose the train over a direct flight home to northeast China.
U.S. companies await the first round of government grants announced by President Obama in his State of the Union address totaling $8 billion to jump-start long-delayed high-speed rail in the USA.
Meanwhile, China enjoys a considerable head-start.
Jim Sinclair’s Commentary
No currency will do this for you, yet gold can going into 2011.
![clip_image001[1]](http://jsmineset.com/wp-content/uploads/2010/02/clip_image001110.jpg "clip_image001[1]")
Decade 2000-2009: Gold’s gain against 17 currencies (in %)
Jim Sinclair’s Commentary
Typical and across the board.
What is the difference between the weak states of the euro and the weak states of the USA? What is the difference between Greece going back to the Drachma or California issuing IOUs?
The answer is pure MOPE.
Oregon government revenues still dropping
By David Steves
The Register-Guard
SALEM — Passage of measures 66 and 67 may not have rescued state government from budget woes after all.
Even with the new taxes and a slowly recovering economy, Oregon’s revenue collections are now expected to fall $183 million below previous expectations, according to the latest forecast issued today.
That’s a small fraction of the $13.3 billion in general-fund spending planned for 2009-11 — but enough to put the budget $106 million after whack, after accounting for the $77 million ending balance. State Economist Tom Potiowsky attributed the dropoff in projected personal income tax revenue to two factors:
A slightly slower pace of economic recovery than was expected in the previous forecast.
A reduction in the tax payments coming in from high-income individuals.
Jim Sinclair’s Commentary
The Fed is playing with a nuclear-hot potato.
Talk hawk and the house will fall down in the Western world.
Believe me, neither the White House or the ECB want to hear that. Clearly the equity boys do not want to hear that.
If Bernanke plays it wrong, the only way a democrat will be elected in November is by changing the party affiliation. QE to infinity must happen or the Fed is History.
Dow Industrials Post First Close Below 10,000 Since Nov. 4
By JAVIER C. HERNANDEZ
Published: February 8, 2010
The Dow Jones industrial average, one of the most watched metrics of the financial world, dipped below the 10,000 threshold on Monday, delivering a psychological setback as investors sought to overcome fears of a faltering global recovery.
At the close of trading on Monday, the Dow settled at 9,908.39, its lowest close in three months.
Lingering fears over a debt crisis in Europe helped trigger the Dow’s fall. As several countries across the Atlantic grapple with swelling deficits, investors spent Monday trying to gauge how seriously American banks would suffer if European governments could not pay back their debt.
Analysts said the Dow’s drop below 10,000 probably did not mean much for the future of the stock market, but they noted it had a deeper psychological effect for Wall Street.
“Investors and traders find solace in 10,000,” said Jeffrey A. Hirsch, editor of The Stock Trader’s Almanac. “While it may not be important technically, falling below that level indicates that the whole economic picture is not as rosy as everyone had thought.”
Jim Sinclair’s Commentary
You can bust any debt by just running the OTC derivative market in the direction of your play. It is simple and effective.
Cash markets are always run by the leverage market. Damn those OTC derivatives anyway! You think any country will escape this?
What Do Rising Sovereign Credit Default Swaps Mean?
Monday, February 8, 2010
Here are the CDS of Greece, Portugal, Spain and the U.S.:
Rolfe Winkler argues that – in the short-run – the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) will slash their budgets and get bailed out by the EU.
Simon Johnson thinks that the weakening Euro caused by the PIIGS’ woes will hurt American exports (weaker Euro equals stronger dollar), and could lead to problems for leading global banks.
Other commentators fear that the PIIGS’ crisis has as much potential as a financial "contagion" as the subprime meltdown and the failure of Lehman.
Jim Sinclair’s Commentary
And what makes you think that MOPE will ever report truthfully?
The US Economic Crisis: Jobs Continue to Vanish While the Media Applauds “Recovery”
by Shamus Cooke
At first glance it appeared there was a typo in the headlines. The national media reported that, in January, another 20,000 more jobs were lost. Somehow, the unemployment rate dropped, from 10 percent to 9.7 percent. Nobody thought this paradox was worth explaining; instead, the media’s attitude was “more good news” about the economy.
But there was other evidence of an obliterated job market hiding behind the cheerful headlines. After revising the employment numbers in 2009, The New York Times reported, “…the economy lost 150,000 jobs in December, far more than the 85,000 initially reported.” Overall in 2009, the adjusted numbers showed an additional “…1.36 million fewer jobs…” (February 5, 2010).
And yet the unemployment rate dropped. One reason this happened is that the U.S. government uses a separate, more unreliable survey to calculate the unemployment rate, in contrast to the survey used to calculate job losses. There are other more important ways the government obscures the unemployment numbers: if you are no longer receiving unemployment benefits you’re not counted as unemployed; if you’ve given up looking for a job, you’re not counted either. You are counted, however, if you are working only 15 hours a week, or if you’re a temporary worker.
In this way the government cooks the books to bring fake optimism to the masses. The mainstream mediareports these fraudulent numbers without asking questions, so that the Democrats can continue doing absolutely nothing towards creating jobs.
But there is a method to the madness. Mass unemployment brings incredible pressure on workers’ wages and benefits. The mere threat of being unemployed puts unorganized workers in a precarious position when they’re told to work for less.
Jim Sinclair’s Commentary
You expected any different?
Irked, Wall St. Hedges Its Bet on Democrats
By DAVID D. KIRKPATRICK
Bankers, unhappy at the president’s proposals for tighter financial regulations, are shifting donations to Republicans.
Jim Sinclair’s Commentary
The illusion now is that ANY currency will maintain buying power.
"The top four U.S. states in the Fiscally Challenged Rankings would make the Greek situation look something akin to a storm in a tea cup."
The Illusion of U.S. Dollar Safety
NFP Fickleness
Over the course of December and January traders witnessed the ultimate in fickle behavior by the globally traded market, which was instigated by the December 4th 2009 Non-farm Payroll numbers printing at -11K jobs, that was far better than the expected -114K. Joyous jubilation hit Wall Street and, as the bunting and tick-tape floated around sunshine lit skies, the USD found buyers.
The equity markets took their time to absorb the historically unreliable NFP report, but within three sessions had found enough support to move S&P futures trade off the 1085 area, and up to test 1151, in a 6.5% move that topped out just in time to absorb January’s NFP numbers.
The Correlation Story
In the December move higher in stocks, the USD shed its high correlation with the equity markets, and took a hiatus from the 90% correlated moves each day, as the global market bought into U.S. economic jobs growth. Stocks went higher, yields went higher, commodities went higher (it took an extra week for commodity markets to catch up, but they too bought into the party with oil moving from $77 to $84 in an 8.5% move), all at the same time, in a play that bought into USD strength and safety.
In January, the NFP party had some cold water thrown on it with a read of -85K. Two days after the release the S&P futures market started its decline from 1151 toward 1068 at the time that February NFP numbers were revealed. The 7% drop in S&P trade reversed the December NFP equity rally.
The USD took strength from the January equity decline, and re-built the Risk Aversion = Stocks Lower = USD higher correlation (dollar up as Treasuries are bought as stocks are sold). The February NFP numbers were released at -20K, with massive revisions to the October and November numbers that added over 200K more job losses than had been reported, and threw into question the market-wide reaction to previously positive numbers.
Jim Sinclair’s Commentary
This is the big guys rolling over.
Apparently not every mansion is owned by a derivative dealer.
Jumbo Mortgage ‘Serious Delinquencies’ Rise to 9.6% (Update1)
February 08, 2010, 12:52 PM EST
By Jody Shenn
Feb. 8 (Bloomberg) — U.S. prime jumbo mortgages at least 60 days late backing securities reached 9.6 percent in January from 9.2 percent in December, the 32nd straight increase for “serious delinquencies,” according to Fitch Ratings.
“The trend line for delinquencies indicates the 10 percent level could be reached as early as next month,” Vincent Barberio, a Fitch managing director in New York, said today in a statement. The rate almost tripled in 2009, Fitch said.
Soured debt across loans backing so-called non-agency securities ballooned last year amid new defaults caused by slumps in home prices and employment, and as the federal government pushed loan servicers to consider debt modifications and states moved to slow foreclosures, reducing property liquidations after borrowers stopped paying.
The share of borrowers current the previous month and that then turned delinquent fell to 1.2 percent in the month covered by January bond reports, down from 1.3 percent as of December reports, Fitch said. The jumbo sector of the non-agency market was the only one in which so-called roll rates — or the amount of loans turning delinquent — rose from a year ago, according to the statement.
Jumbo home loans are larger than government-supported mortgage companies Fannie Mae or Freddie Mac can finance. Their limits now range from $417,000 in most places to as much as $729,750 in high-cost areas. Loans in jumbo securities can be smaller than those amounts if they were issued in earlier years. Non-agency mortgage securities lack guarantees from Fannie Mae, Freddie Mac or federal agency Ginnie Mae.
